Advise & Consult, Inc | September 2, 2015<\/p>\n
The construction industry got an answer they have been waiting for, particularly in Arizona.\u00a0 The Arizona Court of Appeals ruled on Sullivan v. Pulte Home Corp<\/em>., No. 1 CA-CV 14-0199 as to whether homebuilders, as well as other construction professionals, are indefinitely subject to construction defect claims.\u00a0 The determination of the court was that there is not a duty of care to non-original homeowners for solely economic losses pertaining to construction defect claims.<\/p>\n The details of this long running dispute are pretty simple.\u00a0 Pulte Homes, in 2000, built a home and sold that home to the original homeowners.\u00a0 In 2003, the home was sold to the Sullivans who lived in it problem free until 2009.\u00a0 At that point in time they discovered problems with the retaining wall and filed a suit against Pulte Homes in 2010, claiming a number of claims for damages, as well as a claim of negligence.<\/p>\n In 2012 the Court of Appeals determined that the negligence claim by the Sullivans was not barred by the economic loss doctrine (ELD).\u00a0 The court clarified that the ELD only applies when the two parties contracted with each other. The ELD typically bars tort actions (such as negligence) where monetary damages are sought, and a contractual remedy is essentially required.\u00a0 In this case, the Sullivans did in fact already have a contractual remedy with Pulte Homes, but they didn\u2019t have a contractual relationship with Pulte Homes and were subsequent purchasers, the negligence claim was not barred by the ELD.<\/p>\n In 2013 the Arizona Supreme Court agreed with the Court of Appeals which would allow subsequent homeowners, such as the Sullivans, to pursue more legal claims that the original homeowner that entered into a contractual relationship with the builder.\u00a0 This decision also would allow negligence claims by future homeowners to file tort claims for many years following the conclusion of the construction of the home.\u00a0 This aspect of the decision had many concerned over the potential implications that this would allow under the Arizona Supreme Court ruling.<\/p>\n This latest ruling, in 2015, has resolved some of those lingering concerns of the Sullivan case.\u00a0 The Court maintained that the ELD does not bar a future homeowner to bring a negligence claim against a homebuilder for economic loss, the homebuilder, however, does not owe a duty of care to these subsequent homeowners.\u00a0 This would then basically remove negligence claims due to the fact that since the homebuilder doesn\u2019t owe a duty of care, the case for negligence would not succeed.<\/p>\n While the Sullivans claimed that a public policy framework implied this duty of care and on common law principles of negligence, the Court rejected this claim forms sufficient public policy basis for duty of care to future homeowners.\u00a0 The Court did not that Legislative action could change this framework and a duty of care could be then imposed.\u00a0 So until another appeal or Legislative action is taken, homebuilders can rest easy knowing that negligence claims will not prevail in construction defect claim cases.<\/p>\n","protected":false},"excerpt":{"rendered":"