M&C Obtains Dismissal of Potential Billion Dollar Class Action Lawsuit

May 1, 2009

Jefferson S. Smith and Scott J. Loeding successfully achieved the dismissal of a class action lawsuit brought against several replacement window manufacturers when the trial court granted their Demurrer, without leave to amend, based upon the economic loss rule. M&C represented one of three defendants involved in the manufacturing and marketing of vinyl replacement windows, installed in millions of homes throughout California. The potential damages were estimated in excess of a billion dollars.

M&C originally filed a Demurrer to the class action Complaint on the grounds that the plaintiffs’ property damage claims were too individualized for a class action lawsuit. Plaintiffs subsequently amended their Complaint to allege that, although they sustained property damage as a result of the allegedly defective windows, they were not seeking to recover monetary damages for the property damage and instead were only seeking to recover the replacement costs of the windows.

Smith and Loeding filed a Demurrer to plaintiffs’ Amended Complaint, arguing that the claims for strict liability and negligence were barred under California’s economic loss rule. Because the cost of replacing or repairing the windows themselves constituted pure economic losses, M&C argued that plaintiffs could not sue in strict liability or negligence. The trial court agreed and sustained the Demurrer to the Complaint without leave to amend; thus dismissing M&C’s client from the action.

Plaintiffs have appealed the trial court’s decision to the Fourth District Court of Appeals. The Court of Appeals’ decision may have a significant and far-reaching impact on future class action lawsuits where plaintiffs seek to recover replacement costs for a defective product. Mr. Loeding is handling the pending appeal.