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Spencer Fane Obtains Summary Judgment in Case Affecting Manufacturers Throughout Missouri

Spencer Fane obtained summary judgment in a case that has important implications for manufacturers doing business in Missouri.

Spencer Fane client, CTB, Inc., sells farming equipment through a dealer network. A dealer, Bruce Martin Construction, Inc., sued CTB in the United States District Court for the Eastern District of Missouri, claiming damages of lost profits, replacement costs, and labor costs arising from alleged defects in CTB-produced equipment. The dealer purported to state claims for negligent misrepresentation and breach of express warranty.

Spencer Fane obtained judgment on the pleadings in CTB’s favor on the dealer’s negligent misrepresentation claim. Under Missouri’s “economic loss doctrine,” a plaintiff cannot sue in negligence for purely economic losses like those the dealer alleged. However, the doctrine does not extend to claims for fraudulent misrepresentation, and Missouri courts had never determined whether negligent misrepresentation is covered by the doctrine like negligence, or excepted from the doctrine like fraudulent misrepresentation. The Court accepted Spencer Fane’s arguments, and found that a plaintiff may not recover purely economic losses from a transaction in goods under a negligent misrepresentation theory – an important win confirming that manufacturers sued in Missouri can rely on their carefully-crafted contractual protections.

Next, the firm moved for summary judgment on the dealer’s remaining claim of breach of express warranty. CTB’s limited warranty guaranteed that its products would be free of defects in material or workmanship, but was silent about defects in design. Over the dealer’s strenuous objections, Spencer Fane convinced the Court that a warranty of material and workmanship does not include an implied warranty of a product’s design, and that the dealer had failed to introduce any facts supporting a defect in material or workmanship. This design-material distinction – expressly recognized by a court in Missouri for the first time in this case – is an important one for manufacturers to remember as they craft their limited warranties.

Spencer Fane is pleased to announce this important victory. Should you have questions about minimizing the risk of litigation over your products, or if you require counseling regarding threatened or pending litigation, please do not hesitate to contact Spencer Fane attorneys Jim Price, Gerry Greiman, or Pat McLaughlin.