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Forest City Stapleton Inc. v. Rogers

Supreme Court of Colorado, En Banc

April 17, 2017

Forest City Stapleton Inc., a Colorado Corporation and FC Stapleton II, LLC, a Colorado limited liability company, Petitioners/Cross-Respondents:
v.
Tad S. Rogers. Respondent/Cross-Petitioner:

         Certiorari to the Colorado Court of Appeals Court of Appeals Case Nos. 14CA63 and 14CA797

          Attorneys for Petitioners/Cross-Respondents: Brownstein Hyatt Farber Schreck, LLP Hubert A. Farbes, Jr. Jonathan G. Pray David B. Meschke Denver, Colorado

          Attorneys for Respondent/Cross-Petitioner Hamilton Faatz, PC Clyde A. Faatz, Jr. Frank J. Morroni Greenwood Village, Colorado

          OPINION

          RICE, CHIEF JUSTICE

         ¶1 This case requires us to determine whether contractual privity is necessary for a home buyer to assert a claim for breach of the implied warranty of suitability against a developer. We hold that, because breach of the implied warranty of suitability is a contract claim, privity of contract is required in such a case. Here, because the home buyer did not have contractual privity with the developer, he may not pursue a claim against the developer for breach of the implied warranty of suitability.

         I. Facts and Procedural History

         ¶2 In 1990, after Denver determined that it needed a new airport, a group of citizens formed the Stapleton Redevelopment Foundation to develop the former Stapleton International Airport. The Stapleton Redevelopment Foundation created a master plan to convert the former airport site into a pedestrian-centric, mixed-use development. In 1995, the private, nonprofit Stapleton Development Corporation ("SDC") was formed to lease and sell the former airport property. SDC selected Forest City[1] as the master developer for redevelopment of the property.

         ¶3 As the master developer, Forest City subdivides the land into lots and sells the lots to builders. The builders in turn construct and sell houses on the lots. Although Forest City does not build the homes, it selects the builders and styles of homes that can be built on each individual lot to maintain a desired architectural and design aesthetic for the Stapleton community. It also reviews whether proposed homes will be consistent with the applicable design guidelines for the development.

         ¶4 Forest City sold the vacant residential lot at issue here to a professional home builder, Infinity Home Collection at Stapleton, LLC ("Infinity"), with whom Respondent/Cross-Petitioner, Tad Rogers, had contracted to build a home. When Infinity purchased the lot from Forest City, the lot was vacant, did not have utilities, and still needed to be graded to its final configurations. Rogers paid Infinity an extra fee to include a basement that could later be finished.[2] Rogers ultimately purchased the lot and the home from Infinity. The home included a foundation drain system designed to collect ground water into a sump pit and to pump that water into the yard by way of a sump pump.

         ¶5 After Rogers moved into the home, he noticed that the sump pump was discharging frequently. Rogers hired engineers to investigate and discovered that the ground water level was higher than he had believed it to be. He believed that the high water table beneath his house, coupled with calcite leaching from the recycled concrete aggregate base course used to construct the roads, caused a buildup of calcite in the foundation drain around his house. In turn, this water and calcite buildup makes his basement uninhabitable and causes his sump pump to run and discharge more water than expected. Rogers sued Forest City, alleging claims including breach of the implied warranty of suitability, nuisance, and negligent misrepresentation.[3] As relevant here, Rogers's breach of the implied warranty of suitability claim alleged that Forest City impliedly warranted to him that his lot was suitable for a home with a finished basement, when in fact it was not. The jury rendered a verdict in favor of Rogers's breach of the implied warranty of suitability claim, as well as his claims for nuisance and negligent misrepresentation.

         ¶6 Forest City appealed. The court of appeals in a split decision held that the implied warranty of suitability can exist between a developer who sells a vacant lot and a homeowner who is not the first purchaser of that lot. Rogers v. Forest City Stapleton, Inc., 2015 COA 167M, ¶ 1, ___ P.3d ___. However, it also held that it was unable to determine whether such an implied warranty existed in this case because the trial court did not properly instruct the jury, and the jury did not make the relevant factual findings. Id. It then remanded for a new trial. Id. at ¶ 23. The court also concluded that the evidence was insufficient to support the jury's verdict on the nuisance claim. Id. at ¶ 2. Forest City and Rogers both filed petitions for certiorari, and this court granted certiorari.[4]

         II. Analysis

         ¶7 The threshold question in this case is whether contractual privity is necessary for a home buyer to assert a claim for breach of the implied warranty of suitability against a developer. We hold that, because breach of the implied warranty of suitability is a contract claim, privity of contract is required to prevail on such a claim.[5] Because Rogers did not have contractual privity with Forest City, he may not pursue a claim against Forest City for ...


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