9th Circuit Certifies Economic Loss Doctrine Issues to Washington Supreme Court

A classic economic loss scenario: The City of Seattle owns the Monorail between downtown and Seattle Center and has a contract with a JV who operates the Monorail.  In 1999, the City hired a design firm (LTK) under a separate contract to identify and repair problems with the Monorail trains.  The JV had no contractual relationship with LTK.  In 2004, one train caught fire.  The JV's insurance company paid the claim then blamed LTK for causing the fire. Got it? Into the thicket of Washington's economic loss doctrine now comes the 9th Circuit in this recent case certifying a question of state law to the Supreme Court, specifically:May party A (here, SMS, whose rights are asserted in subrogation by [carrier]), who has a contractual right to operate commercially and extensively on property owned by non-party B (here, the City of Seattle), sue party C (here, LTK) in tort for damage to that property, when A (SMS) and C (LTK) are not in privity of contract?At first blush, this issue might appeared to have been cleanly resolved by Berschauer/Philips v, Seattle School District (1994), but wait: the 9th Circuit thinks there are unresolved issues lurking in that case that need to be addressed:  First, the 9th Circuit notes that in Berschauer the claimant had been assigned the right to prosecute claims against the remote third party and thus the claimant still had a meaningful remedy.  Would the doctrine still apply in this situation, where the JV appears not to have acquired the right to sue LTK by way of assignment of rights from Seattle? Second, is the JV's right to operate the Monorail a "property right" such that fire damage to the train would come within an exception to the doctrine for harm to personal injury or property damage?Stay tuned...the Supreme Court is not bound by the 9th Circuit's framing of the issue and could use this case as an opportunity to significantly revise the scope of the economic loss doctrine in Washington.