As a result of two new cases – one from the Washington Supreme Court and another from our Division I Court of Appeals – homeowners may now have additional legal avenues to pursue if they experience personal injury or damage to property, regardless of whether they have a contract with the wrongdoer.
In Eastwood v. Horse Harbor Foundation, Inc., the Washington Supreme Court shook up previous court decisions by holding that under the new “Independent Duty Doctrine,” the existence of a contract does not prevent recovery under negligence law, if the injury is traceable to a breach of a legal duty of care arising independently of the contract. This new ruling means that whether or not you have a contract, you may be able to sue a person or company for negligence if you experience personal injury or damage to your property.
The Eastwood case involved a plaintiff landowner who leased her land to a horse farmer. The landowner claimed that the farmer caused physical damage to her land. The court began its reasoning by reviewing previous interpretations of the old “Economic Loss Rule.” Economic loss is defined as an injury in a contractual relationship, “where the parties could or should have allocated the risk of loss, or had the opportunity to do so.”
The Eastwood court explained that the purpose of the old economic loss rule, as defined by earlier cases, “is to bar recovery for alleged breach of tort [negligence] duties where a contractual relationship exists and the losses are economic losses;” and “[i]f the economic loss rule applies, the party will be held to contract remedies, regardless of how the plaintiff characterizes the claims.”
Along these lines, the Washington Supreme Court ruled in the Alejandre case that a home seller had disclosed sufficient information to the buyer, and that the seller had no independent duty to disclose any additional information. Accordingly, the Alejandre court ruled that the contract sufficed, and that the plaintiffs failed to establish a negligent misrepresentation claim. Trial courts interpreted the Alejandre case as a bar against negligent misrepresentation and fraud claims, in cases involving a purchase and sale agreement.
However, the Eastwood court noted that the Alejandre ruling was limited to the facts of that case, and that the court “would have allowed the [plaintiffs] to sue for fraudulent concealment if they had offered enough evidence to support that tort claim.” Accordingly, it appears that the bright-line bar against negligent misrepresentation and fraud claims has been lifted.
In explaining its ultimate rationale, the Eastwood court also reviewed several other prior Washington cases, including Stuart v. Coldwell Banker Commercial Group, Inc. The Stuart case involved defective condominium decks that were deteriorating because of water intrusion. In Stuart, the court characterized the damages as purely economic loss, because the decks “deteriorated, not through accident or violent occurrence, but through exposure to the weather.”
However, the Eastwood court noted that in Stuart, “… we implied that the builder had an independent duty to avoid unreasonable risks of harm to persons and other property.” Eastwood marks the first time that the Washington Supreme Court has expressly recognized such an independent duty. Consequently, contractors may be held liable if their work leads to personal injury or property damage. Using the logic of Eastwood, a court could hold a builder liable for water intrusion damages, even if the construction contract doesn’t contain any warranties.
In Jackson v. City of Seattle, published just days after the Eastwood case, Division One of the Washington Court of Appeals reinforced theEastwood decision, holding that two construction contractors may be liable for negligent installation of a waterline, which led to a landslide and subsequent damage to landscaping and a house during the Hanukkah Eve Storm of 2006.
In Jackson, the contractors failed to adequately compress the backfill soils that caused the landslide. The court agreed with the plaintiff, holding that the contractors owed the homeowner a tort duty of care to prevent the landslide, independent of any contract. In fact, the plaintiff in Jacksondid not have any contract with the defendant contractors; the defendants installed the waterline under contract with the previous homeowner.
Nonetheless, the Jackson court held, “a builder or construction contractor is liable for injury or damage to a third person as a result of negligent work, even after completion and acceptance of that work, when it was reasonably foreseeable that a third person would be injured due to that negligence.” Furthermore, the court emphasized that in cases like this, the plaintiff may recover damages for personal injury and damage to property.
Under Eastwood and Jackson, homeowners may now have additional legal avenues to pursue if they experience personal injury or damage to property, regardless of whether they have a contract with the wrongdoer.
Please note that every individual’s case is different, and if you think you may have suffered personal injury or property damage, you should promptly consult with legal counsel. If you have questions about these new cases or would like to discuss your own situation, please feel free to give us a call at 206.626.5444.
