Law schools teach torts and contracts as fundamentally distinct areas of the law. Students learn that “‘contract obligations arise form promises made between parties,’ whereas ‘[t]ort obligations generally arise from duties imposed by law. . . without regard to any agreement or contract.’” Dream Finders Homes Ltd. Liab. Co. v. Weyerhaeuser NR Co., 2021 COA 143, ¶ 1. So, as to preserve the distinction between tort law and contract law, some state courts have devised the “economic loss rule,” which clarifies when a party whose contract has been breached may obtain damages under a tort theory. The economic loss rule provides, generally, that a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such a breach absent an independent duty of care under tort law.
However, the Montana Supreme Court has not adopted the economic loss rule and such this judge made doctrine has found no root in Montana.
As observed by the District Court in St. Goddard v. Helena Motors, 2017 Mont. Dist. LEXIS 21, *1, [t]here is scant authority in Montana relating to the economic loss rule” and that “[t]he Montana Supreme Court has not adopted the economic loss rule.”
The one Montana Supreme Court decision quasi addressing the economic loss rule, Jim's Excavating Service v. HKM Associates, 265 Mont. 494, 500, 878 P.2d 248, 252 (1994), addressed the narrow issue as to whether the plaintiff in the underlying case was “not as a matter of law precluded from bringing a negligence action against HKM absent privity of contract. . .” There, the Supreme Court held “that a third-party contractor may successfully recover for purely economic loss against a project engineer or architect when the design professional knew or should have foreseen that the particular plaintiff or an identifiable class of plaintiffs were at risk in relying on the information supplied.”
In summary, unlike many states, Montana does not recognize the economic loss rule.
For additional information concerning the economic loss rule or about construction defect litigation in Montana, generally, you may reach Jean Meyer by telephone at (406) 219-8422 or by e-mail at meyer@meyerconstructionlaw.com.