Execution of an electronic waiver and release of liability can be proven without a printout of the electronically signed agreement

Is a printout of an electronically signed document necessary to prove its execution?  Not according to the majority’s ruling in Berenson v. USA Hockey, Inc., et al., 2013CA138 (Opinion by Judge Furman; Booras, J., concurs; Dailey, J., dissenting).

In Berenson, the plaintiff sued the amateur hockey league after she was injured during a game.  The league moved for summary judgment based upon its assertion that the plaintiff had agreed to the terms of a liability waiver and release when she had registered on the USA Hockey website. The plaintiff did not dispute that she had completed the online registration process for the year she was injured, but could not remember if she had agreed to the terms of a release.  The league did not produce a copy of the electronically executed agreement, but instead relied upon the affidavit of an employee which stated that the plaintiff could not have completed the online registration process without executing the page with the waiver and release, and that the plaintiff had completed the registration process the year she was injured.

The trial court granted summary judgment and the plaintiff appealed.  The Colorado Court of Appeals held that Colorado’s evidence rules did not require a printout of the agreement in this circumstance.  Instead, the release could be proved by other evidence such as the affidavit.

The Court of Appeals analyzed the issue under Colorado’s “best evidence” rule, C.R.E. 1002.  The best evidence rule is a rule of evidence which requires a person seeking to prove the contents of a writing, recording or photograph to submit the “original” writing, recording or photograph into evidence in the court proceeding.  With respect to data saved on a computer, “original” means a printout or other output readable by sight, shown to reflect the data accurately.  C.R.E. 1001(3). 

The Court reasoned that the best evidence rule did not require submission of the printed agreement because the contents of the agreement were not at issue, and the best evidence rule only applies when a party seeks to prove the contents of the writing. The mere fact that a written record has been made does not prevent a witness with personal knowledge from testifying as to facts which have been memorialized in a written record.  Thus, the employee’s affidavit containing the fact that the plaintiff could not register through the website without agreeing to the waiver and release was sufficient to show that the claims had been released. 

The dissent argues that the contents of the writing were at issue in the case because it mattered where the plaintiff initialed the document and thus the initials were part of the document’s contents.  The dissent noted that the distinction between attempting to prove the contents of a writing and attempting to prove a fact about a writing is often difficult to draw.

The opinion does not reference if or how the actual terms of the release were proven. 

You can read the Court’s opinion here: 

http://www.courts.state.co.us/Courts/Court_of_Appeals/Opinion/2013/12CA1013-PD.pdf

Although not discussed in the opinion, Colorado’s electronic signature laws are governed in part by the Uniform Electronic Transactions Act (UETA), C.R.S. §24-71.3-101, et seq. enacted in Colorado in 2002.  The UETA defines and electronic signature as: “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.”  C.R.S. §24-71.3-118(8).  In this case, the affidavit may have served as proof of the “process.”

A best practices guideline for electronic signatures, issued by the Governor’s Office of Information and Technology in 2007, can be found here: http://www.colorado.gov/cs/Satellite?blobcol=urldata&blobheadername1=Content-Disposition&blobheadername2=Content-Type&blobheadervalue1=inline%3B+filename%3D%22Colorado+Electronic+Signature+Guidelines+%28published+2007%29.pdf%22&blobheadervalue2=application%2Fpdf&blobkey=id&blobtable=MungoBlobs&blobwhere=1251656636739&ssbinary=true

Lee Katherine Goldstein is an appellate lawyer with the Denver law firm of Fairfield and Woods, PC. 

Sellers beware! – Sellers of residential properties are responsible for disclosing latent defects

If you are selling a home in Colorado and you know that the home or property has a latent defect (i.e., a defect which is unlikely to be discovered in an inspection), you must affirmatively disclose it to the buyer.  In Gattis v. McNutt, 2013COA 145 (November 7, 2013), the Colorado Court of Appeals ruled that sellers have an independent duty to disclose latent defects to buyers, and that the failure to disclose may give rise to a tort claim.

In Gattis, the Seller knew from an engineering report that the residence had structural problems resulting from expansive soils.  An entity controlled by the Seller oversaw repair work to remedy the structural problems.  Once the repairs were complete, Seller purchased the residence, then entered into a contract to sell the residence to Buyer.  The contract was a standard form real estate contract, approved by the Colorado Real Estate Commission, to which no changes were made.  Although Seller disclosed the structural repairs on a disclosure form which accompanied the contract, it did not disclose the underlying soil problems or that Seller controlled the company which performed the repairs. 

Years after purchasing the property, Buyer sued Seller asserting tort claims for economic losses caused by the negligent non-disclosure of the expansive soil problem.  The trial court denied Seller’s motion for summary judgment based on the “economic loss rule,”¹ and ruled in favor of Buyer on the nondisclosure claim. 

On appeal, the Colorado Court of Appeals held that the economic loss rule did not bar the nondisclosure claim because Seller had a duty to disclose the defects which was independent of the contract.  The Court reviewed other Colorado cases which have held that builders of residential construction have an independent duty to disclose latent defects to buyers and the policy reasons cited therein.  The Court concluded that these same policy reasons apply to home sellers and buyers as well, as follows:

Home sellers have a long recognized common law duty to disclose known but latent defects in the property.

A seller who has actual knowledge of a latent defect is in a superior position than a buyer, and has a duty to disclose facts that in equity and good conscience should be disclosed. 

Buyers have difficulty in learning of a latent defect.

A purchaser of a home (the biggest and most important investment in many people’s lives), can ill afford to suddenly find a latent defect that completely destroys the family’s budget, and have no remedy for recourse.

It is foreseeable that a latent defect will cause harm to the home and homeowner.

Enforcing a duty of disclosure avoids preventable harm to innocent parties and discourages misconduct.

The burden of disclosure is minor because it only applies to defects which are material (i.e. ones which may affect the buyer’s decision to buy).

Gattis, ¶16.  The Court did not rule out the potential for a home sale contract to bar tort recovery.  The Court noted that there are transaction-specific negotiated contracts which address common law duties and completely subsume them.  Gattis, ¶¶18-20.  For example, a contract may state that the buyer is relying solely upon its own investigation and not in any way upon any representations made by the seller, in which case, a nondisclosure claim would likely be barred.  Gattis, ¶21. 

You can read the Court’s opinion here: http://www.courts.state.co.us/Courts/Court_of_Appeals/Opinion/2013/12CA1269-PD.pdf

Fn.1 The economic loss rule is a judicial doctrine intended to maintain the boundary between contract law and tort law by preventing a party from recovering in tort when losses are caused by the negligent breach of a contractual duty.  The economic loss rule helps ensure that contracting parties can allocate their risks and costs by restricting the parties to the remedies they bargained for in their contract rather than allowing use of the more expansive remedies available under tort law.  For a discussion of the origins of the doctrine and its adoption and application in Colorado, see the Colorado Supreme Court’s decision in Town of Alma v. AZCO Construction, Inc., 10 P.3d 1256, 1259-1266 (Colo. 2000).  Broadly speaking, under Colorado law, the economic loss rule bars recovery under tort law unless the party is acting under a duty which is independent of the duties imposed by the parties’ contract.  Gattis, ¶13. 

Lee Katherine Goldstein is an appellate lawyer with the Denver law firm of Fairfield and Woods, PC.