“Before the home reached the market, the Great Recession struck.” – Opinion. Here, a series of loan contracts for the construction of a home and a later default resulted in a Deed in Lieu of foreclosure. The home was transferred to a corporate subsidiary of the lender. Lender later sued contractor for negligent construction. The lower courts declined to apply the economic loss rule (ELR) to bar the tort claims. The Court reversed, clarifying that the ELR applies to parties with contract remedies, including third-party beneficiaries who are not subsequent purchasers. Here, the subsidiary was a third-party beneficiary to a contract between the contractor and lender and thus not a “subsequent purchaser.” But, the Court remanded for further fact finding regarding the interrelatedness of the contracts and the scope of the contractual duties to determine if the ELR applies.
← Hagan v. Farmers; Ewald v. Farmers; Mayfield v. Farmers Insurance Exchange, 2015CO6 (Jan. 26, 2015)
February 9, 2015 · 3:46 pm