The Colorado Court of Appeals in Hildebrand v. New Vista Homes II, LLC, 08CA2645, 2010 WL 4492356 (Colo. App. Nov. 10, 2010) held that part-time resident/owners of a home can receive inconvenience damages arising from the negligently built home. This case, which is an excellent example of how to prove many issues in construction litigation,[1] may now be the leading case in the area of construction defect damages.
Mark A. Hildebrand (Junior) and Mark L. Hildebrand (Senior) purchased a home built by New Vista Homes II, LLC (New Vista). After the basement floor was damaged from ground movement, they sued both New Vista and Richard Reeves, a manager of New Vista, for a variety of issues, including negligence and the Construction Defect Action Reform Act (CDARA).
Junior was a full-time resident of the home. In addition to the severely cracked slab, Junior was distressed because the home in its current condition was no longer his sanctuary. He also had been angry and sleepless over the condition of his home and could not allow his children near the stairs. The court held that Junior was entitled to inconvenience damages under CDARA.
Senior did not live in the home, or in the state of Colorado, but he would “periodically come out to visit.” Senior also testified he would have liked to put his ping-pong and pool tables down in the basement, but could not because of the condition down there. The Court held that enough evidence of derivative inconvenience damages was present for a jury to decide what damages Senior suffered for his limited use of the home.
The court explained that the plain language of CDARA limits the amount of damages against a construction professional to “actual damages.” C.R.S. § 13-20-806(1). Those in construction defect litigation can readily recite that actual damages means the lesser of: 1) the fair market value of the real property without the alleged construction defect; 2) the replacement cost of the real property; or, 3) the cost to repair the alleged construction defect. C.R.S. § 13-20-802.5(2).
However, the court explained, CDARA also allows for personal injury damages, limited by C.R.S. § 13-20-806(4). C.R.S. § 13-20-806(4), allows non-economic loss and derivative non-economic loss, defined by C.R.S. § 13-21-102.5, up to $250,000. Finally, C.R.S. § 13-21-102.5 defines non-economic loss to include pain and suffering, inconvenience, emotional distress, and impairment of the quality of life.
Therefore, if you follow the trail of definitions that begins in CDARA, you have a case for inconvenience and derivative inconvenience damages under CDARA.
That said, this case does not answer all questions about non-economic damages under CDARA. The instant case involved only one single-family home. There are arguments for both future plaintiff and defense attorneys regarding whether homeowners associations have standing to bring non-economic damage claims for their residents. The Hildebrand court also differentiated an owner/visitor, such as Senior, from a traditional landlord. Because a landlord does not have an equal right of enjoyment of the property due to the lease, a landlord cannot recover non-economic damages. Hildebrand at *13. Yet, this analysis begs the question regarding whether an investor with full rights of enjoyment to a home could recover for non-economic damages for an empty home with construction defects.
In conclusion, I still must ask rhetorically if this ruling on non-economic damages, especially derivative non-economic damages, is in the spirit of tort reform that the Colorado Legislature intended with CDARA. Although this recent case can be limited on its facts, it certainly has opened a door when it comes to plaintiffs’ claims of emotional harm under CDARA.
For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.
[1] The court also discussed negligence, negligent misrepresentation, soil disclosure, implied warranty of habitability, CCPA, and pre-judgment interest.
