S K Peightal Engineers, LTD v. Mid Valley Real Estate Solutions VAnnotate this Case
This case stemmed from a series of contracts surrounding the construction of a custom home. Petitioners are soil engineering corporations that subcontracted with developer Sun Mountain Enterprises, LLC to perform soil analysis and soil engineering related to the construction of the home. SK Peightal Engineers, LTD entered an oral contract with general contractor Shannon Custom Homes. Petitioner Hepworth-Pawlak Geotechnical, Inc. entered into a written contract with Sun Mountain containing a duty of care provision. It was unclear whether SK Peightal's oral contact contained the same duty of care requirement. Sun Mountain planned on selling the completed home on the open market, but due to the economic downturn, the house sat until the construction loan contract matured and came due, at which point Sun Mountain and its lender entered into an "Agreement for Deed-in-Lieu of Foreclosure. Sun Mountain was thereby absolved of personal liability for the loan, and the bank took ownership of the house. After the lender took possession, large cracks formed in the walls of the home due to a settling of the soil beneath the home's foundation. The lender sued petitioner soils engineers for negligence. Petitioners moved for summary judgment under the economic loss rule, asserting that the lender was contractually interrelated through the deed-in-lieu and the loan contract to the duty provisions contained in petitioners' contracts with Sun Mountain, and thus the lender was barred from asserting a negligence claim for economic loss. The trial court rejected petitioners' motion. Petitioners then appealed. After review, the Colorado Supreme Court reversed and remanded, finding the appellate court misinterpreted the case law authority pertaining to this case.