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Greyhound Lines, Inc. v. Viad Corp.

ELR Citation: 46 ELR 20183
Nos. 15-01820, (D. Ariz., 11/21/2016) (Campbell, J.)

A district court, in an underlying suit concerning indemnificaton for environmental cleanup, held that a corporation's counterclaims against a bus company for fraud and negligent misrepresentation are barred by Arizona's economic loss doctrine. In 1986, the corporation sold various properties to the bus company, and the contract provided that the corporation was responsible for remediating UST contamination at some of the properties. The parties entered subsquent indemnification contracts that further defined the parties' cleanup responsibilities. The company submitted reimbursement requests to the corporation over the years, and while some have been paid, the corporation has made no payment since 2009. The company filed suit, seeking declaratory and monetary relief for breach of contract and for nuisance. It also sought cost recovery under CERCLA. The corporation filed a counterclaim alleging breach of contract, as well as the tort claims of fraud and negligent misrepresentation. The parties filed cross-motions for summary judgment, and the court denied all but one, holding that the fraud and misrepresentation claims are barred by Arizona's economic loss doctrine. Although Arizona has not yet considered whether the economic loss doctrine applies to cases concerning indemnification contracts, the court determined that the doctrine should apply under the facts of this case. The corporation provided no reason why contract remedies are inadequate to redress the harm it has suffered from the bus company's alleged noncompliance. And limiting the corporation to its contract remedies would serve the important policy of encouraging parties to commercial contracts to allocate risk prospectively and to identify remedies within their agreements.