Construction Law in Colorado

Fire Itself Triggers Statute Of Limitations, Not Discovery Of Cause

United Fire Group v. Powers Electric, Inc. (Colo. App. 2010)

Today, the Colorado Court of Appeals, construing the statute of limitations for claims against construction professionals (C.R.S. 13-80-104), held that the statute of limitations for a claim against an electrician who performed faulty work that resulted in a fire began to run from the date of the fire, not from when the cause of the fire was determined.

Lis Pendens Still Required, Even If Mechanics' Lien Is Bonded

Today, in Weize Company, LLC v. Martz Supply Co., 09CA1369 (Colo. App. June 10, 2010), a division of the Colorado Court of Appeals held that a subcontractor suing to enforce its rights to a mechanics' lien that has been substituted by a bond and thus discharged must still record a lis pendens.  So, according to the Court of Appeals, bonding over a mechanics' lien will not clear title, despite the clear language of the statute.

Repairs Won't Toll The Statute Of Limitations

Smith v. Executive Custom Homes (Colo. 2010)

Reversing the Colorado Court of Appeals, the Colorado Supreme Court holds that the repair doctrine, which is an equitable tolling doctrine, is inconsistent with the Construction Defect Action Reform Act ("CDARA").  As such, ongoing repairs or attempts to repair by a contractor of a construction defect do not equitably toll the statute of limitations.

The finality of arbitration cuts both ways

One reason that parties include arbitration provisions in their contracts is the belief that arbitration is less expensive than litigation.  This is only partially true.  Discovery is typically the most expensive part of any lawuit, and discovery has become common in arbitration.  In fact, under the Colorado Uniform Arbitration Act, arbitrators have authority to permit discovery.  C.R.S. § 13-22-217(3).  Additionally, everyone's tax dollars have already paid for our Judges, whereas the parties to an arbitration have to pay for the arbitration panel's time.

But arbitration can theoretically be less expensive in that an arbitraton panel's decision is almost bullet proof.  And because it is so difficult to challenge an arbitration decision, there is less liklihood of an appeal following arbitration.  This can cut both ways.

The Economic Loss Rule Still Bars Tort Claims, Even Those Pleaded As Fraud

Hamon Contractors, Inc., v. Carter & Burgess, Inc. (Colo. App. 2009)

In this April 30, 2009, opinion, the Court of Appeals rejects the position that alleging fraud is enough to avoid application of the economic loss rule.  Instead, the Court holds that the economic loss rule bars even a claim for alleged fraud where the acts complained of took place during a party's performance of its contractual duties.  This holding is consistent with BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66 (Colo. 2004) (holding that the economic loss rule bars misrepresentation claim by subcontractor against design professional, where alleged misrepresentation took place during the performance of the work).  The Court also holds that alleging that fraud took place before the contracts were entered into may not be sufficient to avoid dismissal, since a duty might not exist as a matter of law.