Western Innovations, Inc. v. Sonitrol Corp.

• Decision Date: 15 May 2008
• Docket Number: No. 06CA2275.,No. 06CA2288.,No. 06CA2287.,06CA2275.,06CA2287.,06CA2288.
• Citation: 187 P.3d 1155
• Parties: WESTERN INNOVATIONS, INC.; Union Insurance Company; United Fire & Casualty; Tartan Products Company; and Randy Overly, d/b/a CP & D Companies, Plaintiffs-Appellants, v. SONITROL CORPORATION, f/k/a Sonitrol Management Corporation, a Delaware corporation, Defendant-Appellee.
• Court: Colorado Court of Appeals

187 P.3d 1155

WESTERN INNOVATIONS, INC.; Union Insurance Company; United Fire & Casualty; Tartan Products Company; and Randy Overly, d/b/a CP & D Companies, Plaintiffs-Appellants, v. SONITROL CORPORATION, f/k/a Sonitrol Management Corporation, a Delaware corporation, Defendant-Appellee.

No. 06CA2275.

No. 06CA2287.

No. 06CA2288.

Colorado Court of Appeals, Division V.

May 15, 2008.

Fasing Law Firm, PC, Gregory Fasing, Denver, Colorado, for Plaintiff-Appellant Western Innovations, Inc.

Vargo Myers Janson, P.C., Todd A. Myers, Lakewood, Colorado, for Plaintiffs-Appellants Union Insurance Company, United Fire & Casualty, Tartan Products Company, and Randy Overly.

Hall & Evans, L.L.C., Alan Epstein, Brian P. Molzahn, Devi C. Yorty, Denver, Colorado; Kane Russell Coleman Logan, PC, Robert N. Lemay, Dallas, Texas, for Defendant-Appellee.

Opinion by Judge JONES. J

Plaintiffs, Western Innovations, Inc. (Western), Tartan Products Company (Tartan), Randy Overly, United Fire & Casualty (United), and Union Insurance Company (Union), appeal the district court's dismissal and summary judgment in favor of defendant, Sonitrol Corporation (Sonitrol), on their claims for negligence. We affirm.

I. Background

Western and Core-Mark International, Inc. (Core-Mark) leased separate but adjacent spaces in a warehouse owned by Prim Upland Distribution Center Associates, LLC (Prim). The two spaces were separated by a firewall. Tartan and Overly stored goods and products in Western's portion of the warehouse. United insured Tartan's inventory; Union insured Western.

In December 1995, Core-Mark contracted with Sonitrol for burglar alarm services covering Core-Mark's portion of the warehouse. Pursuant to that contract, Sonitrol both installed and monitored a burglar alarm system in Core-Mark's premises.

On April 10, 2000, Western entered into an agreement with Sonitrol's franchisee, Cornerstone Security, Inc. (Cornerstone), for installation and monitoring of a burglar alarm system in its portion of the warehouse. Sonitrol monitored the burglar alarm system in Western's premises pursuant to its franchise agreement with Cornerstone.

Cornerstone entered into an agreement with Prim in December 2000 to provide fire alarm and sprinkler signaling services for the entire warehouse. Sonitrol also monitored the fire alarm system pursuant to its franchise agreement with Cornerstone.

During the early morning hours of December 21, 2002, burglars sawed a hole in the overhead door located in Core-Mark's premises and forcibly entered Core-Mark's space. Plaintiffs alleged that although Sonitrol's burglar alarm system detected multiple audio disturbances while the burglars were inside Core-Mark's premises, Sonitrol's employees ignored those alarms, repeatedly reset the alarms, and did not alert the police.

The burglars stole Core-Mark's property and then started two fires in Core-Mark's portion of the warehouse. Sonitrol alerted the fire department after Cornerstone's fire alarm system detected a fire; however, the fire department was already on site. The fire ultimately destroyed the entire building, resulting in the destruction of Western's, Tartan's, and Overly's property.

Numerous parties filed lawsuits against Sonitrol, Cornerstone, and Core-Mark, among others, which the district court consolidated. As relevant here, the complaint filed by plaintiffs (except Overly) against Sonitrol asserted claims for negligence, gross negligence, breach of contract, misrepresentation, and breach of implied warranties. Notably, the complaint alleged duties and obligations arising out of the contract between Sonitrol and Core-Mark as the bases for all of these claims. The complaint did not allege that Sonitrol breached Cornerstone's burglar alarm services contract with Western or Cornerstone's fire alarm contract with Prim, nor did it allege that Sonitrol breached any tort duty arising out of those contracts. (Overly's complaint is not included in the record on appeal.)

Sonitrol moved to dismiss the negligence claims pursuant to C.R.C.P. 12(b)(5) and moved for summary judgment on those claims, arguing that plaintiffs had alleged only nonfeasance, and that in the absence of a special relationship between it and plaintiffs, which plaintiffs had not alleged, it owed no tort duty to plaintiffs as a matter of law. The district court granted Sonitrol's motion to dismiss in case number 04CV3625 and its motion for summary judgment in case number 03CV3836, essentially agreeing with Sonitrol's argument. The court also granted summary judgment in Sonitrol's favor on plaintiffs' other claims.

Plaintiffs appeal only the dismissal of and summary judgment on their negligence claims against Sonitrol.

II. Discussion

Plaintiffs contend (1) the district court erroneously characterized Sonitrol's alleged negligence as nonfeasance rather than misfeasance in determining that Sonitrol did not owe them any duty in tort; and (2) even if the district court properly characterized Sonitrol's alleged negligence as nonfeasance, there was a "special situation" here such that under the principles articulated in the Restatement (Second) of Torts sections 323 and 324A, Sonitrol owed them a duty in tort which Sonitrol breached by negligently performing its obligations under its burglar alarm system contract with Core-Mark.

We disagree with plaintiffs' contentions. We conclude plaintiffs failed to allege any facts which, if proved, would establish that Sonitrol's conduct amounted to misfeasance rather than nonfeasance or that Sonitrol owed them a duty in tort under either section 323 or section 324A. We also conclude that plaintiffs failed to show that a genuine issue of material fact existed as to either of their misfeasance or special situation theories or that Sonitrol was not entitled to judgment as a matter of law.

A. Standard of Review

1. Motion to Dismiss

A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff cannot prove facts in support of a claim that would entitle it to relief. Coors Brewing Co. v. Floyd, 978 P.2d 663, 665 (Colo.1999). But see Bell Atl. Corp. v. Twombly, ___ U.S. ___, ___, 127 S.Ct. 1955, 1965, 1968-69, 167 L.Ed.2d 929 (2007) (abrogating this standard for motions under Fed.R.Civ.P. 12(b)(6), and holding that to survive such a motion the complaint must set forth factual allegations sufficient to "raise a right to relief above the speculative level"); Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215 n. 2 (10th Cir.2007) (holding that the Bell Atl. Corp. standard applies to all motions to dismiss for failure to state a claim for relief). In ruling on a motion to dismiss for failure to state a claim for relief, the court must accept all well-pleaded facts as true, and the allegations of the complaint must be viewed in the light most favorable to the plaintiff. Public Serv. Co. v. Van Wyk, 27 P.3d 377, 386 (Colo.2001); Abts v. Bd. of Educ., 622 P.2d 518, 522 n. 5 (Colo.1980); Sweeney v. United Artists Theater Circuit, Inc., 119 P.3d 538, 539 (Colo.App.2005).

However, the court is not required to accept as true legal conclusions couched as factual allegations. Bell Atl. Corp., ___ U.S. at ___, 127 S.Ct. at 1964-65; Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986); see also Colo. Criminal Justice Reform Coalition v. Ortiz, 121 P.3d 288, 294-95 (Colo.App.2005). Further, a complaint may be dismissed if the substantive law does not support the claims asserted. Denver Parents Ass'n v. Denver Bd. of Educ., 10 P.3d 662, 664 (Colo.App.2000); Nelson v. Nelson, 31 Colo.App. 63, 65-66, 497 P.2d 1284, 1286 (1972).

When reviewing a district court's dismissal of a complaint for failure to state a claim for relief, we apply the same standards as the district court. Schoen v. Morris, 15 P.3d 1094, 1096 (Colo.2000); Coors Brewing Co., 978 P.2d at 665. Hence, we review the district court's dismissal for failure to state a claim for relief de novo. Sweeney, 119 P.3d at 539.

2. Motion for Summary Judgment

Summary judgment should be granted only if the pleadings and supporting documentation show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. C.R.C.P. 56(c); Ringquist v. Wall Custom Homes, LLC, 176 P.3d 846, 849 (Colo.App.2007); Premier Farm Credit, PCA v. W-Cattle, LLC, 155 P.3d 504, 512 (Colo. App.2006). A material fact is one that will affect the outcome of the case. Struble v. American Family Ins. Co., 172 P.3d 950, 955 (Colo.App.2007). Once the movant shows the absence of a genuine issue of material fact, the burden shifts to the nonmovant to show that a dispute exists concerning a material fact. Camus v. State Farm Mut. Auto. Ins. Co., 151 P.3d 678, 680 (Colo.App.2006).

We review an order granting summary judgment de novo. West Elk Ranch, L.L.C. v. United States, 65 P.3d 479, 481 (Colo. 2002); Ringquist, 176 P.3d at 849.

3. Determination of Legal Duty

Whether a particular defendant owes a legal duty to a particular plaintiff is a question of law. Univ. of Denver v. Whitlock, 744 P.2d 54, 57 (Colo.1987). "`The court determines, as a matter of law, the existence and scope of the duty — that is, whether the plaintiff's interest that has been infringed by the conduct of the defendant is entitled to legal protection.'" Id. (quoting Metropolitan Gas Repair Serv., Inc. v. Kulik, 621 P.2d 313, 317 (Colo.1980)). Consequently, we review de novo the district court's determination that Sonitrol owed no tort duty to plaintiffs. Cary v. United of Omaha Life Ins. Co., 68 P.3d 462, 465 (Colo. 2003).

B. Nonfeasance and Misfeasance

Before turning to the merits of this issue, we observe that in their opening brief, plaintiffs, after arguing that Sonitrol's conduct constituted misfeasance, state in purely conclusory fashion that because Sonitrol's conduct constituted misfeasance, "Colorado law clearly imposes a duty which was...