[Copyrighted Material Omitted]
Arapahoe County District Court No. 17CV32889, Honorable
Elizabeth Beebe Volz, Judge
Little & Soran, P.C., John R. Riley, Greenwood Village,
Colorado, for Plaintiffs-Appellants
Appearance for Defendant-Appellee
In this negligence action between plaintiff homeowners, John
and Sandra Ferraro, and defendant contractor, Frias Drywall,
LLC, premised on Friass failure to test for asbestos before
beginning renovation, we must decide two issues that no
Colorado court has considered — one procedural and one
The procedural question asks: After an entry of default but
before entry of the default judgment, may a court sua sponte
reconsider liability at the damages hearing and dismiss the
case for failure to state a claim? We answer that question
"yes," and hold that a court may reconsider whether
the unchallenged facts set forth in the complaint state a
legitimate cause of action after default is entered, because
this holding furthers the goal of a just, speedy, and
inexpensive determination of civil actions. C.R.C.P. 1(a).
The substantive question asks: Did amendments to the
Department of Public Health and Environment Regulations,
adding "single-family residential dwellings" to the
asbestos regulations, create a duty to inspect for asbestos
before beginning construction? And, if so, who has the
inspection duty — the contractor or the homeowner? We
answer the first substantive question "no,"
contrary to the district court, and hold that the plain
language of the regulatory amendments does not create an
inspection duty for single-family dwellings. Absent a duty,
the holding in Corcoran v. Sanner, 854 P.2d 1376
(Colo.App.Div. 1 1993), that a contractor has no duty to
inspect for asbestos before beginning construction, applies
here and supports the courts judgment dismissing the case on
alternative grounds. For these reasons, we affirm
the courts judgment on different grounds and disapprove its
conclusion that a homeowner has the duty, under the
regulations, to inspect for asbestos.
Factual and Procedural Background
The Ferraros entered into an oral contract with Frias to
remove the popcorn ceiling from their home. After Frias
completed the work, the Ferraros became concerned by the
significant amount of residual dust and decided to test for
asbestos. The samples tested positive. The Ferraros then
hired an asbestos abatement company and spent $18,390 to
remove the asbestos from their home.
Alleging that Frias had negligently failed to test for
asbestos before beginning construction, the Ferraros filed
their complaint seeking reimbursement of more than $41,000
for asbestos abatement, contaminated personal items, and
replacement carpet. They also requested annoyance and
inconvenience damages of approximately $41,000. They claimed
that Frias owed them a duty to test for asbestos before
beginning renovation. Frias never responded to the complaint.
The Ferraros moved for entry of default, and the clerk
entered a default. They then moved for a default judgment.
The district court granted the motion in part and set a
hearing to determine damages. At the hearing, the court asked
the Ferraros to address whether Frias had a duty to inspect
for asbestos and requested briefing. The Ferraros responded
with two arguments. First, they asserted that the clerks
entry of default rendered Frias liable as a matter of law, so
the court had no authority to reconsider, sua sponte, whether
they had a viable cause of action. Second, they asserted that
the amended asbestos regulations impose a duty on contractors
to inspect for asbestos in single-family residences.
Alternatively, they argued that because Occupational Safety
and Health Administration (OSHA) standards require
contractors to protect their employees, these same standards
required contractors to inspect single-family residences for
asbestos before beginning construction.
The court disagreed with their contentions. Because Colorado
had never decided the procedural issue, the court relied on
federal authorities interpreting Fed.R.Civ.P. 55, which is
substantially similar to C.R.C.P. 55. It found persuasive
cases interpreting the federal rule to permit a court to
examine the sufficiency of a legal claim after a default is
As well, it agreed with the Ferraros that the amended
regulations created an inspection duty for single-family
dwellings and, thus, that Corcoran is no longer good
law. See generally Dept of Pub. Health & Envt Reg.
8, 5 Code Colo.Regs. 1001-10. And it found that the
regulations do not specify who owes that duty. Therefore, it
applied common law negligence factors to the facts in the
complaint to find that the inspection duty rests with the
homeowner, not the contractor. It denied the motion to enter
default judgment and dismissed the case without prejudice.
The judgment is final for purposes of our review because the
complaint fails to allege a viable cause of action and cannot
be refiled. Therefore, the courts dismissal effectively
constitutes a dismissal with prejudice. Wilbourn v.
Hagan, 716 P.2d 485, 485 (Colo.App.Div. 1 1986).
Dismissal After Entry of Default
The Ferraros contend that the clerks entry of default, after
Frias failed to respond, established liability as a matter of
law and precluded the court from ...