Economic Loss Rule: Where an Entity Holds Itself out to the Public as Having Expertise

Mountain Bird, Inc. v. Goodrich Corp., 369 Fed. Appx. 940 (10th Cir. 2007)(applying Idaho law) addresses the second special relationship exception to the economic loss rule “where an entity holds itself out to the public as having expertise regarding a specialized function, and by so doing, knowingly induces reliance on its performance of that function.”  Blahd v. Richard B. Smith, Inc., 108 P.3d 996, 1000 (Idaho 2005).

In the Mountain Bird case, the Court rejected the buyer’s argument that a special relationship exists with respect to its claims against Cessna (the airplane manufacturer) because Cessna self-certified that its de-icing system complied with Federal Aviation Administration regulations. That did not form a “special relationship.”  This exception only comes into play where a party holds themselves out to the public as an expert.  Mountain Bird, 369 Fed. App’x. at 943-44.