Legal Memorandum: Economic Loss Doctrine in RI

Issue: What is the economic loss doctrine under Rhode Island law?

           The economic loss doctrine makes tort claims unavailable in circumstances in which the parties are in a contractual setting and the injuries are purely economic.  Levin v. Kilborn, 756 A.2d 169 (R.I. June 19, 2000) (declining to apply the doctrine in that case because the plaintiff’s claims were dismissed on statute of limitations grounds). Under the economic loss doctrine, a plaintiff is also precluded from recovering purely economic losses in a negligence action.  Boston Inv. Property # 1 State v. E.W. Burman, Inc., 658 A.2d 515, 517 (R.I. 1995) (citing Hart Eng’g Co. v. FMC Corp., 593 F. Supp. 1471 (D.R.I. 1984)). 

In Boston Investment, the court considered a certified question from the United States District Court for the District of Rhode Island regarding whether, in the absence of privity of contract with the general contractor, a subsequent purchaser of commercial real estate was entitled to recover economic damages it alleged were proximately caused by the negligence of the general contractor.  The court answered that question in the negative.  Because the lack of privity barred recovery on contract grounds, and because the economic losses were not properly the subject of a tort action, the subsequent purchaser was allowed no recovery.  Id. at 518.

In the Hart Engineering case, relied on by the Boston Investment court, the United States District Court for the District of Rhode Island similarly held that a seller-manufacturer of defective equipment was not liable as a […]