1. PO BOX 9404, DENVER, COLORADO 80209 | 303–292–1212 | www.LAW WEEK ONLINE.com VOL. 11 | NO. 37 | $6 | SEPTEMBER 16, 2013
Clyde Faatz and Ashleigh Mason of Hamilton Faatz. | PHOTO COURTESY MLA PHOTONIX
Case Hinged On Implied Warranty
By David Forster
LAW WEEK COLORADO
A STAPLETON homeowner who’s pump-
ing thousands of gallons of water a year from
under his basement floor won an $800,000
jury verdict against the developer of the east
Denver community.
The case may pave the way for other
Stapleton homeowners who’ve complained of
excessive water buildup to sue the developer.
“I think we were a breakthrough case,”
said Clyde Faatz, who along with Ashleigh
Mason represented Tad Rogers at trial. The
two lawyers are with Greenwood Village law
firm Hamilton Faatz.
The lawyers persuaded a Denver district
judge that as the developer, Forest City Staple-
ton owes an implied warranty to homeowners
in its master-planned community that their
homes are suitable for habitation.
Rogers wasn’t the first homeowner to sue
Stapleton over groundwater problems. Just
before he sued, a couple lost their case against
the developer. The judge in that case found no
implied warranty.
In Rogers’ case, the problem wasn’t just a
lot of groundwater that kept his sump pump
cycling every few minutes. The drainage sys-
tem put in place to divert water away from his
foundation was clogging with calcite deposits.
An expert hired by Rogers’ lawyers traced
this calcite to the recycled concrete used as
a base for Stapleton’s roads, one of the many
eco-friendly features touted by the developer
in its promotional materials.
Rogers’ expert said calcium carbonate is
leaching from the concrete into the surround-
ing soil, and calcite, a crystallized form of
calcium carbonate, is building up around the
perforations that allow groundwater to seep
into the drainage pipes.
This calcite buildup, Faatz said, helped
Rogers defeat one of Stapleton’s defenses
against complaints of excessive groundwater,
which is that the homes were built with a sys-
tem in place to divert groundwater buildup.
In other words, homeowners may not like
that their sump pumps are running so often,
but this just shows the system is working as
designed.
But Stapleton’s principal argument, Ma-
son said, is that even if homeowners have a
legitimate beef over excessive groundwater,
the fault lies with the homebuilder and other
parties, not the developer. Stapleton sells lots
to builders, who build and sell the homes.
Any implied warranty that the house is
suitable for habitation runs between builder
and buyer, Stapleton argues.
Rogers’ home was built in 2006. He paid
a $45,000 premium on top of the $735,000
purchase price for the corner lot across from a
planned park. It turns out the park may have
only added to his woes.
A layer of impermeable clay lies not far
under the Stapleton area, which complicates
water drainage, Faatz said. When Stapleton
did groundwater testing in 2001, boring sam-
ples showed the water table in the area where
Rogers’ home now stands was about 20 feet.
When homebuilder Infinity had its own test-
ing done before building the homes in Rogers’
neighborhood, borings 20-feet deep found no
water.
The perforated pipes around the founda-
tion are designed to collect water buildup and
divert it to a pit under the basement. From
there the water is pumped through a pipe into
the yard. Over time, Rogers’ drainage system
started pumping so much water into his yard
it killed his lawn, and the drainage pipe was
hooked up directly to the storm drain system.
Why so much water started building up
aroundRogers’basementisn’tknownforsure,
Mason said, but part of the problem may be
irrigation of the park across the street, which
may be seeping into nearby lots.
Whatever the cause, other Stapleton
homeowners also started complaining about
excessive groundwater.
By the time his lawsuit was filed in August
2010, Rogers’ lawyers estimated his pump
was extracting 500,000 gallons of water a year
from under his basement, a figure Stapleton
disputed.
A boring sample taken by one of Rogers’
experts found groundwater at 7 feet, about 4
feet up the side of his basement walls.
Stapleton also argued that the calcite was
from naturally occurring calcium carbonate
inthesoil.Rogers’expertsaidnaturallyoccur-
ring carbonate wouldn’t produce the amount
of calcite building up on the drainage pipes,
and that he’s seen this problem before where
recycled concrete was used close to homes.
Stapleton argued that even if Rogers’
drainage system is compromised, the fault lies
with others. Stapleton didn’t build the homes
or the roads, so it shouldn’t be held respon-
sible for any problems associated with them,
the developer argued.
Faatz said they attacked this argument by
showing how much control Stapleton exerted
over the community. For example, he said,
it dictates the sizes, prices and design of the
homes built, and on which lots basements can
be dug. Stapleton also received a 1 percent
marketing fee based on sales price of each
home.
The roads and other infrastructure are
built by Park Creek Metropolitan District.
But Faatz noted that the president and senior
vice president of Forest City Stapleton sit
on Park Creek’s board, and Stapleton loans
money to Park Creek to build community
infrastructure.
Given the depth of Stapleton’s involve-
ment,Faatzargued,itowedRogersanimplied
warranty that his basement, which he paid
extra for, was suitable for habitation. Because
of all the groundwater intrusion, he couldn’t
finish the basement and make it livable.
ThejuryawardedRogerscloseto$200,000
to make the repairs to his drainage system.
This includes tearing out the basement slab,
which now sits on the ground, and suspend-
ing a new slab above ground. It also includes
providing permanent access to the drainage
system without tearing out the new slab, given
that because of calcite buildup, Rogers may
have to replace the drainage system every six
to eight years.
The balance of the jury’s $794,000 award
was for noneconomic damages such as incon-
venience and emotional stress.
Forest City Stapleton spokesman Tom
Gleason said the developer disagrees with the
jury’s verdict and is considering its options,
including a possible appeal.
But appealing the verdict presents Staple-
ton with a dilemma, Faatz said. The judge’s
decision in this case that Stapleton owed an
implied warranty to the homeowner is not
binding on any other judge, he said. If Staple-
ton appeals and loses on this issue, it then
could become binding on every court in the
state.
“Ifit’saffirmedonthatissue,”hesaid,“that’s
not going to be good news for developers.” •
— David Forster, DForster@CircuitMedia.com