Park Rise Homeowners Ass'n v. Resource Construction Co.

155 P.3d 427, 2006 Colo. App. LEXIS 926, 2006 WL 1643177
CourtColorado Court of Appeals
DecidedJune 15, 2006
Docket04CA0091
StatusPublished
Cited by26 cases

This text of 155 P.3d 427 (Park Rise Homeowners Ass'n v. Resource Construction Co.) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Park Rise Homeowners Ass'n v. Resource Construction Co., 155 P.3d 427, 2006 Colo. App. LEXIS 926, 2006 WL 1643177 (Colo. Ct. App. 2006).

Opinion

Opinion by

Judge WEBB.

In this construction defects case, plaintiff, Park Rise Homeowners Association, Inc. (the HOA), appeals the judgment entered on a directed verdict in favor of defendant, Resource Construction Company (Resource). We affirm in part, reverse in part, and remand for further proceedings.

The HOA is the homeowners association for a condominium community where Resource acted as the general contractor during much of the construction. The HOA filed this action against both Resource and the developer of the community, Park Rise, LLC (the Developer), alleging property damage from defects throughout the community. The HOA brought claims of negligence, negligence per se, and violation of the Colorado Consumer Protection Act, § 6-1-101, et seq., C©.R.S.2005 (CCPA).

Shortly before trial, the HOA settled with the Developer. The trial court ruled that the jury could apportion fault to the Developer as a designated nonparty. The case proceeded to trial with the HOA presenting expert testimony on numerous defects throughout the community. When the HOA rested, the court directed a verdict for Resource based on the economic loss rule; insufficient evidence apportioning damages between faulty construction and design defects for which Resource was not responsible; and failure to prove a deceptive trade practice.

In its ruling, the court treated the HOA as a third-party beneficiary of the construction contract between the Developer and Resource. Thereafter, the court allowed the HOA to amend the complaint to conform to the evidence by adding a breach of contract claim. Nevertheless, the court concluded that the failure to apportion damages was equally fatal to this claim.

*430 At oral argument, counsel to the HOA stated that, if its negligence claims were reinstated, it would not proceed on the breach of contract claim. Hence, we will not separately analyze that claim.

I. Economic Loss Rule

The HOA first contends the trial court erred in dismissing its negligence claims under the economic loss rule. We agree.

The trial court dismissed both the negli-genee claim and the negligence per se claim on this basis. Resource does not defend dismissal of the negligence per se claim on any other ground. Thus, while a negligence per se claim involves different elements from a negligence claim, we address only the trial court's error in dismissing both claims under the economic loss rule.

A. General Contractor's Duty

The existence and seope of a tort duty is a question of law to be determined by the court. Cary v. United of Omaha Life Ins. Co., 68 P.3d 462 (Colo.2003).

When the trial court ruled, it did not have the benefit of the supreme court's decision in A.C. Excavating v. Yacht Club II Homeowners Ass'n, 114 P.3d 862 (Colo.2005), which we consider to be dispositive.

In A.C. Excavating, supra, as here, the plaintiff was a homeowners association, representing individual unit owners, and seeking purely economic damages for construction defects. The defendant was a subcontractor who had not dealt directly with any of the individual unit owners.

The supreme court concluded that "the Association's negligence action is not barred by the economic loss rule." A.C. Excavating, supra, 114 P.3d at 865. In so holding, the court explained that Cosmopolitan Homes, Inc. v. Weller, 663 P.2d 1041 (Colo.1983), and Town of Alma v. Azco Construction, Inc., 10 P.3d 1256 (Colo.2000), both "recognize that builders are under an independent duty of care to construct homes without negligence." A.C. Excavating, supra, 114 P.3d at 865.

Contrary to Resource's arguments before us, the court interpreted Cosmopolitan Homes, supra, as "suggest[ingl that this duty is broadly shared by builders in general." A.C. Excavating, supra, 114 P.3d at 868. The court also observed that, in applying the factors articulated in Taco Bell, Inc. v. Lannon, 744 P.2d 43 (Colo.1987), for determining the existence of a duty of care concerning "work performed by general contractors as opposed to subcontractors, we do not see how they could create an independent tort duty upon the former group of builders, but not the latter." A.C. Excavating, supra, 114 P.3d at 868.

This expansive language leaves no doubt that general contractors, such as Resource, "and other builders are under an independent tort duty to act without negligence in the construction of homes." A.C. Excavating, supra, 114 P.3d at 868.

B. Latent Defects

Nor are we persuaded by Resource's argument that the trial court could have properly dismissed the negligence claims because experts for the HOA did not apportion damages between latent and patent defects.

Under Cosmopolitan Homes, a subsequent purchaser ean recover "only for latent or hidden defects," which have been defined as "those manifesting themselves after purchase and which are not discoverable through reasonable inspection." Cosmopolitan Homes, supra, 663 P.2d at 1045. The court explained this limitation on the basis that, while "[olften a buyer is willing to accept certain [patent] deficiencies in a house in exchange for a lower purchase price," the buyer "cannot be expected to discover structural defects which remain latent at the time of purchase." Cosmopolitan Homes, supra, 663 P.2d at 1045-46.

A plaintiff need only provide the fact finder with a reasonable basis for calculating actual damages using the relevant measure. Husband v. Colo. Mountain Cellars, Inc., 867 P.2d 57 (Colo.App.1993).

Expert testimony is needed only where the issue does not lie within the ambit of common knowledge of ordinary persons. See, e.g., Am. Family Mut. Ins. Co. v. Allen, 102 P.3d 333 (Colo.2004) (reasonable investi *431 gation and denial of an insured's claim within the common knowledge and experience of ordinary people); Gerrity Oil & Gas Corp. v. Magness, 946 P.2d 913 (Colo.1997) (expert testimony not needed to establish violation of Oil and Gas Commission order); Pomeranz v. McDonald's Corp., 843 P.2d 1378 (Colo.1993) (expert testimony not always required to establish future damages).

Resource cites no authority, and we have found none in Colorado, requiring that latent defects be identified through expert testimony. Applying the test of whether such defects were discoverable through reasonable inspection by a home buyer to the eighteen defect categories used by the HOA's damages expert, several of which were broken down into subcategories, the jury could, based on its common knowledge and with a proper instruction, have determined which defects were latent.

Further, to the extent Resource argues that latent defects were not identified by any evidence at trial, let alone expert testimony, we note the HOA's experts described every defect in detail, including its appearance and location. Also, the HOA introduced numerous photographs depicting these defects.

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Bluebook (online)
155 P.3d 427, 2006 Colo. App. LEXIS 926, 2006 WL 1643177, Counsel Stack Legal Research, https://law.counselstack.com/opinion/park-rise-homeowners-assn-v-resource-construction-co-coloctapp-2006.