5th Circuit holds Economic Loss Doctrine Did Not Preclude Consequential Damages under Tort Claim

Correct Rx Pharmacy Services, Inc. v. Cornerstone Automation Systems, L.L.C. No. 18-11387

http://www.ca5.uscourts.gov/opinions/pub/18/18-11387-CV0.pdf

Cornerstone Automation Systems, L.L.C. (“CASI”) contracted with Correct Rx Pharmacy Services, Inc. (“Correct Rx”) to supply a custom automated pharmacy system by a specified deadline. CASI failed to deliver.  Rather than bringing a breach of contract claim, Correct RX asserted a Texas common law tort claim for negligent misrepresentation based on various alleged misstatements CASI made over the course of their dealings.  CASI appealed the $3.1 million judgment awarding consequential damages, arguing that Texas’s “economic loss rule” precludes tort liability for economic losses resulting from a defendant’s negligence in negotiating or fulfilling a contract between the parties.  On review, the Fifth Circuit holds that the District Court correctly determined that Texas’s economic loss rule does not preclude Correct Rx’s tort claim, and affirms. The Court reasons that Correct Rx established a breach of an independent duty and an independent injury within the meaning of Texas law. Therefore, Correct Rx's recovery was not precluded by the Texas contractual economic loss rule.