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.
The facts regarding the statute of limitations issue are fairly simple. On March 6, 2006, a fire damaged a salon. On March 27, 2006, a fire investigator provided the salon's insurer with a report that found that certain faulty wiring caused the fire. On March 11, 2008, the insurer, which had paid the salon for the damage, brought a subrogation action against the electrician who performed the faulty work. The Court of Appeals held that the insurer's claim was barred by the two-year statute of limitations, reasoning that the claim arose at the time of the fire and not when the insurer learned of the faulty work.
Under section 13-80-104(1)(b)(I), a claim against a contractor for a construction defect "arises . . . at the time the claimant or the claimant's predecessor in interest discovers or in the exercise of reasonable diligence should have discovered the physical manifestation of a defect in the improvement which ultimately causes the injury." According to the Court, the fire itself was the physical manifestation of the electrical wiring defect. It does not matter that the cause of the "physical manifestation" is unknown. The Court reasoned that its holding is consistent with the Construction Defect Action Reform Act, which is supposed to decrease construction defect litigation and encourage the timely resolution of construction disputes.