Hamon Contractors, Inc. v. Carter & Burgess, Inc., Court of Appeals No.07CA0987 (Colo. App. 4/30/2009)
| Decision Date | 30 April 2009 |
| Docket Number | No.07CA0987.,No 07CA0988.,No 07CA2342.,07CA0987.,07CA0988.,07CA2342. |
| Parties | Hamon Contractors, Inc., Plaintiff-Appellant, v. Carter & Burgess, Inc., d/b/a Carter and Burgess, Inc., and Craig Kitzman, Defendants-Appellees. |
| Court | Colorado Court of Appeals |
This case involves a dispute over a public works project. Plaintiff, Hamon Contractors, Inc. (Hamon), the general contractor for the project, sued the City of Louisville; Carter and Burgess, Inc. (C&B), the project administrator; and Craig Kitzman, the Assistant City Engineer. Hamon's claims against C&B and Mr. Kitzman were based solely in tort. As relevant to this appeal, the district court granted summary judgment in C&B's favor on all of Hamon's tort claims against it, granted summary judgment in Mr. Kitzman's favor on certain of Hamon's tort claims against him, and dismissed Hamon's remaining tort claims against Mr. Kitzman for lack of subject matter jurisdiction. Thereafter, the court awarded attorney fees and costs to both C&B and Mr. Kitzman.
JUDGMENTS AFFIRMED, ORDERS AFFIRMED IN PART, VACATED IN PART, AND CASE REMANDED WITH DIRECTIONS.
The Witt Law Firm, Jesse Howard Witt, Denver, Colorado, for Plaintiff-Appellant.
Hall & Evans, L.L.C., Benton J. Barton, Brian Molzahn, Denver, Colorado, for Defendant-Appellee Carter & Burgess, Inc.
Cross & Liechty, P.C., Robert M. Liechty, Denver, Colorado, for Defendant-Appellee Craig Kitzman.
Opinion by: JUDGE J. JONES.
With exceptions noted below, Hamon appeals the summary judgments and the order dismissing claims against Mr. Kitzman for lack of subject matter jurisdiction, as well as the orders awarding attorney fees and costs to C&B and Mr. Kitzman. We affirm the judgments and the order of dismissal. We affirm the orders awarding attorney fees and costs in part, vacate those orders in part, and remand for further proceedings.
In September 2003, the City began soliciting bids from private companies to act as the general contractor on a project which, as relevant here, called for the installation of a large pipe or culvert below a street to allow water to flow from west of the street onto a property east of the street. Mr. Kitzman reviewed and approved contract documents and specifications included in the bid package provided to the prospective bidders. These contract documents included plans prepared by the design engineer, Wilson & Company, which is not a party in this case.
Hamon submitted a bid on October 14, 2003. The City selected Hamon as the general contractor on November 4, 2003. The City and Hamon executed a contract on November 10, 2003. The contract incorporated by reference numerous other documents, including the contract documents and specifications which had been included in the bid package.
On October 30, 2003, C&B submitted a proposal to the City to provide construction management and administration services for the project. The City and C&B entered into a contract on November 24, 2003, which included a scope of work encompassing, as relevant here, observing and evaluating the quality of the work and determining whether the work complied with the contract documents; issuing the City's instructions to Hamon; recommending allowance or disallowance of change orders; and determining the amount owing to Hamon on a periodic basis.
Hamon began work on the project in December 2003. Beginning in May 2004, Hamon experienced delays in construction caused by excessive water on the site. According to Hamon, the site did not drain properly, the soil at the site became oversaturated, and as result, Hamon was required to take steps to stabilize the soil. Hamon submitted a change order for this stabilization work to C&B. C&B, apparently acting on the City's behalf, largely denied the request for additional payment on the basis that Hamon could have taken ordinary and reasonably foreseeable temporary drainage measures to prevent the oversaturation. The City and C&B subsequently notified Hamon that, pursuant to the contract documents, the City would assess liquidated damages against Hamon for its failure to meet certain construction deadlines. The City ultimately withheld approximately $413,000 in liquidated damages.
In April 2005, Hamon sent a letter to the City Manager stating its position that there was no basis for assessing delay damages because all causes of delays were beyond Hamon's ability to control. With respect to the drainage problem specifically, Hamon asserted that in January 2004, Mr. Kitzman had been made "aware that the design for drainage was defective," but had failed to communicate that information to Hamon. Hamon further asserted that "[t]he City's failure to disclose this information constitutes fraud," for which, Hamon indicated, it would seek "all appropriate relief." Hamon also asserted that Mr. Kitzman was "put on notice" of other drainage problems in February 2004. Hamon concluded by demanding $667,925.34 for economic losses attributable to delays, disruptions, and additional work described in change orders.
In May 2005, Hamon sent another letter to the City indicating that its damages had increased to $765,867. Hamon accused the City and Mr. Kitzman of "depriv[ing] [Hamon] of its earnings" by misrepresentations and concealment that "appear to have occurred throughout the project."
Hamon commenced this action in October 2005 by filing a complaint asserting claims against the City, C&B, and Mr. Kitzman. Hamon filed an amended complaint in May 2006. Therein, Hamon asserted a breach of contract claim against the City, alleging that the delays were not Hamon's fault, the City had therefore wrongfully withheld liquidated delay damages under the contract, and the City had failed to compensate Hamon for additional work attributable to delays, disruptions, and design changes. The amended complaint also asserted various tort claims against the parties, as follows:
1. Fraudulent concealment against the City, C&B, and Mr. Kitzman.
As to the City and Mr. Kitzman, Hamon alleged that they were aware, both before and after Hamon entered into the contract with the City, "that the drainage design for the Project . . . was inadequate to handle water flow," but concealed that information from Hamon. Hamon alleged that had it known the drainage design was inadequate, it would not have entered into the contract, and that the City and Mr. Kitzman concealed the information so that Hamon would not know the "true cause" of the drainage problem and they could therefore deprive Hamon of "monies owed" by falsely claiming that Hamon was at fault for the inadequate drainage.
As to C&B, Hamon made essentially the same allegations, but did not allege that C&B was actually aware of the drainage design flaws until March 2004, after Hamon had entered into the contract with the City.
2. Fraudulent misrepresentation against the City, C&B, and Mr. Kitzman.
This claim largely repeated the allegations of the fraudulent concealment claim, with the twist that the defendants allegedly told Hamon that weather and "improper grading" were the causes of the delays, but knew that the drainage design flaws actually caused the delays. Hamon alleged that the defendants made each of the misrepresentations after Hamon entered into its contract with the City.
3. Negligence against C&B and Mr. Kitzman.
Hamon alleged that C&B negligently failed to detect the drainage design flaws before either of them contracted with the City, and that C&B owed Hamon a duty to detect those problems and inform it of them during the bidding process. Hamon alleged that Mr. Kitzman negligently failed to detect the design deficiencies both before and after Hamon entered into its contract with the City 4. Negligent misrepresentation against the City, C&B, and Mr. Kitzman.
This claim was based on the same factual allegations as those supporting the fraud claims, but alleged that the representations concerning the cause of the drainage problem (and the resulting delays) were merely negligent.
C&B moved for summary judgment. The court granted that motion, concluding that C&B owed no pre-contractual duty to Hamon as a matter of law, and that Hamon's post-contractual claims were barred by the economic loss rule. On the latter point, the court reasoned that the post-contractual duties alleged by Hamon were encompassed within the implied covenant of good faith and fair dealing in C&B's contract and the standard of care expressly created by that contract, and therefore did not exist independently of that contract.
Mr. Kitzman also moved for summary judgment on Hamon's post-contractual claims.1 The court granted the motion, concluding that those claims were barred by the economic loss rule because the duties Mr. Kitzman allegedly breached were "encompassed within the contract." The court later dismissed Hamon's pre-contractual claims against Mr. Kitzman pursuant to C.R.C.P. 12(b)(1) for lack of subject matter jurisdiction on the basis that Hamon had not given timely written notice of such claims as required by the Colorado Governmental Immunity Act (CGIA), §§ 24-10-101 to -120, C.R.S. 2008. See § 24-10-109.
C&B and Mr. Kitzman each moved for an award of attorney fees and costs under section 13-17-102, C.R.S. 2008, claiming that Hamon's claims against them lacked substantial justification. Mr. Kitzman also moved for an award of attorney fees and costs under section 13-17-201, C.R.S. 2008, on the basis that the claims against him had been dismissed pursuant to C.R.C.P. 12(b). The court granted those motions, though it limited Mr. Kitzman's recovery of attorney fees and costs pertaining to post-contractual claims to the grounds set forth in section 13-17-102 because the court had granted summary judgment on those claims.
On appeal, Hamon challenges (1) the district court's summary judgment in C&B's favor...
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