Colorado Supreme Court Weighs in on Timeliness of Claims Against Subcontractors in Construction Defect Actions
March 16, 2017 —
Jean Meyer - Colorado Construction LitigationOn February 27, 2017, the Colorado Supreme Court announced its decision in the Goodman v. Heritage Builders, No. 16SA193, 2017 CO 13 (Colo. February 27, 2017) case. In ten short pages, the Colorado Supreme Court completely reshuffled Colorado construction law with respect to application of the statutes of limitation and repose on third-party claims in construction defect cases. Specifically, the Colorado Supreme Court overruled a series of earlier Court of Appeals' decisions that found C.R.S. § 13-80-104(1)(b)(II) (“104(1)(b)(II)”) had no effect on the six-year statute of repose. For context, 104(1)(b)(II) permitted third-party actions for indemnity and contribution to toll until ninety days after the claims in the underlying action were resolved by settlement or judgment. In the construction context, 104(1)(b)(II) was intended to allow a general contractor’s claims against liable subcontractors to toll for the statutorily defined period. This allowed the general contractor to first focus its attention on defending the claims against and thereafter to pursue its claims against the subcontractors.
However, beginning in 2008, in the Thermo Dev., Inc. v. Cent. Masonry Corp., 195 P.3d 1166 (Colo. App. 2008) case, the Colorado Court of Appeals began chipping away at the force of 104(1)(b)(II). This trend continued in the Shaw Constr., LLC v. United Builder Servs., Inc., 2012 COA 24, 296 P.3d 145 decision, the Sierra Pac. Indus., v. Bradbury, 2016 COA 132, _ P.3d_ decision, and culminating in the Sopris Lodging, LLC v. Schofield Excavation, Inc., 2016 COA 158, reh'g denied (Nov. 23, 2016) decision. Effectively, in these decisions, the Colorado Court of Appeals determined that third-party claims could not be brought beyond Colorado’s six-year statute of repose, regardless if they were brought within the ninety day tolling provision set forth in 104(1)(b)(II).
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Jean Meyer, Higgins, Hopkins, McLain & Roswell, LLCMr. Meyer may be contacted at
meyer@hhmrlaw.com
Damron Agreement Questioned in Colorado Casualty Insurance v Safety Control Company, et al.
February 10, 2012 —
CDJ STAFFSafety Control and EMC appealed the judgment in Colorado Casualty Insurance Company versus Safety Control Company, Inc., et al. (Ariz. App., 2012). The Superior Court in Maricopa County addressed “the validity and effect of a Damron agreement a contractor and its excess insurer entered into that assigned their rights to sue the primary insurer.” Judge Johnsen stated, “We hold the agreement is enforceable but remand for a determination of whether the stipulated judgment falls within the primary insurer’s policy.”
The Opinion provides some facts and procedural history regarding the claim. “The Arizona Department of Transportation (“ADOT”) hired DBA Construction Company (“DBA”) to perform a road-improvement project on the Loop 101 freeway. Safety Control Company, Inc. was one of DBA’s subcontractors. As required by the subcontract, Safety Control purchased from Employer’s Mutual Casualty Company (“EMC”) a certificate of insurance identifying DBA as an additional insured on a policy providing primary coverage for liability arising out of Safety Control’s work.”
A collision occurred on site, injuring Hugo Roman. Roman then sued ADT and DBA for damages. “Colorado Casualty tendered DBA’s defense to the subcontractors, including Safety Control. Safety Control and EMC rejected the tender. Roman eventually settled his claims against DBA and ADOT. DBA and ADOT stipulated with Roman for entry of judgment of $750,000; Roman received $75,000 from DBA (paid by Colorado Casualty) and $20,000 from ADOT, and agreed not to execute on the stipulated judgment. Finally, DBA, ADOT and Colorado Casualty assigned to Roman their rights against the subcontractors and other insurers.”
Colorado Casualty attempted to recover what “it had paid to defend DBA and ADOT and settle with Roman. However, Roman intervened, and argued that “Colorado Casualty had assigned its subrogation rights to him as part of the settlement agreement.” The suit was not dismissed, but the Superior Court allowed Roman to intervene. “Roman then filed a counterclaim against Colorado Casualty and a cross-claim against the subcontractors.”
All claims were settled against all of the defendants except Safety Control and EMC. “The superior court ruled on summary judgment that EMC breached a duty to defend DBA and that as a result, ‘DBA was entitled to settle with Roman without EMC’s consent as long as the settlement was not collusive or fraudulent.’ After more briefing, the court held the stipulated judgment was neither collusive nor procured by fraud and that EMC therefore was liable to Roman on the stipulated judgment and for his attorney’s fees. The court also held Safety Control breached its subcontract with DBA by failing to procure completed-operations insurance coverage and would be liable for damages to the extent that EMC did not satisfy what remained (after the other settlements) of the stipulated judgment and awards of attorney’s fees.” Safety Control and EMC appealed the judgment.
Four reasons were given for the decision of the ruling. First, “the disagreement between Roman and Colorado Casualty does not preclude them from pursuing their claims against EMC and Safety Control.” Second, “the settlement agreement is not otherwise invalid.” Third, “issues of fact remain about whether the judgment falls within the EMC policy.” Finally, “Safety Control breached the subcontract by failing to procure ‘Completed Operations’ coverage for DBA.”
In conclusion, the Superior Court affirmed in part, reversed in part, and remanded . “Although, as stated above, we have affirmed several rulings of the superior court, we reverse the judgment against EMC and remand for further proceedings consistent with this Opinion to determine whether the stipulated judgment was a liability that arose out of Safety Control’s operations. In addition, we affirm the superior court’s declaratory judgment against Safety Control but remand so that the court may clarify the circumstances under which Safety Control may be liable for damages and may conduct whatever further proceedings it deems appropriate to ascertain the amount of those damages. We decline all parties’ requests for attorney’s fees pursuant to A.R.S. § 12-341.01 without prejudice to a request for fees incurred in this appeal to be filed by the prevailing party on remand before the superior court.”
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Professional Liability Alert: California Appellate Courts In Conflict Regarding Statute of Limitations for Malicious Prosecution Suits Against Attorneys
April 28, 2014 —
David W. Evans & Stephen J. Squillario – Haight Brown & Bonesteel LLPIn conflict with an earlier decision by a different division within the same District, and with a prior decision of another District which followed the earlier case, Division Three of the Second Appellate District has concluded, contrary to established precedent, that the general two-year limitations period set forth in Code of Civil Procedure section 335.1 (“Section 335.1”) applies to malicious prosecution claims against attorneys, rather than the specific one-year statute of limitations for claims against attorneys codified in Code of Civil Procedure section 340.6 (“Section 340.6”).
In Roger Cleveland Golf Co., Inc. v. Krane & Smith, APC (filed April 15, 2014, Case No. B237424, consolidated with Case No. B239375), Roger Cleveland Golf Co., Inc. (“Cleveland Golf”), filed a malicious prosecution action against Krane & Smith (“the Attorneys”), who had unsuccessfully prosecuted the underlying breach of contract matter for their client against Cleveland Golf. In that action, on April 26, 2010, the trial court entered its order granting a motion for nonsuit and dismissing the complaint in favor of Cleveland Golf. On May 24, 2011, or approximately 13 months after the trial court had dismissed the underlying complaint, Cleveland Golf commenced a malicious prosecution action against the Attorneys. In the interim, the Attorneys initiated an appeal of the underlying judgment, which was eventually dismissed approximately seven months later. In response to the complaint, the Attorneys filed a special motion to strike, commonly referred to as an anti-SLAPP motion, which included the argument that the malicious prosecution claim was time-barred under the one-year limitations period of Section 340.6. The trial court granted the Attorneys’ motion based on the statute of limitations (and Cleveland Golf’s failure to demonstrate a probability of success on the merits) and dismissed the case. Cleveland Golf’s appeal followed.
Reprinted courtesy of
David W. Evans, Haight Brown & Bonesteel LLP and
Stephen J. Squillario, Haight Brown & Bonesteel LLP
Mr. Evans may be contacted at devans@hbblaw.com, Mr. Squillario may be contacted at ssquillario@hbblaw.com
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UPDATE: ACS Obtains Additional $13.6 Million for General Contractor Client After $19.2 Million Jury Trial Victory
June 27, 2022 —
Kristina Southwell - Ahlers Cressman & Sleight PLLCIn March 2022, ACS obtained a $19.2 million jury verdict in favor of its general contractor client after a lengthy trial against the project owner. Since that time, ACS has successfully obtained awards through post-trial motion practice for an additional $13.6 million in favor of the general contractor. These awards increased to total judgment to more than $32 million.
When moving to enter judgment on the jury verdict, ACS successfully argued for and obtained more than $5 million in prejudgment interest on the jury verdict to compensate the general contractor for having to go years without payment for work performed. ACS also successfully obtained a decree of foreclosure on its construction lien and incorporated language in the judgment requiring the owner to pay an additional $1.9 million in Washington State sales tax on the jury award. Finally, under the authority of the Washington construction lien statute (RCW 60.04.181), ACS sought to recover the attorneys’ fees, costs, and expenses incurred by the general contractor client during the course of litigation. ACS succeeded in obtaining an award for more than $6.6 million for various expenses and costs including ACS’s attorney fees, all the costs of hiring expert witnesses, costs and expenses related to subcontractors’ presentation of pass-through claims against the owner, and other litigation costs and expenses.
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Kristina Southwell, Ahlers Cressman & Sleight PLLCMs. Southwell may be contacted at
wendy.wheatmccoy@acslawyers.com
Code Changes Pave Way for CLT in Tall Buildings and Spark Flammability Debate
May 13, 2019 —
Sam Barnes - Construction ExecutiveAlthough nothing new, the debate over which is better as a building material—wood or concrete—intensified in December following the preliminary approval of new codes for cross-laminated timber and mass timber in tall structures.
The discussion among industry professionals has been less about CLT’s structural capabilities and more about its perceived flammability, with either side offering decidedly different perspectives. Comparatively new to the United States, CLT and mass timber products are constructed of several layers of pressed lumber board stacked in alternating directions.
In December, the International Code Council released the unofficial voting results on several code change proposals, including passage of the entire package of 14 tall mass timber codes. The proposals were presented by the ICC’s Ad Hoc Committee on Tall Wood Buildings, comprised mostly of engineers, architects, building and fire code officials, fire service, materials and testing lab representatives.
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Sam Barnes, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.
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David Uchida Joins Kahana Feld’s Los Angeles Office as Partner
December 31, 2024 —
Linda Carter - Kahana FeldKahana Feld is pleased to announce that David M. Uchida recently joined the firm as a partner in the firm’s Los Angeles Office. He is a member of the firm’s General Liability group.
A client-focused and seasoned litigator, David has defended product manufacturers and suppliers in complex toxic tort and environmental litigation. David also has extensive experience defending clients in alleged asbestos, benzene, and silica exposure claims.
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Linda Carter, Kahana FeldMs. Carter may be contacted at
lcarter@kahanafeld.com
#5 CDJ Topic: David Belasco v. Gary Loren Wells et al. (2015) B254525
December 30, 2015 —
Beverley BevenFlorez-CDJ STAFFChapman Glucksman Dean Roeb & Barger attorneys
Richard H. Glucksman,
Jon A. Turigliatto, and
David A. Napper analyzed the above mentioned Belasco case, in which “the Second District Court of Appeal made clear that settlement agreements containing waviers of unknown claims in connection with a construction of a property, absent fraud or misrepresentation, will be upheld.” Glucksman, et al. explained that “the homeowner plaintiff had made a claim against the builder pursuant to California Code of Civil Procedure Section 896 (“Right to Repair”) and settled for a cash payment and obtained a Release of all Claims including for all known and unknown claims. The court held that homeowner’s subsequent construction defect claim was barred pursuant to the terms and conditions of the earlier release.”
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In another article on the subject,
Edward A. Jaeger, Jr. and
William L. Doerler of
White and Williams LLP concluded, “The Court of Appeal’s holding establishes that, despite the prohibition against the release of unknown claims set forth in section 1524 and the protections provided to homeowners by the Right to Repair Act, California homeowners can, in fact, release or waive claims against homebuilders for future, latent construction defects. To release or waive such claims, the language of any settlement agreement should be unequivocal.”
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City Potentially Liable for Cost Overrun on Not-to-Exceed Public Works Contract
June 29, 2017 —
David R. Cook Jr. - Autry, Hanrahan, Hall & Cook, LLPOn a public works construction project, a contractor incurred additional costs and asserted a claim against the city. The city denied the claim because the contract had a not-to-exceed price, and the city council and mayor did not approve contract modifications to exceed that amount. City ordinances require approval for contract modifications and change orders exceeding ten percent of the original not-to-exceed amount.
But the contractor argued that the ordinance did not apply because the excess costs did not result from a contract modification or change order. In addition, the contractor argued that, in refusing to approve an increase in the not-to-exceed amount, the city breached the implied duty of good faith and fair dealing. The court concluded that these questions were factual issues for the jury to decide.
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David R. Cook, Autry, Hanrahan, Hall & Cook, LLPMr. Cook may be contacted at
cook@ahclaw.com
