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S K Peightal Eng'rs, Ltd. v. Mid Valley Real Estate Solutions V, LLC

Supreme Court of Colorado, En Banc

February 9, 2015

S K Peightal Engineers, LTD, a Colorado corporation; Hepworth-Pawlak Geotechnical, Inc., a Colorado corporation; Steve Pawlak; and Daniel E. Hardin, Petitioners:
v.
Mid Valley Real Estate Solutions V, LLC, a Colorado limited liability company, Respondent:

Page 869

Certiorari to the Colorado Court of Appeals. Court of Appeals Case No. 13CA519.

Judgment Reversed.

SYLLABUS

In this civil case, the supreme court considers: (1) whether entities that did not exist at the time the relevant contracts were completed can still be subject to the economic loss rule through the interrelated contracts doctrine; and (2) whether commercial entities situated similarly to the respondent, which was a third-party beneficiary to a contract that interrelated to the contract by which the home at issue was built, are among the class of plaintiffs entitled to the protections of the independent tort duty to act without negligence owed by construction professionals to subsequent homeowners when constructing residential homes. The supreme court holds that (1) the fact that an entity was nonexistent at the time the relevant contracts were completed does not alter the analysis under the interrelated contracts doctrine, and (2) the independent duty at issue does not apply here because, as a third-party beneficiary of a commercially negotiated contract that interrelates to the contract under which the home was built, the respondent cannot properly be considered a subsequent homeowner.

For Petitioner S K Peightal Engineers, LTD: Montgomery Little & Soran, P.C., John R. Riley, Echo D. Ryan, Shawn A. Eady, Greenwood Village, Colorado.

For Petitioners Hepworth-Pawlak Geotechnical, Inc.; Steve Pawlak; and Daniel E. Hardin: Cardi, Schulte & Ford, LLC, Andrew S. Ford, Daniel V. Woodward, Greenwood Village, Colorado.

For Respondent Mid Valley Real Estate Solutions V, LLC: Garfield & Hecht, P.C, David L. Lenyo, Chad J. Schmit, Avery A. Simpson, Aspen, Colorado; Dean Neuwirth P.C., Dean Neuwirth, Denver, Colorado.

For Amici Curiae American Council of Engineering Companies of Colorado, American Institute of Architects of Colorado, Structural Engineers Association of Colorado, and Colorado Association of Geotechnical Engineers: Cardi, Schulte & Ford, LLC, Philip B. Cardi, Greenwood Village, Colorado.

For Amicus Curiae Colorado Defense Lawyers Association: Ruebel & Quillen, Jeffrey Clay Ruebel, Westminster, Colorado; Lambdin & Chaney, LLP, Gregg S. Rich, Denver, Colorado.

For Amicus Curiae Independent Bankers of Colorado: Bieging Shapiro & Barber LLP, John E. Burrus, Tracy A. Davis, Denver, Colorado.

For Amicus Curiae Colorado Trial Lawyers Association: The Witt Law Firm, Jesse Howard Witt, Denver, Colorado.

OPINION

Page 870

RICE, CHIEF JUSTICE

[¶1] Petitioners have requested that we review two issues arising from the court of appeals' opinion issued on interlocutory appeal under C.A.R. 4.2. We must decide: (1) whether entities that did not exist at the time the relevant contracts were completed can still be subject to the economic loss rule through the interrelated contracts doctrine; and (2) whether commercial entities situated similarly to Respondent, which was a third-party beneficiary to a contract that interrelated to the contract by which the home at issue was built, are among the class of plaintiffs entitled to the protections of the independent tort duty to act without negligence owed by construction professionals to subsequent homeowners when constructing residential homes.[1] We hold that (1) the fact that an entity was nonexistent at the time the relevant contracts were completed does not alter our analysis under the interrelated contracts doctrine, and (2) the independent duty at issue does not apply here because, as a third-party beneficiary of a commercially negotiated contract that interrelates to the contract under which the home was built, Respondent cannot properly be considered a subsequent homeowner.

I. Facts and Procedural History

[¶2] This case arises out of a series of contracts surrounding the construction of a " spec" home. Petitioners are soil ...


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