Tuscumbia City School System v. Pharmacia Corp. (871 F. Supp. 2d 1241, 2012)

MEMORANDUM OPINION AND ORDER

LYNWOOD SMITH, District Judge.

The plaintiff in this action is the public school system of the City of Tuscumbia, Alabama. It commenced this diversity jurisdiction case as a putative class action against defendant, Pharmacia Corporation, alleging one count of negligence and one count of wantonness or recklessness in the design, manufacture, and marketing of electric ballasts for fluorescent light fixtures containing “the now-banned toxic chemicals known as Polychlorinated Biphenyls (‘PCBs’),” and with knowledge that: PCBs were toxic; that failing ballasts release PCBs into classrooms like those maintained by the plaintiff; and, that “PCBs could cause systemic toxic injuries” to humans. Defendant moved to dismiss the action for failure to state a claim upon which relief can be granted. Following consideration of the pleadings, motion, briefs, and research the motion will be denied.

I. STANDARDS FOR REVIEWING RULE 12(b)(6) MOTIONS TO DISMISS

Federal Rule of Civil Procedure 12(b)(6) permits a party to move to dismiss a complaint for “failure to state a claim upon which relief can be granted.” That rule must be read in conjunction with Rule 8(a), which requires that a pleading contain only a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). While that pleading standard does not require “detailed factual allegations,” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 550, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), it does demand “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citations omitted).

A pleading that offers “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” [Twombly, 550 U.S. at 555, 127 S.Ct. 1955]. Nor does a complaint suffice if it tenders “naked assertion»” devoid of “further factual enhancement.” Id., at 557, 127 S.Ct. 1955.

To survive a motion to dismiss founded upon Federal Rule of Civil Procedure 12(b)(6), [for failure to state a claim upon which relief can be granted], a complaint must contain sufficient factual matter, accepted as true, to “state a claim for relief that is plausible on its face.” Id., at 570, 127 S.Ct. 1955. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id., at 556, 127 S.Ct. 1955. The plausibility standard is not akin to a “probability requirement,” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Ibid. Where a complaint pleads facts that are “merely consistent with” a defendant’s liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.’ ” Id., at 557, 127 S.Ct. 1955 (brackets omitted).

Two working principles underlie our decision in Twombly. First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere eonclusory statements, do not suffice. Id., at 555, 127 S.Ct. 1955 (Although for the purposes of a motion to dismiss we must take all of the factual allegations in the complaint as true, we “are not bound to accept as true a legal conclusion couched as a factual allegation” (internal quotation marks omitted)). Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. Id., at 556, 127 S.Ct. 1955. Determining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. [Iqbal v. Hasty], 490 F.3d [143] at 157-158 [ (2d Cir.2007) ]. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged- — but it has not “show[n]” — “that the pleader is entitled to relief.” Fed. Rule Civ. Proc. 8(a)(2).

In keeping with these principles a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclu sions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded, factual allegations, a court should, assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.

Iqbal, 556 U.S. at 678-79, 129 S.Ct. 1937 (emphasis added).

When ruling upon a motion to dismiss, the court must assume that all well-pleaded facts alleged in the plaintiffs complaint are true. See Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 453, 126 S.Ct. 1991, 164 L.Ed.2d 720 (2006) (stating that on a motion to dismiss, the court must “accept as true the factual allegations in the amended complaint”); Marsh v. Butler County, 268 F.3d 1014, 1023 (11th Cir.2001) (en banc) (setting forth the facts in the case by “[accepting all well-pleaded factual allegations (with reasonable inferences drawn favorably to Plaintiffs) in the complaint as true”). Accordingly, the statements contained in the following part of this opinion as the “facts” for Rule 12(b)(6) purposes may, or may not, be the actual facts. See, e.g., Williams v. Mohawk Industries, Inc., 465 F.3d 1277, 1281 n. 1 (11th Cir.2006).

II. BACKGROUND FACTS

The Tuscumbia City School System is a public school district in Colbert County, Alabama. Defendant, Pharmacia Corporation, is a Delaware corporation with its principal place of business in New Jersey. It is a wholly owned subsidiary of Pfizer, Inc. It also is the successor in interest of Monsanto Company, which manufactured PCBs from 1929 until 1979. Monsanto was the sole U.S. manufacturer of PCBs, which “do not occur in nature,” and the chemicals were not imported in any significant amounts.

PCBs are hazardous chemicals, so much so that Congress specifically outlawed their manufacture in the Toxic Substances Control Act of 1976. Exposure to PCBs can occur in many forms. Skin contact, inhalation of vapors emitted by heated PCBs, and ingestion of the chemicals are all hazardous. The chemicals are a known carcinogen, and are deleterious to a person’s immune, reproductive, nervous, and endocrine systems. They also can reduce cognitive abilities. For example, children exposed to PCBs may exhibit reduced IQs and altered behaviors.

Prior to the Congressional Act banning the production of PCBs, the chemicals were used, among other purposes, in the assembly of “ballasts” for fluorescent light fixtures. A “ballast” is the device that controls the amount of electricity flowing into the fluorescent tube. “Essentially all ballasts manufactured for fluorescent light fixtures before 1979 contain liquid PCBs.” The danger to humans and the environment lies coiled in the fact that ballasts containing PCBs are known to leak, fail, and overheat. Indeed, all ballasts eventually fail. The devices are especially prone to overheating when they fail, When a ballast containing PCBs fails, it releases the chemicals into the atmosphere and environment.

As early as 1987, studies showed the toxicity of PCBs. Despite Monsanto’s awareness of the dangers inherent in exposure to PCBs, the company did not inform the public of the health risks associated with exposure to devices containing the chemicals. In fact, the company sought to hide the dangers from the public. Monsanto’s attempt to cover up the danger of PCBs lasted from the 1930s through the 1970s. Monsanto sold PCBs to manufacturers of fluorescent light fixtures, despite its knowledge that PCBs were stable chemicals that would linger in the environment for years after being released via ballast failures.

Prior to the 1979 Congressional ban on manufacturing PCBs, the chemicals were •used in all ballasts installed in fluorescent light fixtures, including those placed in school buildings. The Tuscumbia City School System owns and operates schools that contain pre-1979 fluorescent light fixtures operated by ballasts containing PCBs. The release of PCBs from failing ballasts has made the school buildings unsafe, exposing students, faculty, administrators, and adjunct staff to potential harm. The release of PCBs constitutes manifest property damage, similar to the property damage caused by the escape of asbestos fibers into a school’s environment.

A. Procedural Facts

The School System’s initial complaint was filed on January 31, 2012. Defendant responded with a motion to dismiss, together with an unopposed motion to stay discovery pending the court’s ruling on the motion to dismiss. Plaintiff filed an amended complaint on April 20, 2012. Defendant filed the motion to dismiss that is addressed in this opinion on April 27, 2012.

III. DISCUSSION

Defendant argues that, under Alabama law, it is not liable to the ultimate consumer of products manufactured by its predecessor in interest unless there was privity of contract between that manufacturer and the ultimate consumer (here, the plaintiff), or the latter was within the foreseeable zone of risk on the date of the initial sale of the goods to the original purchaser (the manufacturer of the fluorescent light fixtures purchased by plaintiff). In other words, defendant asserts that, unless Monsanto knew of the specific identity of the Tuscumbia City School System, and the risk posed for students, faculty, administrators, and other personnel occupying the System’s school buildings, on the dates it sold ballasts containing PCBs to the manufacturer(s) of the lighting fixtures installed in plaintiffs schools, then defendant is not liable for the alleged negligence of its predecessor in interest. Plaintiff responds that neither privity of contract nor the foreseeability of risk is necessary to sustain a negligence claim against the manufacturer of an inherently hazardous product.

A. “A page of history is worth a volume of logic.” New York Trust Co. v. Eisner, 256 U.S. 345, 349 (1921) (Holmes, J.).

This is not the first occasion on which the undersigned judicial officer has been required to weigh the same arguments in a similar context. Indeed, while serving as a Judge of the Twenty-Third Judicial Circuit for the State of Alabama (Madison County), the undersigned presided over an action commenced by the Huntsville City Board of Education against the five major manufacturers of spray-applied acoustical, fireproofing, and insulation materials containing high levels of asbestos that had been purchased by the plaintiff and installed in public school buildings erected in Huntsville between 1957 and 1967: i.e., Huntsville City Board of Education v. National Gypsum Company, et al., No. CV-83-325L (Mad. Co. Ala. Cir. Ct., filed Mar. 24, 1983). The school board alleged that the products presented a danger to the health of students, teachers, administrators, and maintenance personnel who occupied those buildings. The pivotal issue in the case was the question of whether the school board could recover damages for “economic losses” under a common-law tort action for negligence, or Alabama’s hybridized variant of the theory of strict liability in tort, the so-called “Alabama Extended Manufacturer’s Liability Doctrine.” That was a question of first impression in Alabama, and national opinion on the issue was fragmented. This judge’s opinion on the defendants’ various motions to dismiss, for judgment on the pleadings, and for summary judgment was among the first to analyze all cases then addressing those questions, and established a clear rationale for the recovery of economic loss damages under a tort theory. A copy of the opinion entered in that case on August 27, 1984 is attached to this opinion as Exhibit “A.” The relevant law has not changed appreciably or in a substantive manner during the (nearly) twenty-eight intervening years. Accordingly, this judge’s 1984 opinion is ratified, affirmed, and adopted as the basis of this court’s present rulings, just as fully as if the opinion were set out at this point in haec verba. The following discussion, therefore, should be construed as merely a gloss upon that which was more fully expressed in the earlier opinion.

B. The Alabama Extended Manufacturer’s Liability Doctrine

The Tuscumbia City School System cites several cases that track the development of the Alabama Extended Manufacturer’s Liability Doctrine (“AEMLD”). Plaintiff first points to Jones v. Gulf States Steel Co., 205 Ala. 291, 88 So. 21 (1921), in which' the Alabama Supreme Court acknowledged' an exception to the traditional requirement for showing privity of contract between a defendant and a plaintiff “where the thing causing the injury is of an obnoxious or dangerous character.” Id. at 22. The defendant in Jones was a coal mine operator, and the plaintiff was a person who had been injured when a lump of coal mined by the defendant and sold to the plaintiffs husband exploded. The plaintiff alleged that some employee of the defendant had negligently left explosive material in the coal lump. The Alabama Supreme Court observed that an exception to the requirement of privity for consumer products that possess an “obnoxious or dangerous character”

grew out of the necessity of the case, sustaining a wise public policy for the protection of human life and health, and placed upon the manufacturer and vendor of drugs, foods, and beverages, a high degree of care because of their superior knowledge of the articles manufactured, and the necessary reliance which the public must place upon them. As expressed in Magetti v. Armour & Co., 75 Wash. 628, 135 Pac. 635, 48 L.R.A.(N.S.) 223, Ann. Cas. 1915C, 142, supra, that such manufacturers “having an opportunity to investigate, and thereby know the quality of their merchandise,” are charged with a high degree of responsibility, and in manufacturing and placing on the market for the consumption of the general public, the law requires of them the exercise of a high degree of care to determine that no foreign and deleterious substance shall enter into the article, and that the public shall not be deceived thereby.

Id. at 23. Ultimately, however, the Court affirmed the trial court’s dismissal of the plaintiffs claim, because

the defendant was not dealing with a dangerous article, and one from the use of which any harm would reasonably be anticipated. There is no averment that the defendant knew of the existence of this explosive in the lump of coal, nor is there anything to indicate that it was the duty of the defendant to inspect the coal before allowing the plaintiffs husband to procure the same for domestic purposes. Indeed, we think it must be admitted that the unfortunate accident here set up is most unusual....

Jones v. Gulf States Steel Co., 88 So. at 23.

As discussed more fully in Exhibit “A,” the Alabama Supreme Court formally restated the elements of a manufacturer’s liability claim in two cases decided on the same day, Atkins v. American Motors Corp., 335 So.2d 134 (Ala.1976), and Casrell v. Altec Industries, Inc., 335 So.2d 128 (Ala.1976), and thereby christened the “extended” manufacturers’ liability doctrine that is generally referred to by its acronym, “AEMLD.” The Atkins court framed the elements of a prima facie AEMLD claim in the following manner:

(1) A plaintiff must prove he suffered injury or damages to himself or his property by one who sold a product in a defective condition unreasonably dangerous to the plaintiff as the ultimate user or consumer, if

(a) the seller was engaged in the business of selling such a product, and

(b) it was expected to, and did, reach the user or consumer without substantial change in the condition in which it was sold.

(2) Having established the above elements, the plaintiff has proved a prima facie case although

(a) the seller had exercised all possible care in the preparation and sale of his product, and

(b) the user or consumer had not bought the product from, or entered into any contractual relation with, the seller.

Atkins, 335 So.2d at 141.

As the quoted text makes clear, plaintiffs may rely on AEMLD in asserting claims for both personal injury and property damage. The Atkins court emphasized, nevertheless, that, in announcing the “extended” manufacturer’ liability doctrine, Alabama courts were not adopting the strict tort liability regime that prevailed in some sister states; rather, “selling a dangerously unsafe product is negligence as a matter of law.” Id.

More recent decisions of the Alabama Supreme Court have clearly stated that AEMLD is a stand-alone tort, separate from the common-law action for negligence, rather than a manner of proving negligence; and that the new tort stands in contrast to, e.g., the doctrine of res ipsa loquitur. See Spain v. Brown & Williamson Tobacco Corp., 872 So.2d 101, 105-06 (Ala.2003); Tillman v. R.J. Reynolds Tobacco Co., 871 So.2d 28, 35 (Ala.2003). See also McMahon v. Yamaha Motor Corp., U.S.A., No. 1100679, 95 So.3d 769, 771-72, 2012 WL 677548, at *2 (Ala. Mar. 2, 2012) (citing Tillman, and noting that negligence and AEMLD “have different elements that must be proven”).

Plaintiffs often assert both AEMLD claims and traditional common-law tort claims in the same actions. See, e.g., McMahon, 95 So.3d at 770-71, 2012 WL 677548 at *1; Spain, 872 So.2d at 102; Tillman, 871 So.2d at 29; Keck v. Dryvit Systems, Inc., 830 So.2d 1, 3 (Ala.2002). In the present case, however, the Tuscumbia City School System has not asserted an AEMLD claim. Instead, it only alleges common-law claims for the negligence and wantonness (or recklessness) of defendant’s predecessor in interest. As the Alabama Supreme Court stated in Spain and Tillman, those common-law tort theories are separate from an AEMLD claim. Therefore, and despite plaintiffs reliance on AEMLD cases in its brief, this court must focus on the rules applicable to the common-law tort theories actually asserted in the complaint.

C. Analysis of Plaintiffs Negligence Claim

Plaintiff argues that, as a “general principle,” “privity is not required to recover in negligence for the sale of a hazardous product.” However, plaintiff relies primarily on AEMLD cases to develop that argument. Plaintiff states that privity is not required, regardless of whether the case involves personal injury or property damage, and that the critical distinction is that between hazardous and non-hazardous products. Defendant, on the other hand, argues that privity is still required in negligence cases alleging only property damage.

The facts outlined in the complaint demonstrate the dangers that PCBs pose to humans, and the risk of exposure from ballasts that leak, fail, or overheat in fluorescent light. The actual harm for which the Tuscumbia City School System seeks damages in this case, however, is not compensation- for personal injuries already sustained by any particular person, but instead, damage to property other than the fluorescent light ballasts manufactured by defendant’s predecessor in interest. Specifically, and based upon the proposition that “[t]he release of PCBs into the environment of [plaintiffs schools] is a form of manifest, present property damage,” the Tuscumbia City School System asks that defendant be compelled to pay: the costs of inspecting its school buildings to determine which fluorescent light fixtures have ballasts containing PCBs, and, whether other property in each school building has been contaminated by PCBs that were emitted by ballasts that leaked, failed, or overheated; the costs of removing, replacing, and disposing of the affected ballasts; and, “any and all costs reasonably incurred to remediate the PCB-containing ballasts and all resulting harm” to the plaintiffs property.

1. Privity requirement in property damage cases

The case upon which defendant principally relies is Keck v. Dryvit Systems, Inc., 830 So.2d 1 (Ala.2002). The plaintiffs in that case brought numerous claims based on the failure of an artificial stucco siding compound that was not impervious to water, and allowed moisture to enter their home. Id. at 3-4. The plaintiffs had purchased the house from a previous owner, who had commissioned its construction. Id. at 4. One of their claims sounded in negligence, and alleged that they were foreseeable victims of the stucco siding’s failure and, thus, had been owed a duty of reasonable care by the defendant-manufacturer. Id. at 10. The trial court granted summary judgment on that claim because the plaintiffs had “failed to present substantial evidence of personal injury necessary to avoid the application of the doctrine of caveat emptor.” Id. at 4. On appeal, the Alabama Supreme Court first stated that the lack of privity between plaintiffs and defendants barred plaintiffs’ claim. Id. at 9 (citing Boackle v. Bedwell Construction Co., 770 So.2d 1076, 1081 (Ala.2000) (holding that a homebuyer must be in privity of contract with homebuilder to sue the builder for negligent construction)). The Court then stated that, even if the rule of privity did not bar recovery, the plaintiffs’ claim still would fail because, as subsequent purchasers of the house, they were not in a foreseeable area of risk, such that the defendants owed them a duty of care. Id. at 9-10. In reaching that conclusion, the Court rejected the plaintiffs’ wholly logical argument that it was clearly foreseeable that a house would, at some point, be sold to someone other than the original purchaser. See id.

Defendant also relies on Copenhagen Reinsurance Co. v. Champion Home Builders Co., Inc., 872 So.2d 848 (Ala.Civ.App.2003). In that case, the Alabama Court of Civil Appeals held that privity of contract was required for the owners of a mobile home to assert an action against its manufacturer. Id. at 855-56. The court relied upon the decision in Keck for the proposition that a plaintiff must be either in privity of contract with the defendant manufacturer, or his injury must be foreseeable. Id. Defendant argues that Keck and Copehhagen Reinsurance demonstrate that the Tuscumbia City School System must either show privity or foreseeability in order to maintain a negligence action for the recovery of property damages only, regardless of whether the product is characterized as dangerous or nondangerous.

2. The significance of a hazardous product

Plaintiff argues that “the cases cited by-Monsanto [sic ] are completely wide of the mark,” because neither involved a product alleged to be inherently hazardous or dangerous to human health. Indeed, there is nothing of “an obnoxious or dangerous character” about either imitation stucco siding or mobile homes. Plaintiff further argues that there is no distinction between cases alleging personal injuries and those alleging property damage, citing Harris v. Board of Water and Sewer Commissioners of City of Mobile, 294 Ala. 606, 320 So.2d 624 (1975), a pre-AEMLD case. The plaintiff in that action sued the municipal governmental agency responsible for maintaining the city’s fire hydrants. A fire had destroyed his hotel and restaurant, and he alleged that an inadequate supply of water to the nearest hydrant was a direct and proximate cause of his property loss. Id. at 626. The Alabama Supreme Court determined that the plaintiff was a third-party beneficiary of the contract between the City of Mobile and its water board and, thus, entitled to bring an action if injured by the board’s “breach of the contract to supply water or its negligent maintenance of nonfunctioning fire hydrants ....” Id. at 628. The Court stated that the plaintiff also could recover in tort under a theory of manufacturer’s liability, as applied to the supplier. First, the Court stated that the plaintiff was squarely within the foreseeable area of risk attendant to a contract to provide fire hydrant services. Id. at 630. In that regard, the plaintiffs ability to recover in tort was essentially identical to his ability to recover as a third-party beneficiary in contract. Significantly, the Court also stated that he could recover on the basis that a non-functioning fire hydrant is an inherently dangerous product, a theory of negligence requiring no privity of contract. Id.

If the product in question, although not inherently or imminently dangerous in itself, becomes so when applied to its intended use in the usual and customary manner, and an injury is sustained as the natural and proximate result of the use of that article, then the manufacturer is hable to the user. Defore v. Bourjois, Inc., 268 Ala. 228, 105 So.2d 846 (1958). The fireplug was to be used in the usual and customary manner and the injury was sustained as the natural and proximate result of the inability to use that article, according to Harris’s complaint. What can be more imminently dangerous that a fireplug that does not function when it is needed to fight a fire?

Harris, 320 So.2d at 630 (citing Doyle v. South Pittsburgh Water Co., 414 Pa. 199, 199 A.2d 875, 879 (1964) (holding that, even if the municipal water company had no duty to provide fire hydrants in the first place, once the hydrants were installed, the water company assumed an imperative duty to see that reasonable care was exercised in the maintenance and repair of the hydrants) (internal quotation marks omitted)).

Although the Harris opinion demonstrates that a plaintiff may recover in negligence for property damages caused by an inherently dangerous product, the property damage at issue in that case is distinct from the damage alleged in this case. Harris involved direct, traditional property damage: the plaintiffs hotel was burned to the ground as a result of the defective fire hydrant. Here, plaintiff does not allege that PCBs destroyed its schools. Rather, plaintiff alleges that its injury is the ongoing hazardous conditions in its schools. Thus, the court must turn its attention to the classification of property damage.

3. The “economic loss rule”

Property damages can be divided into two broad categories: traditional property damage (e.g., the fire in Hams) and “economic losses.” Economic losses can be further divided into subcategories. Direct economic losses comprise losses associated with repairing or replacing the defective product, and the loss of the benefit of the bargain. Consequential economic losses encompass the indirect losses, such as the loss of business, that often accompany a defective product. The damages plaintiff alleges do not fit neatly into those categories, but probably are best classified as direct economic losses. That classification is evident from plaintiffs prayer for relief, in which, as previously noted, the School System requests that defendant be ordered to pay for: the costs of inspecting its school buildings to determine which fluorescent light fixtures have ballasts containing PCBs, and, whether other property in each school building has been contaminated by PCBs that were emitted by ballasts that leaked, failed, or overheated; the costs of removing, replacing, and disposing of the affected ballasts; and, “any and all costs reasonably incurred to remediate the PCB-containing ballasts and all resulting harm” to the plaintiffs property.

Thus, the central question in ruling on defendant’s motion to dismiss is: Can a plaintiff sustain an action grounded in the common-law theory of negligence for direct economic losses caused by a hazardous product under Alabama law? The short answer to that question is “Yes.”

In Alabama, a products-liability plaintiff cannot recover for the damage to, or destruction of, the defective product itself under the so-called “economic loss rule.” See Lloyd Wood Coal Co. v. Clark Equipment Co., 543 So.2d 671, 672 (Ala.1989) (citing East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986)). The purpose of the economic loss rule is to prevent contract law from being swallowed by tort remedies. Contract remedies and warranty claims are the proper means to resolve the problems arising from products that fail to perform, either at all or as warranted. See id. at 673-74 (quoting East River at length). The justification for the economic loss rule fades when the product must be replaced or repaired, not because the product failed to perform, but because it is dangerous.

A recent decision of the United States District Court for the Eastern District of Louisiana discussed the applicability of the Alabama economic loss rule to a set of facts similar to those alleged by the plaintiff in this case, and by the Huntsville Board of Education in the state-court case attached as Exhibit “A.” In re Chinese Manufactured Drywall Products Liability Litigation, 680 F.Supp.2d 780 (E.D.La.2010). That case arose in the aftermath of Hurricanes Katrina and Rita. Id. at 782. The massive rebuilding efforts in the Gulf region put a strain on the nation’s supply of construction materials, and some contractors turned to Chinese drywall suppliers. Id. The owners of homes containing drywall manufactured in China began to complain of emission of odors and corrosion of household appliances. Id. Others experienced “headaches, nosebleeds, difficulty breathing and other physical afflictions believed to be caused by the Chinese drywall.” Id. The homeowners brought suit against the builders who installed the Chinese drywall, the manufacturers thereof, and a host of others involved in the process of exposing them to the drywall. Id. The court denied a motion to dismiss, brought under the economic loss rule, and provided a helpful explanation of that rule.

Alabama adopted the ELR [ie., “Economic Loss Rule”] in Lloyd Wood Coal Co. v. Clark Equipment Co., 543 So.2d 671 (Ala.1989), to hold that tort claims for a defective front-end loader that caught fire were barred by the ELR. Subsequently, the Alabama Supreme Court applied the ELR to bar plaintiffs tort claims in Wellcraft Marine, a Division of Genmar Industries, Inc. v. Zarzour, 577 So.2d 414 (Ala.1990), where a, boat was damaged as a result of manufacturing defects in the boat. More recently, the court addressed the ELR in Bay Lines, Inc. v. Stoughton Trailers, Inc., 838 So.2d 1013 (Ala.2002), which involved tort claims for economic losses as a result of the delamination of fiberglass panels on freight trailers. The court held that the ELR barred such claims because the only damage was to the panels themselves and “increased costs of doing business and customer displeasure are precisely the sorts of risks that can be considered before entering into a contract and that can be allocated in the contract.” Id. at 1020. Each of these cases is factually distinguishable from the instant matter. In Lloyd Wood, the front-end loader was not performing as such because it caught fire, in Wellcraft, the boat was not operating because of defective parts in it, and in Bay Lines, the fiberglass panels on the trailers were no longer sufficiently protecting the trailers. In the instant matter, the Chinese drywall has not been destroyed, nor has it ceased to functioned [sic ] for its intended purpose; rather, it is contaminating the health and homes of the Plaintiffs. Further, the instant matter goes beyond the concerns in Bay-Lines of “increased costs of doing business” and “customer displeasure,” to concerns with the destruction of Plaintiffs’ homes and the deterioration of Plaintiffs’ health.

Id. at 795 (bracketed alteration supplied).

The economic loss damages claimed by the Tuscumbia City School System are not a consequence of a “defect” in the product that renders it unusable. Rather, plaintiff alleges that the inherently hazardous nature of the products necessitates their removal from its school buildings. Plaintiffs claims, like those of the plaintiffs in the Chinese Manufactured Drywall cases and the Huntsville Board of Education case referenced in Exhibit “A,” are based in the contamination of buildings constructed with materials containing a hazardous substance. Thus, they are not subject to the economic loss rule. The hazardous nature of PCBs easily distinguishes the facts here from those in Keck and Copenhagen Reinsurance, which involved only ineffective home construction. Moreover, in those cases, as in Lloyd Wood, Wellcraft, and Bay Lines, the defective products themselves, ie., the homes, sustained the damages. Here, although plaintiffs damages can be categorized as “economic losses,” the damages are not just to the products themselves. The inspection, replacement, and remediation costs plaintiff seeks to recover stem from the hazardous nature of the products, not their inability to perform as advertised. Therefore, no privity or foreseeability is required for plaintiff to recover against defendant.

IY. CONCLUSIONS AND ORDER

For the foregoing reasons, defendant’s motion to dismiss is DENIED. Defendant’s initial motion to dismiss and defendant’s motion to stay discovery are DENIED as moot. Defendant is ORDERED to file its answer on or before July 9, 2012. The parties are ORDERED to conduct a discovery planning conference pursuant to Federal Rule of Civil Procedure 26(f) and the ALND Uniform Initial Order Governing All Proceedings, and to file a report of that conference on or before July 17, 2012.

EXHIBIT A

Copy of Slip Opinion Entered In

Huntsville City Board of Education v. National Gypsum Company, et al. No. CV-83-325L

(Mad.Co.Ala.Cir.Ct., Aug. 27, 1984)

MEMORANDUM OF OPINION

I. SUMMARY OF CASE

This is an action seeking damages for the costs of removing asbestos products from public school buildings.

The case was started on March 24, 1983. The original plaintiff was the Huntsville City Board of Education. Five of six, original defendants are said to have manufactured “spray-applied acoustical and fireproofing products” and “insulation materials placed on boilers and pipes” which were purchased by the plaintiff and installed in public school buildings erected between 1957 and 1967 (Amended Complaint ¶¶ 4 — 6); ie., 17 to 27 years ago. Nonetheless, the School Board alleges it only discovered in May of 1982 (id. ¶21) that the defendants’ products contained “high levels of asbestos” (id. ¶ 4), and that such condition presents

... a danger to the health and welfare of school children, teachers, and administrative and maintenance personnel, in that asbestos fiber causes numerous diseases, including mesothelioma, lung cancer, asbestosis, and other diseases harmful to the body, lungs, respiratory system, skin, and health of said persons. ... [Id. ¶ 7.]

Therefore, the Board asserts, it “must remove and abate said asbestos products, and replace furniture, carpeting and other items in the school[s].... ” (Id. ¶ 8.)

While the exact costs of labor and materials occasioned by such work are not presently known (since the effort is ongoing), the Board estimates it will exceed $2,000,000. The Board also contends the removal procedures will cause “various consequential expenses,” flowing from “serious disruptions in the operation” of the public school programs as work is performed and, “the investment of considerable time by administrative personnel.” (Id.) The Board claims the aggregate amount of $15,000,000 in “actual and punitive damages” for all of such alleged harm, and any equitable relief this Court deems appropriate.

The original complaint was bottomed upon nine legal theories: ie., (1) restitution; (2) negligence; (3) strict liability in tort; (4) the “Alabama Extended Manufacturer’s Liability Doctrine”; (5) breach of implied warranties; (6) breach of express warranties; (7) fraud and misrepresentation; (8) conspiracy; and (9) unfair trade practices. On August 22, 1983, however, the Board filed an amended complaint which deleted those four claims based upon the theories of strict liability in tort, breach of express and implied warranties, and unfair trade practices. The remainder of this opinion shall consider the defendants’ various motions directed to the complaint as thus amended.

II. NEGLIGENCE AND THE ALABAMA EXTENDED MANUFACTURER’S LIABILITY DOCTRINE

The third and fourth claims of plaintiffs amended complaint are based upon the theories of negligence and the “Alabama Extended Manufacturer’s Liability Doctrine,” respectively. Defendants raise several arguments in opposition to those tort claims, but the main thrust of their attack is centered on the notion that damages for “economic losses” are not recoverable under either theory. “Plaintiffs remedy in a case such as this one would properly be in a timely contract action for breach of warranty.” (National Gypsum Co. Brief 37.)

Generally speaking, defendants can claim the support of at least three distinguished commentators for their positions. For example, the late Dean William Prosser wrote:

There can be no doubt that the seller’s liability for negligence covers any kind of physical harm, including not only personal injuries, but also property damage to the defective chattel itself, as where an automobile is wrecked by reason of its own bad brakes, as well as damage to any other property in the vicinity. But where there is no accident, and no physical damage, and the only loss is a pecuniary one, through loss of the value or use of the thing sold, or the cost of repairing it, the courts have adhered to the rule, to be encountered later, that purely economic interests are not entitled to protection against mere negligence, and so have denied the recovery.

W. Prosser, The Law of Torts § 101 (4th ed.1971) (emphasis added). See also, Prosser, The Fall of the Citadel (Strict Liability to the Consumer), 50 Minn. L.Rev. 791, 822-823 (1966); White & Summers, Handbook of the Law Under the Uniform Commercial Code § 11-5 (1972).

More recently, and closer to home, the Deans of Alabama’s two, major law schools have said:

Both the manufacturer and retailer may sustain liability for the plaintiffs injuries proximately resulting from their negligence. The plaintiffs damages would be those recoverable in any negligence suit — pain and suffering, medical expenses, lost wages, loss of consortium as well as consequential injury to other property.

Neither the manufacturer nor the retailer, however, is liable in tort to the purchaser for a defective product only. A defective product is a loss of the benefit of the bargain which is a contract rather than a tort action. Negligence and other tort actions have as their public policy the protection of person and property, other than the purchased product. The product itself, therefore, falls outside the protected ambit, but the plaintiff has an action in contract for total or partial failure of consideration or a breach of an express or implied warranty.

C. Gamble & D. Corley, Alabama Law of Damages § 32-8 (1982) (emphasis added). In a subsequent section of the same text (id., at § 32-17), Deans Gamble and Corley add the following:

The companion decisions which gave birth to Alabama’s Extended Manufacturer’s Liability Doctrine (AEMLD) make it fairly clear that the plaintiff may recover damages for proximately caused injury to himself or his property. Section 402A of the Restatement (second) of Torts, upon which AEMLD was based, subjects the defendant to liability for physical harm caused to the plaintiff or to his property.

An abiding and open issue is whether the plaintiff may recover under AEMLD for purely economic loss to the product in question such as down time or loss of use. There is considerable national authority for the proposition that kO%A is not addressed to cases of mere pecuniary loss, but is limited to cases where there is “physical harm” or “property damage.” [Emphasis added.]

In spite of such impressive authority, the question of whether “economic losses” can be recovered under the tort theories of negligence, strict liability, or the Alabama Extended Manufacturer’s Liability Doctrine is not capable of easy resolution. The answer lies in the field of divided opinion. As Deans Gamble and Corley imply in the last excerpt from their text, the debate is far from being closed. In order to see more clearly the direction in which the law may be headed, therefore, it may be helpful to trace from whence it has come. Such an exercise must be undertaken with some caution, however, because clarity of hindsight does not ensure an equally acute vision of the future. As Holmes once said in a related context:

The law [of torts] did not begin with a theory. It has never worked one out. The point from which it started and that at which ... it has arrived, are on different planes. In the progress from one to the other, it is to be expected that its course should not be straight and its direction not always visible. All that can be done is to point out a tendency, and to justify it.

O.W. Holmes, Jr., The Common Law 77-78 (1881).

(A) A SHORT HISTORY OF LIABILITY FOR DEFECTIVE PRODUCTS

(1) The Law Through Greenman v. Yuba Power Products

It has been well said that “[t]he law of products liability has a long and interesting history.” As interesting as that history may be, a detailed account of it will not aid in the solution of the present question. Rather, for present purposes, only a brief look at the positions which the concepts of a “warranty” and “strict liability” have occupied in that development will be useful.

Prior to 1916, manufacturers generally were immune from liability under any theory of recovery to persons who did not have a direct sales or contractual relationship with them. The so-called doctrine of “privity” required that a plaintiff and defendant stand in a direct contractual relationship before the plaintiff could recover for injuries inflicted by products manufactured by the defendant. This rule insulated most manufacturers because the American practice of marketing products through independent wholesalers and retailers precluded the existence of privity between the manufacturer and the ultimate consumer.

The reasons for judicial insistence upon proof of “privity” as a prerequisite for recovery in the early products liability cases — especially those based upon the tort of negligence — are not altogether clear. But it probably was more attributable to the “favored status contemporary society accorded manufacturing in its infancy” than to any judicial misinterpretation of Lord Abinger’s sweeping dictum in the case of Winterbottom v. Wright. As one interpreter has noted, the marketing of articles “imminently” or “inherently” dangerous to human action. Finally, with Judge Cardozo’s famous decision in 1916 in MacPherson v. Buick Motor Co., the exceptions swallowed up the rule. It quickly became settled law that a manufacturer who placed a product on the market reasonably certain to imperil life and limb if improperly made owed a duty to the consumer to use diligence. “If he is negligent, where danger is to be foreseen, a liability will follow.” The opinion made it clear that privity had no place in the law of negligence:

Protection against suits by consumers along the distributive chain was felt essential for two basic reasons. First, it was thought that businessmen could not foresee injury to remote vendees. Second, there was the fear that extension of liability would result in a multiplicity of costly claims which would inhibit industrial development.

Application of this restrictive rule of non-liability yielded many harsh results. It soon became apparent that a more equitable method for spreading the loss among financially responsible parties was needed. Accordingly, the courts were impelled to engraft a series of exceptions on the privity doctrine. Where food or drink was involved the courts recognized a special responsibility of purveyors, and eliminated the requirements of privity in negligence actions. Other exceptions soon followed. However, the most important exception, the one eventually leading to the demise of privity in negligence actions for personal injury and property damage, involved

We have put aside the notion that the duty to safeguard life and limb, when the consequences of negligence may be foreseen, grows out of contract and nothing else. We have put the source of the obligation where it ought to be. We have put its source in the law.

Donovan, The Emerging Confrontation, supra note 3 at 184-185 (footnotes omitted).

The MacPherson case is a benchmark in this field of the law. It established the rule that a manufacturer can be held liable to foreseeable users for personal injury without proof of privity if, through negligence in the manufacturing process, the defendant created a dangerous product. “If the nature of a thing is such that it is reasonably certain to place life and limb in peril when negligently made, it is then a thing of danger,” and liability follows.

The MacPherson doctrine won wide acceptance. It soon became settled law in almost every jurisdiction. As a result, plaintiffs injured by defective products had a choice of remedies: either an action in warranty (requiring proof of privity of contract), or the MacPherson negligence action (not requiring privity). Even so, neither remedy was entirely satisfactory as a vehicle for imposing liability. Both actions presented problems of proof which often prevented (but always frustrated) recovery. One court described the legal dilemma facing a typical plaintiff in a suit against a mass-producer of consumer products as follows:

The warranty action, of ancient lineage, did not require a showing of negligence (through a showing of negligence, of course, did not defeat it) but it did require privity of contract. The negligence action, on the other hand, did not require privity but it did require that the plaintiff show a lack of due care with respect to the particular article, e.g., the bottle of Coca Cola in the present case. Either of these doctrines, literally applied, gave the manufacturer a virtual immunity. As for privity, the injured consumer and the manufacturer were contractual strangers, unless related by a fiction. As for negligence, the annual output of such bottles often ran into the millions. To show the negligence of the manufacturer with respect to any particular bottle was an impossibility.

Manzoni v. Detroit Coca-Cola Bottling Company, 363 Mich. 235, 109 N.W.2d 918, 920 (1961) (emphasis added).

Thus, while both theories presented evidentiary hurdles that were difficult to surmount, the negligence action was the most difficult to maintain. Often, it was (as the Manzoni decision stated) “an impossibility.”

Unfortunately, except in the most obvious instances of negligent conduct, it is difficult for the injured consumer to acquire adequate proof that it was the manufacturer, and not any of the intermediaries in the distributive chain, who was responsible for the defect in the product. In many cases, the injured consumer, who may be hospitalized and unable to earn a living, has neither the resources nor the knowledge to sustain the kind of investigative effort necessary to secure evidence sufficient to establish negligence on the part of the manufacturer. The problem of proof is further compounded by the unfortunate fact that in the milieu of modern manufacturing and marketing conditions, defective products are quite often produced, inspected, and marketed in the absence of negligence on the part of anyone.

Comment, The Vexing Problem of the Purely Economic Loss in Products Liability: An Injury in Search of a Remedy, 4 Seton-Hall L.Rev. 145, 147-148 (1972) (emphasis added) (hereinafter cited as “The Vexing Problem”).

In an effort to circumvent the difficulties of the negligence action, therefore, artful attorneys and crafty courts turned back to the concept of “warranty.” In doing so, however, they had to engage in considerable distortion of the concept. To allow recovery in cases involving physical injury, they restricted or eliminated the requirements of notice, privity of contract, and the right to disclaim liability.

As observance of these aspects of the law of sales ... relaxed, the courts ... inevitably shifted their approach, in fact if not always in terminology, closer to the concept of strict liability.

Comment, Seely v. White Motor Co.: Retrenchment in California on Strict Products Liability, 52 Virginia L.Rev. 509, 513 (1966).

The trend of imposing liability without fault and without proof of privity under the rubric of “implied warranty” began in the field of food and drink. During the 1950s, courts extended the trend to articles designed for intimate bodily use, such as hair dye, soap, and permanent wave solutions. Once breached, however, the walls of the citadel of privity began to crumble on every front. The food/intimate bodily use cases were followed by decisions which appeared to impose strict liability upon manufacturers of mechanical and industrial goods, albeit under the label of “implied warranty.” The landmark decision in this progression was Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69 (1960).

Of all the decisions against manufacturers which attack privity and appear to take the step from food to mechanical products, none has the untainted basis of Henningsen.

Prosser, The Fall of the Citadel (Strict Liability to the Consumer), 50 Minn. L.Rev. 791, 792n.4 (1966).

The plaintiff in Henningsen sued in implied warranty for personal injuries she suffered when a car manufactured by defendant Chrysler Corporation, and given to her by her husband (who had purchased the automobile from Bloomfield Motors), made an unscheduled turn into a very solid, brick wall. The New Jersey Supreme Court, stressing “justice to the consumer,” upheld the plaintiffs action without proof of negligence, and invalidated the defendant-manufacturer’s disclaimer because of its unfair, and unbargained-for, quality. Henningsen v. Bloomfield Motors, Inc., supra, at 404, 161 A.2d at 95. In effect, the court held that, as a matter of law, an implied warranty of fitness attached to every product placed in the stream of commerce, and flowed from the manufacturer to the foreseeable user, regardless of privity or fault.

The use of “implied warranty” as a label to describe the liability imposed, however, was misleading at best. For, indeed, the Henningsen “warranty” was not a product of contract. Rather, it was imposed by law for policy reasons, and existed between parties who had no contractual relationship. Furthermore, it was beyond the power of the parties who did make the contract to modify the effect of the implied warranty by specific agreement. In essence, therefore, the Henningsen concept of an implied warranty action without proof of privity was more an artifice for imposing liability than a description of contractual reality. In actuality, it was a fiction, and the court was “legislating.” In all but name, the New Jersey Supreme Court had created a new tort. As we shall presently see, the name of the new action was supplied by California.

Throughout this long (and if you will pardon the pun) torturous judicial process of gradually eliminating the restrictive aspects of contract concepts in the field of products liability, some clear-headed individuals plainly saw what the courts really were about, and called for frankness. One such voice in the wilderness was Professor Charles O. Gregory of the Yale Law School, who concluded a magnificent essay with the following cry:

[I]n the field of civil liability our courts are undermining the old fault principles, little by little, in a manner which leaves many of us puzzled and confused about the present state of the law. Why should not the courts either adhere to the clear-cut legal principles of Shaw’s day, leaving any departure from them to the legislatures, or cut clean away from them with open acknowledgment of a modern theory of absolute liability without fault, bereft of all the moldy trappings of the ancient common law, if they are going to effect the change anyway, without benefit of legislation? Whether such a new theory should acknowledge absolute liability only for the consequences of extrahazardous conduct or should take the form of an outright enterprise liability analogous to that reflected in the Workmen’s Compensation Acts is a matter “which wiser heads in time may settle.” At least, the courage and wisdom of a Shaw in our times might tell us where we stand, and why, in a manner which would make the teaching and study of the law of torts— let alone its practice and administration — a far different thing from the venture into confusion it now presents.

Gregory, Trespass to Negligence to Absolute Liability, 37 Virginia L.Rev. 359, 396-397 (1951).

Possibly in response to that call, Justice (later Chief Justice) Traynor of the California Supreme Court struck a blow for candor in the case of Greenman v. Yuba Power Products, Inc., 59 Cal.2d 57, 27 Cal.Rptr. 697, 377 P.2d 897 (1963). In Greenman, a consumer brought an action for personal injuries against the manufacturer of a defective power tool. The California Supreme Court held that the plaintiffs failure to give the manufacturer notice of the alleged breach of warranty within a reasonable time as required by California’s version of the Uniform Sales Act (the predecessor of the UCC) was not a bar to the action. Abandoning “implied warranty” as the label under which recovery would be allowed when a defective product caused physical injury, Tray-nor declared that henceforth the true name for such actions would be “strict liability in tort.” While recognizing that cases such as Henningsen had reached substantially the same result under the guise of implied warranty principles, Traynor advocated the clear adoption of “strict liability in tort” in order to demonstrate that consumer remedies did not rest solely on contract theory.

[R]ules defining and governing warranties that were developed to meet the needs of commercial transactions cannot properly be invoked to govern the manufacturer’s liability to those injured by their defective products unless those rules also serve the purposes for which such liability is imposed.

... The purpose of such liability is to insure that the costs of injuries resulting from defective products are borne by the manufacturers that put such products on the market rather than by the injured persons who are powerless to protect themselves. Sales warranties serve this purpose fitfully at best.... It should not be controlling whether the details of the sales from manufacturer to retailer and from retailer to plaintiffs wife were such that one or more of the implied warranties of the sales act arose.... “The remedies of injured consumers ought not to be made to depend upon the intricacies of the law of sales.” ... To establish the manufacturer’s liability it was sufficient that plaintiff proved that he was injured while using the Shopamith in a way it was intended to be used as a result of a defect in design and manufacture of which plaintiff was not aware that made the Shopamith unsafe for its intended use.

Greenman v. Yuba Power Products, Inc., supra at 63, 27 Cal.Rptr. at 701, 377 P.2d at 901.

There is compelling force in Justice Traynor’s basic thesis that noncommercial, personal injury losses caused by defective products are more appropriately handled under a tort theory than under the rubric of warranty principles.

Given the task of providing an effective remedy for the injured consumer or ultimate user of a defective product, the court rejected traditional warranty theory as ill-suited for the “purpose.” Stated in the most basic terms, the court made the value judgment that the strict liability doctrine would produce fewer unjust and anomalous results.

Note, 7 B.C. Indus. & Com.L.Rev. 767, 769 (1966). In addition, there is an attractive simplicity and straightforward quality to Traynor’s argument in Greenman. Yet, it is that very articular simplicity that became so troublesome because it glossed over some very significant questions and caveats. As one commentator observed afterwards,

once the courts tore loose from the semblance of contract liability, they openly entered the arena of potential conflict with the [Uniform Commercial] Code and its handling of sales transactions. The never-ending need for judicial development and elaboration of principles shows Greenman to be both the end of one sequence and the beginning of a new one.

(2) The Law After Greenman: Restatement § I02A, Santor, and Seely

The year following Justice Traynor’s decision in Greenman, Dean Prosser (who served as Reporter for the Restatement (Second) of Torts) persuaded the American Law Institute to adopt the following as Section 402A of the new text.

§ 402A. Special Liability of Sellers of Products for Physical Harm to User or Consumer

(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property, is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if

(a) the seller is engaged in the business of selling such a product, and

(b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold.

(2) The rule stated in subsection (1) applies although

(a) the seller has exercised all possible care in the preparation and sale of his product, and

(b) the user or consumer has not bought the product from or entered into any contractual relation with the seller.

As thus formulated by Greenman and its progeny, Restatement (Second) § 402A, the action for strict liability in tort was originally limited to cases involving personal injuries. But it eventually was extended to cases involving physical damage to property other than the defective product itself. The only question remaining, therefore, was the issue which confronts this court: should strict liability (or its Alabama variant) be extended to the situation in which a plaintiff suffers only “economic loss”? Before addressing that issue, however, one needs to be sure that he understands what the courts mean when they speak of “economic losses.”

Generally speaking, a defective product can cause three kinds of harm: (1) personal injuries; (2) property damage; or (3) economic loss. The first type, if not self-evident, is easily delineated. It denotes any harm or damage to the health of a person, however caused (whether by accident, disease, or otherwise), and encompasses physical pain, illness, disfigurement, or loss of the function of any bodily member or organ. The last two categories are not so easily distinguished from one another, however. Both courts and commentators have experienced difficulty in defining just what kinds of harm should be inserted into the “property damage” and “economic loss” pigeonholes. The purpose of the following sub-sections, therefore, is to state the definitions of those terms that shall be observed throughout this opinion, (a) Definition of “property damage”:

As used in this opinion, the term “property damage” refers to physical harm “that a defective product has caused to tangible property other than itself.” Franklin, When Worlds Collide, supra note 18 at 981 (emphasis added). Usually, this occurs when the product-defect causes an accident “involving some violence or collision with external objects.” Fentress v. Van Etta Motors, 157 Cal.App.2d Supp. 863, 866, 323 P.2d 227, 229 (Super.Ct.App.Dep’t 1958). Thus, for an example,

operation of a defective radiator causes property damage when it results in a fire which destroys the plaintiffs store and economic harm when it results in condi