The appellate judges ruled that based on several findings, “including our conclusion that the asserted fraud claims are barred by the economic loss doctrine,” the court reversed the judgment award to Milan.
 - Photo: Milan Supply Chain Solutions

The appellate judges ruled that based on several findings, “including our conclusion that the asserted fraud claims are barred by the economic loss doctrine,” the court reversed the judgment award to Milan.

Photo: Milan Supply Chain Solutions

A state appellate court on Aug. 14 reversed a judgment against Navistar Inc. that resulted from a lawsuit in which a motor carrier alleged that trucks it purchased powered by the MaxxForce 13L diesel engine were defective.

Two years ago, to the day, on Aug. 14, 2017, a Tennessee jury found against Navistar and awarded $10.8 million in actual damages and $20 million in punitive damages to Milan Supply Chain Solutions (formerly known as Milan Express), which had purchased 243 Navistar International ProStars with MaxxForce engines.

Tennessee-based Milan had alleged that Navistar had failed to disclose that the MaxxForce 13L engine, which used exhaust gas recirculation to meet 2010 emissions standards rather than the selective catalytic reduction used by other truck and engine makers, was launched with “serious known defects.”

The carrier also alleged that Navistar, while touting the quality of its testing program, knew that the testing had serious flaws, was incomplete at launch, and put the trucks into customers’ hands knowing that the customers would end up becoming the de facto test fleet for the new 2010-year model engine.

After that judgment, Navistar said in a statement that it would evaluate its options to challenge it, noting it had successfully defended similar claims in several jurisdictions, including dismissal of claims of fraud in courts in Texas, Wisconsin, Michigan, Indiana, Alabama, and Illinois.

On Aug. 14, 2019, the Tennessee Court of Appeals reversed the 2017 decision. The appellate court stated that Navistar’s appeal “raised a plethora of issues for our consideration,” including one that hinged on the court’s reading of the “economic loss doctrine” for product liability cases  that is enshrined in Tennessee law.

What that boils down to is that in a product liability action, what a plaintiff can recover for purely economic losses is that defined in a contract (such as a warranty), not that resulting from a tort suit.

The appellate judges ruled that based on several findings, “including our conclusion that the asserted fraud claims are barred by the economic loss doctrine,” the court reversed the judgment award to Milan.

HDT sought comment on the appellate ruling from Navistar; a spokesperson said the company has no comment at this time.

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