Miller v. U.S. Steel Corp., s. 89-2533

• Decision Date: 12 July 1990
• Docket Number: Nos. 89-2533,89-2587,s. 89-2533
• Citation: 902 F.2d 573
• Parties: 11 UCC Rep.Serv.2d 1131, Prod.Liab.Rep.(CCH)P 12,453 Jordan A. MILLER and J. Donna Miller, doing business as Office on the Square, Plaintiffs-Appellants, v. UNITED STATES STEEL CORPORATION, Defendant and Third-Party/Plaintiff-Appellee, v. MILLER & MEIER & ASSOCIATES, ARCHITECTS & PLANNERS, INCORPORATED and Selzer-Ornst Company, Third-Party Defendants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 573

902 F.2d 573

11 UCC Rep.Serv.2d 1131, Prod.Liab.Rep.(CCH)P 12,453

Jordan A. MILLER and J. Donna Miller, doing business as

Office on the Square, Plaintiffs-Appellants, v. UNITED STATES STEEL CORPORATION, Defendant and Third-Party/Plaintiff-Appellee, v. MILLER & MEIER & ASSOCIATES, ARCHITECTS & PLANNERS,

INCORPORATED and Selzer-Ornst Company, Third-Party

Defendants.

Nos. 89-2533, 89-2587.

United States Court of Appeals, Seventh Circuit.

Argued April 13, 1990.

Decided May 15, 1990.

As Amended May 17, 1990.

Rehearing Denied July 12, 1990.

E. Campion Kersten, Leslie M. Loftus, Kersten & McKinnon, Milwaukee, Wis., for Jordan A. Miller and J. Donna Miller.

William J. McKim, David A. Luptak, Roger L. Wise, Law Dept., Pittsburgh, Pa., for U.S. Steel Corp.

Thomas L. Shriner, Jr., David E. Beckwith, Cynthia Obremski, Foley & Lardner, James F. Boyle, Edmund W. Powell, Borgelt, Powell, Peterson & Frauen, Milwaukee, Wis., Donald P. Schneider, Schellinger & Doyle, Brookfield, Wis., Donald M. Lieb, Otjen, Vanert, Stangle, Lieb & Weir, Milwaukee, Wis., for Miller & Meier & Associates, Architects & Planners, Inc.

Before CUDAHY, POSNER, and FLAUM, Circuit Judges.

POSNER, Circuit Judge.

We are asked to decide whether this products liability suit, which arises under the diversity jurisdiction, is barred by the "economic loss" doctrine. Rardin v. T & D Machine Handling, Inc., 890 F.2d 24 (7th Cir.1989). The parties agree that Wisconsin law governs. The plaintiffs, Mr. and Mrs. Miller, own an office building in Milwaukee, consisting of an original structure completed in 1969 and an addition completed in 1976. Mr. Miller is an architect and designed the building, including the addition. The exterior walls both of the original building and of the addition are of "Cor-Ten" steel, manufactured by the defendant, U.S. Steel, which sold the steel to a subcontractor, since defunct, who fabricated it into steel panels that were then installed by the project's general contractor.

Cor-Ten is a "weathering" steel; its outer layer is supposed to rust, forming a protective coat that resists further corrosion without need for paint or other coating. Its anti-corrosive properties were talked up in promotional literature that U.S. Steel distributed in the late 1960s when the plaintiffs' building was being designed; and representatives of U.S. Steel met with Mr. Miller and urged him to specify Cor-Ten in the design for the building, which he did. There was never a signed contract between Miller and U.S. Steel.

By 1979 it was apparent that the Cor-Ten installed on the Millers' building was rusting right through and would have to be replaced. In 1984 the Millers brought this suit to recover the cost of replacing the panels. U.S. Steel impleaded other firms that had been involved in the construction of the building and addition, but the third-party claims are of no significance and we shall dismiss the appeal arising from them as moot. The Millers' case against U.S. Steel went to trial and a jury determined that the Cor-Ten had indeed been defective and that it would cost $180,000 to replace the walls of the original building. But the jury awarded the plaintiffs nothing, because it determined that Mr. Miller's negligence in designing the building was 80 percent responsible for the corrosion of the walls, and under Wisconsin's comparative-negligence doctrine the plaintiff takes nothing unless the jury finds that the defendant was at least 50 percent at fault. Wis.Stat. Sec. 895.045. The trial had been confined to the original building because the judge had ruled that U.S. Steel's liability for the addition was barred by the statute of limitations. The paradox that the younger claim was time-barred and the older one not is due to the fact that the statute of limitations that would have barred the older claim had been held unconstitutional by the Supreme Court of Wisconsin. After the trial the statute of limitations that barred the younger claim was held unconstitutional too, and this is one of several grounds on which the Millers urge us to reverse.

The Millers are attempting to use tort law to recover the cost of replacing a defective product sold to them for use in their business. This cost is called in law an "economic loss," to distinguish it from an injury to the plaintiff's person or property (property other than the product itself), the type of injury on which a products liability suit usually is founded. It would be better to call it a "commercial loss," not only because personal injuries and especially property losses are economic losses, too--they destroy values which can be and are monetized--but also, and more important, because tort law is a superfluous and inapt tool for resolving purely commercial disputes. We have a body of law designed for such disputes. It is called contract law. Products liability law has evolved into a specialized branch of tort law for use in cases in which a defective product caused, not the usual commercial loss, but a personal injury to a consumer or bystander.

An increasing number of jurisdictions hold that tort law provides no remedy in a case in which the plaintiff is seeking to recover for a commercial loss rather than damage to person, property, or reputation. Rardin v. T & D Machine Handling, Inc., supra, reviews the leading cases establishing this economic loss doctrine. 890 F.2d at 27-28. A few months earlier the Supreme Court of Wisconsin had jumped on the economic loss bandwagon in Sunnyslope Grading, Inc. v. Miller, Bradford & Risberg, Inc., 148 Wis.2d 910, 437 N.W.2d 213 (1989), although its adoption of the doctrine had been anticipated, as we shall see. The Millers (our Millers) emphasize that Sunnyslope was a particularly strong case...