243 P.3d 521
Wash.2010Background
- Fire on Seattle Monorail blue train in 2004 caused extensive damage to trains and safety concerns for passengers.
- SMS operated the Monorail under a concession with the City; SMS had rights to operate and use facilities but paid concession fees; City was loss-payee on insurance.
- LTK Engineering advised on grounding system changes; SMS was not a party to LTK's contract with the City.
- AFM insured SMS and, by subrogation, asserted SMS’s rights against LTK for negligent engineering.
- District court granted summary judgment for LTK; Ninth Circuit certified whether SMS, via AFM, may sue in tort without privity.
- Lead opinion adopts independent duty analysis; concurrence argues no economic loss rule in this fact pattern.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is there an independent duty of care by an engineer to SMS? | LTK breached independent duty by safe engineering. | LTK owed no independent duty to SMS absent privity. | Yes; engineer owes independent duty of care. |
| Does the engineer's duty extend to SMS's property interests and related harms? | SMS holds property interests via concession; harms to property are actionable. | Duty should be limited to contractual or owner-only interests. | Duty extends to SMS’s property interests. |
| Is the measure of an engineer's duty ordinary care or higher in professional services? | Reasonable care by a reasonably prudent engineer in similar circumstances. | Ordinary care is the standard; utmost care is impractical. | Reasonable care as measured by reasonably prudent engineer in similar circumstances. |
| Does the economic loss rule bar AFM's tort claims when SMS and LTK had no contract? | Economic loss rule does not apply absent contract between SMS and LTK. | Economic loss rule bars recovery for purely economic losses when contract exists. | Economic loss rule does not bar; no direct contract between SMS and LTK. |
| Are SMS’s losses recoverable by AFM standing in SMS's shoes? | SMS’s property interests and subrogation permit recovery for damages to those interests. | No recovery unless tort duty and damages flow under contract framework. | AFM may recover for negligence affecting SMS’s property interests. |
Key Cases Cited
- Eastwood v. Horse Harbor Found., 170 Wn.2d 380 (2010) (economic loss rule misnamed; independent duty analysis)
- Berschauer/Phillips Constr. Co. v. Seattle Sch. Dist. No. 1, 124 Wn.2d 816 (1994) (economic loss rule bars purely economic torts in construction)
- Alejandre v. Bull, 159 Wn.2d 674 (2007) (economic loss rule implications with contract negotiations)
- Scott v. Pac. W. Mountain Resort, 119 Wn.2d 484 (1992) (contractual duties and tort remedies in resort context)
- BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66 (Colo. 2004) (economic loss rule in construction networks )