Facts: After a fire causing significant damage broke out on the Seattle Monorail the monorail’s operating company, Seattle Monorail Services, was reimbursed for the damage by its insurer, petitioner Affiliated F.M. Insurance Company. Affiliated F.M. Insurance Company subsequently filed suit against respondent L.T.K. Consulting Services, Inc., which was responsible for the monorail’s maintenance and repair, in the Superior Court for King County, asserting that L.T.K. Consulting Services’ negligent maintenance of the monorail system had caused the fire. L.T. K. Consulting Services removed the case to the United States District Court for the Western District of Washington and moved for summary judgment, claiming that under Washington law it was not liable in tort insofar as Seattle Monorail Services’ losses were purely economic. The district court granted summary judgment for L.T.K. Consulting Services. Upon appeal, the United States Court of Appeal for the Ninth Circuit certified to the Supreme Court of Washington the question of whether the economic loss rule barred a suit in tort.

Question(s): Is a suit in tort against L.T.K. Consulting Services stemming from its maintenance of the Seattle Monorail barred by Washington law due to the economic nature of the damages suffered by the monorail’s operating company?

Conclusion: Justice Fairhurst’s opinion for the Court concluded that Affiliated F.M. Insurance Company’s tort claim against L.T.K. Consulting Services was not barred by the economic loss rule despite the fact that Seattle Monorail Services does not have a proprietary interest in the monorail and its losses were limited to repair costs and an interruption of business. As L.T.K. Consulting Services implicitly assumed a tort duty of taking reasonable care to avoid harms such as those suffered by Seattle Monorail Services in assuming responsibility for maintenance of the monorail, the Court held that Affiliated F.M. Insurance Company’s claim was not barred by the economic loss rule.

Docket No. 82738-9 (from Court of Appeals Division I Case No. 57445-1)

Petitioner: Affiliated F.M. Insurance Company

(Counsel: William E. Pierson, Jr.)

Respondent: L.T.K. Consulting Services, Inc.

(Counsel: Brandon Hummel, Steven Stein, Jeffrey Winick, C. Steven Tomashefsky, and Terence J. Scanlan)

Briefs:

Argument: Tuesday, October 20, 2009 10:00am

[Source: TVW, http://tvw.org]

Decided: Thursday, November 4th, 2010

Prevailing Party: Affiliated F.M. Insurance Company (Petitioner)

Vote: 9-0

Citation: Pending

Court: Madsen1 Court (2010-2011)

Madsen
(Partial)

Johnson

Alexander

Sanders

Chambers
(Concurs)

Owens

Fairhurst
(Majority)

Johnson

Stephens