The opinion of the court was delivered by: Honorable Marcia S. Krieger
OPINION AND ORDER GRANTING, IN PART, MOTION FOR SUMMARY JUDGMENT AND DENYING MOTION TO DISMISS
THIS MATTER comes before the Court pursuant to Third-Party Defendants' Lennar Colorado, LLC; Lennar Family of Builders Group, Inc.; Lennar Homes of Colorado, LLP; Lennar Corporation; and Lennar Homes, Inc.'s (collectively, the "Lennar entities") Motion to Dismiss or, in the alternative, for Summary Judgment (# 30), Third-Party Plaintiff Condominiums at the Boulders Association's ("the Association") response (# 38), and the Lennar entities' reply (# 42); and the Lennar entities and Third-Party Defendants' Genesee Communities VII ("Genesee"), LLC's Motion to Dismiss First Amended Third-Party Complaint or, in the alternative, for Summary Adjudication (# 44), the Association's response (# 46), and the Lennar entities and Genesee' reply (# 48); and the Association's Motion to Dismiss Plaintiff's Claims for Exemplary Damages (# 84), and the Plaintiff's response (# 87).*fn1
The Plaintiff commenced this action by filing a Complaint (# 1) in this Court on September 28, 2004, and filed an Amended Complaint (# 3) on October 15, 2004.
The Amended Complaint alleges that the Plaintiff purchased a condominium in a development built by Third-Party Defendant Genesee, of which the public and common areas were to be maintained by the Association. Shortly after taking possession of her unit, the Plaintiff detected a persistent, unpleasant odor in her unit. The Association deemed the Plaintiff's complaints to be unfounded and refused to participate in investigation or repair of the situation. The Plaintiff subsequently vacated her unit. Following further discussions with Genesee's insurer, Defendant Travelers Property and Casualty Insurance Co. ("Travelers"), an investigation was conducted, revealing construction defects in the common areas of the unit that were resulting in the release of sewer gas inside the unit. However, the Plaintiff maintains that the Association has failed to remedy the defect, and that her demands upon Travelers were not reasonably investigated or paid.
The Plaintiff asserts seven causes of action: (i) breach of contract against both the Association, apparently based on her purchase agreement, and against Travelers, apparently on a third-party beneficiary theory arising out of the Association's policy with Travelers; (ii) battery against the Association, resulting from her contact with the sewer gas; (iii) assault against the Association, relating to her exposure to the sewer gas; (iv) breach of fiduciary duty against both the Association and Travelers, the latter apparently being a duty arising in a third-party beneficiary context; (v) negligent infliction of emotional distress against both Defendants, arising out of the Association's failure to act and Travelers' failure to afford insurance benefits to the Plaintiff; (vi) breach of the duty of good faith against both Defendants, allegedly arising out of a statutory duty imposed on the Association and Travelers' duty incident to its policy; and (vii) civil conspiracy between the Association, Genesee, and Travelers for allegedly having conspired for unspecified "unlawful and illegal purposes."
On February 25, 2005, the Association filed an Answer and Third-Party Complaint (#23), asserting claims against the Lennar entities. Specifically, the Association alleged that one or more of the Lennar entities acquired Genesee -- and its attendant liabilities -- in a corporate purchase in 2002. As a result, the Association asserted four claims against the Lennar entities: (i) indemnification; (ii) contribution; (iii) negligence; and (iv) breach of express and implied warranties.
The Lennar entities then filed the instant Motion to Dismiss or, in the alternative, for Summary Judgment (# 30).*fn2 Specifically, the Lennar entities alleged that none of them may be held responsible for the acts of Lennar Corp.'s subsidiary, Genesee; that the State of Colorado has abolished the doctrine of implied indemnity; that no claim for contribution lies because none of the Lennar entities are liable for Genesee' acts; that the Association lacks standing to assert vicarious claims of negligence on behalf of the Plaintiff against the Lennar entities; and that the Third-Party Complaint does not allege the basis of any express or implied warranty given by a Lennar entity to the Association.
The Association initially responded to the Lennar entities' motion by filing an Amended Third-Party Complaint (# 36), which named Genesee as an additional Third-Party Defendant and clarified some of the claims. Nevertheless, the Association also filed a response to the Lennar entities' motion, and the Lennar entities filed a reply, acknowledging that the motion directed at the original Third-Party Complaint may have been mooted by the filing of an Amended Third-Party Complaint. Within a few days of their reply, the Lennar entities and Genesee filed a second Motion to Dismiss or, in the alternative, for Summary Judgment (# 44), directed at the Amended Third-Party Complaint. In this motion, the Lennar entities and Genesee acknowledged the partial curative effects of the Amended Third-Party Complaint, and purported to re-assert those arguments from the initial motion that remained viable. Thus, it appears that the Lennar entities' initial motion has been rendered moot and superseded by the later motion. The Court will proceed to analyze only the later motion.
More recently, the Association moved to dismiss the Plaintiff's demand for exemplary damages (# 84), stating that under Colorado law, a claim for exemplary damages may not be included in an initial pleading, but rather, may only be asserted following discovery and amendment of the pleading to assert the basis for the demand. Citing C.R.S. § 13-21-102.5(a). The Association also asserts that the Plaintiff cannot demonstrate facts sufficient to support a prima facie case warranting such damages.
The Court has subject-matter jurisdiction over this action pursuant to 28 U.S.C. § 1332.
Summary judgment is appropriate only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Cattret, 477 U.S. 317, 322 (1986); Henderson v. Inter-Chem Coal Co., Inc., 41 F. 3d 567, 569 (10th Cir. 1994); see also In re Ribozyme Pharmaceuticals, Inc. Securities Litigation, 209 F. Supp.2d 1106 (D. Colo. 2002). Whether there is a genuine dispute as to a material fact depends upon whether the evidence presents a sufficient disagreement to require submission to a jury or conversely, is so one-sided that one party must prevail as a matter of law. Anderson v. Liberty Lobby, 477 U.S. 242, 248-49 (1986); Stone v. Autoliv SAP, Inc., 210 F. 3d 1132 (10th Cir. 2000); Carry v. U.S. Postal Service, 812 F.2d 621, 623 (10th Cir. 1987). A fact is "material" if it pertains to an element of a claim or defense; a factual dispute is "genuine" if the evidence is so contradictory that if the matter went to trial, a reasonable party could return a verdict for either party. Anderson, 477 U.S. at 248. The court must resolve factual ambiguities against the moving party, thus favoring the right to a trial. Houston v. Nat'l General Ins. Co., 817 F. 2d 83, 85 (10th Cir. 1987); Quaker State Minit-Lube, Inc. v. Fireman's Fund Ins. Co., 52 F.3d 1522, 1527 (10th Cir. 1995); Grayson v. American Airlines, Inc., 803 F. 2d 1097, 1101 (10th Cir. 1986).
The analysis to be applied differs depending on whether the moving party is also the party with the burden of proof at trial. Here, the non-movant bears the burden of proof at trial and therefore must point to specific evidence establishing each challenged element of its claims. Ribozyme, 209 F.Supp.2d at 1111; Reed v. Bennett, 312 F.3d 1190, 1194 (10th Cir. 2002).
The Association's motion to dismiss the Plaintiff's exemplary damage claim is brought pursuant to Fed. R. Civ. P. 12(c). In reviewing a motion for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c), the Court applies the same standards as used in motions under Rule 12(b). Ramirez v. Department of Corrections, 222 F.3d 1238, 1240 (10th Cir. 2000). Specifically, the Court accepts all well-pleaded allegations in the Complaint as true, and construes them in the light most favorable to the Plaintiff. Id.; Estes v. Wyoming Dept. of Transportation, 302 F.2d 1200, 1203 (10th Cir. 2002). The Complaint should not be dismissed unless it appears beyond doubt that the Plaintiff can prove no set of facts in support of her claim which would entitle her to relief. Ramirez, 222 F.3d at 1240.
B. Lennar Entities' Motion for Summary Judgment
In many respects, the various arguments raised by the Lennar entities against many of the Association's claims revolve around a single assertion: that, as a matter of law, none of the Lennar entities may be held responsible for the actions of Genesee. At trial, the burden is on the Association to establish liability of the Lennar entities or a particular entity. The Lennar entities challenge the Association's ability to do so. Thus it is up to the Association to make a prima facie showing of facts, which if construed most favorably to it, would allow judgment to enter in its favor.
The Association's response offers several different theories of the Lennar entities' liability. On the one hand, it asserts "Lennar may have successor liability for work performed by [Genesee] or may have acquired [Genesee] prior to the time [Plaintiff] closed on her condominium. These are all issues on which the Association is entitled to conduct discovery." This response appears to be asserted pursuant to Fed. R. Civ. P. 56(f).
That rule provides that "Should it appear from the affidavits of a party opposing the motion that the party cannot, for reasons stated, present by affidavit facts essential to justify the party's opposition, the court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had." The Court should grant relief under Rule 56(f) liberally. Jensen v. Redevelopment Agency of Sandy City, 998 F.2d 1550, 1554-55 (10th Cir. 1993). However, the mere assertion by the non-movant that more discovery is needed is insufficient to properly invoke Rule 56(f). By its own terms, a request under Rule 56(f) must be made by an affidavit, stating reasons why the party is unable to present facts to oppose summary judgment. That affidavit must do more than simply allege that discovery has not been completed, or that specific facts are unavailable to the affiant. Id. at 1555. Rather, the affiant must show how the additional time requested will enable him to rebut the movant's allegations that no issue of fact exists. Id. To do so, the affiant should identify the specific facts sought to be obtained and what steps the affiant has already made to obtain them. Committee for the First Amendment v. Campbell, 962 F.2d 1517, 1522 (10th Cir.1992). The Association did not support its response with any affidavit, much less one conforming to the requirements of Rule 56(f). Thus, the naked assertion that discovery is necessary is insufficient to defeat the Third-Party Defendants' motion.
Next, the Association points out that Lennar Corporation acquired Genesee in 2002.*fn3 However, the Association has not responded directly to the Third-Party Defendants' assertion that, as a matter of law, parent corporations cannot be held vicariously liable for the actions of their subsidiaries. Citing U.S. v. Bestfoods, 524 U.S. 51, 61-62 (1998). Although the Third-Party Defendants have relied entirely on dicta from the United States Supreme Court discussing a "general principle of corporate law," rather than illustrative caselaw from Colorado, that general principle is indeed one with which the Colorado courts have agreed. In H&H Distributors, Inc. v. BBC Intern. Inc., 812 P.2d 659, 663 (Colo. App. 1990), the court explained that a jury verdict against a parent corporation based on its subsidiary's breach of a purchase agreement could stand only if the jury also found that the subsidiary was an "alter ego" of the parent. Citing New Sheridan Hotel & Bar, Ltd. v. Commercial Leasing Corp., 645 P.2d 868, 869 (Colo. App.1982). The alter ego doctrine exists to allow the disregard of nominally separate corporate forms, such as parent-subsidiary or corporation-shareholders, where a corporate entity is a "mere instrumentality" for the transaction of its owner's own affairs, and there is such a unity of interests between the entities that "the separate personalities of the corporation and the owners no longer exist." Krystkowiak v. W.O. Brisben Co., 90 P.3d 859, 867 n. 7 (Colo. 2004); Great Neck Plaza, L.P. v. Le Peep Restaurants, LLC, 37 P.3d 485, 490 (Colo. App. 2001). Among the numerous factors to be considered in making an alter ego determination are the extent to which one company owns the stock of the other; the extent to which management decisions are made by one corporation for the other, such as by common directors or officers; the extent to which the subsidiary has capitalization, assets, or business distinct from that of the parent; and the extent to which corporate formalities are observed. Great Neck, 37 P.3d at 490; New Sheridan, 645 P.2d at 869.
Here, the Association has only offered skeletal evidence with regard to a single factor: stock ownership. The record reflects that Lennar Corporation acquired Genesee in 2002, but it is silent as to the particulars of that transaction, i.e. whether the acquisition was complete or merely the accumulation of a controlling stake of Genesee's stock. The record does not offer any indication that Lennar Corporation makes decisions that affect the operation of Genesee, or whether the entities share common directors or officers. Nor is there any other evidence that Genesee is undercapitalized, or that its only meaningful business is conducted with Lennar Corporation. On the whole, even applying the deferential summary judgment standard in favor of the Association, the Court finds that the Association has failed to make a sufficient prima facie showing that Genesee is an alter ego of Lennar Corporation, such that Lennar Corporation can be held vicariously liable for Genesee' acts.
Finally, the Association contends that at least one of the Lennar entities participated directly in some of the conduct giving rise to the Association's claims. The record indicates that two*fn4 persons involved in one of the inspections of the Plaintiff's unit identified themselves as being associated with "Genesee/Lennar," and that correspondence from Lennar's counsel appears to admit that "Lennar has caused extensive testing and inspections" at the development, and requests that Lennar be permitted to participate in further testing. This evidence, scant and ambiguous as it may be,*fn5 is nevertheless sufficient, when taken in the light most favorable to the Association, to suggest that one or more of the Lennar entities actively participated in some of the allegedly insufficient inspections. The Third-Party Defendants reply to the Association's evidence by hypothesizing that the Lennar personnel participating in the inspection were "loaned" to Genesee, but adduce no evidence in support of this contention.
Thus, the record, construed in the Association's favor, reveals that representatives from an undifferentiated Lennar entity negligently failed to conduct a proper inspection of the common area. Although this evidence might be sufficient to support a negligence or contribution claim against the particular Lennar entity that these individuals purported to represent, the Association offers no evidence which identifies the Lennar entity or entities participating in the inspection.
Although the Court considers the evidence in the light most favorable to the Association at this stage, the Association has the burden of coming forward with sufficient facts to demonstrate a prima facie case against each of the Lennar entities it has sued. The ambiguous assertion that an individual represented "Lennar" is insufficient to do. A factfinder who concluded that the simple notation of "Lennar" on the inspection form meant Lennar Homes, Inc. as opposed to Lennar Corporation, or that it meant Lennar Colorado, LLC and not Lennar Family of Builders Group, Inc., would be engaging in mere speculation as to who "Lennar" is. Without more evidence identifying the ...