Tort Reform's Impact on Contract Law
| Publication year | 1986 |
| Pages | 2206 |
1986, December, Pg. 2206. Tort Reform's Impact on Contract Law
The new Colorado tort reform legislation changed that portion of tort law typically considered to be accident-related.(fn1) The legislation also affected Colorado's evolving contract law sub silentio and may have created a new tort, hereafter known as "tortious breach of contract."
Tort reform has spilled over into contract law due to the legislature's confusion over the term "tort remedies" in contract actions.(fn2) So-called "tort remedies" in contract actions are relatively new applications in Colorado of old damage doctrines to different fact situations. These remedies, awarded in the context of all types of contracts, include consequential damages,(fn3) punitive damages(fn4) and damages for emotional distress.(fn5) Such remedies should not be denominated "tort remedies," since they are generally applicable, assuming the proper factual basis, regardless of theory. Therefore, it is important not to assume that the appellation "tort remedy" is correct.
Claimants in contract actions filed in Colorado should be prepared to address attempts to extend the recent tort reform legislation beyond tort-based actions and into this shadowy area of evolving damage remedies in contract actions. This article addresses two changes which affect contract actions: the new two-year statute of limitations for tort-based actions and the changes to exemplary damage claims and claims for non-economic damages. Finally, some practical options are considered.
Suppose, for example, Mr. Jones sought legal advice in February 1989 because his home was flooded two and one-half years ago. A local "deflooder" agreed to fix the problem but, in so doing, misrepresented me potential results and the work was performed poorly. Mold and mildew soon made the client's home uninhabitable and roaches and ants infested the house. Consequently, Mr. Jones and his family have experienced physical and emotional health problems. Efforts to resolve the problem short of filing suit have been attempted to no avail.
Prior to July 1, 1986, the effective date of the new statute, Mr. Jones probably would have been advised consider asserting claims for breach of contract, breach of warranty, negligence and outrageous conduct (intentional infliction of emotional distress). However, as of July 1, 1986, the new two-year statute of limitations arguably cuts off most of these claims because they accrued more than two years before Mr. Jones visited his attorney. New CRS § 13-80-102(1) states as follows:
The following civil actions, regardless of the theory upon which suit is brought, or against whom suit is brought, shall be commenced within two years after the cause of action accrues, and not thereafter:
(a) Tort actions, including, but not limited to, actions for negligence, trespass, malicious abuse of process, malicious prosecution, outrageous conduct, interference with relationships, and tortious breach of contract.
(b) All actions for strict liability, absolute liability, breach of warranty, or failure to instruct or warn.(fn6) (Emphasis added.)
In the above situation, Mr. Jones' claims accrued two and one-half years before he conferred with counsel; therefore, he may be limited to a claim for breach of contract, which is governed by a three-year statute of limitations.(fn7) In this circumstance, it is suggested that Mr. Jones' breach of contract claim should not be jeopardized merely by the loss of the parallel tort claims, even though the other potential claims arise from the same circumstances. The general rule, supported by the preponderance of authority, is that a statute of limitations operates only on the remedy and does not extinguish the substantive right.(fn8) It is axiomatic that, where two remedies are available for the enforcement of a right, the one selected is the one that has not been barred by the statute of limitations.(fn9)
Therefore, counsel should consider advising Mr. Jones of the potential of proceeding on a breach of contract claim and, at the same time, alleging the deflooder's willful and wanton conduct.(fn10) In this manner, damages appropriate to the circumstances may be recovered and the time bar regarding the tort claims can be obviated.
Punitive damages and damages for emotional distress may be recovered in a breach of contract action. Recent Colorado appellate decisions recognize that a breach of contract action remains a contract action even where the defendant's conduct justifiably results in the award of punitive damages or damages for emotional distress.(fn11)
Trimble v. City & County of Denver(fn12) is the seminal case holding that emotional distress may be compensated in a pure breach of contract action. In Trimble, the defendant city would have been protected by sovereign immunity from plaintiff's tort claims, but enjoyed no such protection against plaintiff's contract claims. The Colorado Supreme Court stated that damages for plaintiff's mental suffering in a contract action constituted a proper element of damage where willful or wanton conduct was...
To continue reading
Request your trial