Litigation: 6 defenses every inside counsel should know (Part 2)

Examining the cases behind the economic loss rule

This is the second of a six-part series on liability defenses that every inside counsel should know. Based on more than 30 years of litigation practice, this series discusses the liability defenses I have found to most often result in successful summary judgments or dismissals, providing the best potential to end expensive and time-consuming litigation. This installment focuses on the “economic loss rule.”

The U.S. Supreme Court and numerous jurisdictions across the United States have adopted the economic loss rule to bar plaintiffs from recovering tort damages for purely economic losses. This rule can and should be used to obtain dismissal of tort claims that are inappropriately pled in many cases involving commercial transactions. The dismissal of these inappropriate claims is important because there are certain types of damages, most notably punitive damages, that are typically recoverable based only upon tort claims.

Contributing Author

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Jonathan B. Shoebotham

Attorney Jonathan B. Shoebotham is a partner in the Houston office of Thompson & Knight, where he leads the firm’s Complex Tort and...

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