## Facts

- Senators Rental, Inc. purchased a bus manufactured by Prevost Car (US) Inc. with an engine manufactured by Detroit Diesel Corporation.
- While traveling on Interstate 65 near Goodlettsville, Tennessee, the bus caught fire, allegedly due to an engine defect.
- The fire caused no personal injury and no damage to property other than the bus itself.
- Lincoln General Insurance Company paid its insured $405,250 for the loss and sued Prevost and Detroit Diesel as subrogee.
- The complaint asserted breach of express and implied warranties, negligence, and strict products liability.
- After removal to federal court, Prevost moved to dismiss the tort claims under the economic loss doctrine; the federal court certified a question to the Tennessee Supreme Court.

## Issues

1. Whether Tennessee law recognizes an exception to the economic loss doctrine allowing tort recovery for damage only to the defective product when the defect is unreasonably dangerous and the damage occurs through a sudden, calamitous event.

## Decision

- The Tennessee Supreme Court answered the certified question “in the negative.”
- Tennessee’s economic loss doctrine bars negligence and strict products liability claims for damage only to the product itself, even if the defect is unreasonably dangerous and the failure is sudden and calamitous.
- The court adopted a bright-line rule consistent with the majority approach that confines such losses to contract, warranty, and insurance remedies.
- The court concluded the Tennessee Products Liability Act does not displace the economic loss doctrine for purely economic loss to the product itself.

## Legal Principles

- Purely economic loss from a defective product that harms only itself is not recoverable in tort; the proper remedies are contract and warranty.
- A “sudden and calamitous event” (including one allegedly caused by an unreasonably dangerous defect) does not create an exception permitting tort recovery when only the product is damaged.
- Tort remedies remain available when a defective product causes personal injury or damage to other property.
- The Tennessee Products Liability Act does not authorize tort recovery for purely economic loss to the product itself and does not override the economic loss doctrine in that setting.

## Conclusion

Tennessee applies a bright-line economic loss rule in products cases: when a defective product damages only itself, negligence and strict liability claims are barred, and recovery is limited to contract, warranty, and insurance, even if the loss results from a sudden, calamitous event and the defect is alleged to be unreasonably dangerous.


Lincoln Gen. Ins. Co. v. Detroit Diesel Corp., 293 S.W.3d 487 (Tenn. 2009)