## Facts

- Loren Berg, a commercial fisherman, bought a new Detroit Diesel 8V-53N marine engine from an authorized dealer that sold and installed the engine in Berg’s fishing vessel.
- The engine was supplied with an MG-506 marine clutch that was allegedly unsuitable for the engine’s horsepower and commercial use, and the manufacturer allegedly did not inform dealers of the clutch’s limitations.
- During the fishing season, Berg experienced multiple breakdowns, including an engine failure attributed to a factory assembly error, a later catastrophic engine failure involving a cap screw/cam roller (with disputed responsibility and parts not preserved), and a subsequent clutch failure tied to the alleged mismatch.
- The breakdowns caused vessel downtime during peak fishing operations.
- Berg sought damages consisting of economic losses, including loss of use and lost profits measured by the anticipated value of fish catch during repair periods.
- Berg sued the manufacturer, asserting negligent manufacture and additional theories involving the dealer’s conduct, but the appeal focused on whether negligence permits recovery for purely economic loss.

## Issues

1. Whether negligence law permits a purchaser to recover purely economic losses (lost profits and loss of use) from a manufacturer when there is no personal injury or damage to property other than the product itself.

## Decision

- The Washington Supreme Court reversed the dismissal of the negligence claim and remanded.
- The court held that a manufacturer may be liable in negligence for purely economic loss suffered by a purchaser, even without accompanying personal injury or damage to other property.
- The court declined to adopt a categorical rule barring negligence recovery solely because the damages are economic rather than physical.
- The court rejected the argument that warranty/UCC remedies automatically displace common-law negligence remedies for purely economic loss.

## Legal Principles

- Negligence liability is not categorically limited to physical injury to persons or property; foreseeable economic harm may fall within the scope of risks that reasonable care is meant to prevent.
- The availability of contract or UCC warranty remedies does not, by itself, preclude a negligence claim for purely economic loss against a manufacturer.
- Claims for economic losses in negligence are evaluated under ordinary negligence elements (duty, breach, causation, and foreseeability), rather than barred by a per se doctrine based solely on the type of damages claimed.
- In a commercial setting, lost profits from loss of use may be foreseeable consequential damages when equipment failure predictably interrupts profit-generating operations.

## Conclusion

The court held that Washington negligence law can allow recovery of purely economic losses against a manufacturer and therefore reinstated the purchaser’s negligence claim, returning the case to the trial court for proof of negligence, causation, and damages.


Berg v. Gen. Motors Corp., 87 Wash. 2d 584, 555 P.2d 818 (1976)