U.S. District Court in Colorado Dismisses Contractor’s Negligence, Third-Party Beneficiary and Indemnity Claims, But Not Its Contribution Claim, Against Architect

Maisel v. Erickson Construction, Inc.
2012 U.S. Dist. LEXIS 108726 (D. Colo. August 3, 2012)

Plaintiff contracted with Charles Cunniffe & Assoc. Architects (“CCA”) for architectural services. Plaintiff separately contracted with Erickson Construction, Inc. (“Erickson”) for construction and general contractor services. No contract existed between CCA and Erickson.

Plaintiff sued both CCA and Erickson for various defects and design deficiencies, and asserted claims for breach of contract, breached of implied warranties, negligence and vicarious liability. Erickson cross-claimed against CCA for negligence, breach of contract (on a third-party beneficiary theory), indemnification and contribution.

CCA filed a motion to dismiss Erickson’s four cross-claims. The United States District Court for the District of Colorado dismissed all but the contribution claim, for the following reasons.

The economic loss doctrine barred Erickson’s negligence claim. The Court relied heavily upon the Colorado Supreme Court’s decision in BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66 (Colo. 2004). In BRW, Inc., the court held that the economic loss doctrine applies not only to parties in privity, but also “within the context of a network of interrelated construction contracts.” While Erickson and CCA were not in privity, a network of interrelated contracts governed the Plaintiff’s construction project, and thus the economic loss doctrine foreclosed Erickson’s tort-based recovery for solely economic loss.

Erickson’s third-party beneficiary claim failed because the architectural services agreement failed to express an intent to directly benefit Erickson. The contract instead stated that “[n]othing contained in this Agreement shall create a contractual relationship with or a cause of action in favor of a third party against either the Owner or Architect.” Colorado law provides third-party beneficiary status “if the parties to the agreement intended to benefit the non-party,” and “provided that the benefit claim is a direct and not merely an incidental benefit of the contract.” The court found neither of those conditions existed and dismissed Erickson’s contract claim.

Because Erickson had no contractual relationship with CCA, Erickson’s indemnity claim could only be based on a common law theory. But under Colorado law, the proportionate fault doctrine has supplanted common law indemnity. So the Court dismissed Erickson’s common law indemnity claim.

Erickson stated a valid claim for contribution because both Erickson and CCA had potential joint or several liability for the same injury to the Plaintiff. Colorado law provides a contribution right “where two or more persons become jointly or severally liable in tort for the same injury to person or property.” CCA maintained that liability for the “same injury” did not exist, as CCA’s liability was premised on design defects, and Erickson’s liability was premised on construction defects. The Court held that that argument missed the mark—“[t]he relevant comparison is between the injuries plaintiff alleges against Erickson and CCA in its … complaint.” The Court refused to dismiss Erickson’s contribution claim because it found no appreciable difference between the type of injuries allegedly inflicted by either Erickson or CCA on the Plaintiff.

 

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