Section 3.8.12 Privity Is Essential to the ELR

• Library: Construction Law Practice Manual 3rd Edition 2016

§ 3.8.12 Privity Is Essential to the ELR

The existence of privity, as the essential predicate for the ELR, was not recognized by the Court of Appeals of Arizona in Carstens v. City of Phoenix.⁴⁴ There, a homeowner sued the City of Phoenix and three of its building inspectors, in tort, for failing to discover serious construction defects in the homes he purchased. So severe were the defects that the home had to be demolished and rebuilt, subjecting the homeowner to significant damages, albeit, all economic - the repair or replacement of the defective work itself. The inspectors arguably owed a duty of care to the homeowner and appeared to have been grossly negligent. Privity between the litigants was not deemed determinative. For this court, it sufficed that the homeowner had a contractual relationship with the builder. The plaintiff could look to that contract and to that potential defendant for redress. Evoking the ELR, Carstens rejected the negligence claims made against the inspectors.

Carstens found support in Colberg v. Relinger,⁴⁵ in which the Court of Appeals of Arizona evoked the ELR to bar a negligence claim against the qualifying party of a corporate construction company that had performed faulty work on the plaintiff’s home. The homeowner’s only damages were economic - the repair of structural defects. Underlying the court’s affirmation of the...