Bermel v. BlueRadios, Inc.
440 P.3d 1150
Colo.2019Background
- Bermel, an engineer for BlueRadios, copied thousands of company emails containing proprietary information to his personal Gmail in 2014 in anticipation of litigation.
- Bermel and BlueRadios had written agreements (Contractor Agreement and Proprietary Information and Inventions Agreement) that restricted removal and required return of Company Materials.
- Bermel sued BlueRadios for unpaid wages; BlueRadios counterclaimed for breach of contract, civil theft ( Colo. Rev. Stat. § 18-4-405 ), conversion, and UTSA violations.
- The trial court found Bermel liable on all counterclaims and awarded BlueRadios statutory damages ($200) under the civil theft and conversion claims; Bermel appealed.
- The court of appeals held the economic loss rule does not bar the statutory civil theft claim; the Colorado Supreme Court granted certiorari to resolve whether the judge-made economic loss rule can bar a statutory civil theft claim when the same conduct breaches a contract.
Issues
| Issue | Bermel's Argument | BlueRadios' Argument | Held |
|---|---|---|---|
| Whether the economic loss rule bars a civil theft claim under § 18-4-405 when same conduct breaches contract | Economic loss rule should bar civil theft because remedies are limited to contractual remedies for breach | Economic loss rule (a judge-made doctrine) cannot preclude a legislatively created statutory cause of action; civil theft may not be a tort or, if it is, statutory remedy governs | The economic loss rule cannot bar a statutory civil theft claim; civil theft claim may proceed (Makoto overruled to the extent inconsistent) |
| Whether civil theft is a tort for purposes of the economic loss rule | (Implicit) If civil theft is a tort, the rule would apply | Civil theft is primarily a punitive/statutory remedy and need not be treated as a common-law tort | Court assumed arguendo it could be a tort but held even if so the judge-made rule cannot bar the statutory cause of action |
| Whether separation-of-powers limits judicially created doctrines from abrogating statutory remedies | Bermel: legislative intent supports limiting civil theft in contract contexts | BlueRadios: legislature enacted an explicit private remedy (treble damages/fees) for theft victims that courts should not judicially nullify | Separation-of-powers favored: judicial policy (economic loss rule) cannot override clear statutory causes of action; statute preempts judge-made bar |
| Whether application of economic loss rule would undermine statute’s purpose (e.g., compensation/deterrence) | Economic loss rule protects parties’ bargain and avoids unexpected tort exposure | Applying the rule would strip a long-standing statutory remedy—including treble damages—meant to deter intentional theft and to redress economic loss | Court emphasized statute’s punitive/deterrent aims and history; barring statutory remedy would be inappropriate |
Key Cases Cited
- Town of Alma v. AZCO Constr., 10 P.3d 1256 (Colo. 2000) (adopted Colorado's economic loss rule to separate contract and tort remedies)
- BRW, Inc. v. Dufficy & Sons, 99 P.3d 66 (Colo. 2004) (applied economic loss rule to bar negligence/ negligent misrepresentation claims)
- Itin v. Ungar, 17 P.3d 129 (Colo. 2000) (construed § 18-4-405 as providing a private remedy to owners of stolen property)
- West v. Roberts, 143 P.3d 1037 (Colo. 2006) (interpreted interaction between § 18-4-405 and other statutory schemes like the UCC)
- Rhino Fund, LLLP v. Hutchins, 215 P.3d 1186 (Colo. App. 2008) (held economic loss rule did not bar civil theft claim under facts involving diversion of escrowed funds)
- Makoto USA, Inc. v. Russell, 250 P.3d 625 (Colo. App. 2009) (held economic loss rule barred civil theft claim where theft and contract claims were inextricably intertwined; partially overruled)
- Van Rees v. Unleaded Software Inc., 373 P.3d 603 (Colo. 2016) (declined to reach whether economic loss rule bars statutory civil theft claims)