Washington Construction Law Blog

Here's a good reason not to designate Oregon law as the controlling law in your next contract -- at least if you are a contractor or owner who wants to invoke the protection of the economic loss doctrine (ELD).  At its most basic, the ELD means that a plaintiff may not sue in tort to recover purely "economic loss" as opposed to personal injury or property damage losses.  The sole remedy is instead to sue on the contract -- an option that is often not available to remote plaintiffs who claim injury due to some act or omission of a party with whom no contract exists.

In this Oregon case, for example, a builder built an apartment complex for its customer.  The customer subsequently sold the complex to a third party.  Upon discovering dry rot damage in the complex, the third party sued the original builder for negligent construction.  The Court of Appeals held that ELD did not bar the negligence claim.  Specifically, the Oregon court held that damage to the complex itself was not purely "economic loss" but instead constituted property damage.

The Oregon holding is at odds with Washington law in one clear respect - and possibly a second.  First, Washington does not recognize a theory of negligent construction.  Therefore, the third party could not possibly have made this claim in Washington against the remote builder regardless of the ELD.  Second, Washington courts are far more likely to hold that damage to the project itself is purely "economic loss" in any event. 

at least if you are a contractor or owner who wants to invoke the protection of the economic loss doctrine ... and why would either want to so such?