The law firm of Stark & Stark, P.C. has joined forces with the consumer advocacy group, Homeowners Against Deficient Dwellings (HADD), to file an amicus curiae (“friend of the court”) brief urging the New Jersey Supreme Court to uphold a homeowner’s right to pursue tort remedies against manufacturers of defective building components.
The case, Dean v. Barrett Homes, Inc., will mark the first time the New Jersey High Court directly addresses whether and to what extent the so-called “economic loss rule,” originating in the law of product liability, applies to residential construction. Concisely stated, that rule forecloses tort remedies against manufacturers of defective goods for “economic loss,” unless accompanied by personal injury or physical damage to property other than to “the product itself.”
Dean involves the purchase of a pre-owned house incorporating an exterior siding product known as Exterior Insulation and Finish System (EIFS). In their complaint against the EIFS manufacturer, Sto Corp., plaintiff homeowners allege that defects in the system permitted water to infiltrate and damage the underlying wood structure of their home. In dismissing the tort claims against the manufacturer, the trial judge applied the economic loss rule, viewing the entire house as the relevant “product” and the asserted damage to the underlying structure as damage to “the product itself,” unrecoverable in tort. On appeal, a divided panel of the Appellate Division affirmed dismissal of the action.
The question now certified to the Supreme Court is whether a home constitutes a “product” for purposes of defining the manufacturer’s tort liability, and, relatedly, whether a homeowner’s presale notice of an otherwise latent defect in an integrated component of the home acts as a bar to tort recovery as a matter of law.
Stark & Stark, P.C., is representing HADD pro bono as amicus curiae in the appeal. The brief filed on behalf of HADD argues that the trial court and Appellate Division improperly barred the Deans’ claims against the EIFS manufacturer, expanding the economic loss rule well beyond its principled origins. Presenting a detailed explication of the nature and historical underpinnings of product liability in New Jersey, the brief explains how imposing the burden of property damage on building component manufacturers who place the injurious defects in the stream commerce serves the purposes and goals of strict product liability in tort; it allocates the risk of loss to the party basically at fault and relieves the injured homeowner who, because of relative inexperience in the field of home construction, is less able to predict and meet the risk of damage caused by defects lurking in the integrated components of the house.
Attorney of record and Stark & Stark shareholder, John Randy Sawyer, remarked that the “Appellate Division’s decision in Dean stands in stark contrast to nearly fifty years of precedent in New Jersey recognizing and protecting a homeowner’s legitimate interest in safe and sound habitation.” It applies the economic loss rule, Sawyer noted, “as a virtual shield of immunity for component manufacturers, leaving either the homeowner, or an innocent builder, vendor or developer, saddled with the risk of loss created by the defectively manufactured building components.”
The issues presented in Dean are of broad implication and of vital importance to HADD’s core constituency of homeowners, according to the organization’s New Jersey chapter president, Tracy Kelly. “For most people,” Kelly observed, “the purchase of a home is the investment of a lifetime, and the consequences of a defective building component can be both financially and personally devastating.” The need for legal recourse against manufacturers of such products is, according to Kelly, “nowhere more pressing than in the context of home construction.” HADD’s amicus submission is supported by Kelly’s certification, detailing the organization’s mission and nearly 15-year experience of advocacy on behalf of residential consumers.