Tri-Aspen Const. Co. v. Johnson

• Citation: 714 P.2d 484
• Decision Date: 24 February 1986
• Docket Number: No. 83SC403,TRI-ASPEN,83SC403
• Parties: CONSTRUCTION CO., Petitioner, v. Wayne A. JOHNSON and Cheryl Johnson, Respondents.
• Court: Colorado Supreme Court

Page 484

714 P.2d 484

TRI-ASPEN CONSTRUCTION CO., Petitioner, v. Wayne A. JOHNSON and Cheryl Johnson, Respondents.

No. 83SC403.

Supreme Court of Colorado En Banc.

Feb. 24, 1986.

Trott, Kunstle & Hughes, Bernard L. Trott, Gary L. Gustafson, Colorado Springs, for petitioner.

Rector, Retherford, Mullen & Johnson, Anthony A. Johnson, Neil C. Bruce, Colorado Springs, for respondents.

LOHR, Justice.

We granted certiorari to review the judgment of the Colorado Court of Appeals in Johnson v. Graham, 679 P.2d 1090 (Colo.App.1983), a case involving claims by Wayne and Carol Johnson based upon structural damage to their house. We limited our review, however, to the issue of whether the trial court was correct, as the court of appeals held, in denying the motion of the builder, Tri-Aspen Construction Company (Tri-Aspen), for a directed verdict on the Johnsons' claim for exemplary damages. We conclude that the evidence was insufficient to submit this claim to the jury and therefore reverse.

I.

In 1973, Tri-Aspen contracted to build a house for Robert Graham on a steep hillside in Colorado Springs. The house was completed in 1974, and Graham and his family resided there until the summer of 1978, when Graham sold the house to Wayne and Carol Johnson. The Johnsons moved into the house that summer, and by January of 1979, they began to discover cracks in the interior walls and in the joints of the exterior masonry. They also experienced great difficulty in opening several of the doors to the house. During the spring of 1979, the Johnsons noticed more cracks in the walls, both inside and outside the house. According to Mr. Johnson, new cracks appeared each day, causing the Johnsons to become alarmed. Eventually, the house suffered extensive damage. A contractor testified at the trial that the house would require $29,000 in repairs, and a real estate appraiser testified that even in a repaired condition, the house would be worth $16,000 less than if it had never suffered any damage.

In 1979, the Johnsons filed suit in El Paso County District Court against Tri-Aspen, Graham, and Graham's employer, Builders Realty, Inc. The Johnsons alleged that Tri-Aspen was guilty of "gross and intentional negligence" in failing to install a peripheral drain at the base of the foundation and adequately prepare and compact the soil around the foundation of the house. ¹ The thrust of their complaint was that the failure of Tri-Aspen to take the action necessary to assure adequate drainage permitted water to enter and remain in the soil around the foundation, which in turn caused the soil to expand and exert pressure against the uphill foundation wall. The resulting stress, the Johnsons asserted, caused the structural damage to the house. After all of the evidence had been presented, Tri-Aspen moved for a directed verdict on the issue of punitive damages. The trial court denied this motion, and the jury returned a verdict of $45,000 actual and $30,000 exemplary damages against Tri-Aspen. ² Tri-Aspen appealed.

The court of appeals upheld the judgment against Tri-Aspen, holding that there was sufficient evidence that Tri-Aspen was guilty of negligence and "wanton and reckless disregard" of the Johnsons' rights and feelings to allow the jury to award both compensatory and punitive damages. We granted certiorari but limited our review to the question of whether the evidence was sufficient to support an award of exemplary damages against Tri-Aspen. We conclude that the trial court should have directed a verdict in favor of Tri-Aspen on this issue.

II.

In Colorado, exemplary damages are available only in accordance with section 13-21-102, 6 C.R.S. (1973), which states In all civil actions in which damages are assessed by a jury for a wrong done to the person, or to personal or real property, and the injury complained of is attended by circumstances of fraud, malice or insult, or a wanton and reckless disregard of the injured party's rights and feelings, the jury, in addition to the actual damages sustained by such party, may award him reasonable exemplary damages.

The language of this statute has remained essentially unchanged since the enactment of the statute in 1889. See 1889 Colo. Sess. Laws 64. We have held that an award of exemplary damages is justified under this statute when the act causing the plaintiff's injuries was performed "with an evil intent, and with the purpose of injuring the plaintiff, or with such a wanton and reckless disregard of his rights as evidence a wrongful motive." Frick v. Abell, 198 Colo. 508, 511, 602 P.2d 852, 854 (1979) (quoting Ress v. Rediess, 130 Colo. 572, 579, 278 P.2d 183, 187 (1954)). We have defined "wanton and reckless" disregard in the context of exemplary damages as involving "conduct that creates a substantial risk of harm to another and is purposefully performed with an awareness of the risk in disregard of the consequences." Palmer v. A.H. Robins Co., 684 P.2d 187, 215 (Colo.1984). ³

In order to recover exemplary damages, the party requesting them must prove beyond a reasonable doubt that the statutory standards have been met. § 13-25-127(2), 6 C.R.S. (1973); see Mince v. Butters, 200 Colo. 501, 503-04, 616 P.2d 127, 129 (1980). The reasonable doubt burden is by definition a heavy one, see Palmer v. A.H. Robins Co., 684 P.2d at 216-17, and we have determined that proof was insufficient to carry that burden on several occasions in the past. E.g., Pizza v. Wolf Creek Ski Development Corp., 711 P.2d 671 (Colo.1985); Rosenbaum v. Mathews, 113 Colo. 307, 156 P.2d 843 (1945); Reyher v. Mayne, 90 Colo. 586, 10 P.2d 1109 (1932).

The question of the sufficiency of evidence to justify an award of exemplary damages is one of law, Mince v. Butters, 200 Colo. at 504, 616 P.2d at 129, often decided, as in the present case, by the trial court in the context of a defendant's motion for a directed verdict. In resolving this question, a court must view the evidence in the light most favorable to the party against whom the motion is directed. Palmer v. A.H. Robins Co., 684 P.2d at 218; Romero v. Denver & Rio Grande Western Railway, 183 Colo. 32, 37, 514 P.2d 626, 628 (1973). A motion for a directed verdict can be granted only when the evidence, "so considered, compels the conclusion that the minds of reasonable men could not be in disagreement" that the party resisting the motion has not satisfied his burden of proof. Romero v. Denver & Rio Grande, 183 Colo. at 37, 514 P.2d at 628-29; see also Palmer v. A.H. Robins, Co., 684 P.2d at 218. Absent evidence upon which a jury could justifiably base a verdict for the party opposing the motion, the trial court should take the case from the jury and enter a judgment for the moving party. Sanderson v. Safeway Stores, Inc., 161 Colo. 271, 272, 421 P.2d 472, 473 (1966).

In the present case, the trial court denied Tri-Aspen's motion for a directed verdict against the Johnsons on the issue of punitive damages, stating that "the Jurors could accept that this [the failure to install a peripheral drain] was done to save money for Tri-Aspen ... and that this was a knowing decision on their part which would support the theory of finding that it was willful." Our review of the evidence, however, persuades us that Tri-Aspen's motion for a directed verdict should have been granted. The evidence is simply insufficient to prove, beyond a reasonable doubt, a wanton and reckless disregard by Tri-Aspen of the Johnsons' rights and feelings. See § 13-21-102, 6 C.R.S. (1973). ⁴

At trial, the Johnsons argued that Tri-Aspen had ignored the advice of a soils engineer whom Tri-Aspen hired to inspect the soil upon which the house was to be built. The engineer allegedly had warned Tri-Aspen that the soil surrounding the house was expansive and had instructed Tri-Aspen to install a peripheral drain around the base of the foundation. The engineer who examined the soil testified on behalf of the Johnsons. He asserted that he sent Tri-Aspen a soils report, part of which directed the builder that "[i]f outfall is available, place exterior drain around foundation wall." The Johnsons' expert witness expressed the opinion that even though the installation of a peripheral drain was not standard practice in 1973, this sentence from the soils report alone should have been sufficient to inform Tri-Aspen that a peripheral drain was required. The soils engineer further testified that he attached a "drain design detail" to his report, showing the builder the manner in which the peripheral drain was to be constructed. The engineer admitted that he personally did not enclose the drain design in the soils report, but he testified that the design was sent "as a matter of routine." The Johnsons argued that Tri-Aspen ignored the recommendations in the report because it wanted to save money. According to the Johnsons, Tri-Aspen disregarded such recommendations as a matter of custom and practice.

Tri-Aspen's president, on the other hand, testified that Tri-Aspen did not receive a drain design detail from the soils engineer when it built Graham's house in 1973 and that although he had seen numerous reports from the soils engineer, he never saw the disputed design detail attached to any such report until 1975. He stated that had such a design detail been included in the report it received, Tri-Aspen probably would have installed a peripheral drain. Tri-Aspen's president also testified that the decision not to install a drain was based on three considerations: 1) the fact that the engineer did not furnish a peripheral drain design; 2) the absence of free, standing water at the base of the foundation; and 3) Tri-Aspen's belief that all surface water could be directed away from the home through proper grading.

Tri-Aspen's president also testified that had Tri-Aspen decided to install a drain, Robert Graham, not Tri-Aspen, would have borne the...