Bailment Claims Under the Colorado Government Immunity Act and the Economic Loss Doctrine
| Publication year | 2015 |
| Pages | 37 |
Articles
Government Counsel
Bailment Claims Under the Colorado Government Immunity Act and the Economic Loss Doctrine
By Dart M. Winkler, Nicholas C. Snow.
Government Counsel articles provide information to attorneys dealing with state and federal administrative agencies, as well as attorneys representing public or private clients in the areas of municipal, county, and school or special district law.
Coordinating Editor
Mary Elizabeth Geiger, Glenwood Springs, of Garfield & Hecht, P.C.—(970) 947-1936, mgeiger@garfieldhecht. com
A recent opinion by the Colorado Court of Appeals considered the overlap and interaction of bailment, the Colorado Governmental Immunity Act, and the economic loss doctrine, finding that bailment claims could arise in tort and are barred by governmental immunity, protecting public entities from liability, and that the economic loss rule did not change that fact.
In a recent case of first impression, Foster v. Bd. of Governors of the Colorado State Univ. Sys. by & on behalf of Colorado State Univ.,[1] the Colorado Court of Appeals analyzed whether plaintiff's alleged breach of oral contract for bailment sounded in tort, triggering the Colorado Government Immunity Act (CGIA) and barring plaintiff's claim, and whether the economic loss doctrine precluded plaintiff from bringing her breach of oral contract for bailment claim in tort. The court held that plaintiff's breach of oral contract for bailment claim could have alternatively been pled in tort[2] and that the economic loss doctrine had no bearing on a claim for which there existed an independent tort duty regardless of any contractual relationship.[3] To firmly grasp why the court's decision harmonized three of the murkiest[4] areas of Colorado law, a brief rundown of the CGIA, the economic loss doctrine, and Colorado law concerning bailment is warranted.
The CGIA
Generally, the CGIA shields governmental entities from tort liability. Colorado has a complicated history with respect to sovereign immunity, but for purposes of this article, we can start with Colorado's adoption of the CGIA. In 1971, the legislature enacted the CGIA, and as amended it has several important features that can be boiled down to four main points:
1. It codified the legislature's intent for governmental immunity to replace the common law doctrine.
2. It provided an express waiver of immunity for particular claims, specifically those sounding intort.
3. It conditioned permissible claims against governmental entities on proper prior notice to the government entity of the claim.
4. It placed financial limits on the government's exposure to permitted claims.
Effective July 1, 2013, the statutory cap on damages was raised from $150,000 to $350,000 for an individual claim and from $600,000 to $990,000 for multiple claims arising from a single incident. The new damages limitations will be adjusted to account for cost of living increases based on the consumer price index every four years.[5]
Application
The CGIA is found at CRS §§ 24-10-101 et seq. CRS § 24-10-108 states that "sovereign immunity shall be a bar to any action against a public entity for injury which lies in tort or could lie in tort regardless of whether that may be the type of action or the form of relief chosen by a claimant" (emphasis added). Whether one is dealing with a public entity may be a relatively straight forward analysis; however, whether the claim lies in tort or could lie in tort can be more challenging. Colorado courts have been consistent and uniform in holding that the CGIA does not apply to purely contractual causes of action.[6]Similarly, where the plaintiff alleges a tort cause of action, no further analysis is needed.
Where a contractual cause of action is alleged, but the claim could also be brought in tort, the analysis becomes more difficult. The statute addresses not only tort claims captioned as such, but also claims that, however pled, "could" lie in tort. The CGIA ensures that artful pleading by plaintiff's counsel cannot avoid the legislature's intent to preserve governmental immunity.[7] Where the plaintiff's claim could lie in tort, the courts have generally looked to the nature of the injury and the form of relief sought to help determine these issues[8]
A public entity's asserted immunity involves an issue of subject matter jurisdiction that must be resolved by the trial court pursuant to a motion to dismiss pursuant to CRCP 12(b)(1). The plaintiff has the burden of proving jurisdiction and demonstrating that governmental immunity does not bar its claim.[9] CRS § 24-10-108 expressly permits an interlocutory appeal from a determination concerning sovereign immunity under the CGIA, and a district court's order regarding a pretrial motion asserting governmental immunity is a final judgment, subject to immediate interlocutory appeal.[10]
When the plaintiff's claim lies in tort or could lie in tort, the CGIA operates to block the claim outright. If the plaintiff can demonstrate that one or more of the enumerated exceptions apply and the CGIA does allow recovery, the plaintiff's recovery is limited to designated amounts. As set forth above, as of the date of this article, the limits are $350,000 for an injury to one person in a single occurrence and 990,000 for an injury to two or more persons in a single occurrence.[11]
The Economic Loss Doctrine
The Colorado Supreme Court adopted the economic loss doctrine[12] in 2000 through two cases: Town of Alma v. AZCO Construction, Inc.[13] and Grynberg v. Agri Tech, Inc.[14] The economic loss doctrine attempts to delineate the boundaries between tort and contract law by precluding plaintiffs in certain cases from asserting a tort cause of action where the alleged tort duty breached is addressed by a contractual duty existing between the parties. According to the 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.[15]
Application
At its core, the economic loss rule attempts to hold contracting parties to the terms of their agreement and protect the respective interests created by the parties' promises established through the contract negotiation process.[16]This, in turn, allows contracting parties to bargain confidently without fear that unanticipated liability may arise in the future and encourages the parties to self-protect against economic loss by building risk and cost considerations into their contract.[17] To help determine whether the duty breached was contractual or tort based, the Court in Town of Alma adopted what is called the "independent duty approach."[18] The Court noted that "[t]ort obligations generally arise from duties imposed by law. . . ." whereas contract obligations "arise from promises made between parties."[19]
However, Colorado case law presents conflicting outcomes in discussing the independent duty approach. Town of Alma, Grynberg, and BRW, Inc. v. Dufficy & Sons, Inc. hold that duties memorialized in contract preclude similar duties in tort law. Five years later, the Supreme Court s oftened that stance in holding that
where there exists a duty of care independent of any contractual obligations, the economic loss rule has no application and does not bar a plaintiff's tort claim because the claim is based on a recognized independent duty of care and thus falls outside the scope of the economic loss rule.[20]
Recent cases have not made the doctrine any less confusing. In Casey v. Colorado Higher Educ. Ins. Benefits Alliance Trust,[21] the court of appeals held that the economic loss doctrine barred plaintiff's tort claims with respect to the trustees because the claims were already subsumed by the fiduciary duties outlined in the trust agreement and were not "appreciably different" than those duties outlined in the contract. Citing BRW, the court reasoned
because the trustees' duty of care is...
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