John J. Tollefsen Civil Litigation Law Blog on Lawyers.com

Many causes of actions were invented by courts and are part of the unwritten common law. Negligence and negligent misrepresentation are examples of these court-made laws. To prove negligence the plaintiff must prove that the defendant owed a duty to the plaintiff. If the duty arises because there is a contract between the parties, courts have held that the plaintiff can only bring an action for breach of contract. A negligence action is not allowed. This is called the “economic loss rule”.

Washington’s Supreme Court extended the rule to cover all cases where the harm is “more properly remediable only in contract” in Alejandre v. Bull, 159 Wash.2d 674, 153 P.3d 864 (2007). The Court then put the legal world on notice that there will be certain exceptions like, maybe, professional malpractice. The reasoning is fuzzy. In a later case, Ross v. Kirner, 162 Wash.2d 493, 172 P.3d 701 (2007), the Supreme Court allowed rescission for negligent representation without mentioning or analyzing the economic loss rule.

In Jackowski v. Borchelt, 151 Wash.App. 1, 209 P.3d 514 (2009), Division II was faced with the question whether a purchaser of a home could sue his real estate agent for negligent misrepresentation. The duty arose because he had signed a contract with the real estate agent. The appellate court reversed the trial court and allowed the plaintiff to sue for rescission but not for damages under a negligent misrepresentation theory. This could have been justified on the grounds that the negligence induced the purchaser to buy the house. However, without the contract between the agent and the purchaser, there would be no duty. The court pointed to the statutory duties of a real estate agent to his client, but these duties to not arise until the agent has a client as a result of a contract.

Stay tuned – this could get messy. Meanwhile lawyers and judges can only guess whether there will be action for fraud in situations where there is a contract.