Source: http://www.coloradoconstructionlitigation.com/2011/01/
Timestamp: 2017-11-23 20:30:29
Document Index: 400006725

Matched Legal Cases: ['§ 6', '§6', '§ 6', '§ 6', '§ 6', '§ 13', '§ 13', '§ 13']

Colorado Construction Litigation: January 2011
Sen. Morgan Carroll (D-Arapahoe) and Rep. Judy Solano (D-Adams) introduced SB 11-68, titled “Concerning an Increase in Consumer Protection under the ‘Colorado Consumer Protection Act ("CCPA").’” However, enacting SB 11-068 would offer no real additional protections to consumers in legitimate deceptive practice cases, cloud existing law, and make defending against baseless CCPA claims more onerous and costly.
The CCPA is found at C.R.S. § 6-1-101, et seq. C.R.S. §6-1-105 (1)(a) through (ccc) offers over forty examples of what may constitute a deceptive trade practice. The list includes deceptive practices that are very general, for example: “(g) represent[ing] that goods, food, services, or property are of a particular standard, quality, or grade, or that goods are of a particular style or model, if he knows or should know that they are of another;” and those that are more specific, for example: “(vv) violat[ion of] section 12-55-110.3, C.R.S.” (regarding posting legal notices required of a notary). Not all of the violations include a “knowing” or intent element. Subsection (3) further provides: “The deceptive trade practices listed in this section are in addition to and do not limit the types of unfair trade practices actionable at common law or under other statutes of this state.”
The CCPA establishes civil penalties (C.R.S. § 6-1-112 provides a penalty of $2,000 for each violation), and criminal penalties (C.R.S. § 6-1-114 makes first violations a class 1 misdemeanor). Most significantly, in private actions C.R.S. § 6-1-113 provides for treble damages plus attorney fees.
To prove a cause of action under the CCPA, a plaintiff must show: (1) that the defendant engaged in an unfair or deceptive trade practice; (2) that the challenged practice occurred in the course of defendant’s business, vocation, or occupation; (3) that it significantly impacts the public as actual or potential consumers of the defendant’s goods, services, or property; (4) that the plaintiff suffered injury in fact to a legally protected interest; and (5) that the challenged practice caused the plaintiff’s injury. Crowe v. Tull, 126 P.3d 196, 201 (Colo. 2006) (citing Rhino Linings USA, Inc. v. Rocky Mountain Rhino Lining, Inc., 62 P.3d 142, 146-47 (Colo. 2003)). In Rhino Linings, the Colorado Supreme Court reviewed the following factors to determine whether the challenged practice significantly impacts the public:
(1) the number of consumers directly affected by the challenged practice;
(2) the relative sophistication and bargaining power of the consumers affected by the challenged practice; and
(3) evidence that the challenged practice has previously impacted other consumers or has the significant potential to do so in the future.
The CCPA and its treble damages provision is distinct from other contract causes of actions, as well as misrepresentation and fraud actions, because of the harm of a deceptive trade practice to not just a party to a transaction, but to the public at large. Therefore, the CCPA requires a plaintiff to show that a deceptive trade practice significantly impacts the public.
SB 11-68 has two components: 1) to permit the Attorney General to identify additional acts that constitute deceptive trade practices; and 2) to remove a requirement that plaintiffs show that a challenged practice significantly impacts the public. The first component of SB 11-68 unnecessarily provides authority to the Attorney General to amend the extensive list of what constitutes a deceptive trade practice already provided by statute and case law. The second component of SB 11-68 would add the following provision to the CCPA:
6-1-113.5. Significant public impact. EVIDENCE THAT A PERSON ENGAGED IN A DECEPTIVE OR UNFAIR TRADE PRACTICE CONSTITUTES PRIMA FACIE EVIDENCE THAT THE PRACTICE SIGNIFICANTLY IMPACTED THE PUBLIC.
The bill summary describes the purpose of the new provision as:
Although not required by statute, case law interpreting the act has resulted in a requirement that plaintiffs separately establish that a defendant's challenged practice caused a significant public impact. In order to eliminate this additional burden on consumers, section 2 creates a rebuttable presumption that a significant public impact has occurred when a plaintiff offers evidence that a defendant engaged in a deceptive trade practice.
The long established requirement for a plaintiff to show a significant public impact is not an “additional burden on consumers” as the bill proponents argue, but one of the elements that differentiates a CCPA cause of action from other available causes of action such as misrepresentation or simply breach of contract. In Rhino Linings, the Colorado Supreme Court provided the following brief history behind the CCPA:
The CCPA was enacted to regulate commercial activities and practices which, “because of their nature, may prove injurious, offensive, or dangerous to the public.” . . . The CCPA deters and punishes businesses which commit deceptive practices in their dealings with the public by providing prompt, economical, and readily available remedies against consumer fraud.
Id. at 146 (citations omitted).
Several reported cases in Colorado arose from disputes where the plaintiff attempted to improperly broaden the litigation to assert CCPA claims, but where the public was not significantly impacted by the disputed transaction. The two cases cited below provide examples of construction disputes where plaintiffs recovered some damages on other grounds, but not CCPA treble damages due to a lack of public impact.
Where a defendant did not disclose that beneath the land sold to plaintiff existed the remains of a concrete swimming pool, the court found that the deceptive act was limited to a single transaction. Anson v. Trujillo, 56 P.3d 114, 118 (Colo. App. 2002). Though the defendant’s conduct was found to have involved misrepresentations or concealment in the deal, the court dismissed the CCPA claim, stating that the misrepresentation itself “was not advertised or otherwise presented to the public in an effort to induce sales.” Id.
In Wheeler v. T.L. Roofing, Inc., 74 P.3d 499 (Colo. App. 2003), a building owner hired the defendant to install a new roof, and thereafter claimed the roof leaked and sued for deceptive trade practices among other causes of action. The Colorado Court of Appeals upheld the trial court’s dismissal of the CCPA claim, which included an award of attorney fees to the defendant, based upon the plaintiff filing a frivolous and groundless claim, holding the plaintiff “did not allege, nor is there any showing in any factual material submitted by the parties that the alleged conduct of [defendant] significantly impacted the public as an actual or potential consumer.” Id. at 506.
This firm has successfully defended general contractors and developers in cases where plaintiffs have brought dubious CCPA claims where an underlying, disputed transaction had no public impact whatsoever. The potential for treble damages was too much for plaintiffs and their counsel to pass up, adding meritless CCPA claims to broaden their contract disputes into punitive actions. SB 11-068 would only increase the frequency of such unsupported claims. Shifting the burden to defendants to prove that a disputed transaction lacks public impact would not increase any protections for consumers with legitimate CCPA claims.
If you would like more information regarding SB 11-68, or the defense of CCPA claims, please contact Bret Cogdill at (303) 653-0046 or by e-mail at cogdill@hhmrlaw.com.
Posted by Bret Cogdill at 11:43 AM 0 comments Links to this post
A clear and unambiguous “premises owned” exclusion in homeowners insurance policies eliminates the duty to defend for all types of claims at all premises not listed in the policy. In Sachs v. American Family Mutual Insurance Company, the Sachses requested their homeowners insurance policy defend them for several claims, including a negligent misrepresentation claim for the sale of their former home. 09CA1536, 2010 WL 3259822 (Colo. App. Aug. 19, 2010). The decision rested on whether the claim fell under the “premises owned” exclusion below:
14. Premises Owned, Rented or Controlled.
We will not cover bodily injury or property damage arising out of any act or omission occurring on or in connection with any premises owned, rented or controlled by any insured other than an insured premises.
“Insured premises” was further defined in the policy as “that dwelling, related private structures and ground at that location where you reside.”
The Sachses filed a motion for summary judgment and argued that the claim did not fall under the premises owned exclusion because the exclusion applies 1) only to currently owned premises, and 2) only to premises liability claims. Essentially, the Sachses’ argument was that because they no longer owned the property, their homeowners insurance policy should cover all claims to that property.
American Family filed a cross-motion for summary judgment and argued that the negligent misrepresentation claim against the Sachses fell within the premises owned exclusion. American Family’s argument was that the provision specifically excluded coverage to all premises not listed in the policy. American Family further claimed the exclusion applies 1) to both currently owned and previously owned premises, and 2) to all types of claims at the subject properties.
Both the District Court and the Court of Appeals agreed with American Family. In making its decision, the Court of Appeals held that the plain language of the policy excluded all premises not listed under the policy. The Court also noted if it agreed with the Sachses, an insurance company would not be able to assess the risks associated with premises not listed under the policy. To hold otherwise, “an insured could obtain coverage by simply conveying the premises where the act or omission occurred to someone else.”
The Court further held that the premises owned exclusion applies to all types of claims. The Court again relied on the plain language of the policy and the unexpected result if it held otherwise. However, the Court noted several cases that properly held coverage existed because the specific policy exclusions contained ambiguous language. See Tacker v. American Family Mutual Insurance Co., 530 N.W.2d 674 (Iowa 1995); Hanson v. General Accident Fire and Life Insurance Corp., 450 So.2d 1260 (Fla. Dist. Ct. App. 1984). Yet those same cases held that express and unambiguous language, similar to the exclusion in this case, would effectively limit coverage and properly express the intent of the parties. Therefore, the Court granted summary judgment in favor of American Family.
Posted by Chad W. Johnson at 11:00 AM 0 comments Links to this post
Labels: Colorado construction attorneys, Colorado construction litigation, Denver construction attorneys, general liability
Posted by Brady Iandiorio at 11:00 AM 0 comments Links to this post
In Hubbell v. Carney Bros. Const., the Hubbells sought to build a home on land they had previously purchased. 05-CV-00026-CMA-KLM, 2010 WL 5147567 (D. Colo. Dec. 13, 2010). In order to finance the construction of the home, the Hubbells borrowed from Alpine Bank. Unsatisfied with the builders and design professionals midway through construction, the Hubbells fired the builders and design professionals and sued them for negligent construction and design. However, after filing suit and before the case was decided, Alpine Bank foreclosed on the property. Therefore, the Hubbells did not own or possess the property at the time defendants moved for summary judgment. Subsequently, the Hubbells settled with Alpine Bank and Carney Brothers settled with the Hubbells. The remaining defendants (“Defendants”) were Teamcorp, Inc., T.J. Concrete Construction, Inc., and Kerry Karnan.
The Defendants moved to limit the Hubbells’ damages to the amount the builders’ alleged negligence diminished the property value. At the same time, Defendants moved to cap damages to CDARA actual damages and vacate any claims to loss of use of the property. After the issue was fully briefed, the court identified four issues that it determined needed to be answered:
(1) whether the CDARA permits damages measured by the diminution in value of the property, (2) if so, whether such damages are the proper measurement of damages in this case, (3) whether loss of use damages are appropriate in this case, and (4) whether the Hubbells have already been fully compensated by their settlements with the other parties.
1. CDARA’s “actual damages” are merely a cap on relief
The court relied on the language of C.R.S. § 13-20-806(1) and several pre-CDARA and non-construction cases to hold that CDARA is merely a cap of “actual damages.”[1] The court relied on Bd. of County Com'rs of Weld County v. Slovek 723 P.2d 1309, 1316 (Colo. 1986), to hold that the proper measure of damages in real property torts are at the discretion of the trial court and should be undertaken on a case-by-case basis. Hubbell at *4. The goal of the trial court should be reimbursement for the actual loss suffered, not to inflict punishment on defendants or encourage wasteful expenditures by plaintiffs. Slovek at 1316. (relying on Zwick v. Simspon 572 P.2d at 134 (Colo. 1977)).
2. Diminution in market value damages is the appropriate relief when Plaintiffs no longer own or possess the property
First, relying again on Zwick and Slovek, the court showed why diminution in market value damages (“DMV”) is appropriate. Those cases held that DMV is the default measure of damages with several factors to determine if an exception exists to use another damage method. Without getting too bogged down in these pre-CDARA cases in this blog,[2] the Hubbell court determined that the desire or ability to repair the subject property (i.e., ownership of the property) is necessary to deviate from DMV. Hence, if a plaintiff no longer owns the property, DMV is the appropriate measure of damages.
The court also recognized it would be giving plaintiffs a windfall if it awards repair costs and plaintiffs do not repair the property. As a result, an award of repair costs would impermissibly go further than “reimbursement of the plaintiff for the actual loss suffered” and “inflict punishment on defendant.” Slovek at 1316.
3. Defendants did not dispute loss of use damages
The court held that Defendants did not meet their burden of proof on this issue and that a jury will decide the loss of use damages.
4. Prior settlements are not relevant to show that the Hubbells were fully compensated
Finally, under C.R.S. § 13-21-111.5, the Hubbells’ prior settlements are not relevant to damages in this action. That section only requires that the jury make a special finding of pro-rata liability for each defendant. Settlement amounts are not admissible to prove liability in Colorado. Greenemeier by Redington v. Spencer, 719 P.2d 710, 714-15 (Colo. 1986).
Furthermore, the court also noted that Defendants merely assumed the foreclosure amount was the DMV. However, because the Hubbells purchased the 14-acre land without the loan, and Alpine Bank foreclosed on both the land and the home, the evidence indicated that the foreclosure amount was less than the DMV. Because the defendants did not present evidence to dispute this fact, and the aforementioned settlement evidence discussion, the court denied summary judgment on this issue.
[1] Actual damages is defined in C.R.S. § 13-20-802.5(2) as the lesser of: 1) the fair market value of the property without the construction defect, 2) the replacement cost of the property, or 3) the reasonable cost of repair of the construction defect. Also included in actual damages are several incidental costs, including loss of use.
[2] For a more in-depth analysis, the Hubbell Court listed and applied the factors used to determine both Slovek and Zwick at *5-6.
Posted by Chad W. Johnson at 2:08 PM 0 comments Links to this post