D.R. Horton v. Bischof & Coffman

• Citation: 217 P.3d 1262
• Decision Date: 09 July 2009
• Docket Number: No. 07CA2081.,07CA2081.
• Parties: D.R. HORTON, INC.-DENVER, d/b/a D.R. Horton-Trimark Series, Third-Party Plaintiff-Appellant, v. BISCHOF & COFFMAN CONSTRUCTION, LLC; Kiowa Creek Construction, Inc.; and Sprigg Construction, Inc., Third-Party Defendants-Appellees.
• Court: Court of Appeals of Colorado

217 P.3d 1262

D.R. HORTON, INC.-DENVER, d/b/a D.R. Horton-Trimark Series, Third-Party Plaintiff-Appellant, v. BISCHOF & COFFMAN CONSTRUCTION, LLC; Kiowa Creek Construction, Inc.; and Sprigg Construction, Inc., Third-Party Defendants-Appellees.

No. 07CA2081.

Colorado Court of Appeals, Div. III.

July 9, 2009.

Holland & Hart, LLP, Marcy G. Glenn, Timothy W. Gordon, Ryan T. Bergsieker, Denver, Colorado, for Third-Party Plaintiff-Appellant.

Jean E. Dubofsky, P.C., Jean E. Dubofsky, Boulder, CO; Dean Neuwirth P.C., Dean Neuwirth, Denver, Colorado, for Third-Party Defendants-Appellees.

Pryor Johnson Carney Karr Nixon P.C., Bradley N. Shefrin, Greenwood Village, Colorado, for Amicus Curiae American Subcontractors Association.

Senn Visciano Kischenbaum P.C., Mark D. Gruskin, Denver, Colorado, for Amicus Curiae American Subcontractors Association Colorado.

Sullan², Sandgrund, Smith & Perczak, P.C., Ronald M. Sandgrund, Scott F. Sullan, Leslie A. Tuft, Denver, CO, for Amicus Curiae Homeowners Against Deficient Dwellings (HADD).

Opinion by Judge ROTHENBERG.^*

Plaintiff, D.R. Horton, Inc.-Denver d/b/a D.R. Horton-Trimark Series (Horton), appeals the judgment entered on a jury verdict in favor of defendants, Bischof & Coffman Construction, LLC, Kiowa Creek Construction, Inc., and Sprigg Construction, Inc. (collectively, subcontractors), for breach of contract, indemnification for breach of contract, and indemnification for breach of warranty. Horton also challenges, as legally insufficient, the damages awarded to it for breach of warranty. We affirm.

I. Background

This case arose from the construction of a new condominium complex in Castle Rock, Colorado. Horton was the general contractor on the project and hired numerous subcontractors, each of whom entered into a contract that included warranty provisions and an indemnification clause.

In 2004, the homeowners association for the condominiums sued Horton for alleged construction defects, and Horton filed third-party claims for breach of warranty, breach of contract, and indemnification against twenty-nine subcontractors involved in the project. All but three of the subcontractors settled with Horton.

On the evening before trial, Horton also settled with the homeowners, agreeing to pay them approximately $23.4 million attributable to the repair of the alleged defects. That sum was reached by allocating an amount to each individual subcontractor based on the damages for which they were responsible. As relevant here, the allocations were $899,379 to Bischof; $1,778,108 to Kiowa; and $3,121,835 to Sprigg.

Immediately after the settlement on the morning of trial, Horton requested a one to two week continuance to prepare its case in light of the settlement and filed two supplemental disclosures containing information about additional experts whom it intended to call as witnesses. Alternatively, Horton asked the trial court to bifurcate the indemnity claims. The subcontractors objected, arguing that Horton had access to the homeowners' witnesses before trial and that a continuance would create significant scheduling problems for their witnesses.

The trial court granted the subcontractors' motion to strike the information in the new disclosures, disallowed evidence of the amount of the settlement or its terms, and denied the request to bifurcate the indemnification claims. The court delayed the trial for two days, but began selecting a jury on the second day, in effect denying Horton's request for a continuance.

Following a lengthy trial, the jury returned verdicts for the subcontractors on the breach of contract and indemnification claims, but found for Horton on the breach of warranty claim. It awarded Horton damages of $3,500 from Bischof; $5,000 from Kiowa; and $9,500 from Sprigg.

Horton then moved for a new trial under C.R.C.P. 59, alleging that the damages awarded were inconsistent with the evidence. Alternatively, Horton requested that the trial court increase the damages award. The trial court denied the motion, reasoning as follows:

[T]he damage evidence presented by Horton was contested as to amount and type. Experts and lay witnesses testified on this issue for both sides. The [c]ourt struck a portion of some of the damages claimed by Horton.... As such, there was much in controversy concerning the amount to be awarded for any claim. The jury listened intently to all of the evidence presented during the course of this five week trial. They certainly could have concluded that the damage claims of Horton were excessive and not supported by credible evidence. Given the nature of the verdicts; that Horton failed to establish a breach of contract, the jury could have concluded that the breach of warranty claims were minor. There certainly is no evidence, as suggested by Horton, that this determination was based on passion or prejudice or that the jury neglected the evidence.

Horton appealed. The subcontractors filed a cross-appeal but later voluntarily dismissed it.

Two amicus curiae briefs also were filed. One was filed by Homeowners Against Deficient Dwellings (HADD), in support of Horton, urging us to apply Burlington Northern R.R. Co. v. Stone Container Corp., 934 P.2d 902 (Colo.App.1997), to the facts before us and to conclude the trial court erred in not admitting the settlement agreement. The second amicus curiae brief was filed by the American Subcontractors Association and the American Subcontractors Association Colorado, in support of the subcontractors. It maintains that the Burlington argument was raised in the trial court and rejected, but was not appealed by the parties and therefore was not preserved for appeal. We agree and do not address the applicability of Burlington to these facts. See Gorman v. Tucker, 961 P.2d 1126, 1131 (Colo.1998) ("We will not consider issues raised only by amicus curiae and not by the parties.").

II. Evidence of Settlement

Horton contends the trial court abused its discretion in excluding evidence of the settlement between Horton and the homeowners. We disagree.

We review a trial court's decision to admit or exclude evidence for an abuse of discretion. Scott v. Matlack, Inc., 39 P.3d 1160, 1170 (Colo.2002). A trial court does not abuse its discretion unless its decision is manifestly arbitrary, unreasonable, or unfair. E-470 Pub. Highway Auth. v. 455 Co., 3 P.3d 18, 23 (Colo.2000).

A party that does not comply with the disclosure deadlines in C.R.C.P. 26(a)(2) faces possible sanctions under C.R.C.P. 37(c), including the preclusion of any evidence that was not properly disclosed. Cook v. Fernandez-Rocha, 168 P.3d 505, 506 (Colo.2007).

C.R.C.P. 26(a)(2)(A) provides:

In addition to the disclosures required by subsection (a)(1) of this Rule, a party shall disclose to other parties the identity of any person who may present evidence at trial, pursuant to Rules 702, 703, or 705 of the Colorado Rules of Evidence together with an identification of the person's fields of expertise.

C.R.C.P. 26(e) explains the requirements for disclosing further information:

A party is under a duty to supplement its disclosures under section (a) of this Rule when the party learns that in some material respect the information disclosed is incomplete or incorrect and if the additional or corrective information has not otherwise been made known to the other parties during the disclosure or discovery process. ... With respect to experts, the duty to supplement or correct extends both to information contained in the expert's report or summary disclosed pursuant to section (b) of this Rule and to information provided through any deposition of or interrogatory responses by the expert. Supplementation shall be performed in a timely manner.

The purpose of C.R.C.P. 26(e) is to ensure that discovery information is provided early and is updated in a timely manner, thus promoting accuracy, encouraging settlements, and avoiding surprises at trial. See Morgan v. Genesee Co., 86 P.3d 388, 394, 396 (Colo.2004) ("[A] fundamental goal of the discovery rules is to encourage the fair, just, and prompt resolution of disputes through settlement.").

C.R.C.P. 37(c)(1) provides: "A party that without substantial justification fails to disclose information required by C.R.C.P. Rules 26(a) or 26(e) shall not, unless such failure is harmless, be permitted to present any evidence not so disclosed at trial or on a motion made pursuant to C.R.C.P. 56."

The trial court has a duty to sanction a party for failure to comply with discovery deadlines by precluding evidence or witnesses, unless the party's failure to comply is either substantially justified or harmless. Todd v. Bear Valley Vill. Apartments, 980 P.2d 973, 975 (Colo.1999).

In Todd v. Bear Valley, 980 P.2d at 979, the supreme court addressed a comparable situation and stated:

We anticipate that cases may arise in which a party fails to make the expert witness disclosures required by Rule 26, lacks substantial justification for such failure, and yet seeks to be allowed to present such witnesses at trial. When these circumstances arise close to the trial date, it is likely that the failure to disclose will cause prejudice to the opposing party. As a practical matter, the trial court may then be faced with a choice between continuing the trial or sanctioning the non-disclosing party by precluding the witness.

See also Trattler v. Citron, 182 P.3d 674 (Colo.2008) (concluding exclusion of evidence was an appropriate sanction when the evidence was not properly disclosed).

Here, the trial court struck the information contained in the new disclosures, because it was untimely. The court stated:

The fact that disclosure occurred on the day before trial involving a new allocation of damages, as it relates to the third-party defendants, was not triggered by the third-party defendants. That was as a result of Horton settling with the plaintiffs. Nevertheless, those disclosures clearly are not timely.

The trial...