Sullivan v. Pulte Home Corp.

Arizona Court of Appeals · Torts

TortsNegligenceDutyEconomic Losssubsequent homeownerhomebuildereconomic losslatent construction defects

Facts

Pulte developed and built the home at issue and sold it in 2000 to the original homeowners. The Sullivans bought the home from those owners in 2003, making them subsequent purchasers with no contract or privity with Pulte. In 2009, they discovered alleged latent defects in a hillside retaining wall and site preparation, including missing footings, rebar, and adequate drainage and grading. They sought only economic damages, including investigation and repair costs and diminution in value, and alleged that duties arose from the City of Phoenix building code and Arizona statutes and regulations governing contractors.

Issue

Whether a subsequent homeowner may maintain a negligence action against a homebuilder for purely economic losses caused by latent construction defects when there is no physical injury to persons or other property. More specifically, the question was whether a duty of care arose from the municipal building code or from Arizona statutes and regulations governing residential contractors.

Rule

A negligence action requires a duty of care. A statute or regulation supports a public policy-based tort duty only when it is designed to protect the class of persons of which the plaintiff is a member against the type of harm that occurred. Where a building code or contractor regulatory scheme does not show an intent to protect a particular class such as subsequent homeowners, and the claimed loss is purely economic rather than personal injury or damage to other property, no tort duty arises on that basis.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Phoenix, Lena Ortiz bought a house from its first owner four years after construction by Desert Crest Builders. She later discovered hidden framing defects that required expensive repairs and reduced the home's market value, but no one was injured and no other property was damaged.

Lena sues Desert Crest Builders for negligence, arguing that the city building code creates a duty because the code states it sets minimum standards to protect life, health, property, and public welfare, but it also says it does not create or designate any particular protected class. What is the strongest argument for dismissal?

Explanation. A negligence claim requires a threshold duty. Under the majority opinion, a statute or regulation supports a public-policy duty only if it was designed to protect the plaintiff's class against the type of harm suffered. A building code that expressly disclaims any intent to protect a particular class does not create a tort duty to subsequent homeowners seeking only repair costs and diminished value. (Derived from Sullivan v. Pulte Home Corp. (n.d.).)