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Carstens v. City of Phoenix9/9/2003
AFFIRMED
William and Deborah Carstens and Deborado, LLC, ("the Carstens") sued the City of Phoenix ("City") and three of its building inspectors alleging that the inspectors were grossly negligent because they failed to discover serious construction defects in the house that the Carstens later purchased. The trial court dismissed the tort claims under the economic loss rule because the Carstens had suffered no personal injuries or damage to property other than the alleged construction defects. For the following reasons, we affirm the trial court's judgment.
BACKGROUND
In July 1996, Corwa, Inc. purchased the house at 56 Biltmore Estates. Later that year, Corwa obtained a construction permit from the City to add 3,150 square feet to the kitchen and second story of the house. The remodeling work was done in 1997. Between January 31 and December 12, 1997, City building inspectors Richard Ryall, Dale Borger, and Jerry Coke inspected the house several times to determine whether, among other things, the footings and structural, electrical, and mechanical aspects of the project complied with the City's uniform building codes. Based upon those inspections, the City approved the work done by Corwa.
In May 1999, the Carstens bought the house from Alvarado, Inc., a successor in interest to Corwa, for $2,000,000. Soon thereafter, the Carstens hired a contractor to do some minor remodeling on the house. Because the contractor discovered a few construction defects and building code violations, the Carstens hired engineers to assess the structural, mechanical, and electrical systems of the house. The engineers found numerous defects and code violations, including missing fire blocking, deeply-notched floor and ceiling joists, inadequate beam support, inadequate natural gas piping, and improper and hazardous venting and electrical wiring. Major repairs were necessary to make the house safe for occupancy.
In December 1999, the Carstens filed a notice of claim against the City and the three inspectors pursuant to Arizona Revised Statutes ("A.R.S.") section 12-821.01(A) (Supp. 2002). They alleged that the City had breached its duty to conduct a proper inspection of the house in accordance with applicable building codes. Thereafter, in January 2000, the Carstens had the house demolished.
In June 2000, the Carstens sued the City and the three inspectors (collectively the "City defendants"). They alleged that the City defendants were grossly negligent in failing to discover numerous violations of the building codes during the inspections performed in connection with the 1997 remodeling project and that their gross negligence created a substantial risk of physical harm to the Carstens.
The City defendants moved for summary judgment. They argued that, because the alleged construction defects had not caused any personal injury or property damage, the economic loss rule barred the Carstens from maintaining a tort claim against them for the amounts necessary to repair or replace the defects.
The trial court granted the motion. It found that the City defendants "did not owe [the Carstens] a duty of care to protect them from the type of harm that they have allegedly suffered in this matter." The court further stated that, although government agencies and employees may be liable for negligent inspection when the negligence causes physical injury and property damage, they could not be liable for the economic losses suffered by homeowners when contractors failed to construct home improvements in compliance with building codes or in a workmanlike manner. The Carstens timely appealed from the judgment.
STAN
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