More than a year ago, the Colorado Court of Appeals issued an opinion in Rogers v. Forest City Stapleton, Inc. (2015COA167). My post then noted the decision could significantly impact developers and construction professionals in Colorado.
The lawsuit involved a dispute between a homeowner in the Stapleton neighborhood and the master developer of the community (Forest City). Before any new structures were built, Forest City subdivided the former Stapleton International Airport land into individual lots to create a new residential development. Undeveloped lots were sold to a professional homebuilder (Infinity Home Collection at Stapleton, LLC). Infinity improved and finished the lot, constructed a house on it, and sold the lot to Rogers.
Rogers claims that an undisclosed high water table beneath his house, coupled with calcite leaching from nearby roads, infiltrated his basement. Rogers’ claim against Forest City included breach of implied warranty. His theory was that by allowing Infinity to construct a home with a basement on the lot, Forest City had implied that the lot was suitable for that purpose.
Forest City argued that it did not have any role in the builder’s or homeowner’s decision to build a basement on the lot because it had provide the builder with all of the information available respecting the lot’s subsurface and groundwater condition.
Before the Court of Appeals decision, no Colorado appellate court had recognized an implied warranty running from a lot developer to a subsequent home buyer where the developer is not involved in construction of the house.
Although the opinion attempted to carve a narrow exception for implied warranty claims against a developer, developers, builders, contractors, and designers may now be exposed to more frequent and successful claims for breach of implied warranty.
The Colorado Supreme Court considered the case and has issued it’s ruling. The Supreme Court concluded that because breach of the implied warranty of suitability is a contract claim, privity of contract is required in such a case.
The home buyer was not in privity of contract with the developer and thus cannot pursue a claim against the developer for breach of the implied warranty of suitability.
Thankfully, the Colorado Supreme Court decision assuaged concerns raised a year ago by the court of appeals’ decision.