Miidas Greenhouses v. Global Horticultural (CA2 12/22/10)

Another economic-loss-rule case.

Miidas bought some peat moss from Global. One batch of it was bad and ruined Miidas’ crops. Miidas sued for breach of contract, strict liability, and negligent misrepresentation. Global moved for summary judgment on the tort claims, arguing the economic-loss rule. The trial court granted it.

See Flagstaff Affordable Housing to brush up on the rule. This is a products case, so the Court of Appeals used the three-factor test. We said that Flagstaff “throws doubt on the three-factor test itself, apparently signaling a willingness to change it when an appropriate products case comes along.” Miidas argued “Flagstaff signals that Salt River‟s three-part test will soon no longer be the law in Arizona products cases.” The court says “Although we acknowledge the Flagstaff court‟s negative comments about the Salt River test, we agree with Global that despite these comments, Flagstaff did not overrule Salt River.” Which proves that you can lead a horse to water, etc.

So, the three-factor test. First, was the product unreasonably dangerous? Yes, it was unreasonably dangerous – to seeds. If that is how the phrase can be used then of course it means anything – and therefore nothing.

Next, the court demonstrates that the best argument against the three-factor test is its application. For what follows is among the most confused and confusing patches of gobbledygook that’ll you ever have to read in a judicial opinion. Flagstaff should have meant (and we’d bet it was intended to mean) never having to read something like this again. Among other things the court tells us that the second factor, which it never really explains, is not “helpful” here. Well, it’s not helpful because the test is largely nonsense – and you’d think that a case that has to try to say that the growing of a crop happened “suddenly” and “accidently,” or that whether it did or not has to be considered but doesn’t matter, would take up Flagstaff’s invitation to admit that. Instead the decision is largely an analysis of Salt River, almost as though Flagstaff didn’t exist.

The court ends up deciding that  Miidas’ seeds were “other property” and that “the third factor of the Salt River test, as well as the first two, supports [sic] a conclusion that the economic loss rule should not be applied in this case.” (What that odd formulation means we’ll leave as an exercise for the reader.)

If you decide to read this one, though, ask yourself afterward just exactly what doing so has added to your knowledge of the law.


(link to opinion)