Under Construction - September 2013


Letter from the Editor

By James J. Sienicki

Welcome to the fall 2013 issue of Under Construction. In this issue, we focus on the economic loss doctrine and how the different courts in our firm’s footprint treat it similarly and differently. We hope you enjoy our review of recent and previous state court decisions relating to the economic loss doctrine in Arizona, California, Colorado, Nevada, New Mexico and Utah. As an encore, we have also included articles on the Arizona Prompt Payment Act and Arizona indemnity law, since these continue to be hotly and frequently contested issues.

In the first article, Dan Frost discusses the economic loss doctrine in Colorado and its important implications for construction projects in the state. Dan cites holdings by the Colorado Court of Appeals and the Colorado Supreme Court and illustrates that the range of recovery options for problems on bad projects is limited in Colorado by the economic loss doctrine. In the next article, Josh Grabel reviews the history of the economic loss rule in New Mexico and raises a number of questions about open or unresolved issues that the New Mexico courts have yet to address.

In the following article, Stewart Peay reviews Utah’s economic loss rule, which generally upholds the rights and risks bargained for in a contract in defective design or construction related litigation. Stuart Einbinder and Colin Higgins then discuss the economic loss rule in California, which addresses the distinction between suits in contract and tort. Stuart and Colin deduce that tort claims may be limited or barred in California based upon the economic loss rule and/or the separate duty rule addressed in a California case cited in the article. Robin Perkins’ subsequent article reviews a number of recent rulings by the Nevada Supreme court that uphold and even strengthen its generally recognized prohibition of negligent tort claims asserting purely economic loss in the context of commercial construction. In our final economic loss doctrine article, Ben Mitsuda reviews a recent decision by the Arizona Supreme Court that clarifies how the economic loss rule does not apply to non-contracting parties in the state, and the prior recent history of the economic loss doctrine in Arizona.

As bonus coverage to our economic loss doctrine coverage, Eric Spencer and Rick Erickson address the Arizona Prompt Payment Act arising out of a recent ruling by the Arizona Court of Appeals. They suggest that this recent decision highlights the distinction between construction and architect-engineer agreements based upon various Arizona statutes. In a separate article, Eric Spencer discusses Arizona’s recently passed bill SB 1231, which amends the state’s public anti-indemnity statutes by clarifying and expanding the situations under which the state and local governments cannot require contractors, subcontractors and design professionals to indemnify a government body for the negligence of others.

We hope you enjoy this Under Construction issue and our decision to focus on a single issue throughout our regional footprint. We would like to hear from you if you have any comments or suggestions. Enjoy the fall season!

Best regards,

Jim Sienicki

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