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What is the Economic Loss Doctrine, or the Moorman Doctrine, in Illinois?

The economic loss doctrine, maintains that no plaintiff may recover under a tort of negligence solely for economic losses arising out of dissatisfied expectations. This doctrine was highlighted in the Illinois Supreme Court decision of Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69 (1982), and is often referred to as the Moorman doctrine in Illinois.

In Moorman, the plaintiff purchased a bolted-steel grain storage tank from defendant for use at its feed processing plant. About ten years later, a crack developed in one of the steel plates. As a result, the plaintiff filed suit against the defendant manufacturer. Count I alleged that the tank was not reasonably safe due to certain design and manufacturing defects. Count II alleged that the defendant had made certain misrepresentations in the sale of the tank. Count III accused the defendant of negligently designing the tank. In its complaint, the plaintiff prayed for damages representing the cost of repairs and reinforcement of the tank, as well as the loss of use of the tank. The trial court held that the cost of repair and loss of profits or income were economic losses which could not be recovered under the tort theories named in the plaintiff’s complaint.

The Court in Moorman defined economic losses as “damages for inadequate value, costs of repair and replacement of the defective product, or consequent loss of profits--without any claim of personal injury or damage to other property.” Id. at 82. The Moorman Court expressed its interest in keeping the spheres of tort and contract law, stating that contract law was best suited as a remedy for loss relating to a purchaser’s disappointed expectations due to deterioration, internal breakdown, or non-accidental cause, and tort law was best suited for personal injury and property damage resulting from a sudden and/or dangerous occurrence. Id. at 86.

However, the court recognized that the Moorman doctrine has three exceptions: (1) where the plaintiff sustained damage from a sudden, calamitous or dangerous occurrence coupled with physical harm to person or other property; (2) where the plaintiff’s damages are proximately caused by the defendant's intentional false misrepresentation; or (3) where the plaintiff’s damages are proximately caused by a negligent misrepresentation by a defendant who is in the business of supplying information for the guidance of others in their business transactions.

In short, the Moorman doctrine is a very relevant doctrine, with many nuances. If you have any questions regarding the Moorman doctrine and its applicability, contact the attorneys at Ball & McCann, P.C., as we have a proven track record of successfully litigating the nuances of the Moorman doctrine for the benefit of our clients.

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