Thursday, November 15, 2012

One Colorado Court Allows Negligence Claim by General Contractor Against Subcontractor


Judge Paul King of the Douglas County District Court recently confirmed that subcontractors in residential construction owe an independent duty, separate and apart from any contractual duties, to act without negligence in the construction of a home in Colorado.  See Order, dated September 7, 2010, Sunoo v. Hickory Homes, Inc. et al., Case No. 2007CV1866; see also Cosmopolitan Homes, Inc. v. Weller, 663 P.2d 1041 (Colo. 1983); A.C. Excavating v. Yacht Club II Homeowners Ass’n, Inc., 114 P.3d 862 (Colo. 2005).  He also verified that the holding in the B.R.W. Inc. v. Dufficy & Sons, Inc., 99 P.3d 66 (Colo. 2004)[1] case does not prohibit general contractors, such as Hickory Homes, from enforcing a subcontractor’s independent duty to act without negligence in the construction of a home.  In his Order, Judge King stated:

The independent duty to construct in a non-negligent manner is not dependent on the nature of the party presenting the claim in residential contract.  It is independent of any agreement and there is nothing that precludes the homeowner or the general contractor from seeking to enforce it in a residential homeowner setting.     
See Order, Sunoo v. Hickory Homes, Inc. et al., p. 7.

In the Hickory Homes case, an excavation subcontractor filed a motion for partial summary judgment on Hickory’s third-party claims for negligence, contribution, and breach of implied warranty.  The excavation subcontractor argued that Hickory’s claims for negligence and contribution were barred by the Economic Loss Rule as a contract existed between it and Hickory.  Hickory asserted that the excavation subcontractor is subject to an independent duty that can form the basis of any tort claim, which bars summary judgment.  Judge King agreed, and denied the excavation subcontractor’s motion for partial summary judgment. 

Another subcontractor joined the excavation subcontractor’s motion for partial summary judgment concerning Hickory’s breach of implied warranty claim, arguing that the implied warranty of habitability did not apply to it.  Hickory clarified that the breach of implied warranty claims were not predicated upon said warranty of habitability.  Rather, Hickory’s claims of breach of implied warranty arise out of implied warranties of merchantability and fitness for a particular purpose.  The court found it undisputed that this subcontractor provided goods in connection with its work on the plaintiffs’ home.  Accordingly, Judge King found that an implied warranty of merchantability and fitness applied to those goods and denied the subcontractor’s joinder in the motion for partial summary judgment.  Judge King’s Order serves as further confirmation that subcontractors engaged in residential construction in Colorado are subject to the same independent duty applicable to builders. 

Additionally, in his Order, Judge King verified that the trial court should follow the criteria set forth in the Redden v. SCI Colorado Funeral Services, Inc., 38 P.3d 75 (Colo. 2001) case in determining whether to permit designations of nonparties beyond statutory time frame allowed, or within 90 days after commencement of the action.  C.R.S. § 13-21-111.5(3)(b) provides that the negligence or fault of a nonparty may be considered if the claimant entered into a settlement agreement with the nonparty or if the defending party gives notice that the nonparty was wholly or partially at fault within 90 days following the commencement of the action unless the court determines a longer period is necessary.  In the Hickory Homes Order, Judge King indicated that the trial court should, in accordance with Redden, “strive to promote justice and should be guided by the following three criteria: 1) was the neglect excusable; 2) was there a meritorious claim; and 3) whether the designation would be consistent with equitable considerations.”  See Order, Sunoo v. Hickory Homes, Inc. et al., p. 2.  
 
Hickory sought to designate several potential nonparties at fault outside of the 90-day time frame allowed by statute following its receipt of expert reports from the plaintiffs.  As such, the court found Hickory’s delay in seeking to designate the nonparties excusable.  Id. at p. 3.  Hickory argued that provisions in the contract dictate that the owners were responsible for certain construction elements, including the structural floor system.  As a result, the court found that Hickory had established a meritorious claim.  As the plaintiffs did not raise structural or geotechnical issues until its experts’ second reports, the court found that equitable considerations favored granting Hickory permission to make its nonparty designations and thereby granted its motion for leave.  For those of us defending construction defect cases, the opportunity to designate nonparties following the receipt of a plaintiff’s expert report(s) is, in many instances, extremely vital to our client’s defense and almost always outside the statutory time frame of 90 days.  Accordingly, it is reassuring to see the Douglas County District Court give consideration to the timing predicaments facing construction defect defendants.

For more information regarding the Hickory Homes case or residential construction defect litigation in Colorado, you can reach Heather Anderson at telephone (303) 653-0044 or by e-mail at anderson@hhmrlaw.com.

[1] In the B.R.W. Inc. case, the Colorado Supreme Court held that the Economic Loss Rule barred the steel subcontractor’s negligence claims against the engineering firm and inspector for a public works project, even though the subcontractor had not directly contracted with the engineering firm or inspector.             

1 comment:

  1. I think this is a legitimate court ruling. Everybody should be responsible when they are constructing a domicile, subcontractor or not.

    ReplyDelete

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