Loosli v. City of Salem

The Oregon Supreme Court affirmed the Court of Appeals decision in Loosli v. City of Salem. The unanimous decision written by Justice Kistler held that the City owed no duty to protect the plaintiff’s from economic losses caused by the negligence of a City planning official. The Court put to rest (in footnote 9) the argument that such a duty arises from the fact that the City charged a fee for providing the required DMV certification.

Tracking precisely the arguments made on the City’s behalf by HLGR attorneys William F. Gary and Sharon Rudnick, the Court forcefully reiterated the “economic loss doctrine” which holds that one is not liable to a plaintiff for purely economic (as opposed to physical) injuries unless the defendant owes a special duty to the plaintiff in addition to the general duty to exercise reasonable care. Such a duty can arise from a statute or other law or from a special relationship between the parties. This opinion made clear that the requisite special relationship does not arise between a city and one of its citizens when the city is performing a regulatory function.