A Good Time Rental, LLC v. First American Title Agency, Inc.
259 P.3d 534
Colo. Ct. App.2011Background
- A Good Time Rental, Noble Petroleum, and Arugula Investment owned Colorado real estate and engaged in a 1031 exchange with California properties.
- IXG facilitated the exchange and created Arugula as a vehicle to hold title to the California properties.
- The closing involved American Heritage as closing agent; a $300,000 promissory note was to be exchanged as consideration.
- Plaintiffs allege American Heritage failed to deliver the original signed note and failed to perform closing duties with care.
- The trial court granted summary judgment based on the economic loss rule barring tort claims; plaintiffs appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the economic loss rule bar the negligence claim? | Plaintiffs contend a tort duty exists independent of contract. | American Heritage argues the duties are contract-based, so tort claims are barred. | Yes; negligence barred by economic loss rule. |
| Does the economic loss rule bar the negligent misrepresentation claim? | Misrepresentation duties are independent of contract. | Misrepresentation arises from contract performance, not independent tort. | Yes; negligent misrepresentation barred by economic loss rule. |
| Is there a fiduciary or special relationship creating an exception to the economic loss rule? | Closing agent may owe fiduciary duties to clients independent of contract. | Even fiduciary duties do not override the contract-based duties here. | No; no policy-based or fiduciary exception established. |
Key Cases Cited
- Town of Alma v. AZCO Constr., Inc., 10 P.3d 1256 (Colo. 2000) (economic loss rule governs whether tort or contract provides the remedy)
- Grynberg v. Agri Tech, Inc., ex rel. Grynberg I, 985 P.2d 59 (Colo. App. 1999) (contractual duties limit independent tort claims; later clarified in Grynberg II)
- Grynberg II, 10 P.3d 1267 (Colo. 2000) (independent tort duties not presumed when they arise from contract)
- BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66 (Colo. 2004) (special relationships do not automatically create independent tort duties when contract governs)
- Keller v. A.O. Smith Harvestore Prods., Inc., 819 P.2d 69 (Colo. 1991) (negligent misrepresentation recognized as tort with independent guidance when pre-contract information misleads)
- Lembke Plumbing & Heating v. Hayutin, 148 Colo. 334, 366 P.2d 673 (Colo. 1961) (duty to perform contract with reasonable care may create tort duty in some contexts)
- White v. Brock, 41 Colo. App. 156, 584 P.2d 1224 (Colo. App. 1978) (closing agent fiduciary considerations in unsophisticated settings)