Van Rees v. Unleaded Software, Inc.
2016 CO 51
| Colo. | 2016Background
- Van Rees operated ExquisiteCrystals.com and contracted with Unleaded Software to redesign his site, build three related sites, provide SEO, ECC integration, training, and hosting; deadlines were repeatedly missed and promised services allegedly were not performed.
- Van Rees alleges Unleaded made pre-contractual misrepresentations (including Magento Gold Partner status and SEO capabilities) that induced him to enter three successive contracts despite lacking staff or intent to perform.
- After launch on April 1, Van Rees claims the site suffered immediate harm (loss of search rankings, broken features, slowness) and sued for fraud, fraudulent concealment, constructive fraud, negligent misrepresentation, civil theft, CCPA violations, and breach of contract.
- The trial court dismissed all non-contract claims on a Rule 12(b)(5) motion; the jury later found for Van Rees on the contract claims. The court of appeals affirmed dismissal of tort and civil theft claims under the economic loss rule and rejected the CCPA claim for lack of public impact.
- The Colorado Supreme Court granted certiorari, reviewed the pleadings de novo, and narrowed the inquiry to whether tort duties alleged were independent of the contracts, and whether statutory elements for civil theft and CCPA were pleaded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether tort claims (fraud, negligent misrepresentation, etc.) are barred by the economic loss rule | Van Rees: pre-contractual misrepresentations induced him into contracting and create an independent tort duty | Unleaded: claims are rooted in the contractual promises and thus barred by the economic loss rule | Reversed as to torts: pre-contract misrepresentations allege an independent tort duty not barred by economic loss rule |
| Whether civil theft claim (§ 18-4-401) survives dismissal | Van Rees: Unleaded knowingly deprived him of things of value (website, rankings, services) | Unleaded: allegations arise from contract breach and lack the specific intent/knowing deprivation required for theft | Affirmed dismissal: complaint fails to allege the requisite knowing intent to permanently deprive or traceable specific funds or property |
| Whether CCPA claim pleads significant public impact | Van Rees: deceptive practices had public impact and affected consumers generally | Unleaded: harm alleged is purely private and individualized | Affirmed dismissal: pleadings allege only Van Rees’s personal loss and fail to plead impact on identifiable segment of the public |
Key Cases Cited
- Town of Alma v. AZCO Constr., 10 P.3d 1256 (Colo. 2000) (recognizes Colorado's economic loss rule and distinguishes contract duties from independent tort duties)
- Keller v. A.O. Smith Harvestore Prods., 819 P.2d 69 (Colo. 1991) (pre-contract negligent misrepresentations can give rise to independent tort claims despite an integrated contract)
- Brody v. Bock, 897 P.2d 869 (Colo. 1995) (oral promises can support fraud claims independent of contract formation)
- Itin v. Ungar, 17 P.3d 129 (Colo. 2000) (civil theft requires specific intent to permanently deprive owner of property)
- Rhino Linings USA, Inc. v. Rocky Mountain Rhino Lining, 62 P.3d 142 (Colo. 2003) (CCPA requires a showing of significant public impact on actual or potential consumers)