MEMORANDUM OPINION AND ORDER

LYNWOOD SMITH, District Judge.

The plaintiff in this action is the public school system of the City of Tuscumbia, Alabama. It commenced this diversity jurisdiction case as a putative class action against defendant, Pharmacia Corporation, alleging one count of negligence and one count of wantonness or recklessness in the design, manufacture, and marketing of electric ballasts for fluorescent light fixtures containing the now-banned toxic chemicals known as Polychlorinated Biphenyls (`PCBs')," and with knowledge that: PCBs were toxic; that failing ballasts release PCBs into classrooms like those maintained by the plaintiff; and, that "PCBs could cause systemic toxic injuries" to humans.1 Defendant moved to dismiss the action for failure to state a claim upon which relief can be granted.2 Following consideration of the pleadings, motion, briefs, and research the motion will be denied.

I. STANDARDS FOR REVIEWING RULE 12(b)(6) MOTIONS TO DISMISS

Federal Rule of Civil Procedure 12(b)(6) permits a party to move to dismiss a complaint for "failure to state a claim upon which relief can be granted." That rule must be read in conjunction with Rule 8(a), which requires that a pleading contain only a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). While that pleading standard does not require "detailed factual allegations," Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 550, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), it does demand "more than an unadorned, thedefendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citations omitted).

Iqbal, 556 U.S. at 678-79, 129 S.Ct. 1937 (emphasis added).

When ruling upon a motion to dismiss, the court must assume that all well-pleaded facts alleged in the plaintiffs complaint are true. See Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 453, 126 S.Ct. 1991, 164 L.Ed.2d 720 (2006) (stating that on a motion to dismiss, the court must "accept as true the factual allegations in the amended complaint"); Marsh v. Butler County, 268 F.3d 1014, 1023 (11th Cir. 2001) (en banc) (setting forth the facts in the case by "[a]ccepting all well-pleaded factual allegations (with reasonable inferences drawn favorably to Plaintiffs) in the complaint as true"). Accordingly, the statements contained in the following part of this opinion as the "facts" for Rule 12(b)(6) purposes may, or may not, be the actual facts. See, e.g., Williams v. Mohawk Industries, Inc., 465 F.3d 1277, 1281 n. 1 (11th Cir.2006).

II. BACKGROUND FACTS

The Tuscumbia City School System is a public school district in Colbert County, Alabama.3 Defendant, Pharmacia Corporation, is a Delaware corporation with its principal place of business in New Jersey. It is a wholly owned subsidiary of Pfizer, Inc. It also is the successor in interest of Monsanto Company,4 which manufactured PCBs from 1929 until 1979.5 Monsanto was the sole U.S. manufacturer of PCBs, which "do not occur in nature,"6 and the chemicals were not imported in any significant amounts.7

PCBs are hazardous chemicals, so much so that Congress specifically outlawed their manufacture in the Toxic Substances Control Act of 1976.8 Exposure to PCBs can occur in many forms. Skin contact, inhalation of vapors emitted by heated PCBs, and ingestion of the chemicals are all hazardous.9 The chemicals are a known carcinogen, and are deleterious to a person's immune, reproductive, nervous, and endocrine systems.10 They also can reduce cognitive abilities.11 For example, children exposed to PCBs may exhibit reduced IQs and altered behaviors.12

Prior to the Congressional Act banning the production of PCBs, the chemicals were used, among other purposes, in the assembly of "ballasts" for fluorescent light fixtures.13 A "ballast" is the device that controls the amount of electricity flowing into the fluorescent tube.14 "Essentially all ballasts manufactured for fluorescent light fixtures before 1979 contain liquid PCBs."15 The danger to humans and the environment lies coiled in the fact that ballasts containing PCBs are known to leak, fail, and overheat.16 Indeed, all ballasts eventually fail.17 The devices are especially prone to overheating when they fail,18 When a ballast containing PCBs fails, it releases the chemicals into the atmosphere and environment.19

As early as 1937, studies showed the toxicity of PCBs.20 Despite Monsanto's awareness of the dangers inherent in exposure to PCBs, the company did not inform the public of the health risks associated with exposure to devices containing the chemicals. In fact, the company sought to hide the dangers from the public.21 Monsanto's attempt to cover up the danger of PCBs lasted from the 1930s through the 1970s.22 Monsanto sold PCBs to manufacturers of fluorescent light fixtures, despite its knowledge that PCBs were stable chemicals that would linger in the environment for years after being released via ballast failures.23

Prior to the 1979 Congressional ban on manufacturing PCBs, the chemicals were used in all ballasts installed in fluorescent light fixtures, including those placed in school buildings.24 The Tuscumbia City School System owns and operates schools that contain pre-1979 fluorescent light fixtures operated by ballasts containing PCBs.25 The release of PCBs from failing ballasts has made the school buildings unsafe, exposing students, faculty, administrators, and adjunct staff to potential harm.26 The release of PCBs constitutes manifest property damage, similar to the property damage caused by the escape of asbestos fibers into a school's environment.27

A. Procedural Facts

The School System's initial complaint was filed on January 31, 2012.28 Defendant responded with a motion to dismiss, together with an unopposed motion to stay discovery pending the court's ruling on the motion to dismiss.29 Plaintiff filed an amended complaint on April 20, 2012.30 Defendant filed the motion to dismiss that is addressed in this opinion on April 27, 2012.31

III. DISCUSSION

Defendant argues that, under Alabama law, it is not liable to the ultimate consumer of products manufactured by its predecessor in interest unless there was privity of contract between that manufacturer and the ultimate consumer (here, the plaintiff), or the latter was within the foreseeable zone of risk on the date of the initial sale of the goods to the original purchaser (the manufacturer of the fluorescent light fixtures purchased by plaintiff). In other words, defendant asserts that, unless Monsanto knew of the specific identity of the Tuscumbia City School System, and the risk posed for students, faculty, administrators, and other personnel occupying the System's school buildings, on the dates it sold ballasts containing PCBs to the manufacturer(s) of the lighting fixtures installed in plaintiff's schools, then defendant is not liable for the alleged negligence of its predecessor in interest. Plaintiff responds that neither privity of contract nor the foreseeability of risk is necessary to sustain a negligence claim against the manufacturer of an inherently hazardous product.

A. "A page of history is worth a volume of logic." New York Trust Co. v. Eisner, 256 U.S. 345, 349 (1921) (Holmes, J.).

This is not the first occasion on which the undersigned judicial officer has been required to weigh the same arguments in a similar context. Indeed, while serving as a Judge of the Twenty-Third Judicial Circuit for the State of Alabama (Madison County), the undersigned presided over an action commenced by the Huntsville City Board of Education against the five major manufacturers of spray-applied acoustical, fireproofing, and insulation materials containing high levels of asbestos that had been purchased by the plaintiff and installed in public school buildings erected in Huntsville between 1957 and 1967: i.e., Huntsville City Board of Education v. National Gypsum Company, et al., No. C83-325L (Mad. Co. Ala. Cir. Ct., filed Mar. 24, 1983). The school board alleged that the products presented a danger to the health of students, teachers, administrators, and maintenance personnel who occupied those buildings. The pivotal issue in the case was the question of whether the school board could recover damages for "economic losses" under a common-law tort action for negligence, or Alabama's hybridized variant of the theory of strict liability in tort, the so-called "Alabama Extended Manufacturer's Liability Doctrine." That was a question of first impression in Alabama, and national opinion on the issue was fragmented. This judge's opinion on the defendants' various motions to dismiss, for judgment on the pleadings, and for summary judgment was among the first to analyze all cases then addressing those questions, and established a clear rationale for the recovery of economic loss damages under a tort theory. A copy of the opinion entered in that case on August 27, 1984 is attached to this opinion as Exhibit "A." The relevant law has not changed appreciably or in a substantive manner during the (nearly) twenty-eight intervening years. Accordingly, this judge's 1984 opinion is ratified, affirmed, and adopted as the basis of this court's present rulings, just as fully as if the opinion were set out at this point in haec verba. The following discussion, therefore, should be construed as merely a gloss upon that which was more fully expressed in the earlier opinion.

B. The Alabama Extended Manufacturer's Liability Doctrine

The Tuscumbia City School System cites several cases that track the development of the Alabama Extended Manufacturer's Liability Doctrine ("AEMLD"). Plaintiff first points to Jones v. Gulf States Steel Co., 205 Ala. 291, 88 So. 21 (1921), in which the Alabama Supreme Court acknowledged an exception to the traditional requirement for showing privity of contract between a defendant and a plaintiff "where the thing causing the injury is of an obnoxious or dangerous character." Id. at 22. The defendant in Jones was a coal mine operator, and the plaintiff was a person who had been injured when a lump of coal mined by the defendant and sold to the plaintiff's husband exploded. The plaintiff alleged that some employee of the defendant had negligently left explosive material in the coal lump. The Alabama Supreme Court observed that an exception to the requirement of privity for consumer products that possess an "obnoxious or dangerous character"

Id. at 23. Ultimately, however, the Court affirmed the trial court's dismissal of the plaintiff's claim, because

Jones v. Gulf States Steel Co., 88 So. at 23.

As discussed more fully in Exhibit "A," the Alabama Supreme Court formally restated the elements of a manufacturer's liability claim in two cases decided on the same day, Atkins v. American Motors Corp., 335 So.2d 134 (Ala.1976), and Casrell v. Altec Industries, Inc., 335 So.2d 128 (Ala.1976), and thereby christened the "extended" manufacturers' liability doctrine that is generally referred to by its acronym, "AEMLD."32 The Atkins court framed the elements of a prima facie AEMLD claim in the following manner:

Atkins, 335 So.2d at 141.

As the quoted text makes clear, plaintiffs may rely on AEMLD in asserting claims for both personal injury and property damage. The Atkins court emphasized, nevertheless, that, in announcing the "extended" manufacturer' liability doctrine, Alabama courts were not adopting the strict tort liability regime that prevailed in some sister states; rather, "selling a dangerously unsafe product is negligence as a matter of law." Id.

More recent decisions of the Alabama Supreme Court have clearly stated that AEMLD is a stand-alone tort, separate from the common-law action for negligence, rather than a manner of proving negligence; and that the new tort stands in contrast to, e.g., the doctrine of res ipsa loquitur. See Spain v. Brown & Williamson Tobacco Corp., 872 So.2d 101, 105-06 (Ala.2003); Tillman v. R.J. Reynolds Tobacco Co., 871 So.2d 28, 35 (Ala.2003). See also McMahon v. Yamaha Motor Corp., U.S.A., No. 1100679, 95 So.3d 769, 771-72, 2012 WL 677548, at *2 (Ala. Mar. 2, 2012) (citing Tillman, and noting that negligence and AEMLD "have different elements that must be proven").

Plaintiffs often assert both AEMLD claims and traditional common-law tort claims in the same actions. See, e.g., McMahon, 95 So.3d at 770-71, 2012 WL 677548 at *1; Spain, 872 So.2d at 102; Tillman, 871 So.2d at 29; Keck v. Dryvit Systems, Inc., 830 So.2d 1, 3 (Ala.2002). In the present case, however, the Tuscumbia City School System has not asserted an AEMLD claim. Instead, it only alleges common-law claims for the negligence and wantonness (or recklessness) of defendant's predecessor in interest. As the Alabama Supreme Court stated in Spain and 'Tillman, those common-law tort theories are separate from an AEMLD claim. Therefore, and despite plaintiff's reliance on AEMLD cases in its brief, this court must focus on the rules applicable to the common-law tort theories actually asserted in the complaint.33

C. Analysis of Plaintiff's Negligence Claim

Plaintiff argues that, as a "general principle," "privity is not required to recover in negligence for the sale of a hazardous product."34 However, plaintiff relies primarily on AEMLD cases to develop that argument. Plaintiff states that privity is not required, regardless of whether the case involves personal injury or property damage, and that the critical distinction is that between hazardous and non-hazardous products.35 Defendant, on the other hand, argues that privity is still required in negligence cases alleging only property damage.

The facts outlined in the complaint demonstrate the dangers that PCBs pose to humans, and the risk of exposure from ballasts that leak, fail, or overheat in fluorescent light. The actual harm for which the Tuscumbia City School System seeks damages in this case, however, is not compensation for personal injuries already sustained by any particular person, but instead, damage to property other than the fluorescent light ballasts manufactured by defendant's predecessor in interest. Specifically, and based upon the proposition that "[t]he release of PCBs into the environment of [plaintiff's schools] is a form of manifest, present property damage,"36 the Tuscumbia City School System asks that defendant be compelled to pay: the costs of inspecting its school buildings to determine which fluorescent light fixtures have ballasts containing PCBs, and, whether other property in each school building has been contaminated by PCBs that were emitted by ballasts that leaked, failed, or overheated; the costs of removing, replacing, and disposing of the affected ballasts; and, "any and all costs reasonably incurred to remediate the PCB-containing ballasts and all resulting harm" to the plaintiffs property.37

1. Privity requirement in property damage cases

The case upon which defendant principally relies is Keck v. Dryvit Systems, Inc., 830 So.2d 1 (Ala.2002). The plaintiffs in that case brought numerous claims based on the failure of an artificial stucco siding compound that was not impervious to water, and allowed moisture to enter their home. Id. at 3-4. The plaintiffs had purchased the house from a previous owner, who had commissioned its construction. Id. at 4. One of their claims sounded in negligence, and alleged that they were foreseeable victims of the stucco siding's failure and, thus, had been owed a duty of reasonable care by the defendant-manufacturer. Id. at 10.38 The trial court granted summary judgment on that claim because the plaintiffs had "failed to present substantial evidence of personal injury necessary to avoid the application of the doctrine of caveat emptor." Id. at 4. On appeal, the Alabama Supreme Court first stated that the lack of privity between plaintiffs and defendants barred plaintiffs' claim. Id. at 9 (citing Boackle v. Bedwell Construction Co., 770 So.2d 1076, 1081 (Ala.2000) (holding that a homebuyer must be in privity of contract with homebuilder to sue the builder for negligent construction)). The Court then stated that, even if the rule of privity did not bar recovery, the plaintiffs' claim still would fail because, as subsequent purchasers of the house, they were not in a foreseeable area of risk, such that the defendants owed them a duty of care. Id. at 9-10. In reaching that conclusion, the Court rejected the plaintiffs' wholly logical argument that it was clearly foreseeable that a house would, at some point, be sold to someone other than the original purchaser. See id.

Defendant also relies on Copenhagen Reinsurance Co. v. Champion Home Builders Co., Inc., 872 So.2d 848 (Ala.Civ. App.2003). In that case, the Alabama Court of Civil Appeals held that privity of contract was required for the owners of a mobile home to assert an action against its manufacturer. Id. at 855-56. The court relied upon the decision in Keck for the proposition that a plaintiff must be either in privity of contract with the defendant manufacturer, or his injury must be foreseeable. Id. Defendant argues that Keck and Copehhagen Reinsurance demonstrate that the Tuscumbia City School System must either show privity or foreseeability in order to maintain a negligence action for the recovery of property damages only, regardless of whether the product is characterized as dangerous or nondangerous.

2. The significance of a hazardous product

Plaintiff argues that "the cases cited by Monsanto [sic] are completely wide of the mark," because neither involved a product alleged to be inherently hazardous or dangerous to human health.39 Indeed, there is nothing of "an obnoxious or dangerous character" about either imitation stucco siding or mobile homes.40 Plaintiff further argues that there is no distinction between cases alleging personal injuries and those alleging property damage, citing Harris v. Board of Water and Sewer Commissioners of City of Mobile, 294 Ala. 606, 320 So.2d 624 (1975), a pre-AEMLD case. The plaintiff in that action sued the municipal governmental agency responsible for maintaining the city's fire hydrants. A fire had destroyed his hotel and restaurant, and he alleged that an inadequate supply of water to the nearest hydrant was a direct and proximate cause of his property loss. Id. at 626. The Alabama Supreme Court determined that the plaintiff was a thirdparty beneficiary of the contract between the City of Mobile and its water board and, thus, entitled to bring an action if injured by the board's "breach of the contract to supply water or its negligent maintenance of nonfunctioning fire hydrants...." Id. at 628. The Court stated that the plaintiff also could recover in tort under a theory of manufacturer's liability, as applied to the supplier. First, the Court stated that the plaintiff was squarely within the foreseeable area of risk attendant to a contract to provide fire hydrant services. Id. at 630. In that regard, the plaintiffs ability to recover in tort was essentially identical to his ability to recover as a thirdparty beneficiary in contract. Significantly, the Court also stated that he could recover on the basis that a non-functioning fire hydrant is an inherently dangerous product, a theory of negligence requiring no privity of contract. Id.

Harris, 320 So.2d at 630 (citing Doyle v. South Pittsburgh Water Co., 414 Pa. 199, 199 A.2d 875, 879 (1964) (holding that, even if the municipal water company had no duty to provide fire hydrants in the first place, once the hydrants were installed, the water company assumed an imperative duty to see that reasonable care was exercised in the maintenance and repair of the hydrants) (internal quotation marks omitted)).

Although the Harris opinion demonstrates that a plaintiff may recover in negligence for property damages caused by an inherently dangerous product, the property damage at issue in that case is distinct from the damage alleged in this case. Harris involved direct, traditional property damage: the plaintiff's hotel was burned to the ground as a result of the defective fire hydrant. Here, plaintiff does not allege that PCBs destroyed its schools. Rather, plaintiff alleges that its injury is the ongoing hazardous conditions in its schools. Thus, the court must turn its attention to the classification of property damage.

3. The "economic loss rule"

Property damages can be divided into two broad categories: traditional property damage (e.g., the fire in Harris) and "economic losses." Economic losses can be further divided into subcategories. Direct economic losses comprise losses associated with repairing or replacing the defective product, and the loss of the benefit of the bargain. Consequential economic losses encompass the indirect losses, such as the loss of business, that often accompany a defective product. The damages plaintiff alleges do not fit neatly into those categories, but probably are best classified as direct economic losses. That classification is evident from plaintiff's prayer for relief, in which, as previously noted, the School System requests that defendant be ordered to pay for: the costs of inspecting its school buildings to determine which fluorescent light fixtures have ballasts containing PCBs, and, whether other property in each school building has been contaminated by PCBs that were emitted by ballasts that leaked, failed, or overheated; the costs of removing, replacing, and disposing of the affected ballasts; and, "any and all costs reasonably incurred to remediate the PCB-containing ballasts and all resulting harm" to the plaintiff's property.41

Thus, the central question in ruling on defendant's motion to dismiss is: Can a plaintiff sustain an action grounded in the common-law theory of negligence for direct economic losses caused by a hazardous product under Alabama law? The short answer to that question is "Yes."

In Alabama, a products-liability plaintiff cannot recover for the damage to, or destruction of, the defective product itself under the so-called "economic loss rule." See Lloyd Wood Coal Co. v. Clark Equipment Co., 543 So.2d 671, 672 (Ala. 1989) (citing East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986)). The purpose of the economic loss rule is to prevent contract law from being swallowed by tort remedies. Contract remedies and warranty claims are the proper means to resolve the problems arising from products that fail to perform, either at all or as warranted. See id. at 673-74 (quoting East River at length). The justification for the economic loss rule fades when the product must be replaced or repaired, not because the product failed to perform, but because it is dangerous.

A recent decision of the United States District Court for the Eastern District of Louisiana discussed the applicability of the Alabama economic loss rule to a set of facts similar to those alleged by the plaintiff in this case, and by the Huntsville Board of Education in the state-court case attached as Exhibit "A." In re Chinese Manufactured Drywall Products Liability Litigation, 680 F.Supp.2d 780 (E.D.La. 2010). That case arose in the aftermath of Hurricanes Katrina and Rita. Id. at 782. The massive rebuilding efforts in the Gulf region put a strain on the nation's supply of construction materials, and some contractors turned to Chinese drywall suppliers. Id. The owners of homes containing drywall manufactured in China began to complain of emission of odors and corrosion of household appliances. Id. Others experienced "headaches, nosebleeds, difficulty breathing and other physical afflictions believed to be caused by the Chinese drywall." Id. The homeowners brought suit against the builders who installed the Chinese drywall, the manufacturers thereof, and a host of others involved in the process of exposing them to the drywall. Id. The court denied a motion to dismiss, brought under the economic loss rule, and provided a helpful explanation of that rule.

Id. at 795 (bracketed alteration supplied).

The economic loss damages claimed by the Tuscumbia City School System are not a consequence of a "defect" in the product that renders it unusable. Rather, plaintiff alleges that the inherently hazardous nature of the products necessitates their removal from its school buildings.42 Plaintiffs claims, like those of the plaintiffs in the Chinese Manufactured Drywall cases and the Huntsville Board of Education case referenced in Exhibit "A," are based in the contamination of buildings constructed with materials containing a hazardous substance. Thus, they are not subject to the economic loss rule. The hazardous nature of PCBs easily distinguishes the facts here from those in Keck and Copenhagen Reinsurance, which involved only ineffective home construction. Moreover, in those cases, as in Lloyd Wood, Wellcraft, and Bay Lines, the defective products themselves, i.e., the homes, sustained the damages. Here, although plaintiff's damages can be categorized as "economic losses," the damages are not just to the products themselves. The inspection, replacement, and remediation costs plaintiff seeks to recover stem from the hazardous nature of the products, not their inability to perform as advertised.43 Therefore, no privity or foreseeability is required for plaintiff to recover against defendant.

IV. CONCLUSIONS AND ORDER

For the foregoing reasons, defendant's motion to dismiss is DENIED. Defendant's initial motion to dismiss and defendant's motion to stay discovery are DNIED as moot. Defendant is ORDERED to file its answer on or before July 9, 2012. The parties are ORDERED to conduct a discovery planning conference pursuant to Federal Rule of Civil Procedure 26(f) and the ALND Uniform Initial Order Governing All Proceedings, and to file a report of that conference on or before July 17, 2012.

EXHIBIT A

Copy of Slip Opinion Entered In

Huntsville City Board of Education v. National Gypsum Company, et al., No. CV-83-325L

(Mad.Co.Ala.Cir.Ct., Aug. 27, 1984)

MEMORANDUM OF OPINION

I. SUMMARY OF CASE

This is an action seeking damages for the costs of removing asbestos products from public school buildings.

The case was started on March 24, 1983. The original plaintiff was the Huntsville City Board of Education.1 Five of six, original defendants2 are said to have manufactured "spray-applied acoustical and fireproofing products" and "insulation materials placed on boilers and pipes" which were purchased by the plaintiff and installed in public school buildings erected between 1957 and 1967 (Amended Complaint ¶¶ 14-6);3 i.e., 17 to 27 years ago. Nonetheless, the School Board alleges it only discovered in May of 1982 (id. 1121) that the defendants' products contained "high levels of asbestos" (id. ¶ 4), and that such condition presents

Therefore, the Board asserts, it "must remove and abate said asbestos products, and replace furniture, carpeting and other items in the school[s]...." (Id. 118.)

While the exact costs of labor and materials occasioned by such work are not presently known (since the effort is ongoing), the Board estimates it will exceed $2,000,000. The Board also contends the removal procedures will cause "various consequential expenses," flowing from "serious disruptions in the operation" of the public school programs as work is performed and, "the investment of considerable time by administrative personnel." (Id.) The Board claims the aggregate amount of $15,000,000 in "actual and punitive damages" for all of such alleged harm, and any equitable relief this Court deems appropriate.

The original complaint was bottomed upon nine legal theories: i.e., (1) restitution; (2) negligence; (3) strict liability in tort; (4) the "Alabama Extended Manufacturer's Liability Doctrine"; (5) breach of implied warranties; (6) breach of express warranties; (7) fraud and misrepresentation; (8) conspiracy; and (9) unfair trade practices. On August 22, 1983, however, the Board filed an amended complaint which deleted those four claims based upon the theories of strict liability in tort, breach of express and implied warranties, and unfair trade practices.4 The remainder of this opinion shall consider the defendants' various motions directed to the complaint as thus amended.5

II. NEGLIGENCE AND THE ALBAMA EXTENDED MANUFATURER'S LIABILITY DOCTRINE

The third and fourth claims of plaintiff's amended complaint are based upon the theories of negligence and the "Alabama Extended Manufacturer's Liability Doctrine," respectively. Defendants raise several arguments in opposition to those tort claims, but the main thrust of their attack is centered on the notion that damages for "economic losses" are not recoverable under either theory. "Plaintiff's remedy in a case such as this one would properly be in a timely contract action for breach of warranty." (National Gypsum Co. Brief 37.)

Generally speaking, defendants can claim the support of at least three distinguished commentators for their positions. For example, the late Dean William Prosser wrote:

W. Prosser, The Law of Torts § 101 (4th ed.1971) (emphasis added). See also, Prosser, The Fall of the Citadel (Strict Liability to the Consumer), 50 Minn. L.Rev. 791, 822-823 (1966); White & Summers, Handbook of the Law Under the Uniform Commercial Code § 11-5 (1972).

More recently, and closer to home, the Deans of Alabama's two, major law schools have said:

C. Gamble & D. Corley, Alabama Law of Damages § 32-8 (1982) (emphasis added). In a subsequent section of the same text (id., at § 32-17), Deans Gamble and Corley add the following:

In spite of such impressive authority, the question of whether "economic losses"1 can be recovered under the tort theories of negligence, strict liability, or the Alabama Extended Manufacturer's Liability Doctrine is not capable of easy resolution. The answer lies in the field of divided opinion. As Deans Gamble and Corley imply in the last excerpt from their text, the debate is far from being closed. In order to see more clearly the direction in which the law may be headed, therefore, it may be helpful to trace from whence it has come. Such an exercise must be undertaken with some caution, however, because clarity of hindsight does not ensure an equally acute vision of the future. As Holmes once said in a related context:

O.W. Holmes, Jr., The Common Law 77-78 (1881).2

(A) A SHORT HISTORY OF LIABILITY FOR DEFECTIVE PRODUCTS

(1) The Law Through Greenman v. Yuba Power Products

It has been well said that "[t]he law of products liability has a long and interesting history."3 As interesting as that history may be, a detailed account of it will not aid in the solution of the present question.4 Rather, for present purposes, only a brief look at the positions which the concepts of a "warranty" and "strict liability" have occupied in that development will be useful.

Prior to 1916, manufacturers generally were immune from liability under any theory of recovery to persons who did not have a direct sales or contractual relationship with them. The so-called doctrine of "privity" required that a plaintiff and defendant stand in a direct contractual relationship before the plaintiff could recover for injuries inflicted by products manufactured by the defendant. This rule insulated most manufacturers because the American practice of marketing products through independent wholesalers and retailers precluded the existence of privity between the manufacturer and the ultimate consumer.

The reasons for judicial insistence upon proof of "privity" as a prerequisite for recovery in the early products liability cases — especially those based upon the tort of negligence5 — are not altogether clear. But it probably was more attributable to the "favored status contemporary society accorded manufacturing in its infancy"6 than to any judicial misinterpretation of Lord Abinger's sweeping dictum in the case of Winterbottom v. Wright.7 As one interpreter has noted,

Donovan, The Emerging Confrontation, supra note 3 at 184-185 (footnotes omitted).

The MacPherson case8 is a benchmark in this field of the law. It established the rule that a manufacturer can be held liable to foreseeable users for personal injury without proof of privity if, through negligence in the manufacturing process, the defendant created a dangerous product. "If the nature of a thing is such that it is reasonably certain to place life and limb in peril when negligently made, it is then a thing of danger," and liability follows.9

The MacPherson doctrine won wide acceptance. It soon became settled law in almost every jurisdiction.10 As a result, plaintiffs injured by defective products had a choice of remedies: either an action in warranty (requiring proof of privity of contract), or the MacPherson negligence action (not requiring privity). Even so, neither remedy was entirely satisfactory as a vehicle for imposing liability. Both actions presented problems of proof which often prevented (but always frustrated) recovery. One court described the legal dilemma facing a typical plaintiff in a suit against a mass-producer of consumer products as follows:

Manzoni v. Detroit Coca-Cola Bottling Company, 363 Mich. 235, 109 N.W.2d 918, 920 (1961) (emphasis added).11

Thus, while both theories presented evidentiary hurdles that were difficult to surmount, the negligence action was the most difficult to maintain. Often, it was (as the Manzoni decision stated) "an impossibility."

Comment, The Vexing Problem of the Purely Economic Loss in Products Liability: An Injury in Search of a Remedy, 4 Seton-Hall L.Rev. 145, 147-148 (1972) (emphasis added) (hereinafter cited as "The Vexing Problem").

In an effort to circumvent the difficulties of the negligence action, therefore, artful attorneys and crafty courts turned back to the concept of "warranty." In doing so, however, they had to engage in considerable distortion of the concept.12 To allow recovery in cases involving physical injury, they resticted or eliminated the requirements of notice, privity of contract, and the right to disclaim liability.

Comment, Seely v. White Motor Co.: Retrenchment in California on Strict Products Liability, 52 Virginia L.Rev. 509, 513 (1966).

The trend of imposing liability without fault and without proof of privity under the rubric of "implied warranty" began in the field of food and drink.13 During the 1950s, courts extended the trend to articles designed for intimate bodily use, such as hair dye, soap, and permanent wave solutions.14 Once breached, however, the walls of the citadel of privity began to crumble on every front. The food/intimate bodily use cases were followed by decisions which appeared to impose strict liability upon manufacturers of mechanical and industrial goods, albeit under the label of "implied warranty."15 The landmark decision in this progression was Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69 (1960).

Prosser, The Fall of the Citadel (Strict Liability to the Consumer), 50 Minn. L.Rev. 791, 792n.4 (1966).

The plaintiff in Henningsen sued in implied warranty for personal injuries she suffered when a car manufactured by defendant Chrysler Corporation, and given to her by her husband (who had purchased the automobile from Bloomfield Motors), made an unscheduled turn into a very solid, brick wall. The New Jersey Supreme Court, stressing "justice to the consumer," upheld the plaintiffs action without proof of negligence, and invalidated the defendant-manufacturer's disclaimer because of its unfair, and unbargained-for, quality. Henningsen v. Bloomfield Motors, Inc., supra at 404, 161 A.2d at 95. In effect, the court held that, as a matter of law, an implied warranty of fitness attached to every product placed in the stream of commerce, and flowed from the manufacturer to the foreseeable user, regardless of privity or fault.16

The use of "implied warranty" as a label to describe the liability imposed, however, was misleading at best. For, indeed, the Henningsen "warranty" was not a product of contract. Rather, it was imposed by law for policy reasons, and existed between parties who had no contractual relationship. Furthermore, it was beyond the power of the parties who did make the contract to modify the effect of the implied warranty by specific agreement. In essence, therefore, the Henningsen concept of an implied warranty action without proof of privity was more an artifice for imposing liability than a description of contractual reality. In actuality, it was a fiction, and the court was "legislating." In all but name, the New Jersey Supreme Court had created a new tort. As we shall presently see, the name of the new action was supplied by California.

Throughout this long (and if you will pardon the pun) torturous judicial process of gradually eliminating the restrictive aspects of contract concepts in the field of products liability, some clear-headed individuals plainly saw what the courts really were about, and called for frankness. One such voice in the wilderness was Professor Charles 0. Gregory of the Yale Law School, who concluded a magnificent essay with the following cry:

Gregory, Trespass to Negligence to Absolute Liability, 37 Virginia L.Rev. 359, 396-397 (1951).17

Possibly in response to that call, Justice (later Chief Justice) Traynor of the California Supreme Court struck a blow for candor in the case of Greenman v. Yuba Power Products, Inc., 59 Cal.2d 57, 27 Cal.Rptr. 697, 377 P.2d 897 (1963). In Greenman, a consumer brought an action for personal injuries against the manufacturer of a defective power tool. The California Supreme Court held that the plaintiff's failure to give the manufacturer notice of the alleged breach of warranty within a reasonable time as required by California's version of the Uniform Sales Act (the predecessor of the UCC) was not a bar to the action. Abandoning "implied warranty" as the label under which recovery would be allowed when a defective product caused physical injury, Traynor declared that henceforth the true name for such actions would be "strict liability in tort." While recognizing that cases such as Henningsen had reached substantially the same result under the guise of implied warranty principles, Traynor advocated the clear adoption of "strict liability in tort" in order to demonstrate that consumer remedies did not rest solely on contract theory.

Greenman v. Yuba Power Products, Inc., supra at 63, 27 Cal.Rptr. at 701, 377 P.2d at 901.

There is compelling force in Justice Traynor's basic thesis that noncommercial, personal injury losses caused by defective products are more appropriately handled under a tort theory than under the rubric of warranty principles.

Note, 7 B.C. Indus. & Com.L.Rev. 767, 769 (1966). In addition, there is an attractive simplicity and straightforward quality to Traynor's argument in Greenman. Yet, it is that very articular simplicity that became so troublesome because it glossed over some very significant questions and caveats. As one commentator observed afterwards,18

(2) The Law After Greenman: Restatement § 402A, Santor, and Seely

The year following Justice Traynor's decision in Greenman, Dean Prosser (who served as Reporter for the Restatement (Second) of Torts) persuaded the American Law Institute to adopt the following as Section 402A of the new text.19 § 402A. Special Liability of Sellers of Products for Physical Harm to User or Consumer

As thus formulated by Greenman and its progeny, Restatement (Second) § 402A, the action for strict liability in tort was originally limited to cases involving personal injuries. But it eventually was extended to cases involving physical damage to property other than the defective product itself. The only question remaining, therefore, was the issue which confronts this court: should strict liability (or its Alabama variant) be extended to the situation in which a plaintiff suffers only "economic loss"? Before addressing that issue, however, one needs to be sure that he understands what the courts mean when they speak of "economic losses."

Generally speaking, a defective product can cause three kinds of harm: (1) personal injuries; (2) property damage; or (3) economic, loss. The first type, if not selfevident, is easily delineated. It denotes any harm or damage to the health of a person, however caused (whether by accident, disease, or otherwise), and encompasses physical pain, illness, disfigurement, or loss of the function of any bodily member or organ. The last two categories are not so easily distinguished from one another, however. Both courts and commentators have experienced difficulty in defining just what kinds of harm should be inserted into the "property damage" and "economic loss" pigeonholes. The purpose of the following sub-sections, therefore, is to state the definitions of those terms that shall be observed throughout this opinion,

(a) Definition of "property damage":

Note, Economic Loss in Products Liability Jurisprudence, 66 Colum.L.Rev. 917, 918 (1966).20

Nonetheless, "violence or collision with external objects" is not the sine qua non for distinguishing "property damage" from "economic loss." Property damage may result from non-violent occurrences which result in physical harm to property other than the defective product itself. For example, consider the following situation: suppose the defendant manufactures a glue which it sells to plaintiff, and plaintiff uses the glue to cement rubber soles to leather shoe uppers. In this fact situation,

Id. See also, Karl's Shoe Stores, Ltd. v. United Shoe Machinery Corporation, 145 F.Supp. 376 (D.Mass.1956) (case brief is found in Appendix II, infra).

(b) Definition of "economic loss":

It would seem to follow by way of elimination, therefore, that "economic loss" includes every kind of damage that results from deterioration, internal breakage, or other non-accidental causes not harmful to persons or other property. In a facile sense, that is true. However, the label is much too broad to be of much use in drawing the fine distinctions that sometimes must be made in order to make sense of the decided cases. The term "economic loss" requires further refinement. To begin with, "economic losses" may be divided into two basic categories: direct and indirect (or consequential).

In a general sense, the term "direct economic losses" refers to out-of-pocket expenditures by the plaintiff. More specifically, it encompasses the following situations:

Consequential economic losses, on the other hand, include all indirect losses sustained by a plaintiff. "Most often these consequential damages are business losses an owner incurs when he is deprived of the product's use." Mead Corp. v. Allendale Mutual Insurance Co., 465 F.Supp. 355, 363 (N.D.Ohio 1979).

Note, Economic Loss in Products Liability Jurisprudence, supra at 934. Thus, some commentators have referred to consequential economic losses as "expectation losses": "for example, loss of use of the product in business or, perhaps, loss of a valuable deal." Franklin, When Worlds Collide, supra note 18 at 981. Nonetheless, such losses may be incurred outside a business context.

Comment, The Vexing Problem, supra at 155.

To summarize, therefore, a defective product can cause the following categories of harm:

(c) The opening volley: Santor v. A & M Karagheusian

The first case following Greerman v. Yuba Power Products to address the question of whether "economic losses" were recoverable under a strict tort liability theory was Santor v. A and M Karagheusian, Inc., 44 N.J. 52, 207 A.2d 305 (1965), and it answered the query in the affirmative.

Santor involved a suit by an ordinary consumer against a remote manufacturer of defective carpeting. Plaintiff had purchased a quantity of the defendant-manufacturer's nationally advertised carpeting from a local retail dealer for installation in his home. The retailer specified that the carpeting was "Grade # 1." Soon after installation, the carpet developed an unsightly line. The retail dealer said it would "walk out." As the pile wore down, however, the line become worse, and, two additional lines appeared. These defects apparently rendered the carpeting useless to plaintiff from an aesthetic standpoint, but they were not dangerous to life or limb. Plaintiff ultimately became so fedup that he decided to sue. But, by that time, the local retail dealer had gone out of business and had left the state. Consequently, plaintiff sued the intermediate wholesaler and the remote manufacturer for breach of an implied warranty of merchantability to recover for his direct "loss of bargain" economic loss, as measured by the purchase price he had paid for the carpeting. The manufacturer conceded at trial that the carpeting had been defectively manufactured, but nonetheless defended on the ground that plaintiff was barred from recovery by the privity rule. Karagheusian contended that privity of contract was still required where the defectively manufactured product was not dangerous, or was not likely to cause personal injury to the ultimate user or consumer. The trial court rejected that contention, and allowed plaintiff to recover. The intermediate appellate court reversed. On further appeal, however, the New Jersey Supreme Court reversed again, and reinstated the trial court judgment.

In reaching that result, the New Jersey Supreme Court acknowledged that "the great mass of warranty cases imposing liability on the manufacturer regardless of lack of privity" — including its own decision in Henningsen v. Bloomfield Motors — "were concerned with personal injuries to the consumer" (207 A.2d at 308), because of "the greater appeal of the personal injury claim." (Id. at 309.) Nonetheless, the court saw no reason why the remedy of implied warranty should be "fenced in by such a factor." (Id.) The court stated that application of the "age-old privity doctrine" so as to restrict the consumer to suit against only his immediate vendor, and thereby "to bar direct recourse to the manufacturer," would only promote "an unduly wasteful process of litigation." Id. at 310, quoting with approval, Randy Knitwear, Inc. v. American Cyanamid Company, 11 N.Y.2d 5, 226 N.Y.S.2d 363, 368, 181 N.E.2d 399, 403 (1962). The court saw "no just cause" for holding that a plaintiff who had sustained personal injuries or property damage could sue the manufacturer directly for breach of

The manufacturer is the father of the transaction. He makes the article and puts it in the channels of trade for sale to the public.... The dealer is simply a way station, a conduit on its trip from manufacturer to consumer. For these reasons in the recent past the courts of many jurisdictions, in an endeavor to achieve justice for the ultimate consumer, have imposed an implied warranty of reasonable fitness on the person responsible for the existence of the article and the origin of the marketing process. From the standpoint of principle, we perceive no sound reason why the implication of reasonable fitness should be attached to the transaction and be actionable against the manufacturer where the defectively-made product has caused personal injury, and not actionable when inadequate manufacture has put a worthless article in the hands of an innocent purchaser who has paid the required price for it. In such situations considerations of justice require a court to interest itself in originating causes and to apply the principle of implied warranty on that basis, rather than to test its application by whether personal injury or simply loss of bargain resulted from the breach of the warranty ....

Santor v. A and M Karagheusian, Inc., supra at 59, 207 A.2d at 309 (emphasis added).

If the Santor opinion had stopped right there, the case probably would have caused no great stir. After all, the concept of allowing the recovery of "economic losses" within the context of a contract action was not unknown in the law. However, the New Jersey Supreme Court went further — much further, in fact. In an entirely separate portion of its opinion, the court added by way of dictum that use of the term "implied warranty" to describe the plaintiff's remedy was merely using "a convenient legal device or formalism" to implement the desired public policy of the court. The remedy ought to be "cast in simpler form" said the courts, and the plaintiff ought to be able to achieve the same result via the action for strict liability in tort. Defining the manufacturer's obligation as what "in justice it ought to be — an enterprise liability ... which should not depend upon the intricacies of the law of sales," the court defined the tort duty of the manufacturer as a duty to avoid producing commodities that are "defective, i.e., not reasonably fit for the ordinary purposes for which such articles are sold and used...." Id. at 66-67, 207 A.2d at 312.

Santor v. A and M Karagheusian, Inc., supra at 63-66, 207 A.2d at 311-312.

(d) The shot strikes a vital part of the Citadel's fortifications, and panic spreads

It is fair to say that, when news of Santor's alternate holding got around, all hell broke loose. The quite state in which legal theorists had been lulled by the articulate simplicity and pleasing symmetry of Justice Traynor's reasoning in Greenman was abruptly shattered. Judges, lawyers, and legal commentators all belatedly awoke to the realization of fundamental conflicts between strict tort doctrine and the law of sales. Some charged that, by holding the strict liability doctrine applicable to all products liability cases, the Santor court had totally displaced the Uniform Commercial Code's warranty rules by judicial flat. The following remarks are representative of the criticism that erupted:

Franklin, When Worlds Collide, supra note 18 at 989-990.21 Indeed, it did seem to be (as one writer remarked some years later, when the smoke from the fusillade had cleared),

Titus, § 402A and the UCC, supra note 13, at 717. See also, Speidel, Product Liability, Economic Loss and the UCC, 40 Tenn. L.Rev. 309 (1973).

(e) Retrenchment and return fire: Seely v. White Motor Co.

In the teeth of such criticism, it is ironically appropriate that the second case following Greenman which had occasion to consider the question of whether economic losses were recoverable under a strict liability theory should be decided by the California Supreme Court. Barely four months after Santor, that court handed down its decision in Seely v. White Motor Company, 63 Cal.2d 9, 45 Cal.Rptr. 17, 403 P.2d 145 (1965). Again, Traynor (who by then had become Chief Justice) spoke for the majority. And, like the New Jersey Supreme Court's opinion in Santor, Traynor's text in the Seely case had two parts: a strict holding and significant dicta. It was in dictum that Traynor acknowledged the looming conflict between the common law doctrine of strict liability in tort and the legislative pronouncement's of the Uniform Commercial Code; and, it was there that Traynor stated his rebuttal to the critics.

The facts which gave rise to the Seely case were these: the plaintiff had purchased a truck manufactured by White Motor Company for use in his heavy-duty hauling business. The sales contract contained an express warranty by the manufacturer that the truck was "free from defects in materials and workmanship under normal use and service," and that the manufacturer would make "good at its factory any part or parts" of the truck that proved defective. Very soon after taking possession of the truck, however, plaintiff discovered that it would bounce violently under load, an action called "galloping." For eleven months following the purchase, the retail dealer (with guidance from the manufacturer) tried unsuccessfully to eliminate the galloping. Those corrective efforts were cut short by a second, and apparently unrelated, problem.

Seely v. White Motor Company, supra at 12, 45 Cal.Rptr. 17, 403 P.2d at 147 (emphasis added).

Plaintiff then filed suit against both the retail dealer and the manufacturer. His complaint was based upon two theories of recovery: breach of an express warranty and strict liability in tort. He sought recovery of both "direct economic losses" (i.e., the cost of repairing the damages resulting from the accident, and, the loss of the benefit of his bargain as measured by the amount he had paid on the purchase price of the truck) and "consequential economic losses" (i.e., the profits he had lost in his business because he was unable to make normal use of the truck). The trial court awarded plaintiff a judgment against the manufacturer

Id. at 13, 45 Cal.Rptr. 17, 403 P.2d at 148. The Supreme Court of California affirmed, holding that "[t]he award was proper on the basis of a breach of express warranty." Id.

As previously noted, however, Chief Justice Traynor went beyond this strict holding. In extensive dicta, Traynor condemned Santor's application of strict liability principles to a case involving only economic loss. In doing so, it appears that Traynor really was addressing his remarks to a wider audience: those critics who contended that strict liability in tort had usurped the Uniform Commercial Code. This supposition is supported by the manner in which Traynor began the dictum portion of the majority opinion:

Id. at 15, 45 Cal.Rptr. 17, 403 P.2d at 149.

Chief Justice Traynor then tried to explain why the common law remedy had not eclipsed the legislative rules for recovery. He did so by narrowly defining the kinds of damages to which the doctrine of strict liability applied: i.e., it applied to personal injuries and property damage (because "[p]hysical injury to property is so akin to personal injury that there is no reason for distinguishing them" [45 Cal.Rptr. 17, 403 P.2d at 152]), but not to economic loses. While it is just to demand of a manufacturer that his products not create unreasonable risks of harm to person and property, Traynor reasoned, it is going too far to hold a manufacturer strictly liable in tort when his product fails to meet a purchaser's particular economic expectations.

Chief Justice Traynor did not speak for a unanimous court. Justice Peters accepted the result of the majority opinion in Seely, but rejected its reasoning. In essence, Peters felt the majority was too concerned about the charge that strict liability in tort had superseded the UCC rules on implied warranties. "Of course," he stated,

Id. at 21, 45 Cal.Rptr. 17, 403 P.2d at 153 (Peters, J., concurring and dissenting).

Peters then explained that such a result — "even if unfortunate," as he said above — certainly was not a heresy in the law. To the contrary, it was "well established" that the damages awarded in socalled "personal injury" cases may include compensation for past loss of time and earnings due to the injury..., for loss of future earning capacity..., and for increased living expenses caused by the injury.... There is no logical distinction between these losses and the losses suffered by plaintiff here. All involve economic loss, and all proximately arise out of the purchase of a defective product.

Id. (Emphasis added.)

On the other hand, Justice Peters acknowledged that he — like the Seely majority — did not want to extend the strict liability doctrine to the point that it would "completely deny any effect to the disclaimer and notice provisions of the Commercial Code." [45 Cal.Rptr. 17, 403 P.2d at 158 (emphasis supplied).] "Thus," Peters said, "a line must be drawn somewhere." (Id.) But, where? That, of course, is the important question. According to Peters, the line should not be drawn long after the transaction has taken place, and according to the type of damages sustained. Such a line is "arbitrary and artificial," Peters said, because there is "no sound basis for distinguishing between the types of damage assigned to opposite sides of the majority's line." (Id.) Rather, Peters argued, the line should be drawn at the time of the sale of the product, and it should be drawn between "commercial" consumers and "ordinary" consumers.

Seely v. White Motor Company, supra at 26-27, 45 Cal.Rptr. 17, 403 P.2d at 156-157 (Peters, Jr., concurring and dissenting) (emphasis in original).

Thus, the trenches of battle were dug. And until just recently, all ensuing litigation occurred principally within the tricornered field described by Santor, Seely, and Justice Peters' position.

(3) Beyond Santor and Seely: The Ebb and Flow of Battle

The conflicting principles set forth in Santor and Seely concerning recovery of "economic losses" under strict liability principles have been adjudicated in numerous jurisdictions during the intervening years. Most of the relevant cases have been cited in the plaintiffs, or in the defendants', briefs. An initial reading of those cases, however, did not disclose either a clear trend of authority, or an underlying rhyme or reason tying the various results together. Rather, the impression gained by this court upon first reading was one of utter confusion. Myriad artificial distinctions between recoverable and nonrecoverable damages were discussed, and cited as the basis for decision.

Consequently, in an effort to, at least, discover the direction in which the tide of verbal battle is moving (if not to discern the logical force behind such movement), this court re-read, and briefed, all of the cases cited by any of the parties, as well as a number of other decisions turned up in independent research. Moreover, in an effort to ensure that comparables were compared, each case was briefed in accordance with a common format of relevant questions. Ninety decisions from thirtythree jurisdictions were thus digested. The fruits of this labor are reproduced in Appendices I, II, and III (and the results summarized in Appendix IV). Although at least one surprising result was gleaned, the harvest of labor was not altogether satisfying.

The "surprise" was finding that, contrary to popular opinion, a majority of jurisdictions (as opposed to cases) have allowed the recovery of economic losses in tort actions. As summarized in Table No. 1 (Appendix IV), thirteen states have clearly allowed the recovery of such losses under the tort theories of negligence or strict liability, or both. In contrast, only eight states have clearly denied the recovery of economic losses under the same theories. Twelve other jurisdictions (with cases on both sides of the issue) initially were categorized as "questionable." After carefully reviewing the rationale(s) underlying the cases from those jurisdictions, however, a judicious estimate was made about the "tendency" of each state on the question confronted by this court. But even when such "tendencies" are taken into account, the trend is not reversed: a clear majority of the states (20 vs. 13) either have allowed, or probably would allow, recovery of economic losses under the theories of negligence or strict liability, or both.

Thus, the general movement of the law appears to be in favor of plaintiffs position. Nonetheless, the policy underlying that trend is not altogether clear. In their search for an appropriate resolution of the tort-contract conflict, the courts have grasped at a wide variety of legal devices and rationales. No consensus of opinion commanding universal allegiance has yet emerged. Obviously, the courts still are groping for firm ground in the doctrinal quagmire lying between the rock of torts and the hard place of contract. With apologies to T.S. Eliot, the flood of words that has poured from the courts and their law review "explicators" in recent years seems, to this writer (after hundreds of midnight hours of reading, re-reading, and still more reading), to

(a) The "anything goes" approach

Beginning at one extreme end of the spectrum of opinions, one finds a minority of courts which allow the recovery of economic losses in negligence or strict liability in all cases where the product defect causes the product to become useless. In these cases, it is irrelevant how the product incurred the harm; it only is significant that the product was defective, did not perform adequately, and as a proximate result the consumer incurred loss — economic or otherwise. This essentially was the position of the New Jersey Supreme Court in Santor.22 It also was the position of the Michigan Court of Appeals in Cova v. Harley Davidson Motor Co.,23 of the Washington Supreme Court in Berg v. General Motors Corporation,24 and of the Oregon Supreme Court in State ex rel. Western Seed Production Corp. v. Campbell.25

(b) The "nature of the damage" approach

Lying at the opposite end of the spectrum are those courts which make the outcome of a case turn upon the nature of the damages sustained by the plaintiff. Sometimes referred to as the "type of harm test,"26 it was the test applied by the California Supreme Court in Seely,27 after rejecting New Jersey's approach in Santor. It is a simplistic approach, and has been criticized as such.28 Nonetheless, it has its adherents, and it has been the basis for decision in a number of cases. An extreme, if not "classic," example is Hawkins Construction Co. v. Matthews Co., Inc., 190 Neb. 546, 209 N.W.2d 643 (1973). In that case, the plaintiff had purchased "Waco HI-LOAD" steel scaffolding and shoring equipment to support the roof deck of a commercial building upon which concrete was to be layered. As the wet cement was being poured, the scaffolding gave way without warning, and the roof collapsed. Three workmen were in the vicinity. Two were not hurt at all; but a third, who fell with the roof twenty feet to the ground and who had "cement and debris come down on top of him ... miraculously escaped with only minor injuries." (209 N.W.2d at 648). In spite of the clear dangers to life and limb presented by such a defective product, and in spite of the fact that some of the damages for which plaintiff sought recovery were collateral damages to property other than to the defective product itself, the Nebraska Supreme Court blithely characterized the damages as "merely economic," and denied recovery under strict liability. Plaintiff's remedy, it said, lay in contract, for breach of express or implied warranties. (See Appendix I.) Other examples of the application of the "type-of-harm" test — although not as extreme as Hawkins — include the decision of the Georgia Court of Appeals in Chrysler Corp. v. Taylor,29 and the Illinois Court of Appeals in Alfred N. Koplin & Co. v. Chrysler Corp."30

(c) The "consumer" test

In between these extreme ends of the spectrum fall several other "tests," or modes of analysis. For example, some cases seem to turn upon the nature of the plaintiff, as first suggested by Justice Peters in his concurring and dissenting opinion in Seely. This approach has been referred to as the "consumer" test.31 The theory behind this test is that the Uniform Commercial Code, while admittedly applicable to consumer transactions, is nonetheless primarily designed to regular "commercial transactions": i.e., situations in which the parties bargain at arm's length, from relatively equal bargaining positions. Hence, if the transaction is "commercial," the law of sales should apply. On the other hand, if the plaintiff is an ordinary "consumer" and (or probably more importantly) if there is evidence of inequality in the bargaining positions of the parties, then tort principles should be employed. Thus, for example, in Iowa Electric Light & Power Co. v. Allis-Chalmers Manufacturing Co., 360 F.Supp. 25 (S.D.Iowa 1973), the U.S. District Court for the Southern District of Iowa (applying Iowa law) did not allow the plaintiff power company to recover direct and consequential economic losses from the manufacturer of a faulty transformer under the theories of negligence or strict liability. In denying recovery, the federal district court opined: "It may be that in a situation where there is inequality of bargaining position between the consumer and the manufacturer, the Iowa Court would allow such recovery." Id., at 32. (See Appendix II for case brief.)

(d) The "how the harm occurred" test

Another approach favored by several courts is a hybrid of the Seely, "type-ofharm" test. Unlike the Seely test, however, this approach does not turn upon how the resultant damages are classified. Rather, it pivots upon how the damages occurred. In such cases, one usually finds that the defective product damaged not just itself, but other tangible property of the plaintiff as well: i.e., collateral "property damage" as defined hereinabove. That fact has led some commentators to describe this approach as the "property damage exception" to the rule against recovery of economic losses under a tort theory.32 I believe such a label to be misleading, however, because the presence of collateral property damage really is not the point which determines the judgment in such cases. Moreover, as one author has aptly noted, "[i]f damage to other property is necessary, it can almost always be found."33 Instead, such cases truly turn upon how the damages occurred. Their ratio decidendi is simply this: when the damages result from an "accident," some sudden or violent event, or some circumstance in which personal injuries easily could have occurred, then the courts should not deny recovery solely because the plaintiff was fortunate enough to escape the calamity with his life, and all limbs, intact.

This "how the harm occurred" approach is demonstrated by two cases decided by the Alaska Supreme Court: Morrow v. New Moon Homes, Inc., 548 P.2d 279 (Alaska 1976); and, Cloud v. Kit Manufacturing Company, 563 P.2d 248 (Alaska 1977). In the first case, plaintiff had purchased a mobile home manufactured by defendant New Moon Homes, Inc. Within six months of the purchase, defects had developed which caused the unit to be unfit for habitation: e.g., the roof leaked; wall panels buckled; the wiring short-circuited; the tub leaked; the furnace failed; doors would not close; and, as incredible as it may sound, the list goes on. Plaintiff sought recovery of direct, repair & replacement economic losses under a strict liability theory. But the Alaska Supreme Court held that plaintiff could recover such losses only in an action for breach of warranty, express or implied. The court refused to extend the action of strict tort liability to cases where the damages occurred gradually, as a result of product deterioration.

One year later, however, the same court permitted recovery of economic losses in a case where the damages occurred suddenly, and violently. In Cloud v. Kit Manufacturing Company, supra, the plaintiff also had purchased a mobile home. Three months after purchase, plaintiff stored a roll of polyurethane foam rug padding (which had been supplied by the defendant manufacturer as a part of the "mobile home package") in the crawl space beneath the mobile home. The padding ignited, and the ensuing fire destroyed the trailer and all of its contents. Plaintiff sued the manufacturer under strict liability in tort. And the Alaska Supreme Court allowed the recovery. But in doing so, the Court verbally danced around the issue, and dubbed the entire loss "property damage."

Cloud v. Kit Manufacturing Co., supra at 251 (emphasis added).

The foregoing excerpt from the Cloud opinion is, at best, misleading. The court can call the Clouds' loss "property damage" and can try to shove the case into that pigeonhole. But it will not fit. There just is no getting around the fact that the primary loss sustained by plaintiffs was economic: i.e., the replacement cost of the mobile home. Admittedly, there was collateral property damage, but the loss of clothing and furnishings was not the most significant aspect of the plaintiffs' damages. Allowing recovery on that basis alone is somewhat akin to allowing the factual "tail" to wag the legal "dog." Moreover, and importantly, if one closely reads the New Moon Homes case, he will find that the Morrows also sustained collateral property damage to their personal property as a result of water blowing into the trailer through leaks in the roof and cracks in the wall; yet, recovery was not allowed in that case under a tort theory. Hence, the Alaska Supreme Court is playing semantic games. They are dealing in legal fictions. They are calling the loss non-recoverable "economic loss" in the first instance and recoverable "property damage" in the second — but what they really are concerned about is how the damage occurred!

(e) The "dangerous-nondangerous" distinction

The final approach followed by some courts as a means of separating cases that may be adjudicated on tort principles from those that must be decided by the UCC rules on warranties has been named the "dangerous-nondangerous distinction." Ribstein, Guidelines for Deciding Product Economic Loss Cases, supra at 500. This approach is a recent addition to the battle of words, but it has much to offer from a conceptual standpoint. It actually is a logical extension of the "how the harm occurred" test, as is demonstrated by yet a third Alaskan case [Northern Power & Engineering Corp. v. Caterpillar Tractor Co., 623 P.2d 324 (Alaska 1981)], and another based upon Pennsylvania law [Pennsylvania Glass Sand Corporation v. Caterpillar Tractor Company, 652 F.2d 1165 (3rd Cir.1981)]. It is merely coincidence that Caterpillar Tractor Company was common to both.

In the first mentioned decision, Northern Power & Engineering Corp. purchased a diesel powered electrical generator manufactured by Caterpillar Tractor Co. Four or five years after the purchase, the generator's oil pressure shut-down mechanism failed, which caused the diesel engine to seize when oil pressure dropped to a point insufficient to lubricate the moving parts of the machine. This resulted in severe damage to the machine itself, but it caused no additional injury to persons or other property. Northern Power sued Caterpillar to recover both direct (repair & replacement) and consequential (loss of use) economic losses. Its claims in this regard were premised upon, inter alia, strict liability in tort. The trial court granted summary judgment in favor of Caterpillar, and Northern Power appealed. The Supreme Court of Alaska affirmed. In doing so, however, that court took a step away from its decisions in New Moon Homes and Cloud, supra. Without question, the harm in this case had occurred "suddenly" and "accidentally"; but that was not deemed the important point. Moreover, there was no collateral damage to property other than the defective product itself; but, again, that was not made the point for decision. Instead, the Alaska Supreme Court focused upon the fact that this damage — even though "severe" — never endangered persons or other property.

Northern, Power & Engineering Corp. v. Caterpillar Tractor Co., supra at 328-329 (emphasis added). See also, Shooshanian v. Wagner, 672 P.2d 455 (Alaska 1983) (in which the Alaska Supreme Court reversed a trial court's dismissal of plaintiffs' strict liability claim for direct and consequential economic losses incurred in the removal of urea-formaldehyde foam insulation from the walls of a two-story, combination store and residence because the "toxicity" of the foam endangered the plaintiffs' health).

Pennsylvania Glass Sand Corporation v. Caterpillar Tractor Company, supra at 1169-1170 (emphasis added) (footnotes omitted). See also, id. at 1172-1173, where the court adds:

The bottom line on the Pennsylvania Glass Sand case is that the defective product "constitute[d] a safety hazard that posed a serious risk of harm to people and property" and, consequently, the Third Circuit Court of Appeals decided that:

Id. at 1174-1175.

B. ALABAMA'S PLACE IN THIS HITORICAL PROGRESSION

This tracing of the historical development of products liability law from the time of Winterbottom to the present inevitably leads to two questions: "Where does Alabama fit in this progression?" and "How would this case be decided by the Alabama Supreme Court?" The answer to the former question is "seemingly, not very well," and to the latter probably is, "in favor of plaintiff." Explanations are obviously in order.

(1) Products Liability in Alabama

Throughout our history, Alabamians have prided themselves on the contributions we have made in times of war. We have given liberally of our resources — material, human, and intellectual — in all wars to protect, and extend, our democratic principles (including the war against Northern aggression). Alabamians always have been among the first to enlist, and in the vanguard of those who attacked. But none of that has been true of the legal battle waged against the citadel of privity. Rather, as Professor Julian McDonnell aptly remarked:

McDonnell, The New Privity Puzzle: Products Liability Under Alabama's Uniform Commercial Code, 22 Ala.L.Rev. 455 (1970). As but one example, Alabama even rejected the special "food warranty rule," based upon the commendable public policy of protecting human health and life against products presenting an exceptionally high risk of harm, and imposing liability without privity upon the manufacturer responsible for placing loathsome food and drink upon the market. See, Titus, § 402A and the UCC, supra note 13 at 742 & n. 158. For another, we were more "restrained" than the majority of states in our application of the MacPherson v. Buick Motor Co. dangerous commodity principle — one of the basic weapons in the struggle to overcome privity — to Alabama fact situations. McDonnell, supra at 463. See also, e.g., Jefferson Standard Life Ins. Co. v. Watson, 242 Ala. 181, 5 So.2d 639 (1942); Hare & Hare, Principal Alabama Actions in Tort: Part II, 22 Ala.L.Rev. 361, 377 (1970).

The reasons for the quiescence of the Alabama judiciary in the most significant legal battle of this century are not easily understood. Undoubtedly, they are complex. But, most likely they are (as Professor McDonnell conjectured):

McDonnell, supra at 461.

In the opinion of this court, Professor McDonnell has correctly discerned the principal, visible keystones supporting the Alabama position on liability for defective products. The same themes he has identified appear over and over — in variegated forms and with varying emphasis — throughout the relevant cases. But those themes are nowhere more clearly in evidence than in the companion cases which purportedly rejected strict liability in tort as formulated by the California cases and Restatement (Second) § 402A, and which created the action known as the "Alabama extended manufacturer's liability doctrine": i.e., Casrell v. Altec Industries, Inc., 335 So.2d 128 (Ala.1976), and Atkins v. American Motors Corp., 335 So.2d 134 (Ala.1976). Thus, after reviewing the historical origins of the strict liability action, Justice Jones stated succinctly:

Atkins v. American Motors Corp., supra at 138. Based upon those ostensible premises, therefore, the Alabama Supreme Court adopted the principle of negligence per se as the proper approach.

Casrell v. Altec Industries, Inc., supra at 132 (Faulkner, J.) (emphasis in original). Mr. Justice Jones echoed Justice Faulkner's thoughts when, in Atkins, he explained that "the gravamen" of the new action

Atkins v. American Motors Corp., supra at 139.

One must pause, however, because none of this seems to make any sense. The Supreme Court plainly tells us — not just once, but twice, in two cases decided back to back — that they "do not intend to impose a no-fault concept" such as strict liability in tort. Then, in the very next breath, they tell us that the requisite fault is supplied "as a matter of law" whenever the plaintiff shows that he has been injured, or that his property has been damaged, by one who sold a product "in a defective condition unreasonably dangerous to the plaintiff as the ultimate user or consumer...." Casrell at 132 (Faulkner, J.); Atkins at 141 (Jones, J.). If that is true, then what in the world is the difference between strict liability in tort as formulated by Restatement § 402A and the Alabama action, other than the fact that the Court says they are different? When viewed from the perspective of outcome, or result, there really is no difference, as the Alabama Supreme Court acknowledged.

Casrell at 131 (emphasis supplied); Atkins at 140-141 (same language repeated). When viewed from the perspective of substantive law, however, there is a difference between the Restatement doctrine and the Alabama hybrid. The Alabama doctrine affords defendants three affirmative defenses, two of which are not available under § 402A of the Restatement: i.e., the "lack of causal relation defense," and contributory negligence. See, Note, 28 Ala. L.Rev. 747, 761-765 (1977). Nonetheless, this court submits that such is not the reason our Supreme Court fashioned the "extended manufacturer's liability doctrine."

Rather, this court submits that there are two reasons for the creation of an Alabama hybrid, and both are peculiar to the legal soil of this State. The first reason was addressed, albeit briefly, in both Casrell and Atkins. And it is related to the historical facts discussed by Professor McDonnell in his thoughtful article: namely, that in the last stages of our State's defense of the parapets of privity, the Supreme Court repeatedly insisted that any radical changes in doctrine were more properly a function of the legislature, rather than of the courts. McDonnell, supra at 461. Mr. Justice Faulkner touched fleetingly on this point when he stated:

Casrell, supra at 133. Mr. Justice Jones also addressed the point, but at more length; the following is the gist of his position.

Atkins, supra at 140.

I shall return to the foregoing arguments presently. For the moment, however, I would direct your attention to the fact that another rationale for adoption of a hybrid form of strict liability lurks just below the surface of Casrell and Atkins. I refer to Alabama's wrongful death act, which has been repeatedly construed by the Supreme Court as allowing only the recovery of punitive damages.

Note, 28 Ala.L.Rev. 747, 759 (1977) (emphasis added). That, I submit, is the real, bottom-line, reason for the Casrell/Atkins hybrid.

(2) Recovery of Economic Losses Under the Alabama Extended. Manufacturer's Liability Doctrine

Even though the preceding observations concerning the reasons for our Supreme Court's adoption of a hybrid form of strict liability might appear, upon first reading, to be nonsequiturs, reflection should prove that to be false. For, indeed, those threads are clues which lead this court to believe that the Alabama Supreme Court would allow the recovery of economic losses under the facts of this case.

(a) No substantive difference between AEMLD and strict liability

The first point supporting that conclusion is this: if the Alabama wrongful death act is (as I contend) the point which really determined the judgment in Casrell and Atkins, and led to the formulation of a hybrid form of action ostensibly based upon the culpability of the defendant,34 then Alabama's doctrine should not be viewed as sui generis, or as radically different from strict tort liability generally.35 Any distinctions that may be drawn between the two approaches must be viewed as differences in emphasis merely, but not substantive variances. And if that is true, as I believe it to be, then it also is probable that our Supreme Court would follow that increasingly clear trend of authority which allows the recovery of economic losses under strict liability principles (see the discussion under sub-section (A)(3), supra).

(b) Economic losses recoverable as ancillary to "property damage"

The second point leading this court to conclude that the Alabama Supreme Court would allow the recovery of economic losses under the facts of this case is simply this: the presence of collateral damage to property other than the defective products themselves.

In addition to the costs of removing asbestos products from the public school buildings in which they were installed, plaintiff also must pay for the removal, and replacement, of carpets, upholstery, and other porous materials into which microscopic asbestos fibers may have settled over time. Plaintiff attached a copy of a November 24, 1976 Raybestos Manhattan memorandum to its brief which indicates the asbestos industry is aware that such fibers cannot be satisfactorily removed from fabrics by normal methods.

(Plaintiff's Brief Attachment A.) The dangers of asbestos products also have been noted in judicial opinions. See, e.g., Moran v. Johns-Manville Sales Corp., 691 F.2d 811 (6th Cir.1982); Karjala v. Johns-Manville Products Corp., 523 F.2d 155 (8th Cir.1975); Bertrand v. Johns-Manville Sales Corp., 529 F.Supp. 539 (D.Minn. 1982).

Even though some defense counsel spoke derisively of these "property damage" claims during oral argument, the cost of removing and replacing carpets, upholstery, and other porous materials from more than a score of school buildings will not be insignificant. Consequently, under accepted approaches the recovery of any so-called "economic losses" should be allowed as ancillary to plaintiffs right to recover for its "property damage." Cf., Federal Mogul Corporation v. Universal Construction Co., 376 So.2d 716 (Ala.Civ. App.), cert.denied. 376 So.2d 726 (Ala. 1979). See also, Sears, Roebuck & Co., Inc. v. Haven Hills Farm, Inc., 395 So.2d 991 (Ala.1981).

(c) The dangerous-nondangerous distinction

Thirdly, this court also believes the Alabama Supreme Court will join that growing number of jurisdictions which have embraced the "dangerous-nondangerous" distinction, and will hold that a plaintiff may recover damages for all losses if the defective product causes — or creates a substantial and unreasonable risk of causing — personal injury or damage to property other than the defective product. Conceptually speaking, the "dangerousnondangerous" distinction appears to be the best approach that has been devised to date for separating contract/warranty actions from tort cases.

Generally speaking, those cases which have held that economic losses are recoverable only under the warranty provisions of the Uniform Commercial Code have been confronted with defects which affected the product's performance, but did not present an unreasonable risk of harm to persons or other property. The rationale behind such cases was expressed by Chief Justice Traynor in Seely, as follows: a consumer "can ... be fairly charged with the risk that the product will not match his economic expectations unless the manufacturer agrees that it will." Seely v. White Motor Co., supra at 18, 45 Cal.Rptr. at 23, 403 P.2d at 151. Such express manufacturer agreements, or warranties, are covered by the Uniform Commercial Code.

In this case, however, we are not talking about a breach of expectation interests. The School Board does not question the "quality" of the asbestos installed in its buildings, nor does it contend that the products have failed to perform their insulation function satisfactorily. (Indeed, except for the ceramic tiles installed on NASA's space shuttle, there probably is no better insulation material than asbestos.) Rather, plaintiff's complaint is that the asbestos is extremely, unreasonably hazardous. Plaintiff's allegations in this regard must, in ruling on the motions to dismiss, be accepted as true. Pruitt v. Pruitt, 343 So.2d 495, 497 (Ala.1977). But this court has no doubt they will be proven. As noted in the preceding sub-section, several courts already have taken note of the extreme hazards of asbestos. For instance, in Bertrand v. Johns-Manville Sales Corp., supra at 544, the U.S. District Court for Minnesota said there could be little argument over the fact that:

This case is not instituted, therefore, by a disappointed user. Rather, it has been brought by the School Board on behalf of those persons who are endangered by the defendants' products. The distinction was colorfully drawn quite recently by one of my black-robed brethren in the State of Kentucky, who also was lucky enough to be assigned a similar case.

It would thus seem that, in the present case, the School Board has undertaken an asbestos abatement program in order to fulfill both the plaintiff's and the defendants' tort duty to protect "consumers" of the respective products from the risk of unreasonable harm. [See Ramp, The Impact of Recall Campaigns on Products Liability, 44 Ins. Couns. J. 83 (1977), for a discussion of those cases holding that manufacturers must take post-sale remedial measures once an excessive danger is discovered in a product line.] In the mind of this court, therefore, plaintiff should be allowed to recover in tort for the losses incurred as a result of the abatement program, because the expenses really are not "economic losses" in the sense of an expectation loss but, rather, the expenses have been incurred to fulfill all parties' tort duties to the true "consumers" of the products. Furthermore, an injury to a person should not be a prerequisite to the action; it should be enough that the products present clearly unreasonable risks of harm, or death. To require that some small child, children, or teachers be injured before allowing this action to lie would contradict the policies of consumer protection, risk allocation, and deterrence upon which strict liability is founded. Moreover, it should be noted that the Uniform Commercial Code is particularly inappropriate as a remedial vehicle in a case of this nature because it is not particularly concerned with product safety for the intended consumer. Rather, the UCC is primarily concerned with contract notions of losses on bargains, and the reasonable expectations of parties to a bargain. It is essentially neutral on the issue of consumer safety. See, e.g., Ribstein, Guidelines for Deciding Product Economic Loss Cases, supra.

Of course, the preceding propositions have not been specifically approved by our State's Supreme Court. Unfortunately, this is a case of first impression in Alabama. Nonetheless, there are hints in Casrell and Atkins that such an analysis would be approved. For example, it will be recalled that Justice Faulkner said:

Casrell v. Altec Industries, Inc., supra at 132 (emphasis supplied). Justice Jones summed it up when he said: "We simply hold that selling a dangerously unsafe product is negligence as a matter of law." Atkins v. American Motors Corp., supra at 141 (emphasis supplied).

Id. at 140 (emphasis supplied). It takes only one short step from the preceding propositions to reach the conclusion that the "expectation-bargain protection policy of warranty law" does not apply to this case, but that the "safety-insurance policy of tort law" does. Pennsylvania Glass Sand Corp. v. Caterpillar Tractor Co., supra at 1173. A United States District Judge in New Jersey applied this same rationale in a similar case.

Cinnaminson Township Board of Education v. U.S. Gypsum Co., 552 F.Supp. 855, 859 (D.N.J.1982).

(d) The demise of the UCC as a viable remedy in cases involving unreasonably dangerous products

The final point which, in the opinion of this court, indicates that the Alabama Supreme Court will allow the recovery of "economic losses" in this case may be viewed by some as heretical. But it nonetheless needs to be stated, and placed face-up on the table for discussion. In unvarnished form, the point can be stated thusly: the Alabama Supreme Court has displaced, by judicial fiat, the UCC's warranty rules insofar as they relate to product defects causing — or creating a substantial and unreasonable risk of causing — personal injury or damage to other property. A proper understanding of this contention requires some backtracking along the historical path that has been traced before.

It first must be recalled that the development of strict tort doctrine occurred almost entirely as a matter of common law development, rather than legislative action. The two modern cornerstones of that doctrine — Henningsen and Greenman — were laid down several years before the Uniform Commercial Code became effective in their jurisdictions. (Henningsen was decided in 1960, and the UCC became effective in New Jersey on January 1, 1963. Greenman was decided in 1963, but the Code did not become effective in California until January 1, 1965.) Thus, the doctrine which those two decisions spawned "is not grounded upon statutory authority but represents an attempt to respond intelligently to the needs of the modern consumer." McDonnell, The New Privity Puzzle: Products Liability Under Alabama Uniform Commercial Code, 22 Ala.L.Rev. 455, 458-459 (1970).

On the other hand, Santor v. A and M Karagheusian (decided Feb. 17, 1965) was handed down after the effective date of the UCC in New Jersey. (This also was true in the California Seely case, decided on June 23, 1965.) Hence, the critical eruption following Santor, and the charge that the New Jersey Supreme Court was totally displacing the UCC's warranty provisions by "open judicial defiance of apparent statutory commands." Franklin, When Worlds Collide, supra note 18 at 990. The reverberations of the critical explosion that Santor ignited are heard still — in this case, in fact — as courts which adopted strict liability after the UCC became effective in their jurisdictions have gone about "the difficult task of working out an accomodation between their new case law and the Code's statutory rules on sales warranties." McDonnell, supra at 459.

If all that has been said from the time of Santor to the present is put in proper perspective, it can clearly be seen that the only reason for drawing a line between "personal injuries & property damage" on one side, and "economic losses" on the other, has been that of trying to preserve a sphere of operation for the UCC's warranty provisions. All of the judicial (not to mention lawyer) blood, sweat, and tears that are reflected in the ninety-odd decisions this opinion has attempted to understand was spilled for no reason other than that. In Professor McDonnell's apt description, all of that effort expended in the attempt to accommodate "the Commercial Code to new tort doctrines is the present price for past judicial innovations — a cost which Alabama has successfully avoided." Id. at 460 (emphasis supplied).

Indeed! Avoided how? By modifying the official 1962 version of the Uniform Commercial Code recommended for State adoption! A close reading of Professor McDonnell's thoughtful, and carefully constructed, article demonstrates that it was

Id. at 487 (emphasis supplied). In the same paragraph, Professor McDonnell goes on to explain that the elements of the remedy fashioned by the Alabama legislature

The Alabama version of the Uniform Commercial Code became effective in this state at midnight on December 31, 1966 (Ala.Code § 7-10-101 (1975)): i.e., more than ten years prior to Casrell and Atkins (both decided and released May 21, 1976). And, Professor McDonnell's articulate interpretation of our Code provisions was published in the Alabama Law Review six years prior to those cases. Therefore, there is no basis for assuming that our Supreme Court Justices were not aware of the possible relevance of those Code provisions — or that they were unaware of Santor and its critical progeny — when they created the "extended manufacturer's liability doctrine." Rather, there is every reason to believe that our Justices were well aware of those matters and knew of what they were about.36

One important question that must be asked at this juncture is: "Why, then, did the Alabama Supreme Court ever contemplate the adoption of strict liability as formulated in the Restatement (see Geohagan, supra note 34), or adopt an indigenous variant of that doctrine which so closely resembles § 402A that it could be called a `clone'?" The answer, I submit, is as stated before: The Alabama wrongful death act mandated that a fault-based version of strict liability be adopted as "the only practical course of action short of reversing a long line of authority...." Note, 28 Ala.L.Rev. 747, 759 (1977). In other words, AEMLD is just another of those prices that we must pay as a result of being the last State in the Union to hold that only punitive damages, based upon the culpability or fault of the defendant, may be recovered in a wrongful death action.

The overwhelming question that must be asked at this juncture, however, is this: "What is the effect of the AEMLD on our UCC warranty rules?" The answer, I submit, is: AEMLD has displaced, and superseded those rules in all cases where the plaintiff seeks damages for losses occasioned by a product defect causing — or creating a substantial and unreasonable risk of causing — personal injury or property damage. The Code's warranty rules will remain viable in those cases where the performance or quality expectations of the buyer/consumer have been breached, and in those cases where a plaintiff may find it necessary to bring an action based upon breach of express or implied warranties against intermediaries in the distributive chain (retailers or wholesalers) who escape AEMLD's noose via the "lack of causal relation" defense. Otherwise, in cases such as this one, where the deterrence of unreasonable risks of personal injury or death is the preeminent concern, AEMLD reigns supreme, it is a new remedy, eclipsing all that preceded it. It merges all of the desirable attributes of negligence, warranty, and strict liability into a single tort action. It rejects all possible limitations on tort recovery, as long as the product defect causes — or creates a substantial and unreasonable risk of causing (as in this case) — personal injury, death, or property damage.

Such a result — even if unanticipated by Casrell and Atkins — need not be deplored. Rather, it should be applauded for blending all of the desirable attributes of its predecessors into a single, integrated tort action. Cf., Donovan, The Emerging Confrontation, supra note 3 at 257 & 260, where that author concludes by observing that, while the UCC played a significant role "in providing the impetus for needed judicial reform of the law of tort," nonetheless:

III. THE STATUTES OF LIMITATION

As noted at the beginning of this opinion, the main thrust of defendants' attack is centered on the notion that damages for economic losses are not recoverable in tort. They mounted one other assault of almost equal force, however. Defendants have argued, strenously, that this action is barred by applicable statutes of limitation. After careful consideration, this court must disagree.

Beginning with the less difficult questions, this court finds that laches is not a bar to the action because plaintiff acted expeditiously from the alleged time of discovering the asbestos hazard to the date of filing suit. Cotney v. Eason, 269 Ala. 354, 113 So.2d 512 (1959).

Further, this court agrees with plaintiff that the amended complaint sufficiently pleads the time and circumstances of discovering the alleged fraud. Associates Financial Services Co. Inc. v. First National Bank of Mobile, 292 Ala. 237, 292 So.2d 112 (1974). The "Discovery rule" of Ala. Code § 6-2-3 (1975) thus applies to the fraud claim.

Finally, defendants' claim that the architects' and engineers' statute of repose [Ala.Code § 6-5-218 (1975)] bars this action is in error. Apart from constitutional problems with that statute [Bagby Elevator and Electric Company, Inc. v. McBride, 292 Ala. 191, 291 So.2d 306 (1974)], it applies only to those furnishing the "design, planning, supervision or construction of improvements to real property." However, the asbestos companies are being sued as material suppliers. Consequently, they cannot claim the protection of the statute under its plain language. See also, County of Loudon v. U.S. Gypsum Co., No. 3-83-329 (E.D. Tenn., filed Oct. 5, 1983) (holding that asbestos companies, as suppliers of material, are not entitled to immunity of architects' and engineers' statute of limitations [slip op. at 30]).

Turning now to the major statute of limitations issue, defendants contend that plaintiff's negligence and AEMID claims are barred by the one year statute of limitations found in Ala.Code § 6-2-39(a)(5) (1975). Plaintiff counters with the argument that its claims are permissible under two rules: Alabama's special asbestos statute of limitations; and, the "continuing tort" rule. After careful consideration, the court agrees with plaintiff on both points.

The Alabama asbestos statute of limitations [Ala.Code § 6-2-30(b) (Supp.1983)] provides in pertinent part:

During oral argument, counsel engaged in heated debate over the language of this statute, as well as its legislative history. Defendants contend that the statute should be limited to personal injury actions, while plaintiff claims the statute encompasses property damage claims as well.

The court starts, as it must, with the language of the statute. On its face, the statute is unambiguous. It applies to two types of asbestos suits: one for injuries to the "person," and one for injuries to the "rights of another." This alone casts doubt on defendants' claim that the statute is limited to injuries to the person. The legislature easily could have stated that the statute should apply only to "bodily injury" or "personal injury," but it has not done so.

Defendants suggested at oral argument that the phrase, "rights of another," is intended to refer to derivative claims in personal injury suits (such as loss of consortium). The court cannot read such an interpretation into the statute without some indication that this type of limitation of the term is what was meant.

Furthermore, defendants are arguing against their own position. As previously noted, they contend that plaintiff's claim is governed by the one year limitation of Ala.Code § 6-2-39(a)(5) (1975) (e.g., Brief of Nat'l Gypsum at 8-9). That statute applies to:

Thus, when it appears to help their position that plaintiff's tort claims are barred by the one-year statute, defendants assert that plaintiffs claim is one "for any injury to the person or rights of another." Ala. Code § 6-2-39(a)(5). In the next breath, however, and without any apology for the obvious inconsistency, defendants contend that plaintiffs claim is not one "for any injury to the person or rights of another" for purpose of the asbestos statute of limitations. Ala.Code § 6-2-30(b) (Supp. 1983). Defendants cannot have it both ways.

Defendants' claim that the asbestos statute is limited to injuries to the person also is weakened by that clause of the statute giving an "injured party" a right to sue after discovering an asbestos "injury." If the legislature intended to limit the statute as defendants contend, it easily could have said the "injured person" could sue after discovering his "bodily injury."

Defendants next urge that the legislative intent of the statute, as expressed in Act No. 80-566 (1980), shows the legislature meant to limit the statute to personal injuries. The court disagrees. While it is highly questionable that this court should even attempt to examine legislative intent when a statute is unambiguous [State v. Dawson, 264 Ala. 647, 89 So.2d 103 (1956)], the court nonetheless will review the legislative material cited to it, to determine the legislative intent. McDonald's Corporation v. DeVenney, 415 So.2d 1075 (Ala.1982).

There is no question about the fact that, at the time of enacting the asbestos exposure statute, the legislature was greatly concerned with the situation in Alabama whereby victims of asbestos exposure were denied recovery under then existing statutes of limitation. The question to be answered, however, is whether the legislative intent necessarily shows a limitation of this concern to personal injury victims of asbestos exposure. The court believes it does not.

The best that can be said is: the legislative history is ambiguous. For instance, the Act which created the statute states that the intent of the legislature was:

Act. No. 80-566, § 1 (1980) (emphasis supplied). The use of the word, "injuries" (as in the statute), instead of "personal injuries," again indicates a broader scope for the statute than defendants concede.

However, defendants argue that the words, "Alabama citizen," limit the statute to natural persons. The court does not believe that the legislature meant the term in the technical sense as one of limitation. Rather, it is used as a word of general description. But, even if it be conceded the word "citizen" was used technically, this court still does not believe it excludes the plaintiff School Board. Had the legislature meant to limit the statute to natural persons it could have said so. It has done so in other contexts, such as in Ala.Code § 8-19-3(2) (Supp.1983), where it defines "consumer" as a "natural person."

Further legal research also has uncovered various definitions of "citizen." Thus, in situations where natural persons would be expected to be the only affected entities, such as in voting or civil liberties cases, the term "citizen" understandably is used in a restrictive sense. For instance, only natural persons can vote, and "citizen" would be expected to refer to such individuals in that context, as it does. Gardina v. Board of Registrars, 160 Ala. 155, 48 So. 788 (1909). Likewise, in securing "civil and political rights," one expects the normal usage of the term "citizen" to refer to those natural persons who would exercise such rights. This, in fact, is the use of the term in Article 1 of the Alabama Constitution, which discusses individual liberties.

In other contexts, however, the term is given a different, and less restrictive meaning. This is in accordance with the rule that terms in statutes should be given their ordinary and everyday meaning in the context within which they are used. Fuller v. Associates Commercial Corp., 389 So.2d 506 (Ala.1980). For example, a corporation cannot vote. It nonetheless would be ridiculous to assert that, because a corporation is not a citizen for voting purposes, it cannot be a citizen for other purposes. In fact, it is well accepted that a corporation is a citizen of the state in which it is incorporated for diversity of citizenship purposes. E.g., Miller Production Co. v. Champlin Petroleum Co., 505 F.Supp. 46 (D.Okla.1980). There is nothing inconsistent between the inclusion of a corporation as a "citizen" for this purpose, and excluding it for voting purposes. The difference is a natural consequence of the settings in which the term is used. Simply stated, a corporation can sue and be sued, but it can't vote.

In like manner, Alabama law recognizes that the term "Alabama citizen" must be read in the context of its use. It has already been noted that "citizen" refers to natural persons in voting cases. Gardina v. Board of Registrars, supra. However, in Ezzell v. First National Bank of Russellville, 218 Ala. 462, 119 So. 2 (1928), it was held that a bank was an Alabama citizen which could be sued by a mortgagor to prevent foreclosure of a mortgage. In pertinent part, the court said:

Applying these principles to this case, it is the judgment of this court that the School Board is an "Alabama citizen." The asbestos statute of limitations concerns the right of an "Alabama citizen" to sue for "injuries" from asbestos exposure. Its subject is thus not one from which a school board is excluded by nature, like voting. There is little question that a school board could suffer "property damage" or "economic loss" injury from asbestos exposure. (And, indeed, plaintiff alleges that it has.) Moreover, other governmental entities, such as cities and counties, have specifically been held to be citizens of the state in which they are located for the purpose of suing for injuries in federal court. Moor v. Alameda County, 411 U.S. 693, 93 S.Ct. 1785, 36 L.Ed.2d 596 (1973); Illinois v. City of Milwaukee, 406 U.S. 91, 92 S.Ct. 1385, 31 L.Ed.2d 712 (1972).1 Therefore, if the defendants are right, and had the School Board sued in federal court, the anomolous situation would arise that it would be an "Alabama citizen" for diversity purposes, but not an "Alabama citizen" for the purposes of the statute of limitations. This court does not believe that this result is desirable, or logically supportable. The School Board is an "Alabama citizen" for purposes of Ala. Code § 6-2-30.

Defendants next contend that, if the School Board is found to be an "Alabama citizen," it still cannot be "suffering the effects of any long-term disease process," another phrase found in the legislative history. Again, the court believes that, by this language, the legislature was describing its primary concern, but not excluding other victims of asbestos exposure. In a very real sense, the School Board is suffering the effects of the asbestos "disease process" which begins with release of asbestos fibers. In fact, it is suffering such effects more directly than "loss of consortium claimants" (whom defendants assert are the other intended beneficiaries of the statute) because the School Board's property and personnel are exposed to the fibers themselves. If the legislature indeed meant to limit the remedial benefits of the statute only to those natural citizens suffering the effects of asbestos "disease," instead of an asbestos "disease process," it could have said so. But it did not, and this court is, therefore, extremely reluctant to pick and choose among the words of the legislative history, or to delete some words, as the defendants' view suggests.

This court gleans some support for its position from the description of the asbestos statute in Cazalas v. Johns-Manville Sales Corp., 435 So.2d 55 (Ala.1983), where the Alabama Supreme Court described it as applying to "all civil cases arising out of exposure to asbestos...." Id. at 56 (emphasis supplied). While Cazalas was a personal injury case, the broad description given to the statute by the Supreme Court is, in this court's opinion, consistent with the legislature's overall intent.

Further support is found in the school asbestos opinion referred to earlier [County of Loudon v. U.S. Gypsum Co., No. 3-83-329 (E.D. Tenn, 1983, filed Oct. 5, 1983)], in which that court addressed a statute applying a favorable limitations period to "any action resulting from exposure to asbestos." (Slip op. at 11.) This closely resembles our statute which applies to "a civil action for any injury to the person or rights or another resulting from exposure to asbestos." Ala.Code § 6-2-30(b). The defendants in County of Loudon cited the federal magistrate to much stronger language in the Tennessee legislative history purporting to show a legislative intent to limit the favorable effects of the statute to "asbestosis" (Slip op. at 14). Nonetheless, the court rejected such a narrow construction of the statute. Instead, it found that in enacting the statute:

In like manner, the plaintiff School Board in this case also is a victim of the ignorance of the general public about the hazards of asbestos. This court therefore finds the general intent of the legislature to aid such victims controlling over a contrary intent that can only be distilled by parsing selected phrases from the legislative history. The statute is a remedial one. As such it should receive a liberal construction, to effectuate the legislature's overall purpose.

Finally, defendants have contended, both in their briefs and at oral argument, that Cazalas v. Johns-Manville Sales Corp., supra, renders application of Ala. Code § 6-2-30 to plaintiff's claim unconstitutional. This court disagrees. Cazalas held that § 6-2-30 applies to extend the benefits of the discovery rule to claims involving "exposure on or after May 19, 1979." Cazalas v. Johns-Manville Sales Corp., supra at 57. Plaintiff's school buildings were unquestionably exposed to asbestos after that date and, under Cazalas, the statute applies.

Apart from the asbestos statute of limitations, plaintiff contends that the "continuing tort" rule applies and allows this suit. In response, defendants claim that the rule is limited to claims for personal injuries. The cases, however, seem otherwise. In Moon v. Harco Drugs, Inc., 435 So.2d 218 (Ala.1983), for example, the Supreme Court had occasion to review the continuing tort rule. It cited as examples of the rule American Mutual Liability Insurance Co. v. Agricola Furnace Co., 236 Ala. 535, 183 So." 677 (1938), and Employers Insurance Co. v. Rives, 264 Ala. 310, 87 So.2d 653 (1955). While neither of these cases was, strictly speaking, a tort case, they both analyzed tort principles in reaching their decision. It is presumably for this reason that they were cited as "continuing tort" cases in Moon. Thus, in American Mutual Liability, the court found that the long-term release of dust was both tortious and an accident. In Employers Insurance, the court dealt with the slow contamination of a well by gasoline that had been released into the ground by faulty workmanship on a fuel line. The leak was repaired, but the gasoline already in the ground continued to leak into an adjoining landowner's well. In the context of an insurance scenario, the Supreme Court found that an "accident" had occurred.

There can be little doubt that the continuing tort rule has vitality today in asbestos cases. In Cazalas v. Johns-Manville, supra, the Supreme Court reversed part of the trial court's decision because of its "misunderstanding of the continuing tort rule of damages." Id. at 57.

Plaintiff contends that a logical marriage of Cazalas (asbestos exposure) with Employers Insurance (slow property contamination) leads to the conclusion that slow property contamination by asbestos exposure also is a continuing tort. With this contention, the court must agree.2 Like the situation in Employers Insurance, where the gasoline was released into the ground to seep out gradually, the asbestos has been put into the ceiling to fall out gradually.3 Defendants have suggested no satisfactory basis for distinguishing these cases. The court thus finds the continuing tort rule to be applicable here.4

IV. CONCLUSION

The remaining contentions which defendants have thrown against plaintiff's claims have not been extensively argued. Those contentions really appear to be a "rear guard," detached from defendants' two main arguments, and intended to be brought up to protect the rear in case of a retreat. If so, that circumstance has now occurred. But this court does not intend to discuss the remaining contentions in any detail. Consideration of those does not indicate that such is required; the arguments are without merit. To the extent that any response is necessary, this court adopts the arguments found in the brief filed by plaintiff in opposition to the defendants' motions.

In conclusion, therefore, this court is of the opinion that the various motions to dismiss, for judgment on the pleadings, or for summary judgment filed by all defendants (except Davis Speake & Associates) should be overruled and denied. An order to that effect shall be rendered contemporaneously herewith.

DONE this 27th day of August, 1984.