e Village Homeowners Ass'n, Inc. v. Brooktree Village, LLC
479 P.3d 86
Colo. Ct. App.2020Background:
- Original developer Combest began the Brooktree Village Townhomes project, sold seven units, then went bankrupt; Combest’s lender conveyed the community’s common areas to the homeowners association (Association).
- Brooktree Village, LLC (Developer) and Rivers Development, Inc. (Builder) acquired remaining lots (not the common areas), completed construction of 45 townhomes, and sold them to individual purchasers; construction defects (grading/drainage) emerged.
- Association sued Developer and Builder in 2017 under CCIOA § 38-33.3-302(1)(d) on theories of breach of implied warranty, negligence, and negligence per se, seeking cost to repair common areas and damage to one owner’s unit (Rumfelt).
- After an 8-day trial, a jury found Developer and Builder liable and awarded $1,850,000; the trial court awarded the full amount to Association on the breach of implied warranty claim and declined to reduce it for Association’s comparative negligence.
- Defendants appealed, raising (inter alia) whether Association had standing to press implied-warranty claims on behalf of members without assignments and whether it could sue successor developer/builder who never owned the common areas; the Court of Appeals affirmed.
- The court also found the trial court erred in admitting some testimony about other owners’ unit damage but deemed the error harmless.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) May a homeowners association assert implied-warranty claims on behalf of members for defects in common areas? | Association: CCIOA § 38-33.3-302(1)(d) gives standing to sue on behalf of owners for matters affecting the community, so it can assert implied-warranty claims for common-area defects. | Developer/Builder: Association lacks privity with them and thus cannot assert implied warranties on behalf of members without assignments. | Held: Association has standing under CCIOA to assert implied-warranty claims on behalf of members for common-area defects; lack of privity does not bar the claim. |
| 2) Can Association sue a successor developer/builder who never owned the common areas and sold only some units? | Association: Direct purchasers who bought from Developer/Builder received implied warranties and have easements to use common areas; Association may vindicate those rights community-wide. | Developer/Builder: They never owned common areas and fewer than all owners bought from them, so Association cannot recover full remediation costs — at most a pro rata share tied to direct purchasers. | Held: Association may recover the full cost to remediate common-area defects caused by the successor developer/builder where two or more members are direct purchasers with implied warranties and rights to use the common areas. |
| 3) Should the damage award be reduced for Association’s comparative negligence? | Association: Comparative negligence does not apply to breach of implied warranty; thus the full jury award on the warranty claim stands. | Developer/Builder: The jury allocated 10% comparative negligence to Association; the judgment should be reduced by that percentage. | Held: Comparative negligence does not diminish damages for implied-warranty claims; the trial court correctly entered the full award where the jury also found warranty liability. |
| 4) Was Association required to obtain assignments from unit owners before asserting owners’ claims, and were evidentiary errors reversible? | Association: CCIOA allows associations to represent owners in litigation affecting the community without grafting an assignment requirement onto the statute; evidentiary errors were harmless. | Developer/Builder: Association needed assignments to assert owners’ individual claims; some late-disclosed evidence and witness testimony was prejudicial. | Held: No assignment requirement under CCIOA; Association could pursue owners’ claims relating to common-area defects. Some testimony re: other units was improperly admitted but harmless; other claimed evidentiary errors were not reversible. |
Key Cases Cited
- Carpenter v. Donohoe, 388 P.2d 399 (Colo. 1964) (recognizes implied warranty of workmanlike construction and habitability between builder-vendor and first purchaser)
- Cosmopolitan Homes, Inc. v. Weller, 663 P.2d 1041 (Colo. 1983) (proof of construction defect is sufficient to establish liability under the implied warranty doctrine)
- H.B. Bolas Enters., Inc. v. Zarlengo, 400 P.2d 447 (Colo. 1965) (limits implied-warranty protection to first purchasers in privity)
- Utz v. Moss, 503 P.2d 365 (Colo. App. 1972) (privity requirement is not dispositive where builder knew first purchasers would be individuals)
- Heritage Vill. Owners Ass’n v. Golden Heritage Invs., 89 P.3d 513 (Colo. App. 2004) (association has standing under CCIOA to assert construction-defect claims affecting the community)
- Yacht Club II Homeowners Ass’n v. A.C. Excavating, 94 P.3d 1177 (Colo. App. 2003) (units are part of the common-interest community; associations may pursue unit-related damage claims)
- Wall v. Foster Petroleum Corp., 791 P.2d 1148 (Colo. App. 1989) (implied warranty of habitability likened to strict liability for construction defects)
- Hildebrand v. New Vista Homes II, LLC, 252 P.3d 1159 (Colo. App. 2010) (comparative negligence does not apply to implied-warranty claims)
- Briarcliffe W. Townhouse Owners Ass’n v. Wiseman Constr. Co., 454 N.E.2d 363 (Ill. App. Ct. 1983) (association has representational standing to sue developer for common-area defects)
- Lakeview Reserve Homeowners v. Maronda Homes, Inc., 48 So. 3d 902 (Fla. Dist. Ct. App. 2010) (association may sue for defects in subdivision infrastructure such as roads and drainage)