United States District Court, D. Colorado
ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT
Michael E. Hegarty, United States Magistrate Judge.
Claimants Linda L. Waterhouse, Stephen E. Tisman, and Estate
of Stephen L. Waterhouse (collectively “the
Waterhouses”) seek summary judgment on Plaintiff/
Counter Defendant Prima Partners, LLC's claims for breach
of contract, fraudulent misrepresentation, fraudulent
concealment, attorney's fees, and exemplary damages.
Prima Partners' claims arise from the Waterhouses'
purported failure to disclose extensive mold, a history of
water intrusion, and a roof leak prior to closing on property
Prima Partners purchased.
issues of material fact exist as to Prima Partners'
breach of contract claim for all of the purportedly
undisclosed issues. Regarding Prima Partners' fraud
claims, I grant summary judgment as to the mold and water
intrusion problems, because the evidence undisputedly
demonstrates that, prior to closing, Prima Partners knew of
these issues. However, I find that disputed issues of
material fact exist as to Prima Partners' knowledge that
the roof would leak once snow and ice formed. Accordingly, I
grant in part and deny in part the Waterhouses' Motion
for Summary Judgment.
Prima Partners seeks summary judgment on the Waterhouses'
counterclaim for attorney's fees under Colorado Revised
Statute § 13-17-102. I find that the Waterhouses
improperly assert this counterclaim as a substantive cause of
action. Accordingly, I dismiss this claim with prejudice.
However, I deny Prima Partners' motion to the extent it
asks me to enter judgment on this claim. Therefore, I grant
in part and deny in part Prima Partners' Motion for
Summary Judgment on the Waterhouses' Counterclaims.
evidence submitted by the parties reveals the following
undisputed material facts.
1. The Waterhouses owned real property in Vail, Colorado
until September 22, 2016, when they sold it to Prima
Partners. Defs.' Statement of Facts ¶¶ 1, 4,
ECF No. 58; Pl.'s Resp. to Defs.' Mot. for Summ. J.
4, ECF No. 64.
2. Prima Partners is a Colorado limited liability company
owned by James Butterworth and his wife, Dr. Sarah Smith
(“Dr. Smith” or “Sallie Smith”).
Defs.' Statement of Facts ¶ 3; Pl.'s Resp. to
Defs.' Mot. for Summ. J. 4.
3. The Waterhouses' residence was built in 1967 as a
stand-alone home. However, subsequent renovations added an
adjoining residence, resulting in a duplex. Defs.'
Statement of Facts ¶ 2; Pl.'s Resp. to Defs.'
Mot. for Summ. J. 4.
4. In September 2011, Mr. Waterhouse discussed fixing a
“basement water problem” with his property
manager, Diane Milligan. This involved “outside drain
work” and inside work, such as “caulking the
foundation wall and also sealing it with a water repellant
product.” ECF No. 64-5, at 3.
5. In 2013, Steven Schwartzreich considered purchasing the
Waterhouses' property. While conducting an informal
inspection of the house, Mr. Schwartzreich noticed
“substantial water staining on the drywall on at least
the western wall of the lower level of the House.”
Decl. of Steven Schwartzreich ¶ 5, ECF No. 64-7.
6. In March 2015, the Waterhouses sent an email to their
property manager stating that a water leak occurred in the
“small bedroom.” ECF No. 64-5, at 2.
7. In May 2016, a different property manager, Glen Susmilch,
informed Mr. Waterhouse that he “found a small amount
of mold on the ceiling next to the exhaust fan in the east
bathroom down stairs.” After further investigation, Mr.
Susmilch discovered “considerable condensation”
in the ceiling, and he came to the conclusion that
“water is seeping into the house from the deck directly
under the living room windows . . . .” Id. at
8. Mr. Susmilch also had someone inspect the roof on the
Waterhouses' property, and he noted that the roof was in
“critical” condition. Id. at 13.
9. Two months later, on July 11, 2016, Prima Partners entered
into a contract to purchase the Waterhouses' property for
$5, 400, 000.00. Defs.' Statement of Facts ¶ 5;
Pl.'s Resp. to Defs.' Mot. for Summ. J. 4; Contract
to Buy and Sell Real Estate, ECF No. 58-4.
10. Provision 10.2 of the parties' contract required the
Waterhouses to disclose “any latent defects actually
known by [them].” Contract to Buy and Sell Real Estate
11. The Waterhouses timely delivered their property
disclosures to Prima Partners on July 15, 2016. Defs.'
Statement of Facts ¶ 7, Pl.'s Resp. to Defs.'
Mot. for Summ. J. 4.
12. Among other statements, the Waterhouses informed Prima
Partners that “moisture and/or water problems”
have never existed in the house, the roof should be replaced
within the next one to two years, there was a minor leak in
the northwest corner of the dining room due to an “ice
block on roof, ” there are no present roof leaks, and
the property has experienced only minor flooding or drainage
problems. Property Disclosures, ECF No. 58-5.
13. After receiving the disclosures, Prima Partners hired Ron
Amass to perform an inspection on July 20, 2016. Among other
issues, the inspection revealed that the roof was near or at
the end of its service life and that mold was growing on the
lower east bedroom wall. Mr. Amass recommended that Prima
Partners conduct a further review to gain a better
understanding of the condition. Amass Inspection Report 21,
48, ECF No. 58-8.
14. The Waterhouses hired SteamMaster to remediate the mold
growing on the lower east bedroom wall. Dep. of Gary Gilman,
44:17-45:6, May 19, 2017 (“Gilman dep.”), ECF No.
15. Mr. Amass subsequently informed Mr. Butterworth that it
would “be advisable . . . to get back in and reinspect
[the remediated] area and any other areas that potentially
could have mold.” Dep. of James Butterworth,
99:19-100:12, September 15, 2017 (“Mr. Butterworth
dep.”), ECF No. 58-63.
16. Mr. Butterworth then told Ron Byrne (the real estate
broker for the sale) that he would like to further inspect
the property, because SteamMaster was not asked to diagnose
the cause of the mold and it closed the affected area before
Mr. Amass could further inspect it. Additionally, Mr.
Butterworth stated that the insulation SteamMaster removed
was damp, which might be caused by compromised deck flashing
or waterproofing. ECF No. 58-10, at 3.
17. Mr. Byrne responded that they “can get Ron Amass
back in after a heavy rain after the Waterhouses departure
for further inspection.” Id.
18. On August 2, 2016, Josh Yandle performed an inspection on
the roof. Mr. Yandle stated that the “[e]xisting cedar
shake roof is in poor condition but may be able to go a few
more years with repairs. . . . Prior to winter I would
suggest blowing all debris off the roof and clearing the
gutter/downspouts with water. This will be a very high
priority to try to eliminate the potential for ice/dam
accumulation.” Mr. Yandle proposed making $2, 250.00 in
repairs. Yandle Inspection Report 2, ECF No. 58-11.
19. Despite the issues Mr. Yandle found, he did not
“know for sure [when], and if [the roof is] going to
leak.” Dep. of Josh Yandle, 76:15-:22, August 31, 2017
(“Yandle dep.”), ECF No. 58-12.
20. After receiving Mr. Yandle's report, Mr. Butterworth
emailed Mr. Byrne to discuss outstanding issues with the
property. Mr. Butterworth stated that “several rooftop
separations . . . need to be sealed with a roofing mastic to
prevent moisture intrusion” and “several missing
shingles need to be replaced.” Mr. Byrne agreed to pay
for these repairs. ECF No. 58-10, at 2.
21. On August 4, 2016, Mr. Butterworth discussed proposed
renovations with his architect, Mike Suman. Among other
plans, the architect noted that Mr. Butterworth planned to
“[f]ix waterproofing over lower bedroom” and
“[r]eplace roof finish.” Suman Proposal 3, ECF
22. Prima Partners did not submit an inspection objection
before the August 9, 2016 deadline. Defs.' Statement of
Facts ¶ 13-14, Pl.'s Resp. to Defs.' Mot. for
Summ. J. 5.
23. At a baby shower in August 2016, Dr. Smith learned that
“there might be a larger mold problem in the
basement.” Specifically, Ms. Schwartzreich informed Dr.
Smith that she and her husband were considering buying the
house in 2013, and they discovered probable mold around the
basement interior walls. Dep. of Sarah Smith, 34:17-36:3,
September 14, 2017 (“Dr. Smith dep.”), ECF No.
24. On August 21, 2016, Mr. Butterworth explained to Mr.
Suman the details of Dr. Smith's conversation with Ms.
Schwartzreich. Dr. Smith learned that Ms. Schwartzreich and
her husband “found mold in multiple places in the
basement, ” “the dining room was constructed . .
. in a way that creates a leak, ” and “[t]heir