Sunridge v RB&G

2010 UT 6
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
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Sunridge Development Corporation 	No. 20080160
and Sunridge Enterprises, LLC,
Plaintiffs and Petitioners,
v.
F I L E D
RB&G Engineering, Inc.,
Defendant and Respondent. 	February 5, 2010
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Fourth District, American Fork
The Honorable Fred D. Howard
No. 070100134
Attorneys: 	Stephen Quesenberry, Charles L. Perschon, Provo, for
plaintiffs
Craig C. Coburn, Lincoln Harris, Zachary E. Peterson,
Salt Lake City, for defendant
---
On Certiorari to the Utah Court of Appeals
NEHRING, Justice:
INTRODUCTION
¶1 	In this case we address the legal relationships created
by an assignment. 	In particular, we examine the scope of an
assignee’s right to recover damages from a third party that
breached a contract made with, or duty owed to, the assignor.
Respondent RB&G, an engineering firm, persuaded a majority of the
court of appeals that while it may have breached a contract or
duty before the key assignment occurred, the assignee could not
recover damages sustained after the date of the assignment.
Petitioners Sunridge Development Corporation and Sunridge
Enterprises, LLC, argue that an assignee may recover damages that
flow from a breach of an assigned contract regardless of when the
actual damages occur. 	We reverse the court of appeals and remand
to the district court.

1 The court of appeals’ opinion refers to Sunridge
Enterprises, LLC as “SEL.”
No. 20080160 	2
BACKGROUND
¶2 	In the 1960s, Stephen Stewart formed Sunridge
Development Corporation (SDC). 	In 1981, SDC purchased a parcel
of property in Provo, Utah, for the purpose of developing the
property into Alpine Brook, a residential development. 	In 1993,
SDC contracted with RB&G Engineering, Inc., a geological
engineering firm, to obtain a geologic study of the property.
SDC commissioned another geologic report from RB&G in 1995. 	The
two reports describe geologic features of the property, make
recommendations for foundation design, and include depictions of
the subdivision and the planned units.
¶3 	In 1996, Mr. Stewart formed Sunridge Enterprises, LLC
(Enterprises). 1 	Mr. Stewart was the principal of Enterprises,
which was the entity that took on the responsibility for
developing the Provo property into Alpine Brook. 	Development of
the property then commenced. 	Mr. Stewart made a statement in a
deposition suggesting that when he formed Enterprises, SDC
transferred the property and made certain assignments to
Enterprises, including an assignment of all rights and claims
under the RB&G reports. 	The documents evidencing the development
agreement, transfer of the property, and assignment are not a
part of the record in this case.
¶4 	In 1998, the Utah Geologic Survey, a division within
the Department of Natural Resources, sent Provo City a letter
expressing its concern that the RB&G reports did not adequately
address the seriousness of the geologic faults on the property.
Provo City responded to the Survey’s concerns by requiring
Enterprises to expand setbacks within the Alpine Brook
development to mitigate the risks associated with the faults. 	By
the time Provo City mandated these changes, Enterprises had
completed the design of certain portions of the development. 	The
site revisions required by Provo City resulted in a loss of
fourteen units, amounting to a claimed loss of over one million
dollars. 	Delays in development, redesign, and attorney fees
resulted in additional costs.
¶5 	Petitioners claim that RB&G failed to notify SDC and
Enterprises of the geologic condition of the site in the reports.
In early February, SDC sued RB&G for breach of contract and
negligence. 	SDC later amended its complaint to include
Enterprises as a plaintiff. 	SDC and Enterprises sought to
recover for the loss of the fourteen units as well as additional

3 	No. 20080160
“administrative costs,” which included the costs of delay,
redesign, and attorney fees. 	As discovery progressed, RB&G moved
for summary judgment on SDC’s negligence claims and Enterprises’
breach of contract and negligence claims. 	The district court
granted summary judgment against both SDC and Enterprises on
their negligence claims, concluding that the economic loss rule
barred any recovery in negligence. 	The court also granted
summary judgment against Enterprises on its breach of contract
claim. 	The court reasoned that Enterprises could not recover
damages from RB&G because it could not stand in a better position
than its assignor, SDC. 	The court explained that because RB&G
had fully performed its contracts with SDC, the assignment only
transferred SDC’s rights to pursue remedies for existing, not
future, breaches of those contracts. 	Therefore, because the loss
of the fourteen units occurred after the assignment, Enterprises
could not recover those damages from RB&G because SDC never had
the right to recover such damages. 	The court further concluded
that the assignment did not establish privity between Enterprises
and RB&G or otherwise entitle Enterprises to pursue its alleged
damages.
¶6 	A year later, RB&G moved for summary judgment on SDC’s
remaining breach of contract claims, which sought recovery for
the “administrative costs.” 	The district court granted summary
judgment to RB&G because SDC had not supported its damage summary
with evidence eligible for consideration by the court under Utah
Rule of Civil Procedure 56(c) before the discovery period closed.
The parties agreed not to appeal the second summary judgment of
SDC’s breach of contract claims.
¶7 	Petitioners appealed the first summary judgment and the
case was transferred to the Utah Court of Appeals. 	Specifically,
Petitioners argued that Enterprises could recover as an assignee
of the RB&G reports for damages that occurred after the
assignment and/or that SDC could recover in negligence. 	The
court of appeals declined to address the merits of the appeal.
Instead, the court of appeals held that because SDC’s contract
damages were dismissed on summary judgment, Enterprises could not
recover as an assignee because “‘an assignee gains nothing more,
and acquires no greater interest than had his assignor. . . .’”
Sunridge Dev. Corp. v. RB&G Eng’g, Inc., 2008 UT App 29, ¶ 8, 177
P.3d 644 (quoting Aird Ins. Agency v. Zions First Nat’l Bank, 612
P.2d 341, 344 (Utah 1980)). 	The court of appeals reasoned that
Enterprises was subject to SDC’s failure to timely present
evidence of the damages at issue in the second summary judgment
because “assignment merely allows the assignee to stand in the
shoes of the assignor.” 	Id. ¶ 9. 	Judge Bench dissented. 	He
reasoned that “[a]lthough an assignee’s damages are limited to

2 The court of appeals noted that “[p]er stipulation,
Plaintiffs do not challenge the trial court’s grant of summary
judgment on SDC’s breach of contract claim” Sunridge Dev. Corp.
v. RB&G Eng’g, Inc., 2008 UT App 29, ¶ 7 n.3, 177 P.3d 644.
Petitioners do not appeal this finding to this court.
Petitioners also concede in their brief to this court that
“[Enterprises] does not appeal the dismissal of its negligence
claims against RB&G, as [Enterprises] and RB&G were in a position
to allocate risk and damages by contract (by virtue of the
assignment).” 	Therefore, we only address the two stated issues.
No. 20080160 	4
those damages the assignor would have suffered, the assignee
should not be required to depend upon the assignor to litigate on
its behalf.” 	Id. ¶ 15 (Bench, J. dissenting). 	Judge Bench noted
that a determination of Enterprises’ rights, if any, to pursue
claims under the RB&G contracts needed to be addressed before
analyzing any effect the second summary judgment might have had
on Enterprises. 	Id.
¶8 	We granted certiorari to determine whether the majority
of the court of appeals’ panel erred in its assessment of the
effect of the judgments rendered by the district court. 	We have
jurisdiction pursuant to Utah Code section 78A-3-102(3)(a)
(2008).
STANDARD OF REVIEW
¶9 	On certiorari review, we review the decision of the
court of appeals, not the decision of the district court. 	See
Massey v. Griffiths, 2007 UT 10, ¶ 8, 152 P.3d 312.
ANALYSIS
¶10 	The parties have briefed two issues: 	(1) whether
Enterprises can recover any damages resulting from the required
redesign of Alpine Brook as an assignee of the RB&G contracts and
(2) whether SDC can recover similar damages in negligence despite
the economic loss rule. 2 	We address each issue in turn.
I. 	AN ASSIGNMENT DOES NOT NECESSARILY PRECLUDE AN ASSIGNEE FROM
RECOVERING DAMAGES FOR CLAIMS THAT ARISE AFTER THE ASSIGNMENT
¶11 	Before we discuss an assignee’s rights against a third
party that owed duties to the assignor, we first note that the
court of appeals erred when it held that SDC’s procedural errors
in proving its contract damages absolutely barred Enterprises’

3 We also note that the court of appeals made a factual
error when it stated that “[i]n August and September of 2005, the
trial court ruled in favor of RB&G on two separate motions for
summary judgment.” 	Sunridge Dev. Corp., 2008 UT App 29, ¶ 4.
The two summary judgments at issue were actually issued on
August 2, 2005 and September 12, 2006.
4 The court of appeals noted: 	“For purposes of summary
judgment, the parties centered their arguments on the effect of
the assignment and not on the underlying validity thereof. 	At
trial, however, [Enterprises] would have the burden of proving
the validity of the assignment by a preponderance of the
evidence.” 	Sunridge Dev. Corp., 2008 UT App 29, ¶ 3 n.1. 	We
agree and note that our opinion assumes a finding of a valid
assignment that also assigned the rights and claims asserted by
Enterprises.
5 	No. 20080160
ability to recover as an assignee of the RB&G reports. 3 	While it
is correct that an assignee stands in the shoes of its assignor
and cannot stand in a better position than its assignor, an
assignee should nevertheless be given the chance to fully and
fairly litigate the rights it claims to have acquired by
assignment. 	The opportunity to litigate its own rights allows
the assignee to demonstrate the rights of the assignor and defend
against any limitations on the effect of the assignment alleged
by the third-party obligor.
¶12 	We now move to the merits of Enterprises’ argument that
it can recover from RB&G as an assignee, a task that requires a
brief detour into the law of assignments generally, as 	well as
an analysis of a central assignment case, SME Industries, Inc. v.
Thompson, Ventulett, Stainback and Associates, Inc., 2001 UT 54,
28 P.3d 669. 4
A. 	Basic Assignment Law
¶13 	It is well recognized that “[t]he assignee [stands] in
the shoes of the assignor.” 	9 John E. Murray, Jr., Corbin on
Contracts § 51.1 (rev. ed. 2007). 	Therefore, “‘[t]he assignee is
subject to any defenses that would have been good against the
[assignor]; the assignee cannot recover more than the assignor
could recover; and the assignee never stands in a better position
than the assignor.’” 	SME Indus., 2001 UT 54, ¶ 16 (second
alteration in original) (emphasis omitted) (quoting 6 Am. Jur. 2d
Assignments § 144 (1999)). 	“[A]n assignee gains nothing more,
and acquires no greater interest than had his assignor.” 	Aird
Ins. Agency v. Zions First Nat’l Bank, 612 P.2d 341, 344 (Utah
1980) (citing Cheney v. Rucker, 381 P.2d 86, 91 (Utah 1963)). 	In

No. 20080160 	6
other words, “the common law puts the assignee in the assignor’s
shoes, whatever the shoe size.” 	Olvera v. Blitt & Gaines, P.C.,
431 F.3d 285, 289 (7th Cir. 2005).
¶14 	The parties, as well as Judge Bench in his dissent,
chose the term “privity” to characterize the relationship created
between an assignee and an obligor. 	Therefore, the extent to
which an assignment creates a relationship roughly equivalent to
traditional notions of privity and the extent to which privity
extends to periods both before and after the assignment are
relevant inquiries.
¶15 	For guidance on these questions, we look further into
the purpose behind the maxim that an assignee stands in the shoes
of its assignor. 	Corbin on Contracts states, “[t]he essential
purpose of the principle is to protect the obligor, the party who
must perform the correlative duty of the assigned right,” so that
the risk to the obligor is not materially enlarged over the risk
created by its agreement with the assignor. 	Murray, supra,
§ 51.1. 	In other words, the purpose behind the rule is that an
assignee has rights and liabilities identical to those of its
assignor. 	We believe that the relationship between the assignee
and obligor is not best characterized as a form of privity, but
rather as a continuation of the rights and liabilities of the
assignor as evidenced by the assigned agreements and any further
limitations stated in the assignment itself.
¶16 	RB&G argued to the court of appeals and to this court
that an assignee cannot recover damages that accrue after the
date of the assignment, regardless of whether the cause of action
accrued before the assignment, because to permit such recovery
would be to place the assignee in a better position than its
assignor. 	RB&G’s argument is based on SME Industries, 2001 UT
54. 	There, we reiterated the rule that an assignee cannot stand
in a better position than its assignor. 	Id. ¶ 16. 	Thus, we now
turn to a discussion of SME Industries and how it affects the law
of assignments.
B. 	SME Industries Did Not Create a Per Se Rule Linking Recovery
to the Time Damages Were Incurred and the Date of the Assignment
¶17 	In SME Industries, Salt Lake County contracted with
TVSA for architectural and design services in connection with the
renovation of the Salt Palace Convention Center in Salt Lake
City. 	Id. ¶ 2. 	TVSA then contracted with other design
professionals for assistance, as permitted by the SLC/TVSA
contract. 	Id. 	Salt Lake County contracted with Hughes-Hunt to
be the general contractor for the project. 	Id. ¶ 3. 	Hughes-Hunt
then entered into a contract with SME Industries for steel

7 	No. 20080160
erection work. 	Id. 	The design of the steel framework was
completed by the “design team,” comprised of the entities which
contracted with TVSA. 	Id. ¶ 4.
¶18 	SME Industries encountered problems with the design of
the steel framework throughout construction, which resulted in
delays and spawned change orders. 	Id. 	SME submitted the costs
of these delays to Hughes-Hunt for reimbursement, arguing that
“the design team’s responses to [SME’s requests for information]
and change orders were consistently late, were internally
inconsistent, conflicted with the plans and specifications, and
often failed to address the issues raised by SME.” 	Id. ¶ 5.
Hughes-Hunt presented SME’s claim to Salt Lake County, which in
turn presented the claim to the design team for comment. 	Id.
¶ 6. 	Salt Lake County ultimately rejected the claim, but settled
with Hughes-Hunt for $150,000. 	Id. 	The settlement included an
assignment of “all rights, causes of action, and claims” Salt
Lake County had against the design team. 	Id. 	Hughes-Hunt then
reached a settlement with SME, paying SME $150,000 and assigning
to SME all of its “assigned rights, causes of action, and claims
against the design team.” 	Id. 	SME then sued the design team for
direct claims as well as the claims Salt Lake County had assigned
to Hughes-Hunt and Hughes-Hunt had in turn assigned to SME for
inter alia breaches of the SLC/TVSA contract. 	Id. ¶ 7.
¶19 	The district court dismissed SME’s breach of contract
claim against TVSA because it found the SLC/TVSA contract
prohibited assignment. 	Id. ¶ 10. 	After discussing the effect of
an anti-assignment clause in the SLC/TVSA contract, the court
briefly addressed the effect of an assignment on a party’s
ability to recover breach of contract damages. 	Id. ¶ 14. 	We
reversed the district court because it was unclear whether the
parties intended to prohibit an assignment of the rights under
the SLC/TVSA contract, “or whether the parties also intended to
prohibit the assignment of a cause of action seeking money
damages for breach of contract after the contract had been fully
performed.” 	Id. ¶ 15. 	We then stated that if on remand the
district court determined that the anti-assignment clause did not
prohibit an assignment of a claim under the SLC/TVSA contract,
“SME’s damages, if any, are limited to those damages suffered by
the County [the first assignor] as a result of TVSA’s alleged
breach of the County-TVSA contract inasmuch as SME may recover
only what the County could recover from TVSA per the assignment.”
Id. ¶ 16.
¶20 	We repeated this holding later in the opinion to
explain the limitation on the damages SME could recover if it
prevailed on its breach of implied warranty claim. 	We reasoned
that

5 Were we to impose a time-driven rule on the law of
assignment damages, it would produce an absurd result. 	For
example, an assignee sues a third party for an alleged breach of
duty to the assignor. 	In response, the third party claims that
if the assignee recovers damages, it would be in a better
position than the assignor since the assignor no longer has a
claim precisely because it assigned the claim away.
No. 20080160 	8
because SME’s implied warranty claim is an
assigned claim, SME may not recover the
damages it suffered as a result of TVSA’s
alleged breach of the implied warranty to use
reasonable and customary care in the
performance of contractual duties under the
County-TVSA contract. 	Rather, SME’s
recovery, if any, is limited to those damages
the County suffered as a result of TVSA’s
alleged breach of the implied warranty to
exercise reasonable and customary care.
Id. ¶ 30.
¶21 	Having discussed SME Industries, we now turn to its
application to this appeal. 	RB&G argues to this court that under
SME Industries, Enterprises cannot recover damages stemming from
the alleged breach of the RB&G contracts because the alleged
breach occurred after the assignment from SDC. 	RB&G argues that
the damages claimed from loss of the fourteen units are solely
the damages of Enterprises and therefore cannot be recovered.
¶22 	We cannot adopt such a literal reading of SME
Industries and find RB&G’s reliance on the case misplaced. 	The
holding in SME Industries was limited to the effect of an
assignment in situations where the assignor had only assigned a
claim under a contract, not assigned all the rights and
privileges under a contract. 	Additionally, in SME Industries
Salt Lake County had actually accrued damages in the form of
$150,000 paid as settlement to Hughes-Hunt before it assigned its
claims to TVSA.
¶23 	Because it is factually distinct from this case, we
reject RB&G’s reading of SME Industries and hold that the rule
that an assignee cannot stand in a better position than its
assignor simply means an assignee cannot recover more than the
assignor could have recovered under the assigned contracts. 5 	The
correct inquiry looks at the assignor’s rights and liabilities

6 Petitioners have indicated that Enterprises’ breach of
contract action may be barred by the applicable statute of
limitations and request this court to apply the discovery rule.
Specifically, they argue that the statute of limitations should
not begin until Enterprises was informed of the fault-line
problems. 	RB&G disputes the date on which the court should deem
the contracts breached. 	We decline to address this issue because
it was not addressed by the district court or the court of
appeals and presents questions of fact. 	Whether the breach of
contract claim pleaded by Enterprises was assigned by SDC and
whether SDC had any knowledge of the breach are factual
determinations to be made by the district court.
9 	No. 20080160
under the contract, not solely whether a claim for damages arose
before or after the date of the assignment.
¶24 	Our holding today is consistent with our holding in
Spears v. Warr. 	2002 UT 24, 44 P.3d 742 overruled on other
grounds Tangren Family Trust v. Tangren, 2008 UT 20, 182 P.3d
326. 	Spears involved a purchaser of land who sought the
conveyance of certain water rights from the seller. 	Id. ¶ 6. 	We
reasoned that a quitclaim deed operated as an assignment of water
rights claims against the original seller of the property. 	Id.
¶ 40. 	Importantly, the opinion concludes that “the deed assigned
[the assignors’] contractual interest in the irrigation water
rights,” and that “[a]ccordingly, the [assignees] are entitled to
bring against the [sellers/obligors] any contractual action the
[assignors] could have brought, including the instant claim for
the irrigation water rights.” 	Id.
¶25 	In this case, we acknowledge that core facts remain
unresolved, most notably, whether an assignment took place and,
if so, the nature of its terms. 	Moreover, the merits of RB&G’s
statute of limitations defense must be addressed. 6 	Additionally,
the court of appeals faulted Enterprises for not suing its
assignor, SDC, “for conveying [Enterprises] a property allegedly
worth over a million dollars less than [Enterprises] paid.”
Sunridge Dev. Corp., 2008 UT App 29, ¶ 10. 	We can discern no
relevance in this observation and do not rely upon it in our
decision today. 	This court’s scope of review precludes us from
addressing the implications of factual disputes that have not
been addressed by the court of appeals. 	Our opinion today is
meant to clarify that SME Industries does not place a temporal
restriction on the damages an assignee may recover. 	The court of
appeals erred when it failed to analyze whether the district
court properly considered the relationship between SDC,
Enterprises, and RB&G. 	We therefore reverse the court of appeals

7 Petitioners do not argue that Enterprises is entitled to
recover in negligence, but instead state in their brief that
“since [Enterprises] is in privity of contract with RB&G,
[Enterprises] does not appeal the dismissal of its negligence
claims against RB&G, as [Enterprises] and RB&G were in a position
to allocate risk and damages by contract (by virtue of the
assignment).” 	We do not reach this issue because Petitioners
explicitly waived it on appeal.
No. 20080160 	10
and remand to the district court with instructions to apply the
rule set forth today.
II. 	AS AN ASSIGNEE, SDC CANNOT TAKE ADVANTAGE OF ANY INDEPENDENT
DUTY EXCEPTION TO THE ECONOMIC LOSS RULE
¶26 	Petitioners argue, in the alternative, that SDC should
be able to recover the damages suffered as a result of the lost
units through a negligence action against RB&G “[s]ince SDC lost
its privity with RB&G pursuant to the 1996 assignment.” 7 	In
other words, SDC argues that an engineer who issues a faulty
geological report may be liable in negligence despite an absence
of damage to other property.
¶27 	The district court held that the economic loss barred
SDC’s negligence claim. 	The court of appeals did not address
whether the district court erred in its application of the
economic loss rule because it found the dismissal of SDC’s
contract claims dispositive. 	Sunridge Dev. Corp. v. RB&G Eng’g,
Inc., 2008 UT App 29, ¶ 4 n.2, 177 P.3d 644. 	Because we reverse
the court of appeals’ treatment of Enterprises’ contract claims,
we now also address whether the economic loss rule bars SDC’s
negligence claims.
¶28 	The economic loss rule serves two purposes. 	First, it
bars recovery of economic losses in negligence actions unless the
plaintiff can show physical damage to other property or bodily
injury. 	See SME Indus., Inc. v. Thompson, Ventulett, Stainback
and Assocs, Inc., 2001 UT 54, ¶ 32, 28 P.3d 669. 	Second, the
economic loss rule prevents parties who have contracted with each
other from recovering beyond the bargained-for risks. 	See id.
¶ 36. 	In essence, the economic loss rule “marks the fundamental
boundary between contract law, which protects expectancy
interests created through agreement between the parties, and tort
law, which protects individuals and their property from physical
harm by imposing a duty of reasonable care.” 	Id. ¶ 32 (citing
Am. Towers Owners Ass’n., Inc. v. CCI Mech., Inc., 930 P.2d 1182,
1190 (Utah 1996)).

8 We recognize that we have applied the independent duty
exception to situations where a contract exists between the
parties. 	See Yazd v. Woodside Homes Corp., 2006 UT 47, ¶¶ 24-26,
143 P.3d 283; Hermansen v. Tasulis, 2002 UT 52, ¶ 17, 48 P.3d
235. 	In these cases, we have recognized that an independent duty
may circumvent the economic loss rule, and “because the claim is
based on a recognized independent duty of care,” the rule does
not bar the tort claim. 	Hermansen, 2002 UT 52, ¶ 17 (internal
quotation marks omitted). 	In Yazd, we noted that the existence
of a duty can be, among other factors, a function of reliance on
a party’s expertise. 	See 2006 UT 47, ¶¶ 24-26. 	Petitioners now
argue that SDC relied on the RB&G engineers’ expertise because an
engineer provides specific and complicated information.
Petitioners argue that RB&G should therefore be subject to a duty
outside of any contract. 	Petitioners also point to the “special
relationship” doctrine in general tort law to show that a
relationship of trust creates a duty between a third party and a
professional when the third party relies on the professional’s
opinion. 	Petitioners’ argument that RB&G has an independent duty
to Petitioners that overcomes the existence of the contracts,
however, is misplaced and unpersuasive. 	In Yazd, a fraudulent
concealment case, we held that a developer-builder had an
independent duty outside of any contract with the purchaser to
disclose known and material defects. 	Id. ¶ 35. 	In this case,
Petitioners argue that SDC’s reliance on RB&G’s expertise in
itself causes RB&G to be liable in negligence. 	This argument
(continued...)
11 	No. 20080160
¶29 	The implications of the economic loss rule on parties
to a contract present themselves in this case. 	Petitioners argue
that the economic loss rule does not apply to SDC and therefore
it may maintain a negligence action because it is not a party to
the assigned contracts. 	We disagree.
¶30 	In making their argument, Petitioners would have us
assume SDC did not assign the contracts to Enterprises. 	Assuming
an assignment of the claims asserted here did not occur, as
Petitioners argue in the alternative, we have no other option
than to conclude that SDC has a contractual agreement with RB&G.
In its argument to this court, however, Petitioners have
characterized as a party that had no opportunity to contract with
RB&G. 	Petitioners claim that because SDC assigned the RB&G
contracts to Enterprises, SDC lacks privity of contract with RB&G
and can therefore sue RB&G for negligence. 	This characterization
of the benefits a party may glean from assigning a contract
impermissibly twists the economic loss rule. 	Petitioners would
have us overlook the fact that SDC originally had the opportunity
to bargain for the allocation of risk and benefits with RB&G. 8

8 (...continued)
fails to acknowledge that the independent duty in Yazd was a duty
to disclose known and material defects, not an independent duty
to refrain from acting negligently. 	We therefore cannot extend
Yazd to this case.
No. 20080160 	12
An assignor who contracts with an obligor cannot subsequently
invoke an assignment of the contract to escape the implications
of the economic loss rule. 	Petitioners are incorrect in their
argument that when SDC assigned the contracts to Enterprises, all
prior history between SDC and RB&G vanished. 	If on remand the
district court finds that an assignment did not take place or
that the assignment did not assign the claims brought by
Enterprises, then SDC must be viewed as a party that had a
contractual relationship with RB&G, exactly the type of
relationship to which the economic loss doctrine applies.
CONCLUSION
¶31 	We hold today that an assignee cannot recover more than
the assignor could have recovered under the assigned contracts.
To determine whether an assignee has stepped into shoes larger
than its assignor is not a robotic inquiry of when the damages
occurred, but rather an inquiry into the rights afforded the
assignor by the contract. 	Additionally, we hold that a party
cannot simply avoid the implications of the economic loss rule by
claiming that it assigned the underlying contract. 	As the
original contracting party with RB&G, SDC had the opportunity to
allocate risks and benefits between the parties. 	We therefore
reverse the court of appeals and remand to the district court for
proceedings consistent with this opinion.
---
¶32 	Chief Justice Durham, Associate Chief Justice Durrant,
Justice Wilkins, and Justice Parrish concur in Justice Nehring’s
opinion.