RUSSO v. HON. GAMA/TRI-RENTAL

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NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c) IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE RUSSO AND STEELE, L.L.C., an Arizona limited liability company, ) ) ) ) Petitioner, ) ) v. ) ) THE HONORABLE J. RICHARD GAMA, ) Judge of the SUPERIOR COURT OF ) THE STATE OF ARIZONA, in and for ) the County of MARICOPA, ) ) Respondent Judge, ) ) TRI-RENTALS, INC., an Arizona ) corporation; CLASSIC PARTY ) ) RENTALS, INC., a California ) corporation, ) Real Parties in Interest. ) ) No. DIVISION ONE FILED: 7/25/2013 RUTH A. WILLINGHAM, CLERK BY: mjt 1 CA-SA 13-0160 DEPARTMENT D Maricopa County Superior Court Nos. CV2010-011542 CV2010-012757 CV2010-015105 CV2010-052812 CV2011-008605 CV2011-010179 CV2011-013784 CV2011-095160 CV2011-095290 CV2011-003021 CV2012-003048 DECISION ORDER The Court, Chief Judge Diane M. Johnsen, presiding, and Judges Randall M. Howe and John C. Gemmill, participating, has considered response Classic of the petition Real Party of Parties Rentals, in Inc., Russo and Interest and Steele, L.L.C., Tri-Rentals, Petitioner s the Inc. Reply. and The petition seeks relief from rulings by the superior court (1) granting Real Parties motion for partial summary judgment and dismissing Petitioner s claims for negligence and gross negligence and (2) denying Petitioner s motion for leave to amend its complaint. For the reasons set forth herein, IT IS ORDERED discretion, over the that declines superior the to Court, exercise court s in the special denial of exercise action of its jurisdiction Petitioner s motion for leave to amend the complaint. IT IS FURTHER ORDERED that the Court, in the exercise of its discretion, accepts special action jurisdiction over the superior court s order granting Real Parties motion for partial summary judgment, and grants the following specific relief: That portion of the order of the superior court, dated March 21, 2013 and filed March 26, 2013, that grants Real Parties motion for partial summary judgment based on economic damages is vacated and Petitioner s negligence and gross negligence claims are reinstated. We exercise our discretion to accept special action jurisdiction over the economic loss doctrine ruling because the issue presented is a pure issue of law, see Orme Sch. v. Reeves, 166 Ariz. 301, 303, 802 P.2d 1000, 1002 (1990), the facts necessary for resolution are not in serious dispute, id., and because, given the procedural posture of the consolidated cases, judicial economy will be served 2 by trying Petitioner s negligence claims along with those of other parties, see Grand v. Nacchio, 214 Ariz. 9, 18, ¶ 24, 147 P.3d 763, 772 (App. 2006). The superior court s economic loss doctrine ruling is an abuse of discretion because it is based on an error of law. Grand, 214 Ariz. at 17, ¶ 21, 147 P.3d at 771. See The ruling is not supported by Arizona case authority and conflicts with the following specific declarations of the Arizona Supreme Court in Flagstaff Affordable Housing Ltd. Partnership v. Design Alliance, Inc., 223 Ariz. 320, 223 P.3d 664 (2010), regarding when the economic loss doctrine will apply and when it will not apply: ¢ Today we apply the doctrine in a construction defect case and hold that a property owner is limited to its contractual remedies when an architect's negligent design causes economic loss but no physical injury to persons or other property. Id. at 321, ¶ 1, 223 P.3d at 665 (emphasis added). ¢ As explained below, we believe the economic loss doctrine is best directed to the first of these issues, and we use the phrase to refer to a common law rule limiting a contracting party to contractual remedies for the recovery of economic losses unaccompanied by physical injury to persons or other property. Id. at 323, ¶ 12, 223 P.3d at 667 (emphasis added). ¢ But if the parties do not provide otherwise in their contract, they will be limited to contractual remedies for any loss of the bargain resulting from construction defects that do not cause personal injury or damage to other property. Id. at 326, ¶ 29, 223 P.3d at 670 (emphasis added). 3 ¢ The doctrine does not bar tort recovery when economic loss is accompanied by physical injury to persons or other property. Id. at 327, ¶ 33, 223 P.3d at 671 (emphasis added). Petitioner alleges it sustained damages of $87,000 in physical damage to its own property. approximately In accordance with our Supreme Court s clear guidance in Flagstaff Affordable, therefore, the economic loss doctrine does not bar its negligence or gross negligence claims. ________________/s/______________ Diane M. Johnsen, Chief Judge 4

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