Source: https://cbaclelegalconnection.com/tag/construction-law/
Timestamp: 2019-04-25 08:34:31+00:00

Document:
The Colorado Court of Appeals issued its opinion in Curry v. Zag Built, LLC on Thursday, May 3, 2018.
Construction Defect Action Reform Act—C.R.C.P. 4(m)—Service—Notice—Notice of Claim—Statute of Limitations.
Defendants Zag Built LLC and its owner, Zagrzebski, (collectively, Zag Built) built a house for the Currys. Shortly after the Currys moved into the house in July 2013, they noticed signs of damage, such as cracks in the drywall and sagging doors. In late-June 2015, the Currys filed a complaint naming Zag Built (among others) as defendants and citing the applicability of the Construction Defect Action Reform Act’s (the Act) notice of claim process, C.R.S. § 13-20-803.5. After filing a status report and two updates, the Currys filed an amended complaint in mid-May 2016. In early July 2017, Zag Built filed a motion for summary judgment, contending that the trial court should dismiss the case. The trial court denied the motion. Zag Built then filed a C.A.R. 4.2 motion for interlocutory review.
On appeal, Zag Built asserted that pursuant to C.R.C.P. 4(m) the trial court erred when it did not dismiss the case when the Currys had not served it within 63 days of the filing of the original complaint. C.R.C.P. 4(m) does not require a trial court to dismiss a case if the plaintiff does not serve the defendant within 63 days of when the plaintiff filed a complaint. Instead, applying the plain language of Rule 4(m), if the court is contemplating dismissing the case within that 63-day period, it must provide the plaintiff with (1) notice that it is contemplating dismissing the case, and (2) an opportunity to show good cause why the court should not dismiss the case. If the plaintiff shows good cause, the court must extend the deadline. If the plaintiff does not show good cause, the court has the discretion to dismiss the case without prejudice, or order that the plaintiff serve the defendant within a specified time. Here, the trial court did not give the Currys notice. Further, C.R.S. § 13-20-803.5(9) stayed the case until mid-April 2016. Therefore, the trial court did not err in declining to dismiss the case.
Zag Built also contended that the trial court should have dismissed this case because the Currys did not send it a notice of claim under the Act until after the statute of limitations had run. First, the statute of limitations stops running once a case is commenced by filing a complaint. Here, the Currys filed their complaint in mid-June 2015, before the statute of limitations had expired. Second, the Act’s notice of claim process is not a prerequisite to filing a complaint or commencing an action. If a plaintiff files a complaint before completing the notice-of-claim process, the case is stayed until the plaintiff completes the process. Therefore, the trial court did not err in declining to dismiss the case on this basis.
The order was affirmed and the case was remanded.
The Colorado Court of Appeals issued its opinion in Tallman Gulch Metropolitan District v. Natureview Development, LLC on Thursday, May 18, 2017.
Colorado Governmental Immunity Act—Public Employee Immunity for Torts.
Richardson owned Natureview Development, LLC (Natureview) and platted and developed Tallman Gulch, a real estate development. In 2006, the Tallman Gulch Metropolitan District (the District) was formed to provide public improvements and services to its residents and taxpayers. Richardson was president of the District’s Board of Directors (Board). Tallman Gulch went into foreclosure, and despite being aware of the foreclosure proceedings, Richardson, acting as president of the District’s Board, signed off on the issuance of $4,214,000 in bonds to Natureview in exchange for the then-existing infrastructure improvements in Tallman Gulch. Ten days after the bonds were issued, the district court authorized the public trustee sale of Tallman Gulch, which was sold in 2011.
The District filed various claims against Natureview and Richardson, alleging it suffered an injury when it issued over $4 million in bonds to Natureview and Richardson, despite Tallman Gulch’s foreclosure status. The District argued that Richardson breached his fiduciary duty to the District as a Board member by approving issuance of bonds in a financially reckless manner and in bad faith, failing to disclose and consider the development’s financial and foreclosure status in making the bonds decision. Defendants moved to dismiss on various grounds. As relevant here, defendants argued that the court lacked subject matter jurisdiction over the claims against Richardson under CRCP 12(b)(1), asserting that the claims were based on Richardson’s actions as an officer of the District and were thus barred by the Colorado Governmental Immunity Act (CGIA). The court denied the motion to dismiss.
On appeal, defendants argued it was error to conclude the CGIA did not apply to the District’s claims against Richardson. Richardson argued that as a public employee he was immune under the CGIA with regard to the District’s tort claims against him. Here, the District, the public entity that employed Richardson, sued him for his malfeasance while in its employ. The plain language of the statute is unambiguous as to the immunity of the entity or employee when called upon to defend against tort claims, but it is silent as to suits brought by a public entity plaintiff. The CGIA clearly states that its purpose is to limit the liability of public entities in defending against tort claims, and thus to lessen the burden on taxpayers who provide funding for public entities. To prevent the District from recovering its loss by allowing Richardson to claim immunity as a public employee does not effectuate the purposes of the CGIA. The Court of Appeals concluded that the district court correctly concluded that the CGIA did not on its face apply to the District’s claims against Richardson.
The Colorado Court of Appeals issued its opinion in Taylor Morrison of Colorado, Inc. v. Terracon Consultants, Inc. on Thursday, May 18, 2017.
Contract—Limitation on Liability—Setoff—Jury Award—Statutory Costs—Prejudgment Interest—Post-Judgment Interest—Expert Testimony—Willful and Wanton—Settlement Statute—Costs.
Taylor Morrison of Colorado, Inc. (Taylor) was the developer of a residential subdivision. Taylor contracted with Terracon Consultants, Inc. (Terracon) to provide geotechnical engineering and construction materials testing services for the development of the subdivision. Taylor and Terracon agreed to cap Terracon’s total aggregate liability to Taylor at $550,000 (Limitation) for any and all damages or expenses arising out of its services or the contract. After homeowners notified Taylor about drywall cracks in their houses, Taylor investigated the complaints and then sued Terracon and other contractors for damages relating to those defects. After trial, the jury awarded Taylor $9,586,056 in damages, but also found that Terracon’s conduct was not willful and wanton. The court concluded that the Limitation includes costs and prejudgment interest and applied it to reduce the jury’s $9,586,056 damages award to $550,000. It also deducted the $592,500 settlement received from the other liable parties to arrive at zero dollars. The court found that neither party prevailed for purposes of awarding statutory interest and further concluded that neither Terracon’s deposit of $550,000 into the court registry nor its email to Taylor addressing a mutual dismissal constituted a statutory offer of settlement that would have allowed Terracon a costs and fees award.
On appeal, Taylor contended that the trial court erroneously deducted the setoff from the Limitation instead of deducting it from the jury damages verdict. The correct approach is to first apply the setoff against the jury verdict and then apply the contractual limitation against this reduced amount. Thus, Terracon’s liability according to the Limitation should have been a final judgment of $550,000 for Taylor.
Taylor next contended that the trial court erred when it concluded that the Limitation, by its terms, includes statutory costs and prejudgment interest. The pertinent contract language states that the Limitation applies to “any and all” expenses “including attorney and expert fees.” Thus, the Limitation’s language covers costs associated with interpreting and enforcing the contract.
Taylor further argued that the trial court erred in ruling that the Limitation does not include prejudgment interest within its cap on liability. The Limitation caps Terracon’s liability for “any and all injuries, damages, claims, losses, or expenses.” (Emphasis in original.) Because prejudgment interest is a form of damages, the Limitation also covers prejudgment interest. Taylor also asserted that post-judgment interest is not covered by the Limitation. The Court of Appeals agreed because post-judgment interest is not an element of compensatory damages.
Taylor next argued that the trial court’s exclusion of expert testimony concerning willful and wanton conduct was reversible error. Here, the court allowed the experts to testify about the factual conduct and opine on Terracon’s performance using characterizations within their expertise, but prevented testimony about legal concepts outside their expertise and whether a legal standard was met.
Terracon argued on cross-appeal that the trial court erred by not awarding it costs under Colorado’s settlement statute. Terracon’s deposit of $550,000 into the court registry pursuant to C.R.C.P. 67(a) was not a settlement offer because Taylor did not have the option to reject it. The statute requires both an offer and a rejection; thus the statute was not triggered, and Terracon is not entitled to costs. Further, Terracon’s email did not comply with C.R.S. § 13-17-202 because this alleged “settlement offer” contained nonmonetary conditions that extended the offer beyond the claims at issue. Therefore, there was no error in denying costs to Terracon.
The judgment was reversed as to the final award and the case was remanded with instructions. The judgment and orders were affirmed in all other respects.
The Colorado Supreme Court issued its opinion in Forest City Stapleton, Inc. v. Rogers on Monday, April 17, 2017.
Implied Warranty of Suitability—Privity of Contract—Implied Warranties.
The Colorado Supreme Court considered whether privity of contract is necessary for a home buyer to assert a claim for breach of the implied warranty of suitability against a developer. The court concluded that because breach of the implied warranty of suitability is a contract claim, privity of contract is required in such a case. Here, the home buyer was not in privity of contract with the developer and thus cannot pursue a claim against the developer for breach of the implied warranty of suitability. Accordingly, the court of appeals’ judgment was reversed and the case was remanded for further proceedings.
The Colorado Court of Appeals issued its opinion in Broomfield Senior Living Owner, LLC v. R.G. Brinkmann Co. on Thursday, March 9, 2017.
Senior Facility—Residential—Commercial—Breach of Contract—Construction Defect Action Reform Act—Homeowner Protection Act of 2007—Accrual—Statute of Limitations—Public Policy—Manifestation of a Defect.
Broomfield Senior Living Owner, LLC (Broomfield) brought claims against R.G. Brinkmann Company (Brinkmann) for breach of contract, negligence, negligence per se, negligent misrepresentation, and breach of express warranties in connection with Brinkmann’s construction of Broomfield’s facility. Brinkmann moved for summary judgment, raising both contractual limitations and statutory limitations defenses to all of Broomfield’s claims. The trial court granted Brinkmann’s motion for summary judgment, reasoning that the two-year statute of limitations applicable to civil claims had expired before Broomfield filed its complaint and that Broomfield had waived its rights to assert claims for repairs under the contract by failing to give Brinkmann timely notice of defects or adequate time to make repairs.
On appeal, Broomfield contended that the trial court erred in granting summary judgment and applying the accrual provisions of the contract rather than the accrual provision of the Construction Defect Action Reform Act (CDARA), titled the “Homeowner Protection Act of 2007” (HPA). Under the parties’ contract, the contractual limitations period expired independent of when the acts or failures to act were discovered, while CDARA links the accrual of construction defect claims to their discovery. The HPA renders a contract’s limitation or waiver of CDARA’s rights and remedies void as against public policy in cases involving claims arising from residential property. The Colorado Court of Appeals determined that the term “residential” is “unambiguous and means an improvement on a parcel that is used as a dwelling or for living purposes.” Here, the building is used as a home for senior residents. Accordingly, the senior facility is “residential property,” Broomfield is a “residential property owner,” and the HPA applies. As such, the contract’s terms limiting the accrual of claims are void as a matter of public policy, and the relevant statutory claims accrual periods apply, making Broomfield’s action timely.
Broomfield also contended that the trial court erred in precluding its breach of warranty claim based on its failure to give Brinkmann an opportunity to correct the defects. The court determined that genuine issues of material fact remain regarding whether Brinkmann received prompt notice of the defects and whether it had an adequate opportunity to correct its work.
Broomfield further argued that the trial court erred in concluding that its negligence claims were barred and that it failed to establish that Brinkmann performed design services. The court concluded that these claims were not barred and the parties offered conflicting design services evidence. Further, a genuine issue of fact remains concerning whether the alleged defects are patent or latent.
In a construction defect action in which more than one insurer has a duty to defend a party, the bill requires the court to apportion the costs of defense, including reasonable attorney fees, among all insurers with a duty to defend. An initial order apportioning costs must be made within 90 days after an insurer files its claim for contribution, and the court must make a final apportionment of costs after entry of a final judgment resolving all of the underlying claims against the insured. An insurer seeking contribution may also make a claim against an insured or additional insured who chose not to procure liability insurance for a period of time relevant to the underlying action. A claim for contribution may be assigned and does not affect any insurer’s duty to defend.
The bill was introduced in the Senate and assigned to the Business, Labor, & Technology Committee. It is scheduled for hearing in committee on February 2 at 2 p.m.

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