## Facts

- Brookings Municipal Utilities, Inc. and the City of Brookings, South Dakota owned and operated a municipal sewer line known as the “Southwest Interceptor.”
- Between 1975 and 1980, Brookings oversaw construction of the Interceptor, including installation of approximately 14,855 feet of “Techite II” reinforced fiberglass pipe manufactured and supplied by Amoco Chemical Company and its subsidiary, Amoco Reinforced Plastics Company.
- Brookings retained an engineering firm to design the line; its project engineer evaluated fiberglass pipe options and received product information from the manufacturer’s representative.
- Brookings approved use of Techite II, allegedly based on representations or understandings that it would resist corrosion and perform for decades in a sewer environment.
- The line experienced a pipe break in 1983 and additional breaks in 1996.
- In 1996, after the later breaks, Brookings decided to replace all Techite pipe in the Interceptor, incurring substantial replacement costs.
- Brookings did not notify defendants about the breaks or the replacement decision before undertaking replacement.
- In 1997, Brookings sued, asserting negligence and strict liability as well as breach of express and implied warranties; defendants moved for summary judgment and later sought reconsideration.

## Issues

1. Whether the economic loss doctrine barred negligence and strict products liability claims seeking replacement costs and related losses tied primarily to the pipe’s failure.
2. Whether breach of warranty claims were barred for failure to provide notice of breach within a reasonable time under U.C.C. § 2-607(3)(a), including whether Brookings qualified as a “buyer” subject to that requirement.
3. Whether disputes about defendants’ knowledge of Techite II problems, the nature of alleged property damage, and limitations defenses precluded summary judgment on some warranty theories.

## Decision

- The court granted summary judgment in part and denied it in part, and denied defendants’ motion for reconsideration.
- The court held the economic loss doctrine barred tort recovery to the extent Brookings sought purely economic losses associated with the product’s failure and replacement.
- The court treated Brookings as subject to U.C.C. § 2-607’s notice requirement for warranty remedies despite the lack of a direct purchase from defendants.
- The court declined to hold, as a matter of law, that Brookings’ lack of notice barred all warranty claims; material fact disputes remained regarding reasonable time notice and the effect of defendants’ alleged knowledge.
- Some warranty theories or damage components were dismissed on legal grounds (including limitations-related issues), but a core set of warranty claims survived.

## Legal Principles

- Under South Dakota’s economic loss doctrine, tort remedies are generally unavailable for losses consisting of repair/replacement costs, loss of expected service life, and other benefit-of-the-bargain damages; such claims typically sound in contract or warranty.
- When a component is incorporated into a larger system, damage to the component and the integrated system may be treated as damage to the product itself rather than damage to “other property,” limiting tort recovery.
- U.C.C. § 2-607(3)(a) requires a buyer to notify the seller of breach within a reasonable time after discovery or when the breach should have been discovered, or the buyer is barred from remedies.
- The notice requirement serves to allow investigation, possible cure, and pre-suit resolution; compliance is assessed case-by-case and may present fact questions on summary judgment.
- A seller’s independent awareness of product problems does not automatically eliminate the notice requirement, but it may bear on whether the purposes of notice were substantially met and whether notice was reasonable under the circumstances.

## Conclusion

The court largely confined Brookings to warranty-based remedies by applying the economic loss doctrine to bar tort claims seeking economic damages tied to pipe failure, while allowing certain warranty claims to proceed because the U.C.C. notice and related defenses turned on disputed facts, and it denied reconsideration of its partial summary judgment rulings.


Brookings Mun. Utils., Inc. v. Amoco Chem. Co., 103 F. Supp. 2d 1169 (D.S.D. 2000)