The jury returned a verdict for the contractor on the breach of contract claim. Both the Colorado Court of Appeal and the Colorado Supreme Court affirmed. Town of Alma v. The issue presented to the Colorado Supreme Court was whether the plaintiffs' negligence claim was barred by the economic loss rule. We hold that a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such a breach absent an independent duty of care under tort law.
Economic loss is defined generally as damages other than physical harm to persons or property.
The court concluded that the town failed to demonstrate that the contractor breached any duty independent of its contractual obligations. The contract contained guaranty and warranty provisions imposing a contractual duty on the contractor to install a system free from defects and to repair defects that manifested themselves in the first year after final billing. The court also found that the damages were economic damages for the cost of repair and replacement of property. The court distinguished prior cases in which the contracts did not address the defendant's duty of care or there was a duty of care independent of contract. In Lembke , the contract imposed no duty upon the plumbing contractor to exercise due care and caution.