The issues involving commercial property owners are often more complex and fact-specific than those involving residential property owners. For example, tort (negligence) claims may be barred by the terms of one or more contracts between the property owner and the contractor, design professionals, and/or subcontractors through application of the “economic loss rule.” This rule generally prevents recovery for negligently caused economic losses when the duty breached is a contractual duty and the harm suffered is the failure of the contract’s purpose. Economic losses are defined generally as damages other than physical harm to persons or property (lost profits, return on investment, etc.), although courts have applied the economic loss rule in the commercial property setting to the cost of repair and replacement of property that is the subject of the parties’ contracts.
Many states and the United States Supreme Court have adopted a form of the economic loss rule. Each jurisdiction’s rule must be carefully analyzed to determine the extent of its applicability to a particular commercial property owner’s situation. For instance, in 2004 the Colorado Supreme Court enforced the economic loss rule against a subcontractor that was not a party to a network of interrelated contracts regarding a commercial construction project. On the other hand, several well-recognized exceptions provide that a contractor may be liable to a property owner based on negligence even though the economic loss rule might otherwise apply.
In addition, the parties’ contracts may severely limit the property owner’s recoverable damages. This requires a detailed analysis and consideration of the contracts and their potential impact on the claims that can be pursued and the owner’s recovery before suit is file. States’ pre-lawsuit notice of claim or right to repair statutes may also apply differently to commercial properties.
Even if you are not the original purchaser of your building, you may have recourse for construction defects.
The economic loss rule, other contractual limitations, and pre-lawsuit notice/repair statutes are just a few examples of the complex, fact-specific issues that must be addressed at the outset of every commercial property construction defect case. We have extensive experience with these and the many other commercial property specific issues that are important to each case and can effectively represent you as a commercial property owner.
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