The Court grappled in this case with what it referred to as "the mysteries of the economic loss doctrine." The Court identified six "guideposts" regarding the scope of doctrine in North Carolina: (1) a tort action will generally not lie against a party to a contract who simply fails to perform the terms of the contract when the resulting injury resulting from the breach is damage to the subject matter of the contract, (2) the UCC bars negligence claims seeking recovery for damages to the product itself if the sale of goods is involved, (3) the UCC bar does not apply to claims of negligent misrepresentation, (4) where fraud and deceit are involved in the breach, punitive damages can be sought, (5) the doctrine does not bar claims of fraud, and (6) courts "must remain vigilant against a party’s unsupported attempt to engraft tort liability on what is at bottom a breach of tort action."

The Court deferred dismissal of the claims, because it was not clear that the plaintiff had a contractual remedy. That was so even though plaintiff had made a claim for breach of express warranty, because a party is entitled under the Rules of Civil Procedure to state all of its claims, regardless of their consistency.

The Court also held that plaintiff could proceed on its claims of negligent misrepresentation and unfair and deceptive practices. (Judge Diaz referenced an earlier opinion, Hospira Incorporated v. Alphagary Corp., written before he joined the Business Court, in which he had thoroughly discussed the economic loss doctrine.  Thanks to Brad Kutrow of Helms Mullis & Wicker for providing a copy of this opinion).

Full Opinion