Architectural, Engineering & Construction Defect
Law Alerts
Architectural, Engineering & Construction Defect
By Eric A. Packel, Esq. (215-575-4554 or eapackel@mdwcg.com)
The U.S. Court Of Appeals For The Third Circuit Recently Considered The Continued Viability Of Pennsylvania's Economic Loss Doctrine.
Sovereign Bank v. BJ's Wholesale Club, Inc., 533 F.3d 162 (3d Cir. Pa. 2008) (Opinion Filed 07/16/08)
The case before the Third Circuit arose from the compromise of electronically stored cardholder data pertaining to Visa cards issued by several financial institutions, including Sovereign Bank ("Sovereign"). Sovereign claimed that BJ's Wholesale Club failed to delete cardholder information after a sales transaction was completed, which allowed the unauthorized and fraudulent use of the cardholder information. Sovereign alleged that, as a result, it was forced to incur expenses resulting from the fraudulent charges and from the costs of issuing replacement Visa cards. Sovereign brought claims for negligence, breach of fiduciary duty, and promissory estoppel against BJ's. The district court dismissed Sovereign's negligence claim as barred by Pennsylvania's Economic Loss Doctrine. On appeal, Sovereign contended that the Pennsylvania Supreme Court had severely weakened the economic loss doctrine in Bilt-Rite Contractors, Inc. v. The Architectural Studio, 581 Pa. 454, 866 A.2d 270 (Pa. 2005), by permitting a negligence claim to proceed without regard to economic loss. In upholding the dismissal of Sovereign's negligence claim pursuant to the economic loss doctrine, the Third Circuit stated that the Pennsylvania Supreme Court did not intend to severely weaken or undermine the economic loss doctrine in Bilt-Rite. Rather, a very narrow exception was carved out, which applies only to the limited Bilt-Rite factual circumstances, where a plaintiff sustains losses when relying on the advice of professionals and the plaintiff has no contractual relationship with the professionals who supplied the information. The Sovereign Bank case illustrates the narrow interpretation of the Bilt-Rite holding and the continued viability of the Economic Loss Doctrine in Pennsylvania. Although plaintiffs will likely continue to use Bilt-Rite to attack the application of the Economic Loss Doctrine, the Doctrine persists in Pennsylvania outside of the unique Bilt-Rite factual circumstances and should be raised as a defense to negligence claims based solely on economic damages.
