Ranta Construction, Inc. v. Anderson (Colo. App. 2008)
In a 34-page opinion regarding defective windows, the Court of Appeals explains at length why the homeowners' refusal to allow the contractor and window vendor to repair admittedly-defective windows justifies the trial court's judgment against the homeowner.
After the installation of windows, defects were observed. Under the construction contract, the contractor's obligation in this situation was to repair the defects. The contractor and the window vendor proposed a repair plan, and the owners initially agreed. But before the repair work could be performed, the owners changed their minds.
The owners proposed one of three solutions: (1) Requiring the contractor to repair and warrant the windows itself; (2) replacing the windows with different windows at the contractor’s expense; (3) or litigation. The contractor did not agree, and intended to have the vendor repair the windows in the field. But on the day that the repairs were to take place, the owners sprayed the windows with water (thus making the repairs impossible), and barred the vendor and contractor from the property. Additionally, because of the dispute concerning the windows, the owners withheld all progress payments due the contractor.
The contractor brought a mechanics-lien foreclosure action, and the owners responded by terminating the contract and counterclaiming for breach of contract, breach of warranty, and excessive lien. The owners also sued the window manufacturer and distributor, alleging several tort claims.
The trial court concluded that the windows were defective, but that they could have been repaired according to the vendor's suggested repair protocol. The trial court also concluded that the owners interfered with the contractor's right to repair the windows, that the owners wrongfully withheld progress payments, and that the owners thereby breached the construction contract, excusing further performance by the contractor. The trial court also concluded that the vendor had the right to repair the windows, which the owners interfered with. The Court of Appeals affirmed.
Rights Between Owner and Contractor
The Court of Appeals's decision relies heavily on the terms of the contract, a big part of which is contained in AIA A201-1997. For example, with respect to the contractor's right to repair, not replace, the windows, A201 details how the contractor is obligated to repair defective work, and under what circumstances the owner may stop work. Additionally, according to the Court, the owner is not permitted to direct the manner in which the contractor can remedy the defective work:
At the outset, under the contract documents, the contractor is responsible for the cost of, and is at risk for, the repairs. It would seem incongruous under the circumstances presented here to conclude that the owners can dictate the manner of repair.
Similarly, under the terms of the construction contract, the owners had no right to withhold progress payments, even though a claim was pending. See AIA A201-1997 § 4.3.3. Instead, the contractor was required to continue working and the owner was required to continue making payments notwithstanding a pending claim.
Rights Between Owner and Vendor
The vendor's right to repair, and not replace, the windows was a closer call. The owners purchased the windows directly. Thus, the rights and duties between the owners and the vendor were governed by the UCC-sales. The Court concluded that the owners properly revoked their acceptance of the windows, which ordinarily would have allowed the owners to send the nonconforming windows back. But the Court also concluded that the owners, by then asking that the windows be repaired, re-accepted the windows on the condition that the defects would be cured, thereby giving the vendor the right to a reasonable opportunity to cure.
Afterthoughts
The opinion raises a few academic questions. First, there is no mention of the pre-litigation claims process contained in the Construction Defect Action Reform Act, C.R.S. § 13-20-803.5 ("CDARA"). Part of CDARA allows an owner to reject a contractor's proposed offer to remedy a claimed construction defect. How does this section fit with the Court's holding that the parties' contract gives the contractor the final decision as to how to repair warranty work?
Second, assume that the owners had not rescinded their revocation of acceptance of the windows. In this situation, the owners would be entitled to send the non-conforming windows back. The revocation of acceptance equates to a rejection. C.R.S. § 4-2-608(3). Once goods are rejected, if the seller does not instruct the buyer on what to do with the goods, then the buyer can store them, ship them back to the seller, or sell the goods for the seller's account. C.R.S. § 4-2-604. In short, the windows have to go. So as between the owners and the vendor, the owners could have the right to completely reject the nonconforming windows, and demand replacements. But as between the owners and the contractor, the owners have to allow the contractor an opportunity to repair the defective windows.
