Tort Damages Allowed Where no Personal Injury or Personal Property Damage

Torts—Economic Loss Doctrine

Valley Forge Ins. Co. v. Sam's Plumbing, 552 Ariz. Adv. Rep. 16 (App. Div. II, March 19, 2009)(Justice Eckerstrom)

TORT VS. CONTRACT—ECONOMIC LOSS RULE DOES NOT BAR TORT CLAIM WHERE HARM IS SUDDEN EVEN WHERE NO PERSONAL INJURY OR PERSONAL PROPERTY LOSS

Plaintiff insured a shopping mall. The mall owner entered into a contract with defendant to perform gas line work. An explosion of the line after the work caused extensive damage to the mall and the plaintiff insurer paid the insured owner $1.1 million then sought subrogation against the defendant plumbing company.

The defendant obtained summary judgment citing the economic loss rule which generally holds the contract alone defines the standard of care and damages where the owner of the mall suffered no personal injury or damage to personal property.

The Court of Appeals reversed finding both a breach of contract and tort may be pursued where the damage occurs suddenly and accidentally and the defect poses an unreasonable risk of danger to people or other property.