Westfield Insurance Co. v. Birkey’s Farm Store, Inc.

Sandrock Enterprises, Inc. d/b/a Sandrock Farms (Sandrock Farms) negotiated with Birkey’s Farm Store Inc. (Birkey’s) to purchase a tractor manufactured by CNH America, LLC (CNH). Sandrock Farms initially agreed to purchase a tractor that did not have an auto-steer system installed. However, Birkey’s later informed Sandrock Farms that it could only locate the CNH tractor that did have an auto-steer system. After further negotiations concerning the price of the auto-steer system, Sandrock Farms agreed to purchase the tractor with an auto-steer system already installed for a higher price. Within a year, the tractor Sandrock Farms purchased caught on fire during normal agricultural use and suffered extensive damage. Sandrock Farms filed a claim for the damage with its insurer, Westfield Insurance Company (Westfield) (plaintiff), which paid the claim. Westfield sued Birkey’s and CNH (defendants) under a theory of subrogation and alleged both tort claims, including negligence and strict products-liability claims, and contract claims. Birkey’s and CNH moved to dismiss Westfield’s tort claims as barred by the economic-loss doctrine. The trial court granted their motion to dismiss. On appeal, Westfield argued that the economic-loss doctrine does not bar its tort claims because the fire caused damage to other property in addition to the tractor itself, including the auto-steer system, clothing worn by Sandrock Farms employees, and fire extinguishers and other equipment used to mitigate the fire, and because some Sandrock Farms employees suffered personal injuries during their attempts to extinguish the fire.