The Economic Loss Rule v. Independent Duty Doctrine

Davis Wright Tremaine LLP

Davis Wright Tremaine LLP

The economic loss rule prohibits recovery for economic loss in tort and provides that such claims are governed by contract law. The State of Washington's Supreme Court adopted the Economic Loss Rule in 1987 in Stuart v. Coldwell Banker Com. Grp., Inc., 109 Wash. 2d 406, 419, 745 P.2d 1284, 1291 (1987), but solidified in Alejandre v. Bull, 159 Wash. 2d 674, 153 P.3d 864 (2007).

In that case, the Washington Supreme Court not only barred tort claims where the risk of loss had been explicitly allocated by the contract, but it also barred claims where there was an opportunity to allocate the risk of loss and the losses were purely economic.

Upon further consideration, the Court in 2010, believing that the term "economic loss rule" was confusing, instead applied the independent duty doctrine. The doctrine permits recovery in tort if "[an] injury is traceable also to a breach of a tort law duty of care arising independently of the contract."

Fraud, however, was specifically exempted from the independent duty doctrine.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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