How Expansively Is The Economic Loss Rule Being Applied Post-Crescent?
When Crescent University City Venture, LLC v. Trussway Manufacturing, Inc., 376 N.C. 54, 852 S.E.2d 98 (2020) was released in December 2020, the decision left some ambiguity about the scope of its intended reach. On the one hand, the North Carolina Supreme Court in Crescent reiterated that the purpose of the economic loss rule was to “prevent contract law from drowning in a sea of tort;” that the rule bars recovery in tort for the simple failure of a defendant to perform its contract; and that where a plaintiff has a bargained-for remedy, it must look solely to contract law when seeking recovery for purely economic losses. On the other hand, the Court more broadly concluded that “North Carolina’s state courts have consistently applied the economic loss rule to hold that purely economic losses are not recoverable under tort law, particularly in the context of commercial transactions.” That language arguably suggests a potentially more expansive application of the economic loss rule, one not dependent upon the existence or non-existence of a bargained-for exchange between the adversaries.