A lawsuit filed by a property owner against an architect alleging professional negligence and seeking purely economic damages is not barred by the economc loss doctrine, the Arizona Court of Appeals has ruled.
According to court documents in Flagstaff Affordable Housing Limited Partnership v. Design Alliance Inc., the owner entered into a contract with Design Alliance to design the Mountainside Village Apartments in Flagstaff, Ariz. As a licensed architectural firm, Design Alliance provided the owner with plans, specifications and drawings. Construction began in 1995 and was completed in 1996 according to the plans and specifications.
In August 2004, the U.S. Department of Housing and Urban Development filed a complaint against the owner for housing discrimination, claiming the design and construction of the apartments violated the Fair Housing Design Construction requirements, which were in effect during construction. The owner incurred a substantial cost to remedy the design deficiencies, court documents state.
The owner subsequently filed a complaint against the architect, alleging breach of contract and professional negligence. No personal injury or property damage had occured, but the owner sought economic losses as compensatory damages.
The architect filed to dismiss the complaint, but the owner argued that the economic loss doctrine did not apply to professional negligence claims.
The trial court granted the architect’s motion to dismiss.
However, the Court of Appeals said in previous Arizona cases, “the alleged deficiencies constituted actual defects in the physical construction of the home or building, such as cracks in the foundation, flooring, and walls; improper and hazardous electrical wiring; and inadequate beam support. In contrast, this dispute is a
professional negligence action arising from the alleged negligent design of the Apartments. This is neither a construction defect case nor a products liability case. The Apartments were constructed in complete conformity with the architectural plans and specifications. The alleged error is in the design embodied within the architectural plans and specifications. Prior Arizona appellate opinions applying the economic loss doctrine have not decided whether the doctrine
should be applied in this context. Nor has our legislature undertaken to prescribe whether the economic loss doctrine can be applied to bar a claim for professional negligence. … For the reasons that follow, we hold that the economic loss doctrine does not apply to this claim for professional negligence against a design professional.”
The Appeals Court further added: “Design professionals such as architects have a duty to use ordinary skill, care, and diligence in rendering their professional services, and this duty arises out of tort, not contract. The economic loss doctrine does not foreclose a cause
of action for professional negligence against an architect, even
though the claim seeks only economic damages.”
Source: Lawyers USA
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