Last November, Otten Johnson sent out a client alert stemming from a jury verdict in Rogers v. Forest City Stapleton, Inc. and FC Stapleton II, where a Colorado homeowner won a judgment of over $700,000 from the master developer under an implied warranty of habitability claim. This was the first time a Colorado court had allowed liability to flow back to a master developer when the developer sold a lot to a professional homebuilder. In our alert, we mentioned that an appeal was possible.

Forest City filed an appeal in the Rogers case on January 13, 2014, raising three questions:

Did the trial court err in ruling that the Plaintiff could assert a claim for breach of implied warranties against Forest City?

Did the trial court err in instructing the jury that the Plaintiff could recover on a claim for breach of implied warranties against Forest City?

Did the trial court err in finding that the Plaintiff presented sufficient evidence from which the jury could infer (1) that Forest City “placed” recycled aggregate base course in the roads around Plaintiffs’ house, or (2) that doing so was unreasonable—both of which are necessary to support Plaintiffs’ nuisance claim?

The first two questions address the same issue: whether a master developer can be held liable to a downstream purchaser for breach of implied warranties. While the Rogers jury said “yes,” a Colorado judge in a 2011 case sitting on virtually the same facts said “no,” setting the stage for this appeal. The outcome of Rogers will be important to developers, homebuilders, and homeowners, as it could redraw the lines of liability between these parties for implied warranties.

Brad Schacht and Amy Hansen