## Facts

- Sandrock Farms negotiated through Birkey’s, a certified dealer, to buy a Case IH STX 500 four-wheel-drive tractor for farm use.
- Birkey’s located a tractor with comparable specifications but with an auto-steer system; Sandrock Farms agreed and separately negotiated $10,795 for the auto-steer component within a $205,000 total purchase.
- The tractor was delivered with the auto-steer system already installed as part of a single sale.
- About a year later, the tractor caught fire during normal agricultural use and sustained extensive damage.
- Westfield, Sandrock Farms’ insurer, paid the loss and sued Birkey’s (dealer) and CNH (manufacturer) as subrogee.
- Westfield alleged negligence and strict products liability, plus contract and warranty theories, and claimed the fire damaged the tractor and “other property” (including the auto-steer system, employees’ clothing, and firefighting items) and caused personal injuries to employees responding to the fire.

## Issues

1. Whether negligence and strict products-liability claims were barred by Illinois’ economic-loss doctrine, or whether alleged damage to “other property” or personal injuries permitted tort recovery.
2. Whether breach-of-warranty claims against Birkey’s were barred by an effective disclaimer in the sales documents.
3. Whether the trial court abused its discretion by denying leave to file a fifth amended complaint.

## Decision

- Affirmed dismissal of the tort counts as barred by the economic-loss doctrine.
- Affirmed dismissal of warranty counts against Birkey’s based on an effective disclaimer of implied warranties.
- Affirmed denial of leave to file a fifth amended complaint as within the trial court’s discretion.

## Legal Principles

- Under Illinois’ economic-loss doctrine, a plaintiff generally may not recover in tort for purely economic loss caused by a defective product; contract and warranty remedies govern absent a recognized exception.
- For economic-loss analysis, components sold as part of an integrated product at delivery are treated as the product itself, even if a component was separately priced during negotiations; damage to such components is not damage to “other property.”
- Conclusory or insufficiently supported allegations of incidental property damage or personal injury do not necessarily remove a claim from the economic-loss doctrine at the pleading stage.
- A conspicuous and properly worded disclaimer in sales documentation can effectively disclaim implied warranties, and a subrogated insurer is subject to the same contractual limits as the insured.
- Leave to amend may be denied after repeated amendments where the proposed changes would not cure legal defects and amendment would be futile.

## Conclusion

The appellate court held that the insurer’s subrogation suit sought recovery for economic loss from an integrated product’s failure, so tort claims were barred; warranty claims failed due to a valid disclaimer; and further amendment was properly denied as futile after multiple prior amendments.


Westfield Ins. Co. v. Birkey’s Farm Store, Inc., 924 N.E.2d 1231 (Ill. App. Ct. 2010)