Van Rees v. Unleaded Software, Inc.
2013 COA 164
Colo. Ct. App.2013Background
- Van Rees contracted with Unleaded for website design/build, SEO, and dedicated hosting across three agreements executed Dec 2009–Mar 2010; the site "went live" April 1, 2010.
- The delivered site was allegedly defective, late, hosted on a shared (not dedicated) server, and SEO work was not performed; Van Rees claimed economic losses.
- Van Rees pleaded ten causes of action: four fraud-related (fraud, constructive fraud, fraudulent concealment, negligent misrepresentation), negligence, CCPA violation, civil theft, and three breach-of-contract claims.
- Unleaded moved to dismiss the seven tort claims under the economic loss rule; the trial court dismissed them; the contract claims proceeded to trial and Van Rees prevailed on those.
- On appeal, the court reviewed de novo whether tort duties alleged were independent of contractual duties and whether other doctrines (CCPA, civil theft) were sufficiently pleaded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fraud/ negligent misrepresentation claims survive under economic loss rule | Van Rees: pre-contract and performance-related misrepresentations create independent tort duties (relying on Brody, Keller) | Unleaded: alleged misrepresentations concern ability to perform contractual duties and are not independent; economic loss rule bars them | Dismissed — misrepresentations concerned contract performance and did not create independent tort duties |
| Whether negligence claim is independent of contract | Van Rees: contract terms vague; professional duty exists apart from contract | Unleaded: negligent acts alleged are breaches of contractual duties; no risk of physical harm; web devs not regulated professionals | Dismissed — no independent duty alleged; no physical-harm policy rationale; no recognized professional standard |
| Whether CCPA claim pleads public impact | Van Rees: conduct was an unfair/deceptive trade practice impacting public consumers | Unleaded: dispute was private between sophisticated businesses, so no public impact | Dismissed — complaint did not allege facts showing significant public impact |
| Whether civil theft claim states independent wrong | Van Rees: Unleaded deprived him of things of value by misconduct | Unleaded: alleged taking arises from contractual breach, not independent tort | Dismissed — claim depends on proving breach of contract and alleges no separate legal duty |
Key Cases Cited
- Town of Alma v. AZCO Constr., 10 P.3d 1256 (Colo. 2000) (articulates Colorado economic loss rule)
- Brody v. Bock, 897 P.2d 769 (Colo. 1995) (fraud inducing a change of position may be independent of contract)
- Keller v. A.O. Smith Harvestore Prods., 819 P.2d 69 (Colo. 1991) (negligent misrepresentation may be an independent tort when inducing purchase)
- BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66 (Colo. 2004) (framework for evaluating duty in contract-related negligence claims)
- A.C. Excavating v. Yacht Club II Homeowners Ass’n, 114 P.3d 862 (Colo. 2005) (tort duty is a question of law; exception where physical harm risk exists)
- A Good Time Rental, LLC v. First Am. Title Agency, Inc., 259 P.3d 534 (Colo. App. 2011) (misrepresentations directly related to contract performance barred by economic loss rule)
- Rhino Linings USA, Inc. v. Rocky Mountain Rhino Lining, Inc., 62 P.3d 142 (Colo. 2003) (CCPA requires a significant public impact)
- Makoto USA, Inc. v. Russell, 250 P.3d 625 (Colo. App. 2011) (civil theft claim not separate where it depends on contract breach)