In Muncie v. Wiesemann, 2018 K.Y. LEXIS 257, the Supreme Court of Kentucky considered whether stigma damages in a property casualty case are recoverable in addition to the costs incurred to remediate the actual damage. The court held that stigma damages are recoverable in addition to repair costs, but the total of the stigma damages and repair costs cannot exceed the diminution in the fair market value of the property. The court’s decision establishes that if the repair costs are insufficient to make the plaintiff whole, a recovery for stigma damages up to the amount of the diminution in the market value of the home is appropriate. Continue reading
In State Farm Mutual Automobile Insurance Company v. Norcold, Inc., 849 F.3d 328 (6th Cir. 2017), the United States Court of Appeals for the Sixth Circuit considered whether Kentucky’s economic loss rule applies to consumer transactions. The economic loss rule prevents the buyer of a product from suing in tort to recover for economic losses when the product damages only itself. The Sixth Circuit predicted that Kentucky would not extend the economic loss rule to consumer transactions. The Norcold case reminds us that, while the economic loss rule can be a significant impediment to products liability subrogation claims, it is important to consider whether there are exceptions available to overcome this defense.
In Nami Resources Company, LLC v. Asher Land and Mineral, Ltd., — S.W.3d –, 2015 WL 4776376 (Ky. App. Aug. 14, 2015), the Court of Appeals of Kentucky recently declined to expand the scope of the economic loss doctrine, holding that the doctrine precludes misrepresentation claims only in commercial product liability cases.
In Nami Resources, Nami Resources Company, LLC (“NRC”) extracted gas from property owned by Asher Land and Mineral, Ltd. (“ALM”) pursuant to a contract. Under the contract, NRC agreed to pay ALM 1/8th of the gas’ market price. A dispute developed over the amount of royalties that NRC paid to ALM under the contract. ALM sued NRC, asserting, among other things, a claim for breach of contract and a tort claim for fraudulent misrepresentation. NRC argued that ALM’s misrepresentation claim was barred by the economic loss doctrine, contending that ALM’s claims were founded on contractual duties and that, absent a basis independent of the alleged breach of contract, ALM could not maintain its tort claims.