The Subrogation Strategist

The economic loss doctrine (ELD) has been a thorn in the side of subrogation practitioners for some time. Particularly in states that enforce it strictly, an adverse ruling based on the doctrine can sometimes be an unexpected pull of the rug from under what would otherwise be a strong subrogation case. Because of the harsh consequences that such a ruling can have, it is crucial to be aware of how the state you are handling a case in deals with the ELD and what the effects are on potential recoverability.

In Sierra Summit, LLC vs. Humphreys & Partners Architects, Nev., LLC, No ... Continue Reading

In City of N. Tonawando v. Penn Power Group, LLC, 77 CA 24-01685, 2026 N.Y. App. Div. LEXIS 1800 (4^th Dept. Mar. 20, 2026), the Supreme Court of New York, Appellate Division, Fourth Department (Appellate Court), considered whether the defendant’s motion to dismiss should be granted on the grounds that the breach of warranty was time-barred by the statute of limitations and the plaintiff’s negligence claims were barred by the economic loss doctrine (ELD). The Appellate Court agreed with the defendant that the breach of warranty claim was barred by the statute of limitations and ... Continue Reading

The economic loss doctrine is a concept in subrogation law that is often debated and rarely completely understood. Even when a subrogation practitioner may think they have it figured out, a new scenario presents itself that creates a brand-new gray area. The United States District Court for the Northern District of Illinois (District Court) recently addressed the effect a data breach – at a software provider - had on an insured’s software access and how the economic loss doctrine played into the resulting claims for damage.

In Travelers Excess & Surplus Lines Co. v. CDK Glob., LLC,Continue Reading

In Carroll v. Isle of Palms Pest Control, Inc., No. 28291, 2025 S.C. LEXIS 98, the Supreme Court of South Carolina (Supreme Court) clarified the scope of the economic loss rule and, in doing so, created new opportunities for subrogating carriers to pursue tort recovery in cases involving negligent service providers.

James E. Carroll, Jr. (Carroll) contracted with Isle of Palms Pest Control (IPPC) for termite protection using a bait station system. The contract capped liability at $250,000 and specified that treatment would consist solely of installing and monitoring bait ... Continue Reading

In Commercial Painting Co. v. Weitz Co. LLC, No. W2019-02089-SC-R11-CV, 2023 Tenn. LEXIS 39 (Weitz), the Supreme Court of Tennessee (Supreme Court) considered whether the economic loss doctrine barred the plaintiff’s claims for fraud, negligent misrepresentation and punitive damages arising out of a contract with the defendant for construction services. The court held that the economic loss doctrine only applies to product liability cases and does not apply to claims arising from contracts for services. This case establishes that, in Tennessee, the economic loss doctrine does not bar tort claims in disputes arising from service contracts.

In Weitz, defendant, Weitz Co. LLC (Weitz), was the general contractor for a construction project and hired plaintiff Commercial Painting Co. (Commercial) as a drywall subcontractor.  Weitz refused to pay Commercial for several of its payment applications, claiming that the applications were submitted untimely and contained improper change order requests.  Commercial filed a lawsuit against Weitz seeking over $1.9 million in damages, alleging breach of contract, unjust enrichment, enforcement of a mechanic’s lien, and interest and attorney’s fees under the Prompt Pay Act of 1991. Weitz filed a counterclaim for $500,000 for costs allegedly incurred due to Commercial’s delay and defective workmanship. In response, Commercial amended its complaint to add claims for fraud, intentional and negligent misrepresentation, rescission of the contract and $10 million in punitive damages. Commercial alleged that Weitz received an extension of the construction schedule but fraudulently withheld this information from Commercial and continued to impose unrealistic deadlines.Continue Reading

In HDI Glob. SE v. Magnesium Prods. of Am., Inc., No. 360385, 2023 Mich. App. LEXIS 2602 (Magnesium Prods.), the Court of Appeals of Michigan (Court of Appeals) considered whether the lower court erred in dismissing the plaintiffs’ claim for loss of income based on the economic loss doctrine. The court found that while the defendant manufacturer owed a duty to the general public to exercise reasonable care in its manufacturing process, that duty did not apply to the economic damages alleged by the plaintiffs.Continue Reading

The economic loss doctrine is a legal principle that has confused and frustrated subrogation practitioners since its inception. Unfortunately, once practitioners understand the basic theory, they realize how frustrating it can be. If there was any doubt about the doctrine’s effect in New York, the Appellate Division put that to rest in a recent ruling on a subrogation case in which it bolstered the economic loss doctrine defense.

In Safeco Ins. Co. of Ill. v. LSP Prods. Grp., 2022 U.S. Dist. LEXIS 139566, the United States District Court for the District of Idaho (District Court) considered whether the plaintiff's tort claims against the manufacturer of an allegedly defective toilet water supply line were barred by the economic loss rule. The defendant filed a motion for summary judgment arguing that, since the supply line was a part of the home when the plaintiff's insureds purchased it, the plaintiff was barred by the economic loss rule from bringing tort claims against the manufacturer. The District Court granted the defendant’s summary judgment motion, ruling that the supply line was a part of the home, which was the subject of the transaction, at the time it was purchased. Thus, the District Court held that the economic loss rule barred the plaintiff’s tort claims.Continue Reading