Maisel v. Erickson Construction, Inc. et al

Filing 156

ORDER RE: CROSS-CLAIM DEFENDANT CHARLES L. CUNNIFFE'S MOTION TO DISMISS CROSS-CLAIMS. Cross-Claim Defendant Charles L. Cunniffe's Motion To Dismiss Cross-Claims [# 119 ] is GRANTED IN PART and DENIED IN PART, by Judge Robert E. Blackburn on 08/03/2012.(wjcsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Robert E. Blackburn
Civil Case No. 11-cv-00555-REB-KLM
ELLIOT B. MAISEL,
Plaintiff,
v.
ERICKSON CONSTRUCTION, INC., a Colorado corporation,
RICKIE DEAN ERICKSON, individually,
CHARLES L. CUNNIFFE, individually, d/b/a Charles Cunniffe & Assoc, Architects,
ALPINE HEATING AND SHEET METAL, INC., a Colorado corporation,
COG PLUMBING & HEATING, INC., a Colorado corporation, and
THE LOG CONNECTION, INC., a Colorado corporation,
Defendants.
ERICKSON CONSTRUCTION, INC., a Colorado corporation,
RICKIE DEAN ERICKSON, individually,
Cross-Claimants/Third-Party Plaintiffs.
CHARLES L. CUNNIFFE, individually, d/b/a Charles Cunniffe & Assoc., Architects,
THE LOG CONNECTION, INC., a Colorado corporation,
DAVID JOHNS, individually, d/b/a Johns Construction,
CROSS SEVEN, INC., a Colorado corporation,
LOGARYTHMS, INC., a Colorado corporation,
STEAMBOAT LANDSCAPING, INC., d/b/a Mountain West Environments, Inc., a
Colorado corporation,
TBW, INC., a Colorado corporation, and
TINMAN ROOFING AND HOME IMPROVEMENTS, INC., a Colorado corporation
Cross-Claimants/Third-Party Defendants.

ORDER RE: CROSS-CLAIM DEFENDANT CHARLES L.
CUNNIFFE’S MOTION TO DISMISS CROSS-CLAIMS
Blackburn, J.

The matter before me is Cross-Claim Defendant Charles L. Cunniffe’s Motion
To Dismiss Cross-Claims [#119]1, filed October 20, 2011. I grant the motion in part
and deny it in part.
I. JURISDICTION
I have subject matter jurisdiction pursuant to 28 U.S.C. § 1332 (diversity of
citizenship).
II. STANDARD OF REVIEW
When ruling on a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), I must
determine whether the allegations of the complaint are sufficient to state a claim within
the meaning of Fed. R. Civ. P. 8(a). For many years, “courts followed the axiom that
dismissal is only appropriate where ‘it appears beyond doubt that the plaintiff can prove
no set of facts in support of his claim which would entitle him to relief.’” Kansas Penn
Gaming, LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir. 2011) (quoting Conley v.
Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957)). Noting that this
standard “has been questioned, criticized, and explained away long enough,” the
Supreme Court supplanted it in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 562,
127 S.Ct. 1955, 1969, 167 L.Ed.2d 929 (2007). Pursuant to the dictates of Twombly, I
now review the complaint to determine whether it “‘contains enough facts to state a
claim to relief that is plausible on its face.’” Ridge at Red Hawk, L.L.C. v. Schneider,
493 F.3d 1174, 1177 (10th Cir. 2007) (quoting Twombly, 127 S.Ct. at 1974). “This

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“[#119]” is an example of the convention I use to identify the docket number assigned to a
specific paper by the court’s electronic case filing and management system (CM/ECF). I use this
convention throughout this order.

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pleading requirement serves two purposes: to ensure that a defendant is placed on
notice of his or her alleged misconduct sufficient to prepare an appropriate defense, and
to avoid ginning up the costly machinery associated with our civil discovery regime on
the basis of a largely groundless claim.” Kansas Penn Gaming, 656 F.3d at 1215
(citation and internal quotation marks omitted).
As previously, I must accept all well-pleaded factual allegations of the complaint
as true. McDonald v. Kinder-Morgan, Inc., 287 F.3d 992, 997 (10th Cir. 2002).
Contrastingly, mere “labels and conclusions or a formulaic recitation of the elements of
a cause of action” will not be sufficient to defeat a motion to dismiss. Ashcroft v. Iqbal,
556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citations and internal
quotation marks omitted). See also Robbins v. Oklahoma, 519 F.3d 1242, 1247-48
(10th Cir. 2008) (“Without some factual allegation in the complaint, it is hard to see how
a claimant could satisfy the requirement of providing not only ‘fair notice’ of the nature of
the claim, but also ‘grounds' on which the claim rests.”) (quoting Twombly, 127 S.Ct. at
1974) (internal citations and footnote omitted). Moreover, to meet the plausibility
standard, the complaint must suggest “more than a sheer possibility that a defendant
has acted unlawfully.” Iqbal, 129 S.Ct. at 1949. See also Ridge at Red Hawk, 493
F.3d at 1177 (“[T]he mere metaphysical possibility that some plaintiff could prove some
set of facts in support of the pleaded claims is insufficient; the complaint must give the
court reason to believe that this plaintiff has a reasonable likelihood of mustering factual
support for these claims.") (emphases in original). For this reason, the complaint must
allege facts sufficient to “raise a right to relief above the speculative level.” Kansas

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Penn Gaming, 656 F.3d at 1214 (quoting Twombly, 127 S.Ct. at 1965). The standard
will not be met where the allegations of the complaint are “so general that they
encompass a wide swath of conduct, much of it innocent.” Robbins, 519 F.3d at 1248.
Instead “[t]he allegations must be enough that, if assumed to be true, the plaintiff
plausibly (not just speculatively) has a claim for relief.” Id.
The nature and specificity of the allegations required to state a plausible claim
will vary based on context and will “require[] the reviewing court to draw on its judicial
experience and common sense.” Iqbal, 129 S.Ct. at 1950; see also Kansas Penn
Gaming, 656 F.3d at 1215. Nevertheless, the standard remains a liberal one, and “a
well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of
those facts is improbable, and that a recovery is very remote and unlikely.“ Dias v. City
and County of Denver, 567 F.3d 1169, 1178 (10th Cir. 2009) (quoting Twombly, 127
S.Ct. at 1965) (internal quotation marks omitted).
III. ANALYSIS
In January, 2003, plaintiff entered into a written contract with defendant/thirdparty defendant, Charles L. Cunniffe, d/b/a Charles Cunniffe & Assoc. Architects
(“CCA”) to provide architectural services for the construction of a residential home in
Steamboat Springs, Colorado. After CCA began its work, plaintiff entered into a
separate agreement with defendants/cross-claim plaintiffs/third-party plaintiffs, Rickie
Dean Erickson and Erickson Construction, Inc. (collectively, “Erickson”), to provide
construction and general contractor services in connection with the construction.
Importantly, although Erickson was required to construct the residence according to the

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plans and specifications provided by CCA, there was no contract between Erickson and
CCA.
Plaintiff alleges various defects and deficiencies in the design and construction of
the home and asserts claims for breach of contract, breach of implied warranties,
negligence, and vicarious liability against Erickson, CCA, and numerous other
contractors and subcontractors involved in the construction. The instant motion is
directed to Erickson’s cross-claims against CCA for negligence, breach of contract,
indemnification, and contribution. I examine the issues raised by and inherent to the
motion seriatim.
CCA argues that Erickson’s claim of negligence is barred by the economic loss
rule. This rule prevents a party from recovering in tort for a mere breach of contract.
Town of Alma v. Azco Const., Inc., 10 P.3d 1256, 1264 (Colo. 2000). That is, the
failure to perform a contract generally does not give rise to liability in tort, unless there
exist duties independent of the contract. Id. The economic loss rule thus maintains the
boundary between contract law and tort law. Id. at 1259. More specifically, and more
relevantly for present purposes, the Colorado Supreme Court has held, in
circumstances closely analogous to those of this case, that the economic loss rule
operates even in the absence of a direct contract between the parties.
In BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66 (Colo. 2004), the City and
County of Denver contracted with BRW, Inc. (“BRW”) to plan, design, and oversee
construction of two steel bridges on Speer Boulevard over the Platte River in Denver.
Id. at 68. The defendant, Dufficy & Sons, Inc. (“Dufficy”) was subcontracted for the

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fabrication, painting, and shipment of structural steel for the project, and it in turn
subcontracted with another entity to supply paint and apply topcoat and a primer to the
bridges. Id. Dufficy had no direct contract with BRW, however. Dufficy suffered
damages due to unexpected delays relating to the application of the primer and top
coat, and sought to recover against, inter alia, BRW. Id. at 69-70. BRW moved to
dismiss the action, arguing that the economic loss rule barred Dufficy’s negligence and
negligent misrepresentation claims, and Dufficy countered that the rule was inapplicable
in the absence of a contract between it and BRW. Id. at 72.
The Colorado Supreme Court disagreed and held that the economic loss rule
applies not only to a direct, two-party contract but also within the context of a network of
interrelated construction contracts. Id. at 72-73. Noting that the primary purpose of the
economic loss rule is to encourage commercial parties to “reliably allocate risks and
costs during their bargaining,” the Court found that these same policy considerations
applied with equal force to a network of related contracts:
In such a contract chain, the parties do have the opportunity
to bargain and define their rights and remedies, or to decline
to enter into the contractual relationship if they are not
satisfied with it. Even though a subcontractor may not have
the opportunity to directly negotiate with the engineer or
architect, it has the opportunity to allocate the risks of
following specified design plans when it enters into a
contract with a party involved in the network of contracts. In
this situation, application of the economic loss rule
encourages a subcontractor to protect itself from risks, holds
the parties to the terms of their bargain, enforces their
expectancy interests, and maintains the boundary between
contract and tort law.
The policies underlying the application of the economic loss
rule to commercial parties are unaffected by the absence of
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a one-to-one contract relationship. Contractual duties arise
just as surely from networks of interrelated contracts as from
two-party agreements.
Id. at 72. Concluding that BRW’s duties of care were set forth in the contracts
governing the project, the Court held that Dufficy’s overlapping tort claims were barred
by the economic loss rule. Id. at 74-75.
So it is in this case. Although Erickson had no direct contract with CCA, the
construction project clearly was governed by a network of interrelated contracts.
Erickson cannot have been unaware that it would be building a house based on CCA’s
design plans when it contracted with plaintiff. See id. at 68. It had the opportunity in
that context to allocate the risks inherent in that arrangement. The fact that it did not do
so does not bar application of the economic loss rule.2
Erickson attempts to distinguish BRW, Inc. by seizing on dicta referring to the
parties as “commerically sophisticated.” Id. at 72. There are at least two problems with
this argument. First, the purported sophistication of the parties vel non was clearly not
central to the Court’s holding. The reference itself was unique, as throughout the
remainder of the opinion, the Court referred more generally to “commercial parties.”
See id. at 71, 72. Nothing in the opinion indicates that the Court quantified or even
examined the “sophistication” of the various parties or made sophistication a
prerequisite to application of the rule announced therein.

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Erickson argues that there is no allegation that it had a written contract with any of the parties
involved in the construction. Plaintiff’s complaint, however, plainly alleges at least that he had a contract
with Erickson.

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Second, and assuming arguendo that commercial sophistication were a
prerequisite, the record before me, and Erickson’s pleading in particular, indicates a
series of relationships between and among a number of commercial entities that facially
appears complex and sophisticated. The fact that Erickson was in the regular business
of building homes, that it knew it would be building according to another party’s
specifications, and that it engaged the services of a variety of subcontractors to assist in
the work implies a more than sufficient level of commercial sophistication to the extent
such is required.
Because the duties on which Erickson bases its negligence claim are identical to
the ones on which it relies for its breach of contract claim, the economic loss rule
forecloses recovery in tort. See Haynes Trane Service Agency, Inc. v. American
Standard, Inc., 573 F.3d 947, 962 (10th Cir. 2009). I therefore find and conclude that
the cross-claim for negligence as against CCA must be dismissed.
Erickson also has alleged a breach of contract claim. As there is no direct
contract between Erickson and CCA, Erickson premises this claim on the contract
between CCA and plaintiff, arguing that it is a third-party beneficiary of that contract.
Erickson may be a third-party beneficiary “if the parties to the agreement intended to
benefit the non-party,” and “provided that the benefit claim is a direct and not merely an
incidental benefit of the contract.” Jefferson County School District No. R-1 v.
Shorey, 826 P.2d 830, 843 (Colo.1992) (citation and internal quotation marks omitted).
Neither of these conditions is satisfied here. Section 9.7 of CCA’s contract with
plaintiff provides that “[n]othing contained in this Agreement shall create a contractual

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relationship with or a cause of action in favor of a third party against either the Owner or
Architect.” (See Am. Compl. App., ¶ 9.7at 12.) Erickson’s suggestion that it is not the
type of third-party contemplated by section 9.7 because the contract contemplates the
existence of and makes various references to the “Contractor” is unconvincing. Given
the unequivocal language of section 9.7, these references must be seen as merely
acknowledgments that such person would be involved in the project. They do not
undermine the parties’ clear intent not to confer any benefit, direct or otherwise, on that
person or any other third-party.3 Accordingly, Erickson’s cross-claim for breach of
contract against CCA must be dismissed.
Erickson also has asserted a claim for indemnification. See Brochner v.
Western Insurance Co., 724 P.2d 1293, 1295 (Colo. 1986). In Colorado, however, the
common law doctrine of indemnity has largely been supplanted by the doctrine of
proportionate fault. See id. at 1299. While certain narrow exceptions survive, see
Johnson Realty v. Bender, 39 P.3d 1215, 1218 (Colo. App. 2001), they are
inapplicable here, a fortiori, in light of my conclusion that Erickson was not a third-party
beneficiary to the CCA contract. This claim therefore also will be dismissed as against
CCA.
Finally, CCA seeks to dismiss Erickson’s claim for contribution. Colorado law
provides a right of contribution “where two or more persons become jointly or severally

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Erickson apparently believes that it can be a “non-party” beneficiary that is not necessarily a
third-party beneficiary. This is a semantical distinction on the order of logomachy with no legally operative
significance as far as this court can discern. Moreover, the argument contradicts Erickson’s own
pleadings, which specifically identify it as a third-party beneficiary of the contract. (See Cross-Claims
and Third-Party Claims ¶ 32 at 7 [#106], filed September 30, 2011.)

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liable in tort for the same injury to person or property.” §13-50.5-102, C.R.S. Focusing
on the “same injury” requirement, CCA maintains that the statue is inapplicable because
the cross-claims are premised on design defects, whereas plaintiff’s amended complaint
seeks to hold Erickson liable for construction defects. This argument misses the mark.
The relevant comparison is between the injuries plaintiff alleges against Erickson and
CCA in its amended complaint.
That comparison reveals no appreciable difference between the type of injuries
allegedly inflicted by these parties on plaintiff. The amended complaint charges
Erickson with failing to build the home “in a good and workmanlike manner” and in
accordance with “all applicable building codes and standards, design plans and
specifications, and in accordance with the practices and standards in the trade or
industry.” (Am. Compl. ¶ 82 at 16.) Similarly, plaintiff claims CCA failed to ensure the
residence was built “in a good and workmanlike manner” and in accordance with “all
applicable building codes and standards, design plans and specifications, and in
accordance with the practices and standards in the trade or industry.” (Id. ¶ 86 at 17.)
Any difference between “building” the home and “ensuring that it would be designed and
built” is so ethereal as to be incognizable. Erickson thus has stated a plausible claim for
contribution against CCA, and the motion to dismiss that claim must be denied.
IV. ORDERS
THEREFORE, IT IS ORDERED as follows:
1. That Cross-Claim Defendant Charles L. Cunniffe’s Motion To Dismiss
Cross-Claims [#119], filed October 20, 2011, is GRANTED IN PART and DENIED IN

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PART as follows:
a. That the motion is GRANTED with respect to the following cross-claims
asserted in the Cross-Claims and Third-Party Claims [#106], filed September 30,
2011, as against cross-claim defendant/third-party defendant Charles C. Cunniffe,
individually, d/b/a Charles Cuniffee & Assoc. Architects, only:
(1) First Claim for Relief (Negligence);
(2) Third Claim for Relief (Breach of Contract); and
(3) Fourth Claim for Relief (Indemnification); and
b. That the motion is in all other respects DENIED; and
2. That the cross-claims enumerated in paragraph 1.a. above are DISMISSED
WITH PREJUDICE; and
3. That at the time judgment enters, judgment SHALL ENTER on behalf of
cross-claim defendant/third-party defendant, Charles L. Cunniffe, individually, d/b/a
Charles Cunniffe & Assoc. Architects, against cross-claim plaintiffs/third-party plaintiffs,
Rickie Dean Erickson, individually, and Erickson Construction, Inc., a Colorado
corporation, as to the cross-claims enumerated in paragraph 1.a. above; provided, that
the judgment as to these claims shall be with prejudice.
Dated August 3, 2012, at Denver, Colorado.
BY THE COURT:

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