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Gas distributor cannot sue valve manufacturer to recover economic losses from claimed defect

Semco Energy sued two manufacturing firms, arguing that they should be responsible for damages it incurred as a result of alleged defects in 41,000 Rockford Eclipse valves Semco had purchased between 1993 and 1998.  Semco claimed that the valves were defective, resulted in property damage, and that it did not "discover" the defect until shortly before 2010, when it filed suit.  It also argued that the manufacturers were guilty of fraud and obligated to indemnify Semco for the damages that Semco was required to cover when valves failed. 

The Court didn't buy it.  The Court pointed out that whether the claim was pursued under the Uniform Commercial Code, under the common law or on the basis of indemnity principles, Semco's claim wasn't valid.  The statute of limitations had run before the suit was filed.  Further, under long-standing law, this kind of "economic" loss is inherently part of a contracting party's risk and not recoverable in a legal action for product liability.

Thompson O’Neil, P.C.
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Traverse City, Michigan 49684
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