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Shaw v. CTVT Motors, Inc. - 3/28/2013

Arizona Court of Appeals Division One Holds the Economic Loss Rule Does Not Apply to Cases Brought Under the Arizona Consumer Fraud Act.

The Shaws’ vehicle suffered significant hail damage, and they contracted with CTVT Motors to repair the damage based on CTVT’s explicit promises that it was capable of doing the work.  In fact, it took nearly two months for CTVT to return the vehicle to the Shaws, who soon discovered that the repairs had not been done properly.  The Shaws brought suit under Arizona’s Consumer Fraud Act (CFA).

CTVT moved for judgment on the pleadings, citing the economic loss rule, which limits plaintiffs to contract remedies when their losses are strictly economic and the incident did not cause injuries to persons or other property.  Flagstaff Affordable Housing Ltd. Partnership v. Design Alliance, Inc., 223 Ariz. 320, 233 P.3d 664 (2010).  The superior court granted the motion, and the Shaws timely appealed.

The Court of Appeals reversed, holding that the economic loss rule applies only to common law tort remedies.  The economic loss rule is a judicially created limit on common law remedies, but it is not a substantive limit on the power of legislatures to create additional remedies.  Because the legislature enacted the CFA to provide consumers with remedies beyond those provided at common law, the economic loss rule cannot limit the remedies granted by statute.  The Court also noted that other jurisdictions have reach the same conclusion.

Judge Pro Tempore Paul F. Eckstein authored the opinion.  Judges Orozco and Swann concurred.

Posted by: Shane Ham

Posted On: 4/2/2013