354 P.3d 424
Ariz. Ct. App.2015Background
- Pulte Home Corp. built and sold a hillside home in Phoenix; retaining wall defects later appeared.
- Sullivans discovered problems in 2009; engineering concluded improper wall construction and drainage components by Pulte.
- Pulte refused to repair; Sullivans filed suit with multiple counts including negligence and economic-loss claims.
- Superior Court dismissed all counts except some negligence claims; on Rule 12(b)(6) grounds the ELD barred torts under earlier view.
- Arizona Court of Appeals partially revived negligence claims on Sullivan I, holding ELD did not bar these claims without privity, remanding for further proceedings.
- On remand, Pulte again moved to dismiss the negligence claims; the superior court granted dismissal, leading to further appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Public policy duty to economic loss | Sullivan: building code/regulations create a duty to protect homeowners from economic loss. | Pulte: no duty arises from building codes or contractor regulations for economic loss. | No duty found; public policy codes do not impose such tort duty. |
| Building Code/regulations as basis for duty | Codes and statutes were designed to protect homeowners like Sullivans from latent defects. | Codes expressly serve public safety with no intended class-specific protection for subsequent owners. | Codes do not create a private duty for economic-loss claims against builders. |
| Restatement Third impact | Restatement supports broader duty to protect subsequent purchasers from latent defects. | Restatement Third limits such duties and favors contractual remedies; should not apply to create liability here. | Restatement Third position rejected as controlling; no duty established under it in this context. |
Key Cases Cited
- Gipson v. Kasey, 214 Ariz. 141 (2007) (duty can arise from public policy and statutory obligations)
- Sullivan v. Pulte Home Corp., 232 Ariz. 344 (2013) (economic loss doctrine not bar to negligence claims without privity)
- Richards v. Powercraft Homes, Inc., 139 Ariz. 242 (1984) (recognizes policy-based expansion for construction defects)
- Cosmopolitan Homes, Inc. v. Weller, 663 P.2d 1041 (Colo. 1983) (subsequent purchaser may recover for latent defects)
- Woodward v. Chirco Const. Co., Inc., 687 P.2d 1269 (1984) (limits on negligence claims for home purchases; relation to latent defects)
- Flagstaff Affordable Housing Ltd. P'ship v. Design Alliance, Inc., 223 Ariz. 320 (2010) ( Restatement Third cited in context of economic-loss rule)