OCTOBER TERM, 1996
Syllabus
certiorari to the united states court of appeals for the ninth circuit
No. 95-1764. Argued February 18, 1997—Decided June 2, 1997
In East River S. S. Corp. v. Transamerica Delaval Inc., 476 U. S. 858, this Court held that an admiralty tort plaintiff cannot recover for the physical damage a defective product causes to the "product itself," but can recover for physical damage the product causes to "other property." The parties here agree that the "product itself" consists at least of a ship as built and outfitted by its original manufacturer and sold to an initial user. Respondent J. M. Martinac & Co. built the fishing vessel M/V Saratoga, installing a hydraulic system designed by respondent Marco Seattle Inc. Joseph Madruga, the Initial User, bought the ship new, added extra equipment, used the ship, and resold it to petitioner Saratoga Fishing Co., the Subsequent User, who used it until it caught fire and sank. In this admiralty tort suit against respondents, the District Court found that the hydraulic system had been defectively designed and awarded Saratoga Fishing damages, including damages for the loss of the equipment added by Madruga. The Ninth Circuit reversed, holding that the added equipment was part of the ship when it was resold to Saratoga Fishing, and, for that reason, the equipment was part of the defective product that itself caused the harm.
Held: Equipment added by the Initial User before he sold the ship to the
Subsequent User is "other property," not part of the product that itself caused physical harm. This Court held in East River that an injury to the defective product itself, even though physical, was a kind of "economic loss," for which tort law did not provide compensation. 476 U. S., at 871. Reasoning that "[c]ontract law, and the law of warranty in particular, is well suited" to setting the responsibilities of a seller of a product that fails to perform its intended function, id., at 872-873, the Court found that, given the availability of warranties, the courts should not ask tort law to perform a job that contract law might perform better, ibid. The Ninth Circuit's holding that recovery should be denied for added equipment because the Subsequent User could have asked the Initial User for a warranty creates a tort damage immunity beyond that set by any relevant tort precedent. Had the ship remained in the Initial User's hands, the added equipment's loss could have been recovered in tort, and there is no suggestion in state or federal law that these
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