Category Archives: Economic Loss Rule

February 12, 2015

Can Only “Subsequent” Home Owners Bring Negligence Claims?

By Tim Gordon

For over a decade, we’ve safely assumed that the economic loss rule does not bar typical homeowners (i.e., individuals who buy a home as their primary residence) from bringing negligence claims for alleged construction defects.  But a new decision from the Colorado Supreme Court suggests that the “homeowner exception” to the economic loss rule protects only “subsequent homeowners” and does not apply to the original home purchasers.  S K Peightal Engineers, LTD v. Mid Valley Real Estate Solutions V, LLC, 2015 CO 7.

Read more >>

September 23, 2013

Everyone Can Qualify As A “Homeowner” For Purposes Of The Economic Loss Rule

By Tim Gordon

In Colorado, the economic loss rule bars torts claim in cases where the defendant’s duty arises from a contract and only economic damages are sought.  See Town of Alma v. AZCO Constr., Inc., 10 P.3d 1256, 1264 (Colo. 2000).  There is one notable exception:  The economic loss rule does not bar negligence claims brought by homeowners regarding the construction of residential properties.  See Park Rise Homeowners Ass’n v. Res. Constr. Co., 155 P.3d 427, 430 (Colo. App. 2006).  This is because home builders have an obligation to act without negligence in the construction of a home, independent of contractual obligations.  Cosmopolitan Homes, Inc. v. Weller, 663 P.2d 1041, 1042 (Colo. 1983).

Read more >>

November 8, 2010

Owner may sue town’s engineering consultant for being billed excessive tap fees

By Tim Gordon

Rocky Mountain Festivals, Inc. v. Parsons Corporation (Colo. Nov. 8, 2010).

Today, the Supreme Court cleared the way for a property owner to pursue claims against a town’s consulting engineer for issuing a faulty report that resulted in the owner having to litigate with the town regarding over assessment of tap fees.

The Town of Larkspur hired Parsons to investigate problems with its water and wastewater systems.  As part of its report to the Town, Parsons noted that the Renaissance Festival had underpaid for water and wastewater services.  The Town then billed the Festival for approximately $1,600,000 in unpaid back tap fees.

Read more >>

April 30, 2009

The Economic Loss Rule Still Bars Tort Claims, Even Those Pleaded As Fraud

By Tim Gordon

Hamon Contractors, Inc., v. Carter & Burgess, Inc. (Colo. App. 2009)

In this April 30, 2009, opinion, the Court of Appeals rejects the position that alleging fraud is enough to avoid application of the economic loss rule.  Instead, the Court holds that the economic loss rule bars even a claim for alleged fraud where the acts complained of took place during a party’s performance of its contractual duties.  This holding is consistent with BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66 (Colo. 2004) (holding that the economic loss rule bars misrepresentation claim by subcontractor against design professional, where alleged misrepresentation took place during the performance of the work).  The Court also holds that alleging that fraud took place before the contracts were entered into may not be sufficient to avoid dismissal, since a duty might not exist as a matter of law.

Read more >>

February 7, 2008

Court Of Appeals Gives Lengthy Analysis Of Changed-Conditions Claims

By Tim Gordon

URS Group, Inc. v. Tetra Tech FW, Inc. (Colo. App. 2008)

The Colorado Court of Appeals addresses in detail the elements of, and defenses against, a Type-I differing site conditions claim.

URS was the winning remediation subcontractor for a U.S. Army cleanup project managed by Tetra Tech FW, Inc. (TTFW).  After beginning demolition, URS encountered problems removing the foundations, and claimed that the conditions encountered were not as represented in the request for proposal.  So URS submitted a contract change notification, seeking $9,166.925 in additional costs.  TTFW rejected the claim, and URS sued.

Read more >>

June 15, 2006

Homebuilders Allowed To “Puff” Without Facing CCPA Liability

By Tim Gordon

Park Rise HOA v. Resource Construction (Colo. App. 2006)

The Colorado Court of Appeals addresses many construction-related issues in this case, including the following:

(1) The trial court ruled that the economic loss rule bars an HOA’s negligence claims for construction defects against the general contractor. The Court of Appeals reversed based on previous cases limiting the application of the economic loss rule in residential construction defects cases.

(2) The Court of Appeals ruled that only latent construction defects were actionable under Cosmopolitan Homes, thus the jury must have some way of deciding what defects are latent. But the Court of Appeals held that expert testimony is not needed for this, rejecting the general contractor’s argument to the contrary.

Read more >>