Architect Can Be Liable for Economic Loss Caused by Negligence

Flagstaff Affordable Housing v. Design Alliance Inc., 552 Ariz. Adv. Rep. 12 (App. Div. I, March 23, 2009)(Justice Gemmill)

PROPERTY OWNER SUIT FOR NEGLIGENCE AGAINST ARCHITECT NOT BARRED BY ECONOMIC LOSS DOCTRINE

Plaintiff hired the defendant architect to design apartments which were later found to be in violation of the Fair Housing Desing Construction requirements of 24 CFR 100.205 and the plaintiff sued for negligence in the design. The trial court granted defendant's motion for summary judgment based upon the economic loss doctrine—no recovery in tort allowed where plaintiff suffers economic damages only and no physical harm.

The Court of Appeals recognized the importance of the rule—to distinguish between actions sounding in contract and those in tort and acknowledged the rule should be applied in most cases. However, as a matter of public policy the law imposes special duties upon professionals in their relationships with their clients even when there is no contract. A breach of these duties, usually categorized as negligence or a breach of the standard of care is properly classified as a tort. Because of the very nature of the services provided by an architect it is foreseeable that a breach of the standard of care will as often as not result in only economic damages. The purpose of the economic loss rule is not furthered by its application to professional negligence cases.

Torts—Professional Negligence—Economic Loss Doctrine