Mealey’s Litigation Report: Construction Defects
Vol. 3, #10, November 2002

Colorado Judge Amends Awards, Contractor Hit For $6.17 Million

GOLDEN, Colo.- A Colorado state court judge on Aug. 14 amended a jury’s construction defect award involving three homeowner couples. The total award for all plaintiffs against the same builder is $6.17 million (Rodney D. Haberer, et al. v. Peterson Construction Inc., et al. v. Arapahoe Drain Systems, et al., No. 99CV695, Colo. Dist., Jefferson Co.; See June 2002, Page 8).

Rodney D. and Hope E. Haberer, Ricky and Michele B. McCoy, Marv and Kathy Mazone and Kenneth and Marie Hackbarth sued Peterson Construction Inc. and Robin C. Peterson, individually.

Peterson asserted third-party claims against subcontractors Arapahoe Drain Systems, C&S Backhoe Inc., Complete Engineering Service, 4x4 Inc., K.C. Enterprises, J.T. Concrete Enterprises and Sergis Concrete Inc., alleging negligence, breach of contract, breach of warranty, indemnification and contribution.

The adjusted amount are the result of pre- and post-judgment interest, attorneys’ fees and other costs associated with the litigation, said Jefferson County District Court Judge R. Brooke Jackson. The total award against Peterson was $6,178,613.17 .

Judgment

In July, a jury awarded the Haberers a judgment on their claims of negligence, economic damages, noneconomic damages and violation of the Colorado Consumer Protection Act. (CCPA) totaling $1,660,079.49. The amended amount is $1,661,374.96.

The McCoys received $1,592,812.14 on their claims for the same causes of action. The amended amount is $1,601,950.47.

The Mazones’ award of $1,213,461.06 was amended to $1,217,701.87, and the Hackbarths increased their recover from $1,615,765.29 to $1,697,585.87.

Verdict Forms

The jurors found that Peterson had been negligent, had breached the implied warranty and violated the CCPA against all plaintiffs.

Furthermore, the jury found that these violations were the cause of real damages and losses to the plaintiffs.

Claims Filed

The plaintiffs alleged in their original complaint that Robin Peterson, as president of Peterson Construction, knew or should have known about expansive soil conditions and should have taken steps necessary during construction to avoid current problems.

All defendants except Peterson, Arapahoe and 4x4 settled before trial. The terms of those settlements were not disclosed.

Economic Loss Rule

Peterson sought summary judgment, maintaining that the remedy for the plaintiffs’ claims lies in contract and that their tort claims should be dismissed under the economic loss rule.

In denying summary judgment before trial, Judge Jackson had ruled the controlling precedent is Cosmopolitan Homes Inc. v. Weller (663 P.2d 1041 [Colo. 1983]), in which the state Supreme Court imposed on home builders an independent duty sounding in tort to perform work subject to the contract with reasonable care and skill.

Peterson attempted to distinguish Cosmopolitan Homes on the grounds that it involved a subsequent purchaser of a home, for whom there is no express or implied warranty, whereas the plaintiffs are first purchasers and have contractual remedies.

Counsel

The plaintiffs are represented by Scott F. Sullan and Curt T. Sullan of Vanatta, Sullan, Sandgrund & Sullan in Greenwood Village, Colo. Peterson is represented by Colin C. Campbell and John D. Halepaska of Campbell Latoilais & Ruebel in Denver.

Arapahoe is represented by Scott Lasater of Lasater & Allen in Littleton, Colo. C&S is represented by Brian K. Stutheit in Littleton. Complete Engineering is represented by William H. Knapp and John R. Riley of Montgomery, Little & McGrew in Englewood, Colo.

Frederick P. Bibik of Louisville, Colo., represents 4x4. K.C. Enterprises and J.T. Concrete Enterprises are represented by James Powers of Harris, Karstaedt, Jamison & Powers in Englewood.