Type of Case: An insurance subrogation action

Background: A 10-year-old car caught fire allegedly due to a defect in design or manufacture and was declared a total loss by its insurer.

Suit Filed: The insurance carrier sought recovery from the automobile manufacturer for the amount it paid to the car’s owner.

Client’s Concern: The automobile manufacturer wanted to discourage future insurance subrogation lawsuits by aggressively contesting this claim.

Action Strategy: Aaronson Rappaport moved to dismiss the case under the “economic loss doctrine,” which holds that a remote purchaser may not use a product liability theory to recover for property damage to the item purchased. This was a novel approach because this principle had not been applied to insurers in the past.

Result: In a decisive ruling in favor of Aaronson Rappaport’s client, the judge dismissed the case. This decision will serve to expand the “economic loss doctrine” to subrogation claims.

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