Commercial Painting Company Inc. v. The Weitz Company LLC

Style: Commercial Painting Company Inc. v. The Weitz Company LLC

TSC Docket Number: W2019-02089-SC-R11-CV

Date of TSC Opinion:  September 28, 2023

Opinion of the TSC:  Click here for majority opinion.   Click here for dissenting opinion.

Summary of the TSC Opinion:

The economic loss doctrine generally precludes a contracting party who suffers only economic losses from recovering damages in tort. In Tennessee, the application of this doctrine is limited to products liability cases. In this appeal, we consider whether the economic loss doctrine should be expanded to apply outside the products liability context.  A jury awarded compensatory and punitive damages to a drywall subcontractor in a suit against a general contractor under theories of breach of contract and tort. The Court of Appeals applied the economic loss doctrine to preclude the recovery of damages in tort in a suit between sophisticated commercial entities. The intermediate court, in part, affirmed the award of compensatory damages for breach of contract, dismissed the tort claim, and reversed the award for punitive damages. We hold the economic loss doctrine only applies in products liability cases and should not be extended to other claims.

Dissent:  The economic-loss doctrine bars recovery in tort for purely economic losses in certain situations. In this case, the Court is asked to apply that doctrine to bar tort claims brought by a subcontractor against a general contractor, where the relationship between the subcontractor and general contractor is governed by a contract. The majority opinion cabins the economic-loss doctrine to products liability cases and refuses to extend it to contracts for services for fear that doing so would require that we also create various exceptions. I respectfully disagree with that holding. The core rationale underlying the economic-loss doctrine—to create a boundary line between tort and contract law to ensure that parties can allocate risks and responsibilities as they see fit—applies equally to cases involving contracts for services. And to the extent that any exceptions to the rule would be needed, their creation would not be nearly as difficult or messy as the majority predicts. I would hold that the economic-loss doctrine applies here and precludes the subcontractor from recovering punitive damages and pre-judgment interest.

Court of Appeals Opinion: https://www.tncourts.gov/sites/default/files/commercialpaintingopn1.pdf

Summary by the Court of Appeals:

This is the third appeal arising from a commercial construction project. Most recently, the case went to trial before a jury, which awarded the plaintiff subcontractor $1,729,122.46 in compensatory damages under four separate theories and $3,900,000.00 in punitive damages. The trial court further awarded the plaintiff pre- and post-judgment interest and attorney’s fees and costs. We conclude the economic loss rule is applicable to construction contracts negotiated between sophisticated commercial entities and that fraud is not an exception under the particular circumstances of this case. Because punitive damages and interest are not authorized under the parties’ agreement, those damages are reversed. The compensatory damages of $1,729,122.46 awarded for breach of contract are affirmed. The award of attorney’s fees incurred at trial is vacated for a determination of the attorney’s fees incurred in obtaining the compensatory damages award. No attorney’s fees are awarded on appeal. We, therefore, reverse in part, affirm in part, and vacate in part.

Issues the Court Will Consider:

1. Whether the Court of Appeals erred in applying this Court’s holding in Milan Supply Chain Solutions, Inc. v. Navistar, Inc., 627 S.W.3d 125 (Tenn. 2021), and expanding the application of the economic loss doctrine to the circumstances of this case.

2. Whether the Court of Appeals erred in vacating the trial court’s award of attorney’s fees and in limiting the scope of recoverable fees on remand, and whether the Court of Appeals erred in denying Commercial Painting Company an award of costs and fees on appeal.

Permission to Appeal Granted: August 4, 2022

Appellants’ Briefs Filed: August 26, 2022

Appellees’ Briefs Filed: September 26, 2022

Appellants’ Reply Brief Filed: October 6, 2022

Appellees’ Reply Brief Filed: November 3, 2022

Amicus Briefs Permitted:  

Oral Argument Date: November 9, 2022

Link to Oral Argument Video: https://www.youtube.com/watch?v=019eOfA45go