Colo. Clarifies What Damages May Be Awarded in Breach of Contract Disputes

The Colorado General Assembly this week sent Governor Bill Owens (R) legislation making commercial agreements more predictable by clarifying what damages can be awarded in breach of contract disputes, according to the American Insurance Association (AIA).

“By passing this legislation, Colorado will increase economic development opportunities in the state and curb rising costs of litigation,” said Fred Bosse AIA vice president, Southwest Region. “It was necessary to fix the confusion created in the tort system by a Colorado Supreme Court ruling in the case of Giampapa v. American Family Mutual Insurance Co.,” explained Bosse.

SB 115, sponsored by Sen. Jim Dyer (R) and Rep. Shawn Mitchell (R), states that non-economic damages – commonly referred to as “pain and suffering” damages – are permitted in breach of contract disputes only if the recovery is specifically authorized by the contract at issue. An amendment by the Senate also permits recovery of pain and suffering damages in the case of a breach of an insurance contract, under limited circumstances.

SB 115 passed the Senate by a vote of 18-17 and the House by a vote of 36-27.

The governor has 10 days to sign the legislation into law.