Court Opinion

ID: 180529
Source: CourtListenerOpinion
Date Created: 2010-12-07 18:30:52+00
Date Added: 2024-06-11T17:25:52.223406
License: Public Domain

FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

AFFILIATED FM INSURANCE               
COMPANY, a Rhode Island
corporation,                               No. 07-35696
               Plaintiff-Appellant,
                v.                          D.C. No.
                                          CV-06-01750-JLR
LTK CONSULTING SERVICES INC., a              OPINION
Pennsylvania corporation,
              Defendant-Appellee.
                                      
       Appeal from the United States District Court
          for the Western District of Washington
        James L. Robart, District Judge, Presiding

                 Argued and Submitted
         December 12, 2008—Seattle, Washington

                  Filed December 7, 2010

      Before: Robert R. Beezer, Ronald M. Gould and
          Consuelo M. Callahan, Circuit Judges.

                 Opinion by Judge Gould

                           19629
        AFFILIATED FM INS. v. LTK CONSULTING SERVICES    19631
                         COUNSEL

William E. Pierson, Jr. (argued), Seattle, Washington, for
plaintiff-appellant Affiliated FM Insurance Co.

Steven G.M. Stein, Brandon G. Hummel, and Jeffrey Winnick
(argued), Stein, Ray & Harris LLP, Chicago, Illinois; Beth
Andrus, Skellenger Bender, P.S., Seattle, Washington, for
defendant-appellee LTK Consulting Services, Inc.

                         OPINION

GOULD, Circuit Judge:

   Affiliated FM Insurance Company (“AFM”), subrogated to
the rights of its insured, Seattle Monorail Services Joint Ven-
ture (“SMS”), sued LTK Consulting Services Inc. (“LTK”),
asserting that LTK had provided negligent design advice to
the Seattle Monorail System that resulted in fire damage. LTK
took the position that the so-called “economic loss rule” pre-
cluded this suit and that AFM did not have an adequate inter-
est in the Monorail System on which to base a suit in tort.

  Determining that Washington law was not clear on this
subject, we certified the following question to the Washington
State Supreme Court:

    May party A (here, SMS, whose rights are asserted
    in subrogation by AFM), 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 prop-
    erty, when A (SMS) and C (LTK) are not in privity
    of contract?

Affiliated FM Ins. Co. v. LTK Consulting Servs. Inc., 556 F.3d
920, 922 (9th Cir. 2009). We also told the Washington State
Supreme Court:
19632    AFFILIATED FM INS. v. LTK CONSULTING SERVICES
      If the Washington State Supreme Court concludes
      that a party with a contractual right to operate com-
      mercially and extensively on another’s property may
      bring a suit in tort against a third party for damage
      to that property, we will reverse the district court’s
      order granting summary judgment to LTK. If, how-
      ever, the Washington State Supreme Court decides
      that the economic loss rule, or some other legal rule,
      bars such a suit in tort, we will affirm the district
      court’s grant of summary judgment in favor of LTK.

Id.

   [1] The Washington State Supreme Court accepted the cer-
tified question and, after thoroughly considering the issues,
filed its opinion, which concludes as follows:

      Applying the independent duty doctrine here, we
      hold that SMS may sue LTK for negligence. LTK,
      by undertaking engineering services, assumed a duty
      of reasonable care. This obligation required LTK to
      use reasonable care, as we have defined it, with
      respect to risks of physical damage to the monorail.
      SMS enjoyed legally protected interests in the mono-
      rail, and LTK’s duty encompassed these interests.
      By subrogation to SMS’s rights, AFM may pursue a
      claim for negligence against LTK. Consistent with
      this opinion, the answer to the Ninth Circuit’s certi-
      fied question is yes.

Affiliated FM Ins. Co. v. LTK Consulting Servs., Inc., ___
P.3d ___, No. 82738-9, 2010 WL 4350338, at *10 (Wash.
Nov. 4, 2010).

  [2] We reverse the district court and remand for further
proceedings consistent with the decision of the Washington
State Supreme Court.
   AFFILIATED FM INS. v. LTK CONSULTING SERVICES   19633
REVERSED AND REMANDED.