At an Economic Loss: Assessing the Implications of Sullivan v. Pulte Home Corp. for Arizona Construction Contractors

Many Arizona homeowners are noncontracting subsequent purchasers—they are secondhand buyers who neither bargained for nor contracted with the builders of their homes. When a construction defect was discovered, the economic loss doctrine stood as both a hurdle for those homeowners and a safety net for homebuilders.

But it turns out that the economic loss doctrine might not be such a hurdle after all. In Sullivan v. Pulte Home Corp., the Arizona Supreme Court held that the doctrine does not bar tort claims by noncontracting subsequent purchasers. The decision is likely to cause uncertainty for homeowners and homebuilders alike as Arizona courts wade through murky waters to figure out what Sullivan means for construction-defect litigation. Many unanswered questions remain after the Court’s short opinion. Can subsequent purchasers really bring tort claims more than a decade after construction has ended? The Arizona Supreme Court says yes, in theory, they can.