Arizona Supreme Court Clarifies Economic Loss Doctrine

Arizona Supreme Court Clarifies Economic Loss Doctrine

By Thomas A. Stoops

STOOPS, DENIOUS, WILSON & MURRAY, P.L.C.

            The recent Arizona Supreme Court opinion in Flagstaff Affordable Housing, L.P. v. Design Alliance, Inc., CV-09-0117-PR, clarified the application of the “economic loss doctrine” which bars plaintiffs in certain circumstances from recovering economic damages in tort. The Supreme Court noted that it had previously applied the economic loss doctrine only in products liability cases but now extended it to construction defect cases, and held that a property owner is limited to contractual remedies when an architect’s negligent design causes economic loss but no physical injury to persons or other property. The Supreme Court catalogued a number of confusing and apparently inconsistent holdings dealing with the application of the economic loss doctrine and attempted to clarify its application. The Court extended the economic loss doctrine to design professionals in construction defect cases, observing that it had not addressed the issue of economic loss doctrine since the 1984 case of Salt River Project Agricultural Improvement and Power District v. Westinghouse Electric Corp., 143 Ariz. 368, 694 P.2d 198 (1984).

Because of a good deal of confusion about the definition of the “economic loss doctrine” the Supreme Court began by clarifying terminology. The Court’s definition of economic loss is...READ THE REST BY CLICKING HERE