Section 3.7.12 Elements of a Professional Liability Claim

• Library: Construction Law Practice Manual 3rd Edition 2016

§ 3.7.12 Elements of a Professional Liability Claim

In defining the elements of a professional liability claim in Arizona, one must first distinguish claims by a plaintiff who has a contract with the defendant design professional from all other types of claims. By adopting the economic loss doctrine in Flagstaff Affordable Housing Limited Partnership v. Design Alliance, Inc.,¹⁰⁸ the Arizona Supreme Court has stated unequivocally that “a contracting party is limited to its contractual remedies for purely economic loss from construction defects.”¹⁰⁹ Therefore, without regard to whether the claim is premised on (1) failure to perform some express or implied contractual duty,¹¹⁰ (2) breach of the standard of care,¹¹¹ (3) failure to discharge a legal duty imposed on registered design professionals,¹¹² or (4) failure to comply with a duty under some other statute,¹¹³ a contracting party must look to its contract remedies to recover economic losses from a design professional.¹¹⁴ Through their negotiations, design professionals and their clients can bargain for and allocate the risks and benefits each party assumes in a design or construction contract.¹¹⁵ Such allocations may include a waiver of subrogation rights as to both tort or contract claims, and such waivers will also bind an insurer claiming through, or on behalf of, one of the contracting parties.¹¹⁶ The Arizona Supreme Court has also held that contractual limitations on liability are not barred by public policy or the anti-indemnity statute.¹¹⁷

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