V&H v. Beardsley

23CA0754 V&H v Beardsley 08-14-2025

COLORADO COURT OF APPEALS

Court of Appeals No. 23CA0754
Jefferson County District Court No. 21CV31219
Honorable Todd L. Vriesman, Judge

V&H Development Co., LLC,

Plaintiff-Appellant,

v.

Craig Beardsley, Beardsley Construction & Development, Inc., Beardsley
Enterprises, LLC, and Matthew Beardsley,

Defendants-Appellees.

JUDGMENT AFFIRMED IN PART AND REVERSED IN PART,
AND CASE REMANDED WITH DIRECTIONS

Division VI
Opinion by JUDGE WELLING
Brown and Moultrie, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)
Announced August 14, 2025

Fox Rothschild LLP, Spencer L. Sears, Risa B. Brown, Esther H. Lee, Denver,
Colorado, for Plaintiff-Appellant

Martin Hild, P.A., Ll. Rhyddid Watkins, Codi K. Cox, Aurora, Colorado, for
Defendants-Appellees
¶1 Plaintiff, V&H Development Co., LLC, appeals the trial court’s

grant of summary judgment in favor of defendants, Craig Beardsley,

Matthew Beardsley, Beardsley Construction & Development, Inc.,

and Beardsley Enterprises, LLC (collectively, the Beardsleys). We

affirm the trial court’s judgment in part and reverse it in part, and

we remand the case to the trial court for further proceedings on

V&H’s contribution claim.

I. Background

¶2 In 2015, V&H purchased an undeveloped lot with the

intention of building a single-family home. V&H hired Beardsley

Construction (succeeded by Beardsley Enterprises) to act as the

builder and general contractor for the project. Craig Beardsley and

his son, Matthew Beardsley, own Beardsley Enterprises.

A. The 2019 Action and the Homeowner Action

¶3 In 2018, V&H sold the home to Christopher and Svetlana

Martie (the Homeowners). One year later, V&H brought suit against

Craig Beardsley, Beardsley Enterprises, and Beardsley Construction

alleging that they owed damages because of project delays, excess

costs, and defects with the HVAC system. We will refer to that case

1
as the 2019 action and the court that presided over it as the

Beardsley 1 court.

¶4 In the 2019 action, V&H asserted the following claims against

Craig Beardsley: intentional misrepresentation of project completion

schedule and estimated project costs, intentional misrepresentation

and nondisclosure of project invoicing, and negligent

misrepresentation of project completion schedule and project costs.

V&H asserted the following claims against Beardsley Construction

and Beardsley Enterprises: breach of contract, construction defects,

and unjust enrichment. Matthew Beardsley wasn’t named as a

defendant in the 2019 action. During the course of the litigation,

V&H withdrew its intentional misrepresentation and construction

defect claims, and the Beardsley 1 court later entered judgment

dismissing those claims with prejudice.

¶5 In 2020, the Homeowners filed suit against V&H, alleging that

the home suffered from a multitude of construction defects. We will

refer to that case as the Homeowner action. Even though the

Beardsleys weren’t named defendants in the Homeowner action,

V&H filed a motion to consolidate the Homeowner action with the

2019 action. The Beardsley 1 court partially granted that motion,

2
consolidating the cases for discovery purposes only. In May 2021,

the Homeowners settled their suit with V&H. Pursuant to the

settlement agreement, the Homeowners “assign[ed] to V&H any and

all claims asserted or that could have [been] asserted in the lawsuit

filed in Jefferson County, Colorado, [the 2019 action] consolidated

with [the Homeowner action].”

¶6 Although the Homeowner action settled, the 2019 action

remained ongoing. Approximately three months after the

settlement, in August 2021, V&H filed a motion to amend its

complaint in the 2019 action, seeking to add, among other things, a

contribution claim related to V&H’s settlement of the Homeowner

action. The Beardsley 1 court denied V&H’s motion to amend,

ruling that

[c]onsolidation of the actions [for discovery
purposes] does not make [Craig Beardsley,
Beardsley Construction, or Beardsley
Enterprises] a party to the [Homeowners’] suit
against V&H. Even though the [Homeowners]
assigned all of their claims to V&H in one case,
the assignment does not carry over to any
other lawsuit involving V&H. V&H should
have added the new defendants and claims in
[the Homeowner action] or filed a new lawsuit
as they stated they would do on June 21,
2021. [Craig Beardsley, Beardsley
Construction, and Beardsley Enterprises]

3
should not be required to be involved in
litigation by V&H against subcontractors that
may owe V&H for claims assigned to them by
the [Homeowners], or for claims that V&H has
known about all along and not added until
now.

We will refer to this order as the amendment denial order.

¶7 V&H filed a motion requesting that the Beardsley 1 court

reconsider its amendment denial order. The Beardsley 1 court

denied V&H’s request for reconsideration.

B. The 2021 Action

¶8 After the Beardsley 1 court denied V&H’s motion to amend the

complaint and its motion to reconsider that denial, V&H filed this

case — a separate action against multiple contractors, including the

Beardsleys — in November 2021. We will refer to this case as the

2021 action and the court that presided over it as the Beardsley 2

court.

¶9 As relevant to this appeal, in the 2021 action, V&H asserted a

breach of contract claim against Beardsley Construction and

Beardsley Enterprises and negligence, negligence per se,

contribution, and negligent misrepresentation/nondisclosure claims

against the Beardsleys.

4
¶ 10 In June 2022, the Beardsleys filed their first motion for

summary judgment seeking dismissal of all claims against them,

arguing that V&H filed the 2021 action “with full knowledge that it

is barred by [the] statute of limitations and [the amendment denial

order].” In their motion, the Beardsleys also contended that issue

preclusion barred all of V&H’s claims and that the economic loss

rule foreclosed V&H’s negligent misrepresentation claim. The

Beardsley 2 court granted the first motion for summary judgment in

part, dismissing the negligent misrepresentation claim based on the

application of the economic loss rule. The Beardsley 2 court denied

the balance of the Beardsleys’ first motion for summary judgment.

¶ 11 In November 2022, the Beardsleys filed a second motion for

summary judgment, arguing that the remaining claims against

them should be dismissed because they were barred by the doctrine

of claim preclusion and constituted impermissible claim splitting.

According to the Beardsleys, V&H’s second suit — the 2021

action — “involve[d] the same transaction, the same contract, and

the same property, as V&H’s first suit.” In its order on this motion,

the Beardsley 2 court expressly stated that claim preclusion wasn’t

a proper ground on which to grant the second motion for summary

5
judgment. Nevertheless, the Beardsley 2 court granted the second

motion for summary judgment and vacated the trial date.

¶ 12 In its order granting the second motion for summary

judgment, the Beardsley 2 court determined that the Beardsley 1

court specifically ruled in its amendment denial order “that new

claims by Plaintiff V&H were barred against [Craig Beardsley,

Beardsley Enterprises, and Beardsley Construction] due to the

specific circumstances of that case, including [V&H’s] actual or

presumed knowledge of the claims and failure to present them

timely in one or both lawsuits then currently pending.” The

Beardsley 2 court further stated that it would “not permit a second

trial to circumvent that ruling [of the Beardsley 1 court].”

¶ 13 V&H filed a motion to reconsider the dismissal of its claims

against Matthew Beardsley, arguing that the Beardsley 2 court’s

order failed to address the fact that Matthew Beardsley wasn’t a

party to the 2019 action. But the Beardsley 2 court denied the

motion to reconsider, stating that “[t]he claims against individual

Matthew Beardsley arise from the same work performed by [Craig

Beardsley, Beardsley Enterprises, and Beardsley Construction]” and

that “the claimed source[s] of personal liability against him are

6
derivative because, as noted in the Motion, his work was allegedly

tortious or wrongful conduct on behalf of a corporate Beardsley

entity.”

C. Judgment in the 2019 Action

¶ 14 In 2023, the Beardsley 1 court held a five-day jury trial on the

breach of contract and negligent misrepresentation claims brought

in the 2019 action. The jury found in favor of V&H and against

(1) Beardsley Enterprises on the breach of contract claim in the

amount of $78,207.51; (2) Beardsley Construction on the breach of

contract claim in the amount of one dollar; and (3) Craig Beardsley

on the negligent misrepresentation claim in the amount of one

dollar. Both sides appealed the judgment in the 2019 action.

Today, in a separate unpublished opinion, we affirm the judgment

in the 2019 action. See V&H Dev. Co. v. Beardsley, (Colo. App. No.

23CA0630, Aug. 14, 2025) (not published pursuant to C.A.R. 35(e)).

II. Analysis

¶ 15 On appeal in this case, V&H argues that the Beardsley 2 court

erred by (1) determining that the Beardsley 1 court’s amendment

denial order precluded V&H from bringing the 2021 action and

claims against Matthew Beardsley and (2) dismissing V&H’s claim

7
for negligent misrepresentation based on the economic loss rule. In

their briefing, the Beardsleys defend the Beardsley 2 court’s orders

and further argue that we can affirm the judgment below on the

alternate grounds that the doctrines of claim preclusion and claim

splitting bar V&H’s 2021 action. The Beardsleys also contend that

they are entitled to an award of their attorney fees and costs

incurred on appeal.

¶ 16 In addressing these issues, we first discuss the relevant

standard of review and then address the issues in the following

order: (1) whether the Beardsley 2 court erroneously determined

that the Beardsley 1 court’s amendment denial order precluded the

2021 action against the Beardsleys collectively or against Matthew

Beardsley individually; (2) whether claim preclusion or claim

splitting bars any or all of the claims V&H asserted in the 2021

action; (3) whether the economic loss rule bars V&H’s negligent

misrepresentation claim; and (4) whether the Beardsleys are

entitled to an award of their costs and fees.

A. Standard of Review

¶ 17 We review summary judgment de novo and apply “the same

standard as the trial court.” S. Cross Ranches, LLC v. JBC Agric.

8
Mgmt., LLC, 2019 COA 58, ¶ 11. A court can enter summary

judgment before trial if “there is no genuine issue as to any material

fact and . . . the moving party is entitled to a judgment as a matter

of law.” People in Interest of S.N. v. S.N., 2014 CO 64, ¶ 14 (quoting

C.R.C.P. 56(c)). In considering whether to grant summary

judgment, “the trial court must give the non-moving party all

favorable inferences that can be drawn from the record.” Id. at

¶ 16.

B. The Beardsley 2 Court’s Grant of the Beardsleys’ Second
Motion for Summary Judgment

¶ 18 We start by addressing V&H’s contention that the Beardsley 2

court erred by granting summary judgment in favor of the

Beardsleys on its contribution, negligence, negligence per se, and

breach of contract claims. We first address V&H’s contention that

the Beardsley 2 court erred by relying on the Beardsley 1 court’s

amendment denial order to dismiss the claims. We then address

the Beardsleys’ contention that claim preclusion and claim splitting

bar the 2021 action.

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1. The Beardsley 2 Court’s Reliance on the Beardsley 1 Court’s
Amendment Denial Order

¶ 19 V&H contends that the Beardsley 2 court erroneously relied on

the alleged preclusive effect of the Beardsley 1 court’s amendment

denial order to support its decision to grant summary judgment. In

support of this contention, V&H asserts that (1) the Beardsley 1

court’s amendment denial order only considered whether to permit

an amendment of the complaint in the 2019 action, not whether a

new suit could be pursued; (2) the Beardsley Defendants conceded

in the 2019 action that V&H could file a new lawsuit; and (3) by

implicitly relying on the elements of issue preclusion to conclude

that the Beardsley 1 court’s amendment denial order was “final and

binding” on V&H, the Beardsley 2 court “improperly” reversed its

earlier conclusion that issue preclusion didn’t apply. We agree with

V&H that the Beardsley 2 court erred by relying on the Beardsley 1

court’s amendment denial order to preclude the 2021 action. As a

result, we decline to address the Beardsleys’ purported concessions

or whether the law of the case applies.

10
a. Legal Principles

¶ 20 In certain circumstances, issue preclusion bars successive

litigation to “protect[] litigants from needless relitigation of the same

issues, further[] judicial economy, and promote[] the integrity of the

judicial system by affirming that one can rely upon judicial decrees

because they are final.” Villas at Highland Park Homeowners Ass’n

v. Villas at Highland Park, LLC, 2017 CO 53, ¶ 28 (quoting Wolfe v.

Sedalia Water & Sanitation Dist., 2015 CO 8, ¶ 14). When a party

asserts issue preclusion, the party must show:

(1) the issue is identical to an issue actually
litigated and necessarily adjudicated in the
prior proceeding; (2) the party against whom
estoppel was sought was a party to or was in
privity with a party to the prior proceeding;
(3) there was a final judgment on the merits in
the prior proceeding; and (4) the party against
whom the doctrine is asserted had a full and
fair opportunity to litigate the issues in the
prior proceeding.

Id. at ¶ 29 (citation omitted). Whether issue preclusion applies is

dependent upon the essential elements of the claim a party seeks to

preclude. Id. at ¶ 31.

11
b. Issue Preclusion Isn’t Applicable

¶ 21 Issue preclusion doesn’t apply because the first element isn’t

met. “An issue is necessarily adjudicated when a determination on

that issue was necessary to a judgment.” Bebo Constr. Co. v. Mattox

& O’Brien, P.C., 990 P.2d 78, 86 (Colo. 1999). And here, the issue

of whether V&H could file a new lawsuit wasn’t necessary to the

Beardsley 1 court’s disposition of V&H’s motion to amend. Indeed,

in the companion case that we announce today, V&H Dev. Co. v.

Beardsley, No. 23CA0630, we determine that the Beardsley 1 court

erred when it concluded unnecessarily that V&H was required

under section 13-80-104(1)(b)(II), C.R.S. 2024, to file a new case to

assert its proposed amended claims against Craig Beardsley,

Beardsley Construction, and Beardsley Enterprises and improperly

that such an action would be time barred. Id. at ¶¶ 42-44.

¶ 22 We didn’t reverse on the basis of this error, however, because

we concluded that an independent basis — V&H’s delay in seeking

leave to amend — supported the Beardsley 1 court’s denial of V&H’s

motion to amend. Id. at ¶ 50. Thus, not only was the basis invoked

for its preclusive effect not necessary to the disposition of the

motion to amend by the Beardsley 1 court, but the court’s

12
erroneous disposition of that particular issue was harmless in that

case. See id. at ¶¶ 44, 50.

¶ 23 For this reason, the Beardsley 1 court’s disposition of the

motion to amend shouldn’t have been accorded preclusive effect in

this case and the Beardsley 2 court erred by dismissing the balance

of the claims against the Beardsleys on this basis. Because we

conclude that the Beardsley 2 court’s invocation of issue prelusion

was erroneous, we decline to address V&H’s remaining contentions

about the Beardsleys’ concessions regarding the propriety of a

second suit or the applicability of the law of the case. Moreover,

because we determined that the first element of issue preclusion

wasn’t satisfied, we need not reach V&H’s separate contention that

issue preclusion didn’t apply to Matthew Beardsley on the basis

that he wasn’t a party to the 2019 action.

2. Claim Preclusion Bars Some, But Not All, of V&H’s Claims

¶ 24 The Beardsleys contend that, even if the Beardsley 2 court

erred by dismissing V&H’s claims based on the Beardsley 1 court’s

amendment denial order, the doctrine of claim preclusion and its

prohibition against claim splitting bars the claims based on the

final judgment entered in the 2019 action. We agree that claim

13
preclusion bars V&H’s breach of contract claims, and that claim

splitting bars its negligence and negligence per se claims, but we

aren’t persuaded that either doctrine bars its contribution claim.

Because the Beardsley 2 court dismissed V&H’s negligent

misrepresentation claim on other grounds, we discuss the propriety

of its dismissal of that claim in Part II.C, infra.

a. Legal Principles

¶ 25 Claim preclusion “preclude[s] the relitigation of matters that

have already been decided as well as matters that could have been

raised in a prior proceeding but were not.” Argus Real Est., Inc. v.

E-470 Pub. Highway Auth., 109 P.3d 604, 608 (Colo. 2005).

¶ 26 Claim preclusion will bar a claim in a current proceeding if

“(1) ‘the judgment in the prior proceeding was final’; (2) ‘the prior

and current proceeding involved identical subject matter’; (3) ‘the

prior and current proceeding involved identical claims for relief’;

and (4) ‘the parties to both proceedings were identical or in privity

with one another.’” Foster v. Plock, 2017 CO 39, ¶ 12 (quoting

Meridian Serv. Metro. Dist. v. Ground Water Comm’n, 2015 CO 64,

¶ 36).

14
¶ 27 In addition to precluding relitigation of matters that have been

decided or could have been raised in a prior proceeding, claim

preclusion also serves to bar “a litigant from splitting claims into

separate actions because once judgment is entered in an action it

‘extinguishes the plaintiff’s claim . . . includ[ing] all rights of the

plaintiff to remedies against the defendant with respect to all or any

part of the transaction, or series of connected transactions, out of

which the action arose.’” Argus, 109 P.3d at 608-09 (quoting

Restatement (Second) of Judgments § 24 (Am. L. Inst. 1982)).

b. Claim Preclusion

¶ 28 In its order granting the Beardsleys’ second motion for

summary judgment, the Beardsley 2 court rejected the Beardsleys’

claim preclusion argument, finding that “the claims in [the 2019

action] and this case are legally different and, both in concept and

by statutory authorization, separate lawsuits under CDARA could

be maintained despite overlapping facts.” Notwithstanding this

finding, the Beardsleys contend that claim preclusion bars V&H’s

claims in the 2021 action. See Million v. Grasse, 2024 COA 22, ¶ 29

(“[W]e may affirm a trial court’s judgment on any basis supported

by the record.”).

15
¶ 29 In contesting that claim preclusion or claim splitting bars its

claims, V&H focuses its argument on whether the 2019 action and

2021 action involved identical subject matter and claims for relief.

V&H argues that the two actions involve different subject matters

and claims for relief because the 2019 action sought damages for

delay costs and cost overruns, not damages for defects. We’re only

partially persuaded and conclude that V&H’s breach of contract,

negligence, and negligence per se claims are precluded by claim

preclusion or claim splitting but that its contribution claim isn’t

precluded on either ground.

i. Breach of Contract Claim

¶ 30 Regarding the breach of contract claim, we can readily

conclude that the first and fourth elements of claim preclusion are

satisfied. The first element is satisfied because the 2019 action

constitutes a prior proceeding with a final judgment. And the

fourth element is satisfied because both the 2019 action breach of

contract claim and the 2021 action breach of contract claim were

brought by V&H against identical parties (Beardsley Construction

and Beardsley Enterprises).

16
¶ 31 Determining whether the second and third elements are

satisfied requires closer scrutiny.

¶ 32 In considering whether the second element of identity of

subject matter is satisfied, we must “determin[e] whether the same

evidence would be used to prove the claims, even if the actions are

different.” Foster, ¶ 28. In this case, both breach of contract claims

rely on the same evidence: the agreement between V&H, Beardsley

Construction, and Beardsley Enterprises and action or inaction by

Beardsley Construction or Beardsley Enterprises that might be

considered a breach of that agreement. Based on this, we conclude

that the second element is satisfied. See Argus, 109 P.3d at 608

(concluding that the identity of subject matter element of claim

preclusion was met because the actions “involve[d] the same parcel

of land and same agreement as the subject matter of litigation”).

¶ 33 We also conclude that the third element of claim preclusion is

satisfied because the claims for relief are sufficiently identical.

When assessing whether claims for relief are identical, our inquiry

doesn’t “focus on the specific claim asserted or the name given to

the claim”; rather, “the ‘same claim or cause of action requirement

is bounded by the injury for which relief is demanded, and not by

17
the legal theory on which the person asserting the claim relies.’” Id.

at 608-09 (citation omitted). Claim preclusion therefore bars

relitigation of “all claims actually decided” and “all claims that

might have been decided if the claims are tied by the same injury.”

Id. at 609. In this case, as stated in the complaint, both claims

arose from Beardsley Construction’s and Beardsley Enterprises’

agreement with V&H to “perform certain construction work on the

Project” and Beardsley Construction’s and Beardsley Enterprises’

alleged violation of the agreement “through various actions and

inactions including . . . failing to perform the Project in a

workmanlike manner.” Because both claims relate to Beardsley

Construction’s and Beardsley Enterprises’ purported breach of the

same contract with V&H, the claims are tied to the same injury.

See Layton Constr. Co. v. Shaw Cont. Flooring Servs., Inc., 2016 COA

155, ¶ 27 (“Generally, a contract is considered to denote a single

transaction for the purpose of claim preclusion, and therefore

claims for different breaches of a contract ordinarily must be

brought in the same action.” (quoting Loveland Essential Grp., LLC

v. Grommon Farms, Inc., 2012 COA 22, ¶ 16)).

18
ii. Contribution, Negligence, and Negligence Per Se Claims

¶ 34 We now turn to whether claim preclusion bars V&H’s claims

for contribution, negligence, or negligence per se. Because the

2019 action and the 2021 action don’t assert identical claims for

relief, we conclude that V&H’s remaining claims aren’t barred by

claim preclusion.

¶ 35 V&H’s claims for contribution, negligence, and negligence per

se in the 2021 action aren’t identical to its claims for relief in the

2019 action because the claims involve different injuries. The

claims in the 2019 action are based almost exclusively on cost

overruns and delays in finishing construction of the home.

Conversely, the claims in the 2021 action are based on defects in

the construction of the home. Because these claims consist of

different injuries, V&H’s contribution, negligence, and negligence

per se claims in its 2021 action aren’t barred by the doctrine of

claim preclusion.

¶ 36 Further, we aren’t convinced that the contribution claim was

ripe in the early stages of the 2019 litigation such that litigation of

that claim in a second suit should be barred, as that claim arose

19
upon the settlement of the Homeowner action. See § 13-80-

104(1)(b)(II).

c. Claim Splitting

¶ 37 Although the claims aren’t identical, there is still a question of

whether V&H improperly split its claims by failing to bring its

contribution, negligence, and negligence per se claims against the

Beardsleys in the 2019 action. We conclude that the negligence

and negligence per se claims are barred on claim splitting grounds,

but that the contribution claim isn’t.

¶ 38 First, V&H’s negligence and negligence per se claims are part

of the same connected transactions and, therefore, should have

been brought in the 2019 action. Indeed, any negligence would

have occurred while the Beardsleys were constructing the home and

as part of the same events giving rise to the breach of contract. It’s

of no moment that the complaint details a duty of care in the

Beardsleys’ services “independent of any contractual duties.” And,

specifically as it relates to Matthew Beardsley, it’s inconsequential

that he wasn’t a named defendant in the 2019 action. V&H avers

that Matthew Beardsley is an owner of Beardsley Enterprises. And

because V&H’s claims relate to construction of a home built by

20
Beardsley Enterprises and a contract purportedly breached by

Beardsley Enterprises, the negligence and negligence per se claims

against Matthew Beardsley should have been brought in the 2019

action.

¶ 39 Second, while claim splitting bars V&H’s negligence and

negligence per se claims, the contribution claim is different because

it’s a claim for indemnification based on the disposition of the

claims asserted in the Homeowners action and, as such, arose well

after the 2019 action had commenced and is independent of those

claims.

¶ 40 To support their contention that V&H improperly split its

contribution claim, the Beardsleys cite Layton, ¶ 22, for the

proposition that CDARA doesn’t create an exception to claim

splitting. We aren’t persuaded.

¶ 41 In Layton, the claimant added claims against an indemnitor in

its initial action and then moved to dismiss those claims with

prejudice. Id. at ¶¶ 4-6. But the claimant later filed suit against

the indemnitor asserting additional indemnification claims and

declaratory judgment for attorney fees and costs incurred from

defending the initial action. Id. at ¶ 8. A division of this court held

21
that the trial court correctly granted summary judgment in favor of

the indemnitor based on the doctrine of claim preclusion because

(1) there was identity of claims because a claim for indemnity could

have been brought in the prior action; (2) CDARA doesn’t modify

claim preclusion as to indemnification for attorney fees and costs

and doesn’t permit claims splitting; and (3) no exceptions to claim

preclusion applied to the case. Id. at ¶¶ 9, 19, 22, 25, 36.

¶ 42 But Layton is inapposite. While Layton holds that CDARA

doesn’t permit claim splitting, it doesn’t hold that claim preclusion

prevents a party from bringing an indemnity or contribution case

after settlement with a third party. Id. at ¶¶ 22-24. And that’s

what happened here, at least with respect to the contribution claim.

Further, the procedural facts of this case are materially

distinguishable from Layton. In Layton, the indemnification claim

could have been brought in the initial action. Id. at ¶ 16. But in

this case, the contribution claim brought in the 2021 action didn’t

arise until V&H settled the Homeowner action, and V&H’s attempt

to amend its complaint in the 2019 action to add a contribution

claim was denied, see V&H Dev. Co., No. 23CA0630, slip op. at

¶¶ 31-33, 42. In this situation, V&H may bring a later contribution

22
claim against the Beardsleys for all or part of V&H’s liability to the

Homeowners. See § 13-80-104(1)(b)(II); Goodman v. Heritage

Builders, Inc., 2017 CO 13, ¶ 9 (“Although third-party claims under

section 13-80-104(1)(b)(II)(A) do not arise until settlement or entry

of judgment, . . . such claims may be brought in either (1) the

construction defect litigation before a settlement or entry of

judgment or (2) a separate lawsuit after a settlement or entry of

judgment.”); V&H Dev. Co., No. 23CA0630, slip op. at ¶¶ 43-46.

¶ 43 And V&H isn’t precluded from filing the 2021 action because

the Beardsley 1 court denied its request to add these claims to the

2019 action. See V&H Dev. Co., No. 23CA0630, slip op. at ¶¶ 42-

46. Indeed, “the rule against claim-splitting ‘does not require

distinct causes of action — that is to say, distinct matters, each of

which would authorize by itself independent relief — to be

presented in a single suit, though they existed at the same time,

and might be considered together.’” Hartsel Springs Ranch of Colo.,

Inc. v. Bluegreen Corp., 296 F.3d 982, 990 (10th Cir. 2002) (quoting

The Haytian Republic, 154 U.S. 118, 125 (1894)).

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¶ 44 In summary, we conclude that claim preclusion and claim

splitting preclude V&H’s breach of contract, negligence, and

negligence per se claims but not its contribution claim.

C. The Economic Loss Rule Is a Bar to V&H’s Negligent
Misrepresentation Claim

¶ 45 V&H next contends that the Beardsley 2 court erred by

dismissing its negligent misrepresentation claim on the basis that

the economic loss rule barred it. The court was correct.

1. Legal Principles

¶ 46 Under the economic loss rule, “a party suffering only economic

loss from the breach of an express or implied contractual duty may

not assert a tort claim for such a breach absent an independent

duty of care under tort law.” Town of Alma v. AZCO Constr., Inc., 10

P.3d 1256, 1264 (Colo. 2000); see also Mid-Century Ins. Co. v. HIVE

Constr., Inc., 2025 CO 17, ¶ 22. Generally, economic loss is defined

as “damages other than physical harm to persons or property.”

Town of Alma, 10 P.3d at 1264. “Damages for the cost of repair and

replacement of property that were the subject of the contract

constitute economic loss damages that must be supported by an

24
independent duty of care to be recoverable in a negligence action.”

Id.

¶ 47 The purpose of the economic loss rule is “to maintain the

boundary between contract law and tort law.” Id. at 1259. “The

essential difference between a tort obligation and a contract

obligation is the source of the duties of the parties.” Id. at 1262.

Typically, tort obligations “arise from duties imposed by law,”

whereas “contract obligations arise from promises made between

parties.” Id. It’s appropriate to limit tort liability when there is a

contract between parties so that parties are held “to the terms of

their bargain,” which “ensure[s] predictability in commercial

transactions.” Id. “The precise allocation of risk through

contracting is of particular importance in the construction industry

. . . because architects, contractors, and other construction

industry professionals determine the fees to be charged based on

their expected liability exposure as bargained and provided for in

their contracts.” Mid-Century Ins., ¶ 23 (citations omitted).

¶ 48 When considering whether a contract or tort action is

available, it’s critical to “determin[e] the source of the duty that

forms the basis of the action.” Town of Alma, 10 P.3d at 1262. In

25
some cases, a tort claim is based on a duty of care independent of a

party’s contractual obligation, and therefore the economic loss rule

doesn’t apply. Id. at 1263. One such claim, in certain

circumstances, is negligent misrepresentation. Keller v. A.O. Smith

Harvestore Prods., Inc., 819 P.2d 69, 72 (Colo. 1991). Negligent

misrepresentation claims are based on principles of duty and

reasonable conduct, not principles of contractual obligation; so if a

party negligently misrepresents material facts before a contract is

executed, there may be a basis for an independent tort claim. Id. at

72-73. The economic loss rule typically precludes claims for

negligent misrepresentation made during the execution of the

contract. See Van Rees v. Unleaded Software, Inc., 2016 CO 51,

¶ 17 (“The key in [Keller] is our recognition of an independent tort

duty regarding negligent misrepresentations inducing the

contractual arrangement, not the subject (that is, product or

services) of the arrangement itself.”); McWhinney Centerra Lifestyle

Ctr. LLC v. Poag & McEwen Lifestyle Ctrs.-Centerra LLC, 2021 COA

2, ¶ 72 (“As the supreme court has made clear, tort claims based on

theories of negligence and negligent misrepresentation necessarily

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stem from duties created by a contract between parties and,

therefore, the economic loss rule often applies.”) (emphasis added).

2. Application

¶ 49 In their first motion for summary judgment, the Beardsleys

argued that V&H’s negligent misrepresentation claim was barred by

the economic loss rule. In the motion, the Beardsleys observed that

“V&H’s claim for negligent misrepresentation is based on

statements allegedly made after it entered into an agreement with

Beardsley Construction and Beardsley Enterprises” and that the

statements alleged in the complaint “concerned the house as

constructed and designed, as opposed to statements that induced

the agreement.” In its first summary judgment order, the

Beardsley 2 court dismissed the negligent misrepresentation claim,

finding that the economic loss rule applied and that the claim

“arose from the contractual relations of the parties and not some

independent duty of care under tort law causing unexpected

different damage.” The court also observed that there was “no

material allegation that negligent misrepresentations were made

prior to the contracts.”

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¶ 50 On appeal, V&H doesn’t provide any record evidence indicating

that the alleged statements forming the basis of the negligent

misrepresentation claim were made before the parties entered into a

contract. Rather, V&H argues that the Beardsley 2 court erred

because it didn’t “provide V&H with all favorable inferences to be

drawn from the facts as alleged in its Complaint,” as is required

when resolving a motion for summary judgment. But in its

complaint, V&H fails to allege that the Beardsleys made statements

that could form the basis of a negligent misrepresentation claim

outside of the contract, let alone before the contract was formed.

And V&H didn’t provide any evidence in the form of affidavits or

otherwise with its brief in opposition to the motion for summary

judgment. While the court was required to give V&H “all favorable

inferences that c[ould] be drawn from the record,” S.N., ¶ 16,

without an allegation or any evidence that any purported

misrepresentations were made before the contract was formed or

outside of the contract, the court correctly concluded that the

economic loss rule barred V&H’s negligent misrepresentation claim.

See id. at ¶ 17 (“A genuine issue of material fact . . . ‘cannot be

raised by counsel simply by means of argument.’” (quoting Sullivan

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v. Davis, 474 P.2d 218, 221 (Colo. 1970))); Griswold v. Nat’l Fed’n of

Indep. Bus., 2019 CO 79, ¶ 23 (The party moving for summary

judgment may show that there is no genuine issue of material fact

and that they are entitled to judgment as a matter of law “by

demonstrating that there is an absence of evidence in the record to

support the nonmoving party’s case.” (quoting Civ. Serv. Comm’n v.

Pinder, 812 P.2d 645, 649 (Colo. 1991))).

¶ 51 V&H further argues that the economic loss doctrine is

inapplicable because the Beardsleys’ negligence resulted in property

damage. But if the damages sought for the repair or replacement of

property stem from the contract, they constitute economic loss

damages and can’t be recovered under a tort claim unless an

independent duty exists. See Town of Alma, 10 P.3d at 1264; see

also Mid-Century Ins., ¶ 24 (“Whether the economic loss rule applies

depends not on the nature of the damages — physical or economic

— but rather on the source of the duty allegedly breached — the

contract or some other source.”). And no independent duty exists

here. Because there is no indication that the repair and

replacement damages that V&H is attempting to recover wouldn’t

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fall within the scope of the contract, the economic loss doctrine

applies to bar the claim.

¶ 52 Accordingly, the Beardsley 2 court correctly dismissed V&H’s

negligent misrepresentation claim based on the economic loss

doctrine.

D. The Beardsleys Aren’t Entitled to Fees and Costs on Appeal

¶ 53 The Beardsleys assert that V&H’s appeal is frivolous and

request an award of their reasonable attorney fees and double costs

pursuant to section 13-17-102(3), C.R.S. 2024, and C.A.R. 38. We

decline to award the Beardsleys attorney fees or costs under section

13-17-102 or C.A.R. 38 because V&H’s appeal isn’t groundless or

frivolous, as evidenced by our decision to partially reverse the

Beardsley 2 court’s order granting summary judgment. See In re

Marriage of Martin, 2021 COA 101, ¶ 42.

III. Disposition

¶ 54 As described above, the judgment is affirmed in part and

reversed in part, and the case is remanded for further proceedings

on V&H’s contribution claim.

JUDGE BROWN and JUDGE MOULTRIE concur.

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