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Does the Economic Loss Rule Preclude a Claim for Civil Theft?

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The Colorado Court of Appeals dealt with that question in Bermel v. Blue Radios, Inc., (2017 COA 20).

In 2009, Chris Bermel (“Bermel”) entered into a contractor agreement with BlueRadios, Inc.(“BlueRadios”) to provide engineer services to the company. Bermel also signed a “Proprietary Information and Inventions Agreement” (“PIAA”) that included rules related to Bermel’s removal, delivery, and return of “Company Materials”. Bermel and BlueRadios decided to part ways, and anticipating litigation over wages, Bermel breached the PIAA by forwarding to his personal e-mail account thousands of BlueRadios’ e-mails and attachments, some of which contained proprietary information. After the contract expired, Bermel demanded and received more than $5000 in back wages. Soon thereafter, Bermel filed suit claiming breach of contract, unjust enrichment, and violation of the Colorado Wage Protection Act (“CWPA”).

During a deposition, Bermel revealed that he had sent himself documents. BlueRadios filed counterclaims against him, including breach of contract, civil theft, and conversion. BlueRadios received a preliminary injunction barring Bermel from doing anything with or to the emails. Despite the injunction, Bermel continued to alter the emails. Both parties filed for summary judgment: BlueRadios contending as a contractor, Bermel was not protected by the CWPA. Bermel claimed the Economic Loss rule precluded BlueRadios from claiming civil theft and conversion.

The court granted summary judgment on BlueRadios’ claim, but it denied summary judgment on BlueRadios’ civil theft and conversion claims. Bermel appealed. Under the economic loss 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.  The Court says the economic loss rule cannot preclude a claim under the civil theft statute because the legislature explicitly provided the cause of action, and remedy, to victims of theft. Allowing the economic loss rule to preclude the civil theft claim would thwart the legislature’s goals of punishing thieves.

The Court also did extensive analysis on what constitutes an independent contractor for the determination of CWPA protection. The Court of Appeals reversed the summary judgment on CWPA, and is remanded for further action. The Court also affirmed the trial court’s conclusion that the economic loss rule does not bar a claim under the civil theft statute.

The Metier Law Firm is committed to assisting people with personal injury claims throughout Colorado, Wyoming and Nebraska, and we frequently serve as co-counsel to law firms nationwide. Tom Metier recently secured the largest personal injury verdict in Colorado.