Lockheed Martin Corp. v. RFI Supply, Inc.

Lockheed Martin Corporation (Lockheed) (plaintiff) contracted Rantec Power Systems, Inc. (Rantec) (defendant) to design, build, and install an anechoic chamber in Lockheed’s facility. A system for detecting fires and a sprinkler system were included as a part of the chamber. The sprinklers were designed to go off only after the room reached a certain temperature, not at the first detection of smoke. However, twice, the sprinklers went off when they should not have, causing hundreds of thousands of dollars’ worth of water damage. More than four years after the chamber was installed, Lockheed sued Rantec for negligence, strict liability, and implied warranties. The damages claimed by Lockheed were solely for damage to the chamber’s foam and subflooring. Lockheed stated at trial that a pedestal and a position system worth over $160,000 were also damaged, but it did not include that claim in its petition or in any amendment. The district court granted summary judgment against Lockheed, finding that the implied-warranty claims were barred by the statute of limitations and that the tort claims were barred by the economic-loss rule. Lockheed appealed, arguing that the court should look at how the damage occurred and that if the defective product was a risk to people or property, then the economic-loss rule should not apply and repair or replacement damages should be allowed.