This is a case of how NOT to flip a house. Defendants bought a house, repaired damage caused by expansive soils, and then sold it to Plaintiffs. In the standardized Seller Property Disclosure form, Defendants claimed no knowledge of expansive soils. Plaintiffs brought a nondisclosure tort claim after the soils damaged the home. Defendants asserted the Economic Loss Rule as a defense, which was rejected by the trial court. As a matter of first impression, the court of appeals held the economic loss rule does not bar nondisclosure tort claims arising from a house built on expansive soils. First, home sellers owe home buyers an independent duty to disclose latent defects of which they are aware. Second, common law duties remain with standardized form contracts that do not set out a standard of care, limit rights to specific disclosures, or provide express remedies for nondisclosure.
Tag Archives: Independant Duty
In re the Estate of Carol S. Gattis, deceased. Scott M. Gattis, Linda L. Spreitzer, and Amy G. Goeden, as Personal Representatives, v. John E. McNutt; Timothy A. McNutt; and Christopher L. Boortz, 2013COA145 (Nov. 7, 2013)
Stan Clauson Associates v. Colemen Brothers Construction, Coleman Ranch, Dan Coleman, 2013COA7 (January 17, 2013)
“We are all professionals here…” But not if you are a land planner. In this case, a developer hired a land planner to help develop a property. Eventually, the planner sued the developer for breach of contract, who counter-sued for negligence. The counterclaim was dismissed based on the economic loss rule. That rule dismisses tort claims that are really contract claims, unless there is an independent tort duty outside of contract duties. Professionals owe independent tort duties consistent with other members of the profession and not just a duty to substantially perform under the contract. CRS 12-1.5-101 et. seq. lists 45 professions. The common law will recognize a duty only if the risk, likelihood of loss, burden, and consequences justify imposing a higher duty. The court of appeals held land planners are not professionals so the economic loss rule barred the counterclaim.