The propriety of this tripartite analysis', the court felt, was supported by “[sjeveral principles and trends” which generally view warranty law as the appropriate vehicle to redress claims that a defective condition renders a product “inferior or unable to adequately perform its intended function”. Damages due to such “qualitative defects” are generally expressed as “reduced value, return of purchase price, repair and replacement” and are obtained by suit for breach of contract. 652 F.2d at 1172.
Continuing, Pennsylvania Glass Sand observed that “[o]n the other hand”, contract theory is “ill-suited” to correct problems of hazardous products which “cause physical injury”. As such, tort law obligates manufacturers to produce safe items “regardless of whether the ultimate impact of the hazard is on people, other property, or the product itself.” 652 F.2d at 117-273.
Defendants, asserting that the case at bar falls squarely within the “qualitative defect”, breach of contract category, argue that Class I plaintiffs may not seek recovery in tort for either the “reduced value” of their homes or the costs associated with the “repair and replacement” of the insulation. Countering, plaintiffs urge that the product’s proffered defect caused “physical injury” to “other property”, their homes, and that tort recovery is permissible.2 This latter argument follows Pennsylvania Glass Sand’s observation that “[ejconomic loss frequently involves only damage to the defective product itself, with no attendant injury to persons or other property.” 652 F.2d at 1171.
An analysis of the “interrelated factors”, as revealed by the proposed complaint with regard to the nature and type of risk involved and the manner in which the injury arose, convinces us that Class I plaintiffs have stated a colorable tort claim. Pennsylvania Glass Sand v. Caterpillar Tractor Co., 652 F.2d at 1173. See also, EJ. Stewart, Inc. v. Astken Products, Inc., 81-3192 (E.D.Pa. October 19, 1982).
Specifically, the proposed amended complaint alleges that defendants placed formaldehyde into the stream of commerce with the knowledge that it would be mixed with other resins and sold as urea formaldehyde insulation. Plaintiffs also assert that once installed, the product emits carcinogenic toxic fumes which require its prompt removal. Plaintiffs also claim that defendants failed to exercise reasonable care in the sale of their product. Worse, defendants purportedly failed to warn plaintiffs of the dangerous propensities of urea formaldehyde notwithstanding the fact that they, defendants, knew or should have known, of its inherent dangers.
As a result of these allegations, Class I plaintiffs seek damages for the diminution in the quality and value of their homes, costs associated with retrofitting their residences as well as other compensatory and punitive damages.
These allegations which highlight the “nature of the defect and the type of risk it poses” are the factors which “guide[j” our inquiry. Pennsylvania Sand Glass v. Caterpillar Tractor Co., 652 F.2d at 1174.
Hence, the damage which plaintiffs’ homes have allegedly suffered arises from use of a defective component part; one which purportedly causes cancer and thereby results in a devaluation of property. Allegations that component building parts contain latent defects and cause harm typically state tort claims. See, Lantis v. Astec Industries, Inc., 648 F.2d 1118 (7th Cir. 1981); Borel v. Fibreboard Paper Products Corp., 493 F.2d 1076 (5th Cir.1973), cert. denied, 419 U.S. 869, 95 S.Ct. 127, 42 L.Ed.2d 107 (1974); Brizendine v. Visador Co., 437 F.2d 822 (9th Cir.1970). We, therefore, conclude that the nature of the defect, the first subject of inquiry under Pennsylvania Glass Sand, supports plaintiffs’ contention that they have stated a claim under § 402A.
2
Plaintiffs colorfully express this theory with the observation that “merging] rhyme with reason, it is the home not the foam that has been damaged”. Plaintiff’s Reply Memorandum in Support of Motion to Amend (Document 51) at 6.