By Rebecca L. Reed, Attorney
In Alejandre v. Bull, Docket Number, 76247-1, the Supreme Court applied the economic loss rule to preclude the Buyer’s claims of negligent misrepresentation for losses flowing from a defective septic system, which the Buyers claimed the Seller knew about prior to closing, but did not disclose to the Buyers.

The economic loss rule applies to contractual relationships to bar tort claims flowing from the contractual relationship, but which are economic in nature. Economic losses are those which are distinguishable from personal injuries.

In this case, the Court found that a defective septic system is purely an economic loss, and therefore one which is precluded from recovery on the basis of a negligent misrepresentation claim flowing from the contractual relationship between Buyer and Seller in a purchase and sale transaction.

However, the economic loss rule will not bar a claim of fraudulent concealment of defects. The Plaintiff must prove that fraud existed by clear and convincing evidence, a very high standard and by proving the following elements of fraud (1) residential dwelling has a concealed defect; (2) the vendor has knowledge of the defect; (3) the defect presents a danger to the property, health, or life of the purchaser; (4) the defect is unknown to the purchaser; (5) the defect would not be disclosed by a careful, reasonable inspection by the purchaser.

You can access the full case opinion at the Washington State Courts website.

DISCLAIMER: This Article is not intended as legal advice. It is merely purposed to provide an overview of a particular legal issue. This information should not be relied upon nor serve as a substitute for legal advice. You should seek competent legal counsel for advisement for any of the issues raised herein.