COLORADO COURT OF APPEALS November 4, 1999

No. 98CA0083 NOT SELECTED FOR PUBLICATION

John C. Dean and Dorothy H. Dean,

Plaintiffs-Appellees and Cross-Appellants,

McStain Enterprises, Inc., a Colorado corporation, Beauprez

Piszek Limited Partnership, a Colorado limited partnership,

Defendants-Appellants and Cross-Appellees,

and

Robert L. Beauprez,

Defendant and Cross-Appellee.

Appeal from the District Court of Boulder County

Honorable Roxanne Bailin, Judge

Honorable Joseph Bellipani, Judge

No. 95CV635

Division III JUDGMENT AFFIRMED IN PART,

Opinion by JUDGE STERNBERG* REVERSED IN PART, AND CAUSE

Taubman and Kapelke, JJ., concur REMANDED WITH DIRECTIONS

Daniel W. Patterson & Associates, P.C., Daniel W. Patterson, Heather R. Hanneman, Denver, Colorado, for Plaintiffs-Appellees and Cross-Appellants

Fowler, Schimberg & Flanagan, P.C., Daniel M. Fowler, Catherine A Tallerico, Denver, Colorado; Hale Hackstaff Tymkovich, Denver, Colorado, for Defendants-Appellants and Cross-Appellees, and Defendant and Cross-Appellee.

*Sitting by assignment of the Chief Justice under provisions of the Colo. Const. Art. VI, Sec. 5(3), and §24-51-1105, C.R.S. 1999.

Plaintiffs, John C. Dean and Dorothy H. Dean, purchased a home bordering on a fairway of a golf course. Defendants, who were the developers of this community, are McStain Enterprises, Inc. (McStain), and Beauprez Limited Partnership (BPLP) (collectively the developers). Plaintiffs filed this suit when, shortly after they occupied the home, they noticed that an excessive number of golf balls were being hit onto their property and that of their neighbors. During the course of trial, plaintiffs presented evidence that the developers had ignored safety setbacks recommended by their golf-course design firm. Plaintiffs testified that many golf balls had been hit into their backyard, some of which struck their home. An expert witness estimated that, in the course of a year, between 1,000 and 3,000 balls would be hit onto plaintiffs’ property.

The jury returned a verdict in favor of plaintiffs on a negligence claim against the developers and on a fraud claim against McStain for violation of the Colorado Consumer Protection Act (CCPA), §6-1-101 et. seq., C.R.S. 1999. Attorney fees were also awarded to plaintiffs. The developers appeal and we affirm.

Before trial, the court entered summary judgments dismissing certain additional claims against BPLP and defendant, Robert L. Beauprez. Plaintiffs cross-appeal these summary judgments. We reverse in part the dismissal of certain of plaintiffs’ claims, and remand with directions.

Developers contend that the trial court erred in denying their motion for directed verdict on plaintiffs’ negligence claim. McStain contends that the trial court erred in not directing a verdict on plaintiffs’ claims for fraud by deceit and negligent misrepresentation. McStain also argues that the CCPA is not applicable to it under the circumstances of this case and that, therefore, the court also should have directed a verdict in its favor on that claim. We disagree with these contentions.

A motion for directed verdict should be granted only if the evidence presented compels the conclusion that no evidence has been received upon which a verdict against the moving party could be sustained. In making this determination, the court is to view the evidence in a light most favorable to the nonmoving party. Fair v. Red Lion Inn, 943 P.2d 431 (Colo. 1997).

Developers assertion that the trial court should have directed a verdict against plaintiffs on the negligence claim is based on their contention they had no duty to warn plaintiffs of the known and obvious risk of golf balls entering their property. They argue that the number of golf balls hit onto plaintiffs’ property could not have been foreseen. In the alternative, they argue that plaintiffs knew that golf balls would enter the property and that, therefore, the risk was open and obvious. We reject both arguments.

A party is negligent if it breaches a reasonable standard of care owed to another and such conduct naturally and foreseeable results in injury to the other. Winger v. McKee, 809 P.2d 999 (Colo. App. 1990). It is not the exact degree of harm that must be foreseeable; rather, if a person should reasonable foresee that his or her act or failure to act will involve an unreasonable risk of harm to another, a duty to avoid such harm exists. Leake v. Cain, 720 P.2d 152 (Colo. 1986).

Here, plaintiffs presented evidence that a large number of golf balls had been hit onto their property, as well as an estimate by an expert that 1,000 to 3,000 golf balls per year would be hit onto their lot and that such number was excessive compared to the number that ordinarily would enter a similarly situated property. They also presented evidence that developers were informed that safety setbacks were necessary to protect homeowners from an unreasonable risk of danger and that developers not only ignored these safety recommendations but also did not require a waiver of liability from the homeowners.

This evidence is sufficient to support a reasonable jury’s finding that plaintiffs did not assume the increased risk of harm from the excessive number of golf balls hit onto their property and that the resultant harm to plaintiffs was caused by developers’ negligent conduct in ignoring safety recommendations. Thus, the trial court properly denied developers’ motion for directed verdict on this claim.

McStain contends that the trial court erred in not directing a verdict in its favor on plaintiffs’ claims for fraud by deceit and negligent misrepresentation. It argues that, because the risk of golf balls coming onto plaintiffs’ property was known and obvious, it could not have fraudulently induced the sale of the house or negligently misrepresented the risk. We are not persuaded.

Plaintiffs did not dispute the fact they were aware of the risk of some golf balls entering the property; however, their claim was based on the excessive number of balls that was hit onto the property, McStain’s decision not to include the safety setbacks as recommended, and McStain’s failure to inform the marketing representatives that an increased risk of danger existed because of its decision. Therefore, plaintiffs argued, potential buyers were misinformed as to the true risks associated with the development.

A plaintiff asserting a claim for fraud by deceit must establish that the defendant: 1) failed to disclose a material fact which it had a duty to disclose; 2) was aware that the fact was being concealed; 3) knew the plaintiff was ignorant of that fact; 4) failed to disclose such fact with the intention that the plaintiff would rely on it; and 5) that the plaintiff suffered an injury as a result. Burman v. Richmond Homes, Ltd., 821 P.2d 913 (Colo. App. 1991).

To establish a claim for negligent misrepresentation, a plaintiff must show that the defendant, in the course of his or her profession, supplied false information for the plaintiff’s guidance in making a business decision and that the plaintiff incurred damages in justifiable reliance on the information. Mehaffy, Rider, Windholz & Wilson v. Central Bank, 892 P.2d 230 (Colo. 1995).

Here, plaintiffs testified that the large number of golf balls hit onto their property rendered it unsafe. Their immediate neighbors also testified to that effect. Plaintiffs presented evidence that the developers had intentionally ignored the safety recommendations of their golf course architects and had reduced the size of the golf course, including narrowing of the fairways, in order to have more buildable lots. There also was evidence that, in addition to concealing the safety recommendations, the marketing representatives, as McStain’s agents, told plaintiffs that they could build a fence and a play structure in the backyard for children, leading plaintiffs to believe that the property was safe. Plaintiffs presented further evidence that the golf course architect recommended that, in the absence of setbacks, McStain obtain waivers of liability from the home purchasers and that McStain did not do so.

We conclude that this evidence would be sufficient to support a conclusion by the jury that, because McStain had knowledge of the potential danger within the development if safety setbacks were not included and because it failed to take steps to inform the marketing representatives concerning this material information or to warn potential buyers, McStain wrongfully concealed from plaintiffs the failure to follow the safety recommendations. Thus, the trial court properly denied the motion for directed verdict.

McStain next asserts that the CCPA is not applicable to plaintiffs’ claims because McStain made no direct representations concerning the property, it was not a party to the sale of the house, and plaintiffs’ injury is a purely private wrong. We do not agree.

Under §§6-1-105(1) (e) and 6-1-105 (1) (u), C.R.S. 1999,

A plaintiff asserting a violation of the CCPA must show that: 1) the defendant’s conduct constituted a deceptive trade practice; 2) the practice occurred in the course of the defendant’s business; 3) the challenged practice significantly impacted the public as actual or potential consumers; 4) the plaintiff suffered an injury in fact; and 5) the defendant’s actions caused the injury. Hall v. Walter, 969 P.2d 224 (Colo. 1998). The jury was instructed on the elements of a claim under CCPA, and no objections were raised as to those instructions.

An injury to property lies squarely within the interests of the CCPA is intended to protect. Hall v. Walter, supra. The CCPA is to be interpreted liberally, in light of its broad purpose and scope. People ex rel Dunbar v. Gym of America, Inc., 177 Colo. 97, 493 P.2d 660 (1972).

McStain argues that it did not engage in a deceptive trade practice because it made no direct misrepresentations. However, under §6-1-105(u), concealment of a material fact also constitutes a deceptive trade practice.

Plaintiffs presented evidence that developers, through their agents, falsely represented the nature of the development as a master planned golf course community, knowing that safety recommendations had been ignored, that houses had been built on the edge of the course violating recommended safety setbacks, and filed to warn potential buyers concerning the risk created by the lack of such setbacks.

Based on this evidence, a reasonable jury could conclude that McStain’s decision to ignore safety recommendations and not inform its marketing representatives or potential buyers of the resulting hazard constituted a deceptive trade practice which caused plaintiffs’ injury.

McStain also argues that the CCPA claim must fail because plaintiffs did not show that the challenged actions significantly impacted the public, as required by the third prong of the five-prong test adopted by the court in Hall v. Walter, supra. To the contrary, evidence of golf balls being hit onto the property of other owners and onto common areas of this planned community indicated that the acts complained of constituted more than a purely private wrong. Cf. Martinez v. Lewis, 969 P.2d 213 (Colo. 1998).

For these reasons, we hold that the trial court properly denied McStain’s motion for directed verdict on plaintiffs’ CCPA claim.

II.

McStain also contends that the award of attorney fees to plaintiffs was unreasonable because the trial court did not exclude from the award the fees incurred by plaintiffs in pursuing other claims. We disagree.

Under §6-1-113(2) (b), C.R.S. 1999, a party who is successful in an action to enforce the CCPA is entitled to an award of costs and reasonable attorney fees.

In determining the reasonableness of such fees, the court must consider the complexity of the case, the time and labor required, the novelty and difficulty of the issues involved, the skill required to perform services properly, the fee customarily charged in the community, the amount involved, the results obtained, the time limitations imposed by the client or circumstances, the experience, reputation, and ability of the lawyer involved, and whether the fee is fixed or contingent. The issue of reasonableness is a question of fact and the court’s determination will not be overturned unless it is clearly erroneous and unsupported by the evidence. Robinson v. Lynmar Racket Club, Inc., 851 P.2d 274 (Colo. App. 1993).

The trial court, in its detailed findings, considered the factors listed above and made appropriate findings in awarding plaintiffs the amount claimed for attorney fees. The court’s findings have ample evidentiary support. Because of the overlapping nature of the claims and of the evidence supporting them, the award of fees was not inappropriate. See Zubek v. El Paso County Retirement Plan, 961 P.2d 597 (Colo. App. 1998).

III.

Plaintiffs, in their cross-appeal, first contend that the trial court erred in granting summary judgment on their claims against BPLP and Robert Beauprez for fraud, negligent misrepresentation, and violation of the CCPA. We agree.

Summary judgment is appropriate if no genuine issue as to any material fact exists and the moving party is entitled to judgment as a matter of law. The burden of showing that no such issue exists is on the moving party, and all doubts are to be resolved in favor of the nonmoving party. Vargas v. State Farm Mutual Automobile Insurance Co., 916 P.2d 652 (Colo. App. 1996).

In their motion for summary judgment, BPLP and Beauprez argued that there was no joint venture between them and McStain and, therefore, no relationship between them and the marketing representatives hired by, and working as agents of, McStain. Accordingly, they argued, because the marketing representatives were not their agents, the statements made to plaintiffs by the representatives were not attributable to BPLP or Beauprez.

Plaintiffs, on the other hand, asserted that the marketing representatives were agents of BPLP, Beauprez, and McStain because all participated in the development and marketing of the community.

In granting the motion for summary judgment, the trial court found that, in order for plaintiffs’ claims to survive, plaintiffs had to show that BPLP and Beauprez made an affirmative representation concerning the safety of the house plaintiffs purchased. The court then found that all but one of the statements upon which plaintiffs based their claims were about the golf course rather than the house and that the other statement was made by a marketing representative and not BPLP or Beauprez.

Resolving all doubts in favor of plaintiffs as the nonmoving party, we conclude that an issue of material fact existed as to whether the marketing representatives were agents of BPLP and Beauprez as well as McStain. If so, the statements of the marketing representatives could be viewed as misrepresentations by the developers through their agents. Thus, the trial court erred in entering summary judgment for BPLP and Beauprez, and it is necessary to remand for a determination whether the marketing representatives were agents of BPLP and Beauprez, and for further proceedings in the event the court determines that they were acting as agents.

IV.

Plaintiffs contend that the trial court erred in granting Robert Beauprez’s motion for directed verdict on their negligence claim against him. We agree.

An agent may be held personally responsible for torts committed by him or her, even if the tortious acts were done on behalf of a principal. See Galie v. RAM Associates Management Services, Inc., 757 P.2d 176 (Colo. App. 1988).

The record reveals that Beauprez was the managing general partner of BPLP, that he oversaw day-to-day responsibilities, and that he was the only individual acting on behalf of BPLP. There was evidence presented that Beauprez acted negligently in performing these acts. Thus, it was error to enter a directed verdict on this claim.

Lastly, plaintiffs contend that the trial court erred in denying their motion to amend their complaint to include a claim against developers for attorney fees incurred as the result of the tort of another. We disagree.

After a responsive pleading has been filed, a complaint may be amended only by leave of the court or with written consent of the adverse party. C.R.C.P. 15; In re Estate of Blacher, 857 P.2d 566 (Colo. App. 1993). Although, as a general rule, leave to amend a complaint should be freely granted, the court does not abuse its discretion in refusing to permit a futile amendment. Polk v. District Court, 849 P.2d 23 (Colo. 1993).

Attorney fees incurred in litigating a claim against a third party may be recoverable as damages against a defendant if the natural and probable consequence of the defendant’s wrongful act is to involve the plaintiff in litigation with the third party, that is, if such wrongful act required the plaintiff to engage in separate litigation in order to preserve his or her rights. Elijah v. Fender, 674 P.2d 946 (Colo. 1984); Swartz v. Bianco Family Trust, 874 P.2d 430 (Colo. App. 1993) (separate litigation need not be asserted in separate lawsuit).

Here, the trial court, in denying plaintiffs’ motion, found that they alleged an injury resulting from the failure to include safety setbacks in designing and developing the community or to warn about the danger. Plaintiffs claimed that defendants and a third party together caused this injury.

Because plaintiff asserted that defendants and the third party engaged in the same conduct and caused the same injury, they were not required to litigate their claims with that party in order to protect or determine their rights under the claims they asserted against the other defendants. The litigation against the other party was not a natural and probable consequence of defendants’ actions and therefore, the trial court did not abuse its discretion in denying plaintiffs’ motion to amend their complaint.

VI.

Plaintiffs request an award of their attorney fees for this appeal. On remand, the trial court should determine a reasonable award of attorney fees for the services performed on appeal as to the CCPA claim. See §6-1-113(2) (b) (attorney fees allowed to party who successfully enforces a claim that violation of CCPA occurred).

The judgment against McStain and BPLP based on negligence and the judgment against McStain for fraud and violation of the CCPA are affirmed. The award of attorney fees to plaintiffs is affirmed. Denial of their claim for attorney fees incurred as a result of the tort of another is also affirmed.

The summary judgment in favor of BPLP and Beauprez on plaintiffs’ claim for fraud, negligent misrepresentation and violation of the CCPA is reversed. The judgment entered on the directed verdict on the negligence claim against Beauprez is also reversed. The cause is remanded for a new trial on these claims and for an award of reasonable attorney fees incurred by plaintiffs for this appeal.

JUDGE TAUBMAN and JUDGE KAPELKE concur.