Subsequent Buyer of a Home Can Sue Homebuilder for Negligent Construction
On July 31, 2013, the Arizona Supreme Court ruled in Sullivan v. Pulte Home Corporation, CV-12-0419-PR, that Arizona’s economic loss doctrine did not bar a homeowner, who was not the original buyer of the home, from bringing negligence claims more than nine years later against a homebuilder to recover damages suffered from construction defects.
Arizona’s economic loss doctrine limits parties to a contract to their agreed upon contractual remedies for economic losses due to a breach of contract, and generally prohibits negligence and other tort claims for the breach of contract. The purpose of the economic loss doctrine is to encourage parties to agree upon all remedies for any breach of contract at the time of the contract. However, if there was no contract, an injured party could still have negligence and other tort claims. Therefore, if a subsequent homeowner does not have a contract with the homebuilder, the subsequent homeowner is not barred by the economic loss doctrine from bringing negligence and other tort claims against the homebuilder for construction defects.
Note: Although the subsequent homeowner also had a contract claim for breach of implied warranty, this contractual claim had lapsed after eight years. A.R.S. § 12-552. The subsequent homeowner had timely filed the negligent construction claim within the two years after discovery, as allowed by A.R.S. § 12-542.