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Carstens v. City of Phoenix9/9/2003
The Colberg court, however, distinguished Donnelly from Colberg 's application of the economic loss rule by noting that Donnelly "did not involve a claim of negligent construction nor a claim of implied warranty of workmanlike performance and habitability... [because] there were no structural defects to remedy." 160 Ariz. at 47, 770 P.2d at 351. In addition, the Donnelly court's allowance of the negligence claim against the architects hinged on the special situation in which the contractor, although not in privity of contract with the architects, had to rely directly upon their work. As the Arizona Supreme Court noted in Napier v. Bertram, 191 Ariz. 238, 242, 16, 954 P.2d 1389, 1393 (1998), Donnelly recognized a professional's duties to a non-client where "there was a foreseeable risk of harm to a foreseeable non client whose protection depended on the actor's conduct" such that "the contractor was in the care of the architect." Here, the Carstens alleged that James Hurst, rather than the City defendants, represented to them that there were no structural, mechanical, or electrical problems with the house; that there were no violations of city, building, zoning, or health laws, codes, statutes, ordinances, or regulations regarding the house; and that all latent, material defects had been disclosed. Given these allegations, the Carstens could not be considered to have been in the "care" of the City inspectors in the same way that the Donnelly contractor was in the care of the architects. Therefore, Donnelly does not control here.
Finally, the Carstens point out that, under the provisions of the applicable immunity statute, A.R.S. ยง 12-820.02(A)(6), City inspectors are liable for gross negligence for " he failure to discover violations of any provision of law when inspections are done of property other than property owned by the public entity in question." While this, of course, is a correct statement of law, the fact that the City inspectors may be liable for gross negligence does not mean that the economic loss rule does not limit recovery when no personal injury or damage to other property has resulted. Rather, the statute merely establishes the standard of liability. Thus, in a case where an inspector's gross negligence leads to personal injury or property damage, the inspector would be liable in tort and those tort-based damages would be recoverable. However, when tort-based damages are not present, the economic loss rule controls.
CONCLUSION
For the foregoing reasons, we hold that the economic loss rule precludes the negligence claims against the City defendants. Accordingly, we affirm the judgment.
SHELDON H. WEISBERG, Judge
CONCURRING:
JEFFERSON L. LANKFORD, Presiding Judge
PATRICK IRVINE, Judge
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