The Subrogation Strategist

In Rogers v. Wright, 366 P.3d 1264 (Wyo. 2016), the Supreme Court of Wyoming held that home builders have a tort duty of reasonable care and this duty, independent of any contractual obligations, makes the economic loss rule inapplicable.

On July 8, 2009, Leon and Brenda Rogers purchased a home from Jeffrey Wright. Shortly after moving into the house, the Rogers discovered several structural defects, including a cracking and leaking foundation and improper grading. The Rogers filed a lawsuit against Mr. Wright and two of his construction companies, JWright Development, LLC and JWright Companies, Inc., alleging breach of contract, breach of warranty, intentional misrepresentation, negligent misrepresentation and negligence. The trial court granted summary judgment in favor of the defendants on all grounds and the Rogers appealed.

With respect to the negligence claim, the defendants argued that they were entitled to summary judgment based on Wyoming’s economic loss rule, which bars recovery in tort when a plaintiff claims purely economic damages. Although the trial court agreed with the defendants’ position, the Supreme Court overruled the lower court, stating that Wyoming law establishes “a tort duty of reasonable care upon home builders and a breach of that duty will result in the builder being liable for foreseeable damages resulting from the negligent construction of the home.” This duty is distinct from any contractual relationship and extends to subsequent purchasers of homes who never had any contractual relationship with the builder. Thus, despite the fact that the Rogers’ damages were solely economic or pecuniary in nature, the Supreme Court held that the economic loss rule did not apply.

The decision of the Supreme Court of Wyoming highlights that, when addressing the economic loss rule in Wyoming, “the salient question is not whether the tort claim is based in negligence, but whether a tort duty exists independent of any duties established in a contract.” If a tort duty exists independent of any contractual duties, the economic loss rule should not apply.