{"id":901110,"date":"2023-04-27T12:09:39","date_gmt":"2023-04-27T18:09:39","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901110"},"modified":"2023-04-27T12:09:48","modified_gmt":"2023-04-27T18:09:48","slug":"economic-loss-rule-willful-or-wanton-conduct","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/economic-loss-rule-willful-or-wanton-conduct\/","title":{"rendered":"Willful or Wanton Conduct Not Enough to Overcome Economic Loss Rule Says Colorado Court"},"content":{"rendered":"\n<p>Amandeep S. Kahlon and Carly Miller | <a href=\"https:\/\/www.buildsmartbradley.com\/2023\/03\/willful-or-wanton-conduct-not-enough-to-overcome-economic-loss-rule-says-colorado-court\/?utm_source=Bradley+Arant+Boult+Cummings+LLP+-+BuildSmart&amp;utm_campaign=bfd08cfaa6-RSS_EMAIL_CAMPAIGN&amp;utm_medium=email&amp;utm_term=0_b504caf31b-bfd08cfaa6-78863422\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">BuildSmart<\/a><\/p>\n\n\n\n<p>In\u00a0<em>Mid-Century Insurance Co., v. HIVE Construction, Inc.<\/em>, a Colorado court of appeals recently reversed the decision of a lower court that had refused to apply the <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/economic-loss-rule-duty-arise\/\" target=\"_blank\" rel=\"noreferrer noopener\">economic loss rule<\/a> to a negligence claim alleging wanton or willful misconduct. The appellate court determined that, where the negligence claim was based solely on the breach of a contractual duty, it was barred by the economic loss rule regardless of whether the negligence was willful or wanton.<\/p>\n\n\n\n<p>The project at issue involved the buildout of a restaurant in Denver, Colorado. The general contractor substituted a layer of fire-resistant plywood in place of a layer of drywall used to separate the kitchen and dining room of the restaurant. Although fire-resistant, the plywood was combustible, and the broiler selected for the kitchen required eight inches of clearance from combustible materials. The parties disputed whether the owner was on notice of the substitution. The owner installed the broiler only an inch from the plywood layered wall. Despite that, the kitchen passed inspection.<\/p>\n\n\n\n<p>Two years later, a fire broke out in the wall next to the broiler, and the owner\u2019s expert opined that the ignition of the plywood due to heat radiated from the broiler caused the fire. The owner asserted a single negligence claim against the contractor alleging, in part, that the contractor\u2019s installation of the combustible plywood demonstrated a careless and reckless disregard for the rights and safety of others, which constituted willful and wanton conduct.<\/p>\n\n\n\n<p>The contractor answered the complaint by arguing the economic loss rule barred recovery on the negligence claim. After the jury returned a verdict in favor of the owner, the contractor moved for a directed verdict based on the economic loss rule. The trial court denied the motion, relying primarily on prior Colorado precedent that the \u201ceconomic loss rule does not apply to intentional conduct.\u201d The contractor appealed.<\/p>\n\n\n\n<p>Per the appellate court, the \u201ceconomic loss rule generally provides that a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such breach absent an independent duty of care under tort law.\u201d The rule is intended to maintain a distinction between breaches of contractual obligations\/promises and breaches of duties imposed by law without agreement or contract (tort). \u201cEven if the duty allegedly breached is separately recognized under tort law, it is not \u2018independent\u2019 of the contract for the purposes of the economic loss rule if it addresses the same obligations created by the contract.<\/p>\n\n\n\n<p>The parties agreed that the relief sought by the owner under the negligence claim was identical to the relief it could have sought under a breach of contract claim \u2014 purely economic damages. The appellate court concluded the duty allegedly breached under the negligence claim was indistinguishable from the duty the contractor owed under the parties\u2019 contract. In other words, no independent duty existed.<\/p>\n\n\n\n<p>In rejecting the trial court\u2019s application of existing Colorado precedent, the appellate court noted that there was no allegation of &nbsp;an intentional tort. Specifically, the court wrote \u201cwillful and wanton conduct is that which approaches but does not include an intentional tort nor can it be classified as such.\u201d The court further noted that there was no need for an exception from the economic loss rule for wanton or willful misconduct. That sort of conduct cannot be abrogated or limited by contract in Colorado, so the wronged party maintains a remedy under the contract. Per the court, application of the economic loss rule depends more on the nature of the duty owed and not on the nature of the defendant\u2019s conduct. The appellate court reversed the trial judge\u2019s denial and remanded with instructions to grant the directed verdict.<\/p>\n\n\n\n<p>The Colorado appellate court\u2019s opinion is instructive in describing the basis for and application of the economic loss rule. Inexplicably, the owner in\u00a0<em>Mid-Century<\/em>\u00a0did not file a corresponding breach of contract claim, which resulted in a particularly harsh outcome in this case. Parties to a contract may want to be careful to pursue tort claims in the alternative to or in addition to contract claims to prevent this sort of result. Parties sometimes pursue tort claims to avoid contractual limitations on remedies, and there may be exceptions to the economic loss rule that permit this approach. But, relying solely on those exceptions to pursue a claim may result in an unfavorable or unexpected ruling.<\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\" target=\"_blank\" rel=\"noreferrer noopener\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Amandeep S. Kahlon and Carly Miller | BuildSmart In\u00a0Mid-Century Insurance Co., v. HIVE Construction, Inc., a Colorado court of appeals recently reversed the decision of a lower court that had refused to apply the economic loss rule to a negligence claim alleging wanton or willful misconduct. The appellate court determined that, where the negligence claim&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/economic-loss-rule-willful-or-wanton-conduct\/\">Continue reading <span class=\"screen-reader-text\">Willful or Wanton Conduct Not Enough to Overcome Economic Loss Rule Says Colorado Court<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[10721,10885],"tags":[9895,120,319],"class_list":["post-901110","post","type-post","status-publish","format-standard","hentry","category-insurance","category-property-insurance-claims","tag-advise-consult","tag-colorado","tag-economic-loss-rule","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Willful or Wanton Conduct Not Enough to Overcome Economic Loss Rule Says Colorado Court - Advise &amp; 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