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Town of Alma v. Azco Construction9/18/2000
en the parties, however, may support a tort action. Tommy L. Griffin Plumbing & Heating Co. v. Jordan, Jones & Goulding, Inc., 463 S.E.2d 85, 88 (S.C. 1995)(emphasis added).
Determining when a contract action will lie and when a tort action will lie requires maintaining this distinction in the sources of the respective obligations. The phrase "economic loss rule" necessarily implies that the focus of the inquiry under its analysis is on the type of damages suffered by the aggrieved party. However, the relationship between the type of damages suffered and the availability of a tort action is inexact at best. Examining the type of damages suffered may assist in determining the source of the duty underlying the action (e.g., most actions for lost profits are based on breaches of contractual duties while most actions involving physical injuries to persons are based on common law duties of care). However, some torts are expressly designed to remedy pure economic loss (e.g., professional negligence, fraud, and breach of fiduciary duty). It is here that substantial confusion arises from the use of the term "economic loss rule."
This confusion can be avoided, however, by maintaining the focus on the source of the duty alleged to have been violated. For example, we have recognized that some special relationships by their nature automatically trigger an independent duty of care that supports a tort action even when the parties have entered into a contractual relationship. See, e.g., Bebo Constr. Co. v. Mattox & O'Brien, P.C., 990 P.2d 78, 83 (Colo. 1999)(attorney-client relationship creates independent duty of care); Greenberg v. Perkins, 845 P.2d 530, 534 (Colo. 1993)(physician-patient relationship creates independent duty of care, as does physician's independent medical examination of non-patient); Farmers Group, Inc. v. Trimble, 691 P.2d 1138, 1141-42 (Colo. 1984)(quasi-fiduciary nature of insurer-insured relationship creates independent duty of care). We have also recognized that certain common law claims that sound in tort and are expressly designed to remedy economic loss may exist independent of a breach of contract claim. See Brody v. Bock, 897 P.2d 769, 776 (Colo. 1995)(common law fraud claim is based on violation of a duty independent of contract); Keller v. A.O. Smith Harvestore Prods., Inc., 819 P.2d 69, 73 (Colo. 1991)(negligent misrepresentation is a tort claim based "not on principles of contractual obligation but on principles of duty and reasonable conduct."). In these situations where we have recognized the existence of a duty 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 does not fall within the scope of the rule.
D. A Workable Economic Loss Rule: The Focus on Duty
We believe the principles underlying the rule, as discussed above, serve an important role and should be observed and applied in Colorado jurisprudence. In recognition of its importance, we undertake here to formulate its content.
We have previously recognized a court's duty to determine, at the outset of a lawsuit, the type of duty that has allegedly been breached. In Taco Bell v. Lannon we described the court's function as such:
The question of whether a defendant owes a plaintiff a duty to act to avoid injury is a question of law to be determined by the court. The court determines, as a matter of law, the existence and scope of the duty¾that is, whether the plaintiff's interest that has been infringed by the conduct of the defendant is entitled to legal protection. 744 P.2d 43, 46 (Colo. 1987)(internal
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