Cal-Am Properties Inc v. Edais Engineering Inc, 509 P.3d 386

Cal‑Am leased an RV park property and managed construction of a new banquet/concert hall; the owner funded construction but Cal‑Am supervised the project.
General contractor VB Nickle hired Edais Engineering to survey and set construction stakes; Edais had no contract with Cal‑Am.
Edais placed stakes incorrectly, so the hall was built 10 feet north and eight planned RV parking spaces were lost, causing purely economic harm to Cal‑Am.
Cal‑Am sued Edais for negligence among other claims; the trial court granted summary judgment for Edais on the negligence claim, holding Cal‑Am could not recover purely economic damages. The court of appeals affirmed.
The Arizona Supreme Court granted review to reexamine Donnelly’s rule that design professionals owe tort duties to foreseeable third parties, in light of the post‑Gipson duty framework.
The Court held Donnelly is disavowed to the extent it relied on foreseeability; under post‑Gipson law, a design professional without privity does not owe a tort duty to reimburse a project owner for purely economic loss (summary judgment for Edais affirmed).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a subcontracted design professional owes a tort duty to a project owner for purely economic loss absent privity	Donnelly creates a duty to foreseeable third‑party owners; statutes/regulations governing design professionals and public‑policy principles impose a duty	Gipson rejected foreseeability as a duty basis; no special relationship or statutory duty protects purely economic interests; reliance is absent	Donnelly disavowed where based on foreseeability; no tort duty here without privity — summary judgment affirmed
Whether Restatement doctrines (Second §324A or Third §6) impose tort liability for Cal‑Am’s economic loss	Restatement provisions support liability of a design professional to third parties harmed by negligent services	§324A requires physical harm and protection as its purpose; §6 requires the injured party be the one for whose benefit the service was performed and reliance; those elements are missing here	§324A inapplicable (no physical harm); §6 requires reliance by the plaintiff (Cal‑Am did not rely) — Restatement provisions do not create liability in this case

Donnelly Construction Company v. Oberg/Hunt/Gilleland, 139 Ariz. 184 (1984) (previously held design professionals liable to foreseeable third parties for economic loss based on foreseeability)
Gipson v. Kasey, 214 Ariz. 141 (2007) (rejected foreseeability as a basis for duty determinations)
Quiroz v. ALCOA Inc., 243 Ariz. 560 (2018) (clarified post‑Gipson duty framework and limited prior foreseeability‑based precedents)
Dinsmoor v. City of Phoenix, 251 Ariz. 370 (2021) (duty is a legal question reviewed de novo; discusses categories of special relationships)
Dabush v. Seacret Direct LLC, 250 Ariz. 264 (2021) (applies Restatement §324A and limits it to undertakings aimed at preventing physical harm)
Lips v. Scottsdale Healthcare Corp., 224 Ariz. 266 (2010) (courts reluctant to recognize tort duties for purely economic well‑being)