Rogers v. Forest City Stapleton, Inc
411 P.3d 969
Colo. Ct. App.2015Background
- Forest City was master developer of the Stapleton redevelopment; it subdivided and sold residential lots to builders, selected allowable builders/styles, and served as development manager to Park Creek Metropolitan District (PCMD) for infrastructure work.
- Forest City sold the disputed vacant lot to a builder; Rogers contracted with that builder to construct a home with a finishable basement and paid extra for the basement shell.
- After occupancy, Rogers experienced excessive sump-pump operation; investigations showed higher-than-expected groundwater and calcite deposits that interfered with the foundation drain system.
- Rogers sued Forest City alleging breach of implied warranty of suitability, nuisance (placement of recycled concrete aggregate base course, RABC, in adjacent roadbeds), and negligent misrepresentation; jury found for Rogers on all claims and awarded damages.
- Trial evidence showed Forest City recommended contractors and advised PCMD (which contracted for infrastructure), but PCMD contracted for and installed roads; Forest City had board influence (2 of 5 PCMD seats) and participated as development manager.
- Post-trial, the court awarded sanctions/fees for discovery violations; appeals followed raising instruction error on implied warranty, sufficiency of nuisance evidence, and challenges to sanctions/cost awards.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a developer can owe an implied warranty of suitability to a later homeowner (not first purchaser) | Rogers: implied warranty runs to homeowners who rely on developer improvements; warranty covered suitability for a finishable basement | Forest City: implied warranty should not extend to subsequent purchasers or where developer did not directly build or represent suitability for that specific house | Court: An implied warranty can run to a non-first purchaser if (1) developer improved lot for a particular purpose and (2) subsequent purchasers relied on developer's skill; instructional error required reversal and remand for retrial on this claim |
| Whether jury instructions correctly stated law for implied warranty claim | Rogers: instructions were sufficient to find breach | Forest City: instructions omitted critical elements (reliance and that the lot be improved for the same particular purpose) | Court: Instructions were legally inadequate (failed to require jury findings on reliance and consistent particular purpose); new trial required with corrected instruction |
| Sufficiency of evidence to support nuisance verdict (Forest City "placed" RABC in roads) | Rogers: Forest City caused or directed placement of RABC via its control/management role and PCMD ties | Forest City: PCMD contracted for roads and placed RABC; Forest City did not place RABC | Court: Evidence insufficient under the jury instruction that required Forest City to have placed RABC itself; judgment notwithstanding the verdict should have been entered for Forest City on nuisance claim (nuisance verdict reversed) |
| Appropriateness/amount of discovery sanctions and fee awards | Rogers: larger fee award required (sought ~$90,000) | Forest City: sanctions should be limited; disclosure lapse was oversight and documents of slight use | Court: $10,000 sanction affirmed as within trial court's discretion (least severe proportional sanction) |
Key Cases Cited
- Rusch v. Lincoln-Devore Testing Laboratory, Inc., 698 P.2d 832 (Colo. App. 1984) (developer-improved lot sold for residential construction can carry implied warranty if purchaser relies on developer's expertise)
- Beeftu v. Creekside Ventures LLC, 37 P.3d 526 (Colo. App. 2001) (assumed implied warranty may extend to subsequent purchaser but no breach where developer did not participate in home design/construction and the lot was only unsuitable for a particular house feature)
- Jordan v. Talaga, 532 N.E.2d 1174 (Ind. Ct. App. 1989) (developer improvements and nondisclosure of latent defects can give rise to implied warranty enforceable by later homeowners)