- 5/09 SMB Litigators Listed in 2009 Southwest Super Lawyers
- 5/09 Arizona Appellate Courts Split on Economic Loss Rule
- 10/08 SMB Top Litigators Listed in 2008 Southwest Super Lawyers
- 10/08 SMB Lawyers Obtain Appellate Victory for Seattle-Based Insurer
- 10/08 Oregon Supreme Court Finds Exception to Economic Loss Rule
- 10/08 Arizona Supreme Court Eliminates Privity from Construction Warranty Claims
- 11/07 Court of Appeals Limits Privity Exception to Construction Warranty
- 10/07 SMB Attorney Obtains $5.82 Million Verdict
- 10/07 U.S. Litigants Still Amenable to English Anti-Suit Injunctions
 SMB Litigators Listed in 2009 Southwest Super Lawyers
SMB’s senior litigators, Tom Shorall and Paul McGoldrick, have again been recognized as among the top five percent of the practicing bar, being listed among the 2009 Southwest Super Lawyers. Tom was again recognized in the area of construction litigation, while Paul was listed again as one of the leading plaintiffs’ personal injury lawyers in Arizona. The Southwest Super Lawyers publication is distributed each year, and the lawyers listed are included based upon the results of surveys taken of the practicing bar, and the independent research of the publication’s editors. Roughly only five percent of the practicing bar are listed.
Arizona Appellate Courts Split on Economic Loss Rule
The economic loss rule is a judicially created doctrine that serves to shield contract law from tort law. Under the doctrine as announced by Division One of the Arizona Court of Appeals in Carstens v. City of Phoenix, economic loss is defined as the loss of the benefit of the contractual bargain that does not include a claim for personal injury or damage to “other property” outside the bounds of the contract. Thus, a person who is a party to a contract cannot sue in tort (or negligence) for damages that would be covered by the contract. This rule has generally protected parties to contracts from having their counterparts try to use general tort law to change the terms of those contracts. For example, where a contract requires a party to have engaged in an intentional act before that party is considered in breach, a suit in negligence would impose a negligence standard on that party, making it easier for the plaintiff to prove a breach of contract. The side-effect of this rule is that many Arizona construction cases involve considerable argument as to whether damaged property was actually within the scope of a contractor’s work. Yet, recently, Division Two of the Arizona Court of Appeals has cast doubt on the exact requirements of the economic loss rule, finding that the Arizona Supreme Court has already rejected the standard used by the Carstens court. Instead, Division Two’s opinion in Valley Forge Insurance v. Sam’s Plumbing, stated that items contemplated within a contract could still be sued for in tort where the loss was sudden or accidental. Thus, the divisions of the Court of Appeals are currently in disagreement over whether the economic loss rule is triggered by the contractual relations of the parties or the nature of the actual loss.
SMB Top Litigators Listed in 2008 Southwest Super Lawyers
Tom Shorall and Paul McGoldrick, who head up SMB’s litigation practice group in Phoenix, have both been listed in the 2008 Southwest Super Lawyers. Tom was recognized for his expertise in construction litigation, while Paul was listed as one of the leading plaintiffs’ personal injury lawyers in Arizona. The Southwest Super Lawyers publication is distributed each year, and the lawyers listed are included based upon the results of surveys taken of the practicing bar, and the independent research of the publication’s editors. Only about five percent of the practicing bar are listed.
SMB Lawyers Obtain Appellate Victory for Seattle-Based Insurer
Paul McGoldrick headed an SMB appellate team that successfully argued for the affirmance of a judgment now worth over $2.8 million in favor of a Washington-based insurer against its former insured, representing unpaid insurance premium. In the underlying trial, Paul McGoldrick and Tom Shorall had successfully defended the insurer against bad faith allegations, and obtained a jury verdict awarding the insurer all of its unpaid premium.
Oregon Supreme Court Finds Exception to Economic Loss Rule
The Oregon Supreme Court carved out an exception this past year, to the economic loss rule in cases involving construction, in its Harris v. Suniga opinion. The Harris court permitted a subsequent purchaser to sue the general contractor for water damage to the property. The court agreed with the subsequent purchaser that the claim was for “property damage,” such that the economic loss rule did not preclude the claim. The Harris opinion is instructive to courts in western states, such as Arizona, in that it provides an example of potential tort liability for builders. Normally, the economic loss rule will limit a builder’s liability its contractual obligations.
Arizona Supreme Court Eliminates Privity from Construction Warranty Claims
In this year’s decision in The Lofts at Fillmore Condominium Association v. Reliance Commercial Construction, Inc., the Arizona Supreme Court carved out another exception to the traditional privity requirement in cases of construction defects. Traditionally, only parties to a contract are permitted to make claims on that contract. Arizona courts have recognized for some time that Arizona law implies a warranty into any construction contract, that the construction will comport with good workmanship and result in a habitable structure. In Richards v. Powercraft, the Arizona Supreme Court had stated that subsequent purchasers, though not parties to the original purchase agreement or construction contract for their home, could still sue the original builder for breach of the implied warranty of workmanship and habitability. The court more recently expanded this right of homeowners, by finding that even if the builder was not a party to the original sales contract, and thus, not a “privy” to the sale, a subsequent purchaser could still sue the builder for breach of the implied warranty. Ultimately, the court’s decision in The Lofts holds that anyone who builds a home, will be liable for any breach of the implied warranty of workmanship and habitability, to any owner or subsequent owner of that home, regardless of who the actual parties were to the home’s original sale.
Court of Appeals Limits Privity Exception to Construction Warranty
The Arizona Court of Appeals’ November 6, 2007 decision in The Lofts at Fillmore Condominium Association v. Reliance Commercial Construction, Inc. clarifies that Supreme Court case law on the implied warranty of habitability and workmanlike construction has not abolished the implied warranty’s privity requirement. Ultimately, the Court of Appeals determined that while a purchaser’s successors in interest could sue on the implied warranty, the relaxed privity requirement did not extend to allow a plaintiff to sue a homebuilder who was not in contractual privity with the original homebuyer. Rather, the cause of action extended only to the original vendor of the home.
SMB Attorney Obtains $5.82 Million Verdict
On October 25, 2007, the jury in the Coconino County Superior Court case of Warren v. Parfitt returned a verdict of $6 million against Walgreens for pharmaceutical liability for the wrongful death of Eric Warren in December of 2002, who died of lethal combined drug toxicity after taking his prescription medication. Tom Shorall, Jr., a senior partner with the law firm of Shorall McGoldrick Brinkmann represented Mr. Warren’s family in the wrongful death lawsuit. The jury reduced its $6 million award to $5.82 million based upon the contributing negligence of other parties.
U.S. Litigants Still Amenable to English Anti-Suit Injunctions
Mr. Justice David Steel of the Commercial Court, sitting in London, made it plain by his decision in General Motors Corporation v. Royal & Sun Alliance Insurance plc on October 2, 2007, that English courts would still issue anti-suit injunctions restraining litigants from filing lawsuits in the United States in breach of exclusive jurisdiction agreements. Judge Steel concluded that an earlier consent order in the same case constituted an agreement on exclusive jurisdiction. Meanwhile the European Court of Justice is still determining whether the EU Jurisdiction Regulation allows English courts to issue anti-suit injunctions against proceedings in other European Union countries that violate arbitration agreements, after the House of Lords had referred the matter of West Tankers Inc. v. RAS Rivnione Adriatica di Sicurta SpA to the European court.
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