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Click here for the full text of this decision FACTS:Tarrant County Hospital District is a local government unit that operates a health-care service in the name of John Peter Smith Hospital. GE Automation Services contracted with TCHD to install a power supply system in the hospital. GE completed the job on Dec. 31, 1996. Supply Operations Inc. and General Electric Co. were also part of the job. Part of the system failed, and American Guarantee and Liability Co. (known as Zurich) paid TCHD for the damages. On April 1, 2002, TCHD and Zurich (who asserted subrogation rights) sued GE, Supply and General Electric for various causes of action related to the alleged failure of materials used in the installation. TCHD sought damages for breach of contract, breach of express and implied warranties, products liability, negligence and gross negligence. After suit was filed, the parties agreed on four stipulations of fact: (1) all products or goods complained of were sold to TCHD no later than Dec. 31, 1996; (2) delivery of the products or goods was no later than Dec. 31, 1996; (3) installation of the complained-of materials was completed by Dec. 31, 1996; (4) all breaches of contract occurred no later than Dec. 31, 1996. In its motion for partial summary judgment, citing Civ. Prac. & Rem. Code �16.061, TCHD said the limitations period did not apply to a governmental entity like TCHD. In GE’s motion for summary judgment, the company said that the four-year limitations period from Bus. & Com. Code �2.725 applied. GE also said the tort claims were barred under the “economic loss rule,” and that even if TCHD was immune from application of the statute of limitations, Zurich was not. GE and Supply also filed a no-evidence summary judgment motion, saying TCHD could not prove any element of any of its causes of action. The trial court granted GE and the others’ summary judgment motion, and denied TCHD’s and Zurich’s motion for partial summary judgment. HOLDING:Affirmed. The court first addresses whether the trial court was correct in finding that TCHD was not immune from application of the four-year statute of limitations. To do so, the court lays out the competing statutes. Section 16.061 lists 28 code provisions containing limitations periods that will not be applicable to governmental entities. Therefore, if �16.061 applies to TCHD’s causes of action for breach of contract and warranty, then limitations will not be a bar to them. None of the 28 statutes deal with any of the causes of action alleged in this lawsuit. Section 2.725 is not among the code provisions listed in �16.061. Instead, that provision, which is part of the U.C.C., says that breach of contract claims are governed by a four-year statute of limitations. Under the terms of �2.725, GE argues that TCHD is an “aggrieved party” who has engaged in a transaction or made an agreement subject to the U.C.C., and that a “person” includes governmental units. The court agrees that transaction between TCHD and GE was for the purchase and delivery of goods and/or services, so it is governed by the U.C.C. Therefore, unless TCHD enjoyed immunity from the limitations provision of �2.725, its contract and warranty causes of action are barred. The court finds nothing in the language or history or enactment of �2.725 to indicate that the legislature intended to include this section within the immunity section of section 16.061 or its predecessor statute. The plain meaning of �16.061 is unambiguous. If the legislature had intended to exempt a governmental entity from any and all statutes of limitations or repose, it could have done so. Instead, when the legislature enacted �16.061, it expressly provided that a governmental entity is not barred by specific separate statutes, and �2.725 is not one of those statutes. Because TCHD’s contract causes of action are barred by limitations, so are Zurich’s. The court then examines the application of the “economic loss rule,” which precludes recovery of economic losses in tort cases when the loss is the subject matter of a contract between the parties. TCHD claims that the economic loss rule is an affirmative defense, and that GE did not meet its burden to prove it. On the other hand, GE says the rule is merely a judicially created ruled that provides a bar to recovery. The court says it knows of no other cases dealing with this point. Without much discussion, the court finds that the economic loss rule is not an independent reason for denying recovery; instead, it applies to the contract that forms the basis of the existing dispute and precludes recovery when a plaintiff’s injury is only the economic loss to the subject of a contract itself, as determined from reviewing the substance of plaintiff’s cause of action. Consequently, the rule is not an affirmative defense, but a court-adopted rule for interpreting whether a party is barred from seeking damages. Applying this new finding, the court determines that the damages TCHD is suing on � the products liability, negligence and gross negligence claims � are damages from the economic loss to the subject of the contract between the parties and these actions sound in contract or breach of warranty, not in tort. OPINION:Dixon W. Holman, J.; Holman, Walker and McCoy, JJ.

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