Sullivan v. Pulte Home Corp., __Ariz. Adv. Rep. __, No CV2010-004898 (App. Div. I, July 28, 2015) (J. Downie)
HOMEBUILDER OWES NO DUTY BASED UPON STATUTE OR ORDINANCE TO SUBSEQUENT PURCHASER OF HOME WITH WHOM BUILDER HAS NO CONTRACTUAL RELATIONSHIP FOR PURELY ECONOMIC LOSS
Plaintiff purchased a home built by Pulte from the original homeowner. Subsequently plaintiff discovered settling of the home and sued Pulte for creating a latent defect -- improper footers and absence of a proper retaining wall. Plaintiff suffered no physical injury related to the house settling. The trial court granted Pulte's motion for summary judgment finding Pulte had no contractual relationship with the plaintiffs and therefore had no duty to them. The Arizona Court of Appeals affirmed.
The two significant factors supporting this decision are that the plaintiff suffered no physical injury and had no contractual relationship with Pulte. Further plaintiffs stipulated they were not pursuing these claims based upon a common law negligence claim. Rather the claims were brought on a public policy-based tort duty arising out of the municipal building code and the regulations and statutes governing licensed contractors.
The court of appeals rejected these arguments addressing first the Phoenix Municipal Building Code§101.2 which expressly states, “T]he purpose of this code is not to create or otherwise establish or designate any particular class or group of persons who will or should be especially protected or benefited by the terms of this code.” As such, plaintiffs cannot argue that they are part of a class of people intended to be protected by the building code requirements. Therefore no duty is created to plaintiffs by this ordinance. As to the statutes and regulations governing licensed contractors the court found the intent of the legislature is to provide protection to those who enter into contracts with contractors and not strangers to that contract.
Finally the court found that where there is no allegation of a physical injury, the court must be circumspect about expanding the scope of a homebuilder's duty for purely economic loss.
Restatement (Third) of Torts: Liability for Economic Harm (“Restatement”), Section 1(a) states that “[a]n actor has no general duty to avoid the unintentional infliction of economic loss on another, explaining that such duties are “notably narrower” than duties to prevent physical harm and “that duties to avoid causing economic loss require justification on more particular grounds than duties to avoid causing physical harm.”
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