Colorado News: Designation of Non-Parties at Fault in Construction Defect Cases is Not as Straightforward as it First Seems

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[author: Jonathan M. Allen]

In Colorado construction defect cases, defendants often designate non-parties at fault under a Colorado statute that allows for the fact-finder to apportion fault between parties and non-parties. See C.R.S. § 13-21-111.5(3). Issues frequently arise involving whether builders owe non-delegable duties of care, thus rendering designation of non-parties at fault improper, or whether apportionment of fault is appropriate when the theory of recovery is based on contract, rather than tort. No published appellate decision has addressed the issue head-on, so practitioners often look to trial court decisions for guidance.

Unfortunately, as is so often the case, Colorado trial courts are split on the issue. A recent decision from the Arapahoe County District Court determined that a homebuilder does not owe a non-delegable duty to the homeowner. See Marx v. Alpert Custom Homes, 10-cv-405, Order Regarding Plaintiffs’ Motion for Determination of a Question of Law (Arapahoe Co. Dist. Ct., Dec. 27, 2011). The trial court denied the plaintiffs’/homeowners’ request to strike the defendant’s/homebuilder’s designation of non-parties at fault on the theory that the homebuilder’s duty to plaintiffs was non-delegable. The court looked to A.C. Excavating v. Yacht Club II Homeowners Association, 114 P.3d 862 (Colo. 2005), which held that a subcontractor owed an independent duty of care to a homeowner. The Marx court reasoned that there would be no reason for the holding in Yacht Club II if the homebuilder’s duty to the homeowner was non-delegable. Consequently, the Marx court concluded that the homebuilder’s designation of its subcontractors as non-parties at fault was proper. 

The issue also presents itself in the context where tort claims are barred by the economic loss rule, leaving a plaintiff with only a contract remedy. The question then is whether designation of non-parties at fault under a contract theory of recovery is proper. In Dwight v. R.A. Nelson & Associates, 09-cv-94, Order re: Plaintiff’s Motion for Determination of Questions of Law (San Miguel Co. Dist. Ct., March 12, 2010), the court concluded that designation of non-parties at fault was appropriate for a breach of contract claim. The court rejected the defendant’s argument that apportionment of fault to non-parties was inappropriate in a breach of contract action because a non-party must owe a duty to the plaintiff before designation of fault is appropriate. Thus, defendant argued, because only the parties to the contract owe duties to the other, no non-party to that contract could appropriately be designated. The court rejected this argument, concluding, “A party who breaches a contract should only be responsible for damages caused by the breach. When there are multiple causes of the damage, the jury must be given a way to apportion the damages among the various causes. The apportionment statute is a sensible and practical way for a jury to do just that.”

Other courts have reached different conclusions. For example, in Ashby Family Partnership v. Design Service & Construction, LLC, 10-cv-89, Order (Grand Co. Dist. Ct., March 11, 2011), the court concluded, without much analysis, that “[r]egardless of whether there are contract or negligence claims, a general contractor may not designate its independent contractor as a non-party at fault.”

Whether and under what circumstances designation of non-parties at fault is appropriate in a construction defect case has important consequences and impacts a defendant’s potential exposure, expert witness opinions and the presentation of one’s case to a jury. However, until a Colorado appellate court weighs in on the issue, practitioners and trial courts will continue to struggle with non-party designation of fault issues in construction defect cases.

Published In: Civil Procedure Updates, General Business Updates, Construction Updates, Commercial Real Estate Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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