Taylor Morrison of Colorado, Inc., f/k/a Morrison Homes of Colorado, Inc., Plaintiff-Appellant and Cross-Appellee,
Terracon Consultants, Inc., Defendant-Appellee and Cross-Appellant.
County District Court No. 10CV2032 Honorable C. Scott
& Wilmer L.L.P., Michael E. Lindsay, Jessica E. Yates,
Bethany Gorlin, Denver, Colorado, for Plaintiff-Appellant and
McDowell, Rice, Smith, & Buchanan, P.C., Thomas R.
Buchanan, Jason L. Buchanan, Linda C. McFee, Kansas City,
Missouri, for Defendant-Appellee and Cross-Appellant
Román and Freyre, JJ., concur.
1 This case requires us to address for the first time how a
trial court should adjust a jury verdict awarding damages for
breach of contract when there is both a setoff for the amount
recovered from other liable parties and a contractual
limitation on a defendant's liability. We conclude the
correct approach is to first apply the setoff against the
jury verdict and then apply the contractual limitation
against this reduced amount.
2 We therefore reverse the judgment as to the final award,
and remand with directions. In all other respects the
judgment and orders of the trial court are affirmed.
3 Plaintiff, Taylor Morrison of Colorado, Inc. (Taylor),
appeals the judgment entered following a jury trial on a
breach of contract theory against defendant Terracon
Consultants, Inc. (Terracon).
4 Taylor was the developer of a residential subdivision known
as Homestead Hills. In 2004, Taylor contracted with Terracon
to provide geotechnical engineering and construction
materials testing services for the development of the
subdivision. Through two contracts, Taylor and Terracon
agreed that Terracon was responsible for testing the soil for
compliance with project specifications and building codes.
Taylor and Terracon further agreed to a contractual
limitation on liability (Limitation). The Limitation capped
Terracon's total aggregate liability to Taylor at $550,
000 for any and all damages or expenses arising out of its
services or the contract.
5 By 2010, many of the homeowners notified Taylor about
cracks in the drywall of their houses. Taylor investigated
the complaints and then sued Terracon and other contractors
for damages relating to those defects.
6 The court rejected Taylor's pretrial arguments that the
$550, 000 Limitation was either invalid or inapplicable to
the action. The court then granted Terracon's
motion to dismiss it as a defendant after authorizing
Terracon to deposit $550, 000 into the court's registry,
rendering Taylor's claims moot.
7 Taylor proceeded to trial against the other contractors.
One of these other contractors was Bemas Construction, which
performed site grading, including overlot and subexcavation
work. The jury returned a verdict in Bemas' favor.
8 Taylor ultimately recovered $592, 500 through a settlement
with the remaining contractors.
9 Taylor appealed the trial court's dismissal of Terracon
as a defendant. In Taylor Morrison of Colo., Inc. v.
Bemas Constr., Inc., 2014 COA 10 (Taylor I), a
division of this court remanded the case to the trial court
to determine if Taylor should have been permitted to
introduce evidence of Terracon's willful and wanton
conduct to overcome the contract's Limitation clause,
and, if so, to order a new trial against
10 On remand, the trial court considered the issue and
ordered a new trial on Taylor's breach of contract claim
against Terracon. Although the court allowed evidence of
willful and wanton conduct, it excluded opinion testimony
from Taylor's experts that characterized Terracon's
conduct as "willful and wanton." The jury awarded
Taylor $9, 586, 056 in damages, but also found that
Terracon's conduct was not willful and wanton.
11 After the court subsequently reviewed the parties'
extensive post-trial briefing on damages, it entered a final
judgment of zero dollars. It arrived at this figure by first
concluding that the $550, 000 Limitation includes costs and
prejudgment interest. It then concluded that the Limitation
must be applied to reduce the jury's $9, 586, 056 damages
award to $550, 000. Finally, it deducted the $592, 500
settlement (received from the other liable parties) to arrive
at zero dollars.
12 The court found that neither party prevailed for the
purposes of awarding statutory costs. It also concluded that
neither Terracon's deposit of the $550, 000 into the
court registry nor its e-mail to Taylor addressing a mutual
dismissal constituted a statutory "offer of
settlement" that would have allowed Terracon an award of
actual costs and fees under section 13-17-202(1)(a)(II),
13 Taylor now appeals and Terracon cross-appeals.
Prior Challenges to the $550, 000 Limitation
14 As an initial matter, Taylor reasserts arguments it made
in the 2012 litigation that challenged the validity of the
Limitation under the Homeowner's Protection Act of 2007
(HPA) as well as its applicability to any payments Terracon
received from its Commercial General Liability (CGL) insurer.
For the reasons stated below, we decline to address them.
15 Taylor first requests that we revisit Taylor I,
which held that the HPA could not be retroactively applied to
invalidate the Limitation because such application would be
16 True, a division of this court may review another
division's ruling in the same case where "the
previous decision is no longer sound because of changed
conditions or law, or legal or factual error, or if the prior
decision would result in manifest injustice."
Core-Mark Midcontinent, Inc. v. Sonitrol Corp., 2012
COA 120, ¶ 10 (quoting Vashone-Caruso v.
Suthers, 29 P.3d 339, 342 (Colo.App. 2001)).
17 After considering Taylor's arguments, however, we
conclude that none of these extraordinary circumstances exist
here. Indeed, the division in Taylor I considered,
and ultimately rejected, the arguments that Taylor repeats in
this appeal. We are persuaded that the ruling in Taylor
I correctly stated the law, thus we decline to revisit
18 Taylor next argues that the Limitation is not applicable
to the extent damages are paid under Terracon's CGL
policy. Thus, Taylor contends that the trial court erred when
it rejected Taylor's request to enter a judgment allowing
it to pursue Terracon's CGL insurer.
19 But, as the trial court observed, it had already ruled on
the CGL insurance issue in the 2012 litigation. Taylor did not
then request the court to reconsider its ruling, and Taylor
did not appeal it. We agree with the trial court that Taylor
had abandoned the issue.
20 In the 2012 litigation, Taylor raised the CGL insurance
issue as one of two bases for objecting to Terracon's
dismissal as a defendant upon its $550, 000 deposit into the
court registry.Taylor appealed the court's dismissal
of Terracon, but only pursued one of its two objections to
the dismissal: that the $550, 000 Limitation would not apply
to Terracon's alleged willful and wanton conduct. See
Taylor I, ¶¶ 8, 35-38.
21 Taylor could have appealed the CGL insurance ruling in
Taylor I, but did not do so. Thus, Taylor abandoned
it. See Giampapa v. Am. Family Mut. Ins. Co., 64
P.3d 230, 245-46 (Colo. 2003) (finding appellant waived a
damages cap issue in part because the appellant did not raise
the issue in its previous appeal); Fed. Lumber Co. v.
Hanley, 33 Colo.App. 18, 21, 515 P.2d 480, 482 (1973)
(declining to consider an appellate challenge to the denial
of a motion when an appeal had previously been taken from the
same denial of that motion); In re Marriage of
Tognoni, 313 P.3d 655, 658 (Colo.App. 2011) (finding no
error where court declined to revisit issue when husband had
failed to appeal the previous order addressing the same
issue); see also Crocker v. Piedmont Aviation, Inc.,
49 F.3d 735, 739 (D.C. Cir. 1995) ("We have several
times said that appellate courts are precluded from
revisiting . . . those prior rulings of the trial court that
could have been but were not challenged on an earlier
Contractual Limitation and Setoff
22 Taylor contends that the trial court erroneously deducted
the $592, 500 setoff from Terracon's contractual $550,
000 limit on liability instead of deducting it from the $9,
586, 056 jury damages verdict. We agree.
23 The proper measure of damages presents a question of law
subject to de novo review. Colo. Ins. Guar. Ass'n v.
Sunstate Equip. Co., LLC, 2016 COA 64, ¶ 128;
see Ferrelgas, Inc. v. Yeiser, 247 P.3d 1022,
1026-27 (Colo. 2011) ...