Construction Law in Colorado

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.

Court of Appeals Addresses Unjust Enrichment Claims by Subcontractors and Suppliers

Redd Iron, Inc. v. Int'l Sales and Service Corp. (Colo. App. Dec. 24, 2008).

In DCB Construction Co., Inc., v. Central City Development Co., 965 P.2d 115 (Colo. 1998), the Supreme Court of Colorado held that, in order for a property owner to be liable under a theory of unjust enrichment to a tenant's contractor, the contractor must show some type of improper, misleading, or deceitful conduct by the owner.  Now in Redd Iron, Inc., a division of the Colorado Court of Appeals held that the requisite showing of improper, misleading, or deceitful conduct by the owner is not a required element outside the context of a claim against a landlord by a party working at the tenant's behest, and that malfeasance need not invariably be shown to establish unjust enrichment.

Refusal To Release Mechanics’ Lien And Lis Pendens Following Payment Of Judgment Results In Award Of Fees

Front Range Home v. Stowell (Colo. App. 2007)

The Colorado Court of Appeals affirmed a trial court's award of attorney's fees to defendant based upon plaintiff’s conduct concerning the release of the mechanic’s lien and notice of lis pendens. Basically, plaintiff wins lawsuit, defendant pays judgment in full, but plaintiff refuses to release the lien and lis pendens without further explanation.

Mechanics' Lien Statute Creates An Exception To The Common Law Doctrine Of Claim Preclusion

Dave Peterson Electric, Inc. v. Beach Mountain Builders, Inc., (Colo. App. 2007)

Subcontractor sued for breach of contract, got judgment by default, and recorded a judgment lien. Same subcontractor then filed a second lawsuit for foreclosure of its mechanics' lien based on the same transaction. The Court of Appeals held that claim preclusion does not bar the filing of the second lawsuit for foreclosure of the lawsuit, ruling that the mechanics' lien statute creates an exception to the common law doctrine of claim preclusion.

Read slip opinion

A Malicious Prosecution Claim Based On The Filing Of A Lis Pendens Requires Favorable Termination On The Merits

Hewitt v. Rice (Colo. 2007)

The Colorado Supreme Court held that a malicious prosecution action based upon the filing of a lis pendens requires favorable termination on the merits of the claim underlying the lis pendens. "Favorable termination" is a question of law requiring an action to be resolved on the merits in favor of the party claiming malicious prosecution. The concurring opinion raises the issue of whether the recording of a lis pendens can ever be the basis of a malicious prosecution claim.

Read slip opinion

Trust Fund Claim Exists Independent Of Mechanics’ Lien Claim

Fowler v. Regan (Colo. 2007)

On a certified question from the 10th Circuit, the Colorado Supreme Court held that a party does not need to have perfected a mechanics' lien or even still be within the time limits to perfect such a lien in order to have a claim for moneys held in trust under Colorado's trust-fund statute. The opinion includes a detailed history and explanation of mechanics' liens in Colorado, and there is a dissenting opinion by Justice Rice, with two other Justices joining.

Read slip opinion

Scope Of Lis Pendens Limited

Thomas v. Lynx (Colo. App. 2006)

The Court of Appeals addressed several notice-related issues raised in a foreclosure action. The property was foreclosed, the defendants appealed but did not request a stay, and the property was subsequently sold to a third party. The Court held that:

(1) The appeal was not moot although the property had been foreclosed and sold to a third party and the appellant did not redeem (there is a split of authority in the divisions of the Colorado Court of Appeals on this issue).