Texas Economic Loss Rule

ByCurtis Watts

Texas Economic Loss Rule

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economic loss rule and what are the limits of its preclusive reach. This paper discusses the nature of the economic loss rule as it exists in Texas and specifically discusses the challenges/opportunities that it presents in the context of construction litigation.


Generally, the economic loss rule precludes recovery in tort for economic losses resulting from a party’s failure to perform under a contract when the harm suffered consists only of the economic loss from the respective contract.

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A new Texas Supreme Court decision in Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 2014 WL 4116839 (Tex. 2014) narrows the stranglehold of the Economic Loss Doctrine (ELD) and states that the ELD precludes recovery in tort for economic losses resulting from a party’s failure to perform under a contract when the harm consists only of the economic loss of a contractual expectancy.

Rogers Townsend - The Economic Loss Rule - March 1, 2013 economic loss rule is defined as ‘the principle that a plaintiff cannot sue in tort to recover for purely monetary loss—as opposed to physical injury or property damage—caused by the defendant.’”).

The Texas Supreme Court recently addressed the economic loss rule, a legal concept that can have a significant impact on construction defect cases and other cases involving contractual relationships. As clarified by the Court in LAN/STV v.

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