Supreme Court Update: Chapman Custom Homes v. Dallas Plumbing Co.

One year ago, the Dallas Court of Appeals held that a homeowner’s negligence claims against the company that installed the home’s plumbing were barred by the economic loss doctrine. Today, the Texas Supreme Court has reversed that ruling in a per curiam opinion. Although the plumber’s liability to the homebuilder was contractual, the negligent performance of a contract that injures a non-party’s person or property is sufficient to state a claim for negligence. The Supreme Court reiterated that the economic loss rule does not permit a party to avoid tort liability to the rest of the world simply by entering into a contract with another person.

Chapman Custom Homes, Inc. v. Dallas Plumbing Co., No. 13-0776

Economic Loss Rule Clogs the Pipes for Homebuilder’s Negligence Claim

Pursuant to a contract with Chapman Custom Homes, Duncan Plumbing installed the plumbing in a house Chapman was building in Frisco, Texas.  But a year-and-a-half later, those pipes sprung a leak and damaged the house.  The Court of Appeals, however, found that Chapman could not recover for negligence because the economic loss rule bars such a tort claim where a contract governs the parties’ relationship.  The Court rejected Chapman’s argument that the economic loss rule only bars recovery for damages to the “plumbing system itself” (while its damages based on injuries to the entire home), because “the only duty [Chapman] alleged Dallas Plumbing breached was its contractual duty.”

Chapman Custom Homes v. Dallas Plumbing Co.