Economic loss claims are civil lawsuits filed to recover monetary damages for financial losses not caused by physical injuries or property damage.

Topic Overview

An economic loss claim is a lawsuit brought to recover financial damages for harm not caused by a physical injury or damage to property. Economic loss is typically the loss of money or the opportunity to earn money due to specific circumstances, not a personal injury.

Key takeaways about economic loss claims

  • An economic loss lawsuit seeks to recover financial damages not related to a physical injury.
  • An economic loss case is different from a personal injury or wrongful death case. Those focus on emotional and financial losses.
  • Economic loss lawsuits are commonly resolved through negotiations, mediation, or a court trial.

What’s an economic loss lawsuit?

An economic loss lawsuit is a claim made by a person seeking compensation for the financial harms caused by another entity. Harms that might prompt an economic loss lawsuit include:

  • Business losses
  • Costs to repair or replace damaged property
  • Domestic service costs
  • Lost wages
  • Medical expenses

You typically can’t sue for negligence in cases where a contract is in place because of a rule called the Economic Loss Doctrine (ELD).

Understanding the Economic Loss Doctrine

The Economic Loss Doctrine (ELD) prevents people from suing for more money than their contract with a negligent party allows. Courts frequently apply the ELD to limit or block claims arising from a contract. In these cases, they require the parties to rely on a contract’s remedies instead of suing for negligence in civil court.

Whether the ELD is applied depends on a number of factors, such as:

  • Facts of the case
  • Relationship of the parties
  • Terms of the contract

There are exceptions to the ELD in some courts. These include professional negligence and negligent misrepresentation in specific fields.

How economic loss lawsuits differ from personal injury and wrongful death cases

Unlike personal injury and wrongful death cases, economic loss lawsuits focus solely on financial losses. Personal injury and wrongful death cases may include financial losses. However, they may not be considered economic loss lawsuits because they typically include physical and emotional harms in addition to financial losses.

Examples of economic loss lawsuits

Here are some examples of economic loss lawsuits:

  • BP Deepwater Horizon Business and Economic Loss settlement: The BP Deepwater Horizon Oil Spill caused an incredible amount of suffering and damage to Gulf Coast businesses, residents and the environment. An economic loss settlement agreement was finalized on Dec. 8, 2014, and settlement claims were accepted until June 8, 2015. Eligible applicants, which included individuals and businesses, were compensated for a range of losses. These included business economic loss, property damage, failed business loss, loss of subsistence use, physical damage and real property damage.
  • Takata Airbag injury lawsuit: Defective Takata airbags initiated the largest product recall in U.S. history, with approximately 70 million vehicles recalled in the nation and nearly 100 million globally. The flawed airbags caused at least 25 deaths and hundreds of injuries, resulting in several lawsuits, including a class action case focused on the economic losses of vehicle owners. In 2017, a class action settlement of $553 million was awarded to vehicle owners who sustained economic losses related to the faulty airbags. The settlement did not include personal injury or property damage claims.
  • GM class action lawsuit: On July 16, 2014, Motley Rice filed a class action complaint against General Motors LLC and its predecessor, General Motors Corporation, as well as Delphi Automotive PLC, regarding the manufacturers’ ignition switch defects. The claim alleged breach of warranty, fraudulent concealment and consumer protection that resulted in the decreased value of the plaintiffs’ vehicles. In December 2020, final approval of a $120 million settlement was granted to resolve vehicle-owner claims that the automaker concealed ignition switch defects and delayed recalls.

Contact an economic loss attorney

If you suspect you have an economic loss claim, our attorneys are ready to help you. For more information, contact our team by filling out our online form or call 1.800.768.4026.

How economic loss lawsuits proceed in court

Here is the general process economic loss lawsuits may follow in court:

  • Filing the claim in the appropriate court
  • Proving the economic loss with relevant evidence and expert testimony
  • Compiling documents in the discovery phase
  • Resolving the case through negotiations, mediation, or trial

Jurisdictional differences can mean that the process may change depending on where you file your claim. Attorneys with experience litigating for economic loss lawsuits can guide plaintiffs through the court process.

Frequently asked questions about economic loss lawsuits

What is the Economic Loss Doctrine?

The Economic Loss Doctrine is a rule that prevents parties from filing a lawsuit to recover damages purely for economic losses when the parties’ contract offers suitable remedies. For the jurisdictions that follow the ELD, recovery in a lawsuit is limited by the terms of a contract.

What kinds of damages are recoverable in an economic loss lawsuit?

Various types of damages may be recovered in an economic loss lawsuit, including:

  • Costs for repair/replacement
  • Loss of business opportunities
  • Loss of use of property
  • Lost revenue/profits
  • Other financial losses

Damages for physical or emotional harm are not covered in economic loss claims. Instead, they may be recovered in personal injury lawsuits.

What is considered economic loss?

An economic loss is a loss of money without physical injury. Here are some examples of losses that might lead to economic loss lawsuits:

  • Loss of business opportunities
  • Loss of employment benefits and earnings
  • Medical expenses
  • Other business losses

How does the economic loss rule work?

The economic loss rule limits tort claims when the harm is only a financial loss. Although the rule might seem straightforward, its application is often complicated. A lawyer with experience handling economic loss litigation can help you understand your legal options.

Our economic loss litigation experience

Motley Rice aggressively seeks justice and accountability for victims across a broad range of litigation. We lead some of the largest and most impactful economic loss cases today.

Fortified by a depth of knowledge, resources and experience, Motley Rice attorneys have helped shape some of the most significant settlements and decisions over the past 30 years:

  • In August 2022, Motley Rice filed an economic loss lawsuit against ARC Automotive and numerous automakers. The lawsuit seeks compensation for vehicle owners and lessees who lost money when their vehicles lost value because of defective ARC airbags. The plaintiffs allege that they were not warned about the faulty airbags before they purchased the vehicles and, as a result, suffered loss of use and out-of-pocket costs.
  • Motley Rice co-founder Joe Rice was co-lead negotiator for the plaintiffs’ steering committee (PSC) for both settlements reached with BP, one of which is the largest civil class action settlement in U.S. history.
  • In August 2014, Motley Rice co-founder Joe Rice was appointed to the plaintiffs’ executive committee for the multidistrict litigation In re General Motors LLC Ignition Switch Litigation. The MDL alleged financial injury due to the unsafe condition of GM vehicles recalled for ignition defects.

With more than 100 attorneys, hundreds of support personnel, and a network of co-counsel across the globe, Motley Rice has the resources to investigate and litigate claims throughout the U.S. and around the world.

Read more about our complex litigation experience.

Sources
  1. American Bar Association. Economic Loss Doctrine.
  2. American College of Surgeons. Ending the Confusion: Economic, Non-Economic, and Punitive Damages.
  3. Goodman, Jeffrey L., Peacock, Daniel R., Rutan, Kevin J. “A Guide to Understanding the Economic Loss Doctrine.” Drake Law Review. 2019. 67(1);1–57.
  4. National Public Radio. 4 Car Companies Settle Takata Airbag Lawsuit For $553 Million.
  5. USA Today. GM settles deadly ignition switch cases for $120 million.