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LB Rose Ranch, LLC v. Hansen Construction, Inc.

Court of Appeals of Colorado, Seventh Division

September 5, 2019

LB Rose Ranch, LLC, Defendant-Appellant,
v.
Hansen Construction, Inc., Defendant-Appellee.

          Garfield County District Court No. 10CV142 Honorable James B. Boyd, Judge.

          Hall & Evans, LLC, Alan Epstein, Brian Molzahn, Denver, Colorado, for Defendant-Appellant

          Holley, Albertson & Polk, PC, Dennis B. Polk, Eric E. Torgersen, Lakewood, Colorado, for Defendant-Appellee

          OPINION

          NAVARRO JUDGE.

         ¶1 LB Rose Ranch, LLC (Rose) appeals the district court's contribution judgment in favor of Hansen Construction, Inc. (Hansen), representing Rose's share of damages for which they were jointly liable in tort. We hold that a release Rose received from the plaintiffs as part of a settlement did not discharge Rose's contribution liability under section 13-50.5-105(1)(b), C.R.S. 2018. Before Rose's settlement, Hansen had fully satisfied the tortfeasors' common liability to the plaintiffs. Because the settlement between Rose and the plaintiffs did not resolve any common liability shared by Rose and Hansen, the release did not discharge Rose's contribution liability to Hansen. Therefore, we affirm the contribution judgment.

         I. Procedural History

         ¶ 2 A group of homeowners sued Rose, Hansen, and other defendants for damages caused by defects in the design, construction, and repair of twenty single-family homes in the Ironbridge Golf Club and Mountain Community subdivision in Glenwood Springs.[1]

         ¶ 3 Hansen and other defendants compelled arbitration, but Rose did not. Thus, Rose did not participate in the ensuing arbitration. The arbitrator awarded damages to the homeowners and found that Hansen, Rose, and other defendants jointly caused them.

         ¶ 4 Rose and the homeowners went to a jury trial. Hansen did not participate in that trial. Like the arbitrator, the jury found Rose, Hansen, and other defendants jointly and severally liable for sizeable damages. In particular, the jury found that Rose "consciously conspired and deliberately pursued with [Hansen and others] a common plan or scheme to engage in conduct that was negligent, that involved a negligent misrepresentation or nondisclosure, or which was a breach of [their] fiduciary duties."

         ¶ 5 As to each homeowner's damages, the jury found Rose 30% at fault and Hansen 15% at fault. As later interpreted by the district court, the arbitrator attributed 20% fault to Rose and 18% to Hansen. Both the arbitrator and the jury awarded damages on a lot-by-lot basis, rather than a single aggregate award.

         ¶ 6 In October 2015, the court confirmed and entered judgment on the arbitration awards against Hansen and others. Hansen satisfied this judgment as to each homeowner, paying an aggregate amount of over $9 million.

         ¶ 7 When entering judgment on the jury verdicts against Rose, the court found that Rose was bound only by the jury's findings and Hansen was bound only by the arbitrator's findings. The court also decided that the homeowners could not receive double recovery for damages already paid by Hansen. Therefore, the court compared the jury award for each lot to the arbitrator's award for each lot, and the court determined that Rose must pay each homeowner only those damages awarded by the jury that exceeded those awarded by the arbitrator (and already paid by Hansen).

         ¶ 8 To accomplish this, the court entered judgment against Rose for the entire amount of the jury award (with a small deduction for an inconsistency) but found that the judgment for each lot was satisfied to the extent that Hansen had already paid the damages. For many lots, this finding entirely extinguished Rose's duty to pay the homeowners. In total, the court entered judgment against Rose for over $6.6 million and ruled that most of it - all but $698, 548.93 - had been satisfied by Hansen. The homeowners' claims against Rose for prejudgment interest, fees, and costs remained outstanding.

         ¶ 9 After the court entered judgment on the jury verdicts, Rose settled with the homeowners for approximately $1 million, and they released Rose from all claims related to the properties. Both Rose and the homeowners waived their right to appeal the judgment.

         ¶ 10 Hansen then sought a contribution judgment against Rose for the amount of common liability to the homeowners that Hansen had satisfied. To determine the common liability of Rose and Hansen, the court referred to its findings supporting the judgment on the jury verdicts. The court found that Rose and Hansen were jointly liable as to each lot for only the damage amounts awarded both by the jury as to Rose and by the arbitrator as to Hansen. The court found this joint amount to be $5, 914, 566.37 and ruled that Hansen had paid this entire amount to the homeowners when it satisfied the arbitration judgment. The court, applying the jury's finding as to Rose's percentage of fault, then concluded that Rose must pay Hansen 30% of this joint liability, or $1, 774, 369.91.

         ¶ 11 In doing so, the court rejected Rose's assertion that the release received from the homeowners as part of the settlement discharged Rose from any contribution liability to Hansen. According to the court, Rose's settlement with the homeowners did not resolve any common liability with Hansen. This was true because, at the time of the settlement, only Rose was liable to pay the homeowners anything: the $698, 548.93 owed them under the judgment on the jury verdicts (plus interest, costs, and fees in amounts yet to be determined). Rose appeals.

         II. Contribution Judgment

         ¶ 12 Rose contends that the district court erred in the contribution judgment because (1) Hansen's satisfaction of the arbitration judgment did not extinguish Rose's liability to the homeowners; (2) Rose's settlement with the homeowners discharged any contribution liability to Hansen; and (3) the court violated Rose's due process rights by holding it responsible for the damages determined by the arbitrator even though it was not a party ...


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