Noneconomic Damages in Colorado Construction Defect Cases

Those who find themselves facing defects in the construction of their home are often upset with their circumstances. Many of our clients have expressed anger, discomfort, and disruption of their daily lives due to damages caused by construction defects. In Colorado, homeowners are able to request compensation for these inconveniences – these are typically known as noneconomic damages.

Colorado law allows a person who owns property affected by construction defects to recover monetary damages for “inconvenience, emotional stress, and impairment of the quality of life.”[1] These damages extend to co-owners of property, even those who may not live at the property on a full-time basis.

This issue was addressed by the Colorado Court of Appeals in Hildebrand v. New Vista Homes, II, LLC.[2] The case required the court to consider whether or not an out-of-state co-owner of property could be awarded noneconomic damages. The court held that a father who co-owned a residence with his son could recover noneconomic damages even though his presence at the home was intermittent.[3]

The case involved damage to a brand-new home resulting from basement floor movement. The co-owner son testified that he was inconvenienced because his home was an investment and his sanctuary, and he became angry and sleepless after discovering the damage.[4] The co-owner father also testified he was inconvenienced by the damage when he would periodically visit his son and stay in the home because he had tripped over unlevel stairs leading to the basement, the damages prevented him from finishing the basement, and he could not use a pool table and ping-pong table that he had purchased to use in the basement.[5]

The Hildebrand court held that an award of noneconomic damages for both the son and father were appropriate under Colorado law because both owned the affected property.[6] Specifically, the court held that the out-of-state father’s right to occupy the property entitled him the right to recover inconvenience damages to the extent he occupied the house during his visits.[7]

If you have construction defects, you may be entitled to several different types of damages including personal injury damages and other noneconomic damages. Call Johnson Law today to discuss your circumstances and explore available solutions.

[1] C.R.S. § 13-21-102.5(2)(b).

[2] 252 P.3d 1159 (Colo. App. 2010).

[3] 252 P.3d at 1172-1173.

[4] Hildbrand, 252 P.3d at 1171.

[5] Id. at 1172.

[6] Id. at 1172-1173.

[7] Id. at 1173.

What is Litigation?

The language of law can seem foreign for those that find themselves involved in a legal dispute. Johnson Law specializes in litigation: bringing our clients’ claims into the legal system for resolution. But what does that really mean? Below you will find an overview of what can be expected during litigation.

Litigation is the legal process that occurs when people or companies make claims or complaints against other people or companies in court or other forums, such as arbitration. Litigation often occurs when the parties disagree as to the scope, severity, and appropriate outcome of their dispute, which requires a neutral third party (like judges, juries, or arbitrators) to resolve the dispute for them. There are four basic phases to a lawsuit: procedural, discovery, trial, and post-judgment.[1]

1st Phase: Procedural

The first phase is procedural, meaning the attorneys and clients work together to put the case together and present their dispute to the court. This phase is where litigation is started by filing a complaint in the court. A complaint is a legal document that outlines the facts and legal claims of the dispute. The party bringing the claims is called the Plaintiff. Once the complaint is filed, the Plaintiff must serve their complaint on the other party. The other party is called the Defendant and service of the complaint is required to put the Defendant on notice the legal process has begun. The Defendant then answers the complaint or files motions to get the case dismissed.

Assuming the case is not dismissed and the Defendant files an answer, the parties work with the court to determine procedural aspects of the case including setting various case deadlines and picking a date for trial. During this phase, the Plaintiff and Defendant each collect and exchange information about the dispute. This process is called disclosure. Disclosures are the exchange of information between the parties, including all relevant documents, pictures, texts, emails, contracts, agreements, etc. as well as identifying people who may know something about the dispute. The parties have an ongoing obligation to disclose relevant information throughout the life of the case.

2nd Phase: Discovery

The second phase is discovery. Once the parties have disclosed the information they have about the dispute, each side gets to investigate the other party’s claims and/or defenses through formal discovery.

Most commonly, the tools of discovery are depositions, written discovery, site inspections, and expert disclosures. Depositions are questions asked by the other party during a face-to-face meeting that is written down (transcribed). Written discovery means questions asked in written form. There are three main components of written discovery: interrogatories (written questions about the case); requests for production of documents or things (asking one party to hand over or disclose additional documents or things that have not yet been shared); and requests for admissions (asking one party to admit a specific fact).

For construction cases, site inspections are an important part of the process because it allows the parties to view and experience the construction that is in dispute. Site inspections are also important for the parties’ experts in forming their opinions as to what went wrong and how much it will cost to fix it. Expert disclosures are where each party’s expert shares his/her opinions with the other party on what caused and who is at fault in the dispute.

3rd Phase: Trial

The third phase of litigation is the trial phase. This phase is by far the most time consuming and costly phase of the litigation. The trial phase is where the parties take all the facts of the dispute they have obtained through disclosures and discovery and present the case to the decision maker – the judge or jury. During this phase, the attorneys have pre-trial meetings with the court to determine specific legal issues of the case; exchange their evidence and witness lists; and prepare jury instructions and witness examinations. This phase is time consuming for the parties too because the Plaintiffs and Defendants must be present for each day of the trial. The attorneys turn all of their focus and attention to presenting the case and advocating on behalf of their respective clients. The end of this phase is a decision or judgment, by the judge or jury, as to the outcome of the dispute.

4th Phase: Post-Judgment

The final phase is the aftermath of the court’s or jury’s decision of the dispute. If one party is displeased with the outcome of the case, they may appeal the judgment. An appeal is where one party asks a higher court to reconsider the judgment based on some alleged error. Appeals generally take a long time to resolve before the parties receive a full and final resolution of their dispute. Other post-judgment issues include a request by the prevailing party for the court to award them their litigation costs. Litigation costs include items like expert fees, filing fees, copying costs, witness fees, among others. If a party is entitled to recover their attorney fees, the court determines the amount of attorney fees during the post-judgment phase. If the Defendant or their insurer does not pay a judgment, often times the collection process begins until the amount is paid.

Conclusion

This basic overview outlines what can be expected during litigation. However, each dispute, each party, and each case are unique and not all cases go through the process in the same manner. The life of a case can last anywhere between a few months to a couple of years before resolution occurs. That is why Johnson Law strongly believes each client should be informed of what they can expect if they find themselves in litigation. At Johnson Law, we pride ourselves on our candor with clients and efficiency in navigating the litigation process to achieve our clients’ goals.

[1] Since most cases involve court instead of arbitration, this blog post will focus on court litigation instead of arbitration litigation, although they are very similar.

A contractor’s tool to getting paid – Colorado’s Mechanic’s Lien

A mechanic’s lien is a legal tool for an individual to get paid for work or materials supplied to a project when the owner or general contractor does not pay for the work.

For example, it is the end of a four-month kitchen remodel construction project and the owner does not want to make a payment until he is satisfied the project is complete. The contractor requests final payment because all inspections have passed and the permit is closed, but the owner still refuses to pay. This situation creates problems for contractors who may have outstanding invoices for materials or laborers who need payment for the work they provided on a job.

Owners withhold payment for various reasons: dissatisfaction with the quality of work, inability or unwillingness to pay because changes in the work or unforeseen circumstances increased the construction budget, or disputes arise as to what work remains unfinished and whether or not that work is warranty work or punch-list items. While the reasons for nonpayment are plentiful, Colorado’s mechanic’s lien may provide a remedy for an individual to get paid.

In Colorado, every person who furnishes labor, machinery, tools, or equipment used in the construction or repair of any improvement to land may file a lien upon the property where they rendered their services. Those who build a structure, dig a ditch, install a fence, or provide the materials to do any of these projects may have the right to lien if they do not get paid. Mechanic’s liens are not only for contractors either. Surveyors, designers, planners, map creators, cost estimators, superintendents, engineers, and architects are among the class of people the law allows to file a mechanic’s lien.

What is a lien? A lien is a right to take possession of another person’s property for a debt that is owed by the property owner, until the debt is satisfied. This means that the kitchen-remodel contractor may claim an interest in the home where he performed his construction services. The purpose of a mechanic’s lien is to protect those who add value to and enhance another’s property by providing labor, materials, and/or services.

The four basic components of a mechanic’s lien are: (a) providing the work or materials specified under the law; (b) for the benefit of specific real property; (c) at the request of the property owner or property owner’s agent; and (d) abiding by the law’s requirements for perfecting and enforcing the lien. To perfect and enforce the mechanic’s lien, the person claiming the lien must provide the property owner a notice of intent to lien at least 10 days before filing the mechanic’s lien. A notice of intent to lien must be personally served or mailed, via certified mail, return receipt requested, to the last known address of the property owner. The person claiming the lien must include an affidavit of service certifying that notice was provided 10 days before recording the mechanic’s lien.

After serving the notice of intent to lien and waiting 10 days, the person claiming the lien must file the lien with the county clerk and recorder in the real property records where the real property is located. The mechanic’s lien statement must include: (a) the name of the property owner; (b) the name of the lien claimant (the person who furnished the labor or materials) and the name of the contractor when the lien claimant is a subcontractor; (c) a description of the property; and (d) the amount due or owing. A person claiming a lien should be careful in determining how much is due and owing because the individual forfeits all rights to the lien (and may be responsible for the other person’s costs and attorney fees) if the lien is filed in an amount greater than the lien claimant knows is due and owing. The lien statement must be signed and sworn to by the lien claimant or someone on their behalf. A lien claimant is entitled to receive interest on the lien at the interest rate established by a contract or at Colorado’s statutory interest rate of 12%.

There are tight timelines for when a lien may be filed that range between 2-4 months from the date labor or materials were last performed or provided. However, these timelines can vary depending on different circumstances, including, but not limited to, the type of work or materials provided, abandonment of the work, or the project remains unfinished. Once a person has perfected the lien, meaning the lien claimant provided a notice of intent to lien with proof of service and correctly filled out and recorded the lien statement, they must foreclose on the property in order to collect on the lien. A foreclosure action needs to begin within 6 months from the date the last labor or materials were provided or the project was completed. If a foreclosure action is not started, the person claiming the lien will not be able to enforce the lien after the time for foreclosure has passed.

In short, mechanic’s liens can be useful when a contractor or other professional who assisted in the construction or improvement to real property does not get paid. There are strict requirements as to the procedures to follow in order to make the lien enforceable. If an owner still refuses to pay, a foreclosure action must begin in order to preserve a lien claimant’s right in their interest to the real property they helped improve. With quick and varying deadlines based on the specifics of each individual case and the strict procedural requirements, Johnson Law is here to ensure your mechanic’s lien is valid so you can get paid. Call us and speak with one of our attorneys today to discuss the specifics of your case and how Johnson Law may assist you.

What is a Construction Defect?

Part of the American dream is owning a home. It is often the largest purchase a person or family will make in their lives. However, such an important purchase can also come with a set of problems that no family should have to face. What happens when a home’s foundation moves or settles? What do cracks in concrete or drywall mean? What about uneven floors/windows/walls, water intrusions, sewage backups, etc.?

Johnson Law specializes in helping homeowners reach solutions when they encounter construction defects. But what exactly is a construction defect?

Colorado law does not define the term “defect”, but construction defects generally occur when a construction professional’s work falls below the standard of care. The standard of care is established through industry standards, manufacturer specifications, and building codes. These standards are in place to protect public health and safety by regulating and controlling buildings, structures, and equipment, including, but not limited to, foundations, stucco, heating and cooling systems, plumbing and drainage, signage, elevators and escalators, electrical systems, framing, siding, roofing, painting, and interior finishes.

The standard of care sets a minimum level of quality for construction professionals to use the products and materials as intended, fully incorporate the individual products and materials into the larger project, and achieve the desired outcome anticipated by the project documents. Defects can occur when inappropriate and/or defective products are used, products and materials are improperly installed, or design and engineering plans are not followed. Experts specialized in establishing the standard of care and determining whether the standard of care was met are important in construction defect cases.

What this means for a homeowner is that a defect can vary significantly and is unique to each case. For example, a homeowner may discover the physical manifestations of a defect if they see cracked drywall or concrete, have difficulty opening and closing doors, notice out-of-plumb walls, have broken pipes, observe discoloration of stucco, discover mold on walls, experience deteriorating building materials, encounter dysfunctional household systems and appliances etc.

Colorado law does not require a homeowner to know what the cause of the construction defect is at the time it is observed, but a homeowner’s claim arises when the homeowner discovers some physical manifestation of a construction defect. In other words, if you see a crack or some problem that could be a defect, the clock could begin ticking on when you can bring a timely claim against your builder or other construction professional.

If you have questions regarding potential defects at your home, please contact Johnson Law to speak with an attorney and hear more about potential solutions today.

-Tessa DeVault

Johnson Law is handling Weyerhaeuser Joist Formaldehyde Claims and Cases

Johnson Law has been recently contacted from dozens of Colorado homeowners to investigate claims against Weyerhaeuser and other potentially liable parties for the installation of Weyerhaeuser’s fire protection coating product, Flak Jacket®, to floor joists.

The Flak Jacket® coating was applied to floor joists installed in many new homes in Colorado and is causing risk of formaldehyde poisoning to the occupants. Occupants with the affected product in their home have been advised to move out as soon as possible to avoid exposure and seek medical attention if their symptoms persist.

Unfortunately, despite several large national homebuilders knowing about the issue for weeks, not all homeowners were told immediately, and the builders have done very little to assist displaced homeowners. Many homeowners were advised by their builder to move out immediately, but have been given no assurances their home will receive proper repairs, or that the affected homeowners will receive fair compensation for their hotel stays, medical bills, loss of home value, and everything else they are entitled to under Colorado law.

Johnson Law is working with homeowners all over Colorado to assist them with getting temporary housing and reaching fair resolutions with Weyerhaeuser and other potentially liable parties. There is a possibility this becomes a class-action case.

If you would like to find out more information about retaining a construction defect attorney to assist with Weyerhaeuser floor joist claims, please send us an email at hello@chadjohnsonlaw.com (for fastest response) or give us a call at 303.586.4829. Johnson Law represents homeowners all across Colorado in construction defect cases with flexible fee agreements, including contingency fees.

House Bill 1279 – New Requirements for Colorado Homeowners’ Associations Making Construction Defect Claims

On May 27, 2017, Governor Hickenlooper signed HB 1279 into law which changes the way Colorado homeowners’ associations may bring construction defect claims. The new Colorado law requires homeowners’ associations to send notice, hold a meeting, and conduct a voting period by the owners before bringing construction defect claims.

First, the notice must contain, among other things, a description of the alleged defects and a good-faith estimate of the benefits and risks involved. The new law establishes very specific and detailed notice requirements that include disclosure of attorney fees and costs, impacts on an individual owner’s property during the process, and the benefits and/or consequences of filing or not filing construction defect claims. Notably, the notice must also be sent to the construction professionals who performed the defective construction.

Second, Colorado homeowners’ associations must now hold an owner meeting between ten and fifteen days after the notice was mailed. The construction professionals must be invited to attend this owner meeting and have an opportunity to address the owners regarding the alleged construction defects. The construction professional may, but is not required, to provide an offer to remedy the alleged construction defects at the meeting.

Third, the owner voting period requires Colorado homeowners’ associations to maintain detailed owners’ lists and track owners’ votes. Homeowners’ associations may bring construction defect actions against construction professionals only after complying with the notice, meeting, and voting requirements established in the new law and upon authorization by a majority of favorable votes by the owners.

This new law goes into effect on September 1, 2017 and the full implications of these additional requirements for homeowners’ associations remain unknown. The law contains tight timelines and harsh consequences if the law’s requirements are not met. Questions remain regarding how this new law’s meeting requirement will interact with the notice of claim process required under Colorado’s construction defect laws. Finally, the new law establishes specific details on who and how owner votes are counted, how to amend claims, and exceptions to when homeowners’ associations can bring construction defect claims against a construction professional without an owner vote.

Contact Johnson Law today to discuss how this new law may impact your community and to ensure your homeowners’ association is complying with the law’s heightened requirements before filing claims for construction defects.

-Tessa R. DeVault

Johnson Law is looking for a great Paralegal/Office Manager to add to our team

Litigation Paralegal/Office Manager

We are a boutique law office focusing on construction defect law seeking a full-time paralegal/office manager for our uptown Denver office.

We might be a good fit if you are someone who:

  • Is energetic and a self-starter, has great organization skills and superior customer service
  • Is comfortable working independently, but also in a team
  • Has time management skills to organize, multi-task, prioritize assignments and complete tasks under pressure due to workload volume and changing demands
  • Has great attention to detail
  • Likes being involved in the details of each case.

Responsibilities include:

  • Collecting, organizing, and reviewing of documents
  • Drafting court filings under attorney supervision, such as routine motions and proposed orders, disclosures, subpoenas, notices, case management orders, and pretrial orders
  • Assisting with preparation and filing of court filings
  • Maintaining and updating a docket of all pleading deadlines and court obligations for counsel on all cases
  • Reviewing all applicable rules and practice standards to ensure compliance
  • Ensuring all deadlines are calendared and met
  • Proofreading and checking of final court filings and other correspondence
  • Assisting with preparation for depositions and trials
  • Coordinating the scheduling of court dates, depositions, mediation, and other client meetings
  • Conducting initial client intakes via phone
  • Orderings office supplies and various other administrative tasks

Requirements:

  • Strong administrative skills and attention to detail a must
  • Law firm and prior litigation experience is preferred but not required
  • At least one year of customer service office experience is required
  • Paralegal certificate and/or a bachelor’s degree is preferred but not required
  • Our office strives to be paperless, uses Mac OS, Clio, and other cloud technology, so familiarity with technology is crucial

What we offer:

  • A flexible work schedule
  • A health care benefits plan
  • A retirement plan with matching contributions
  • A comfortable, collaborative, and friendly work environment
  • A salary commensurate with your experience

We are committed to giving every client outstanding customer service, exceeding their expectations by being helpful, friendly, and having a positive attitude. If you share our commitment then we want to hear from you. Qualified candidates should respond with their resume and cover letter with salary requirements to apply@chadjohnsonlaw.com.

Colorado Court of Appeals holds that statute of repose and limitation does not begin to run until a contractor finishes repair efforts

In Sierra Pacific Industries, Inc. v. Bradbury, ___ P. 3d ___, 2016 WL 4699116 (2016), Sierra Pacific had settled with the homeowners’ association and the general contractor with regard to water intrusion at a condominium building. Sierra Pacific then brought suit against its subcontractor Jason Bradbury.

Bradbury moved for summary judgment arguing that the six-year statute of repose had expired – therefore the claims were too late. The undisputed facts relevant to the motion were:

• On June 11, 2004, the City and County of Denver issued a certificate of occupancy for all units.
• At the HOA’s direction, the general contractor and Sierra Pacific attended to the reported leaks and water damage between 2004 and 2011, including two substantial retrofit repairs in January 2005 and March 2011;
• Bradbury participated in some repair efforts in 2004, but none thereafter.

Applying those facts to the statute of repose, the Sierra Pacific court ultimately held that Sierra Pacific’s claims were barred by the statute of repose.

The court recognized that statute of repose commences upon “substantial completion of the improvement to the real property.” However, the court explained that “substantial completion of the improvement to the real property” is not necessarily the date of a certificate of occupancy, but instead the court concluded “that a subcontractor has substantially completed its role in the improvement at issue when it finishes working on the improvement.”

Applying the court’s interpretation of the statute of repose, the court ultimately concluded that because Bradbury finished its repair work on the windows and doors in 2004, the the statute of repose commenced, at the latest, in 2004.

This decision makes sense in the context of the law and social policy. It allows homeowners to hold off of suing contractors if the contractor is still willing to make reasonable repairs. That is obviously beneficial to homeowners and contractors, who will be involved in fewer lawsuits in situations where good contractors are willing to make reasonable repairs to their work.

Under Sierra Pacific, Homeowners, HOAs, and other property owners are now clearly afforded their full statute of limitations and repose to determine if a contractor’s’ repairs are successful before taking next steps.

Douglas County District Court Rejects Builder’s Argument That Economic Loss Rule Applies to Original Homeowners

In light of the Colorado Supreme Court’s “subsequent homeowner” analysis in S K Peightal v. Mid Valley, 342 P.3d 868 (Colo. 2015), questions remain as to how courts will interpret the term in deciding whether or not the independent tort duty to act non-negligently in the construction of a home is barred by the economic loss rule. Construction litigators must now define who is and who is not a “subsequent homeowner” in bringing and defending negligence claims for construction defects.

In S K Peightal, the court refused to extend the judicially recognized independent tort duty to act non-negligently in the construction of home to a third-party beneficiary of a commercial entity whose claims rested purely on economic damages under a negligence theory. Id. at 870-71. The “subsequent homeowner” analysis hinged on “whether a party who stands in the shoes of one of the parties to a Construction Loan Contract that financed the construction of the home in question can properly be considered a subsequent homeowner of the property.” Id. at 876. The court held the third-party beneficiary was not a “subsequent homeowner” and within the class of plaintiffs to whom the duty was owed because the third-party beneficiary was able to and did negotiate the construction contracts outlining the duties and liabilities during construction of the home. Id. at 876-77.

Despite the fact the court responded narrowly to the specific and unique facts of S K Peightal, construction professionals have started to argue an original purchaser’s negligence claims should be barred by the economic loss rule. Construction professionals have argued an original homeowner is analogous to the third-party beneficiary in S K Peightal because original purchasers are at “arm’s length” in negotiating construction contracts during construction of the home.

This argument falls short because it makes the assumption original purchasers of newly constructed homes are involved in negotiating the duties and liabilities in the contracts for construction of the home. Quite the contrary; homeowners are rarely involved in the negotiating the means and methods involved in constructing a new home. Homeowners rely on the builder’s expertise, which is why the court has judicially recognized a construction professional’s independent duty to act non-negligently in the construction of homes.

Vision Homes recently argued this in a case where Johnson Law and co-counsel represented eleven homeowners against it in Castle Rock Colorado. Douglas County District Court Judge Shaw Whitaker did not reach defendants’ “subsequent purchaser” arguments. Instead, Judge Whitaker relied on Colorado precedent in Town of Alma v. AZCO Constr. Inc., 10 P.3d 1256, 1259 (Colo. 2000) and held the economic loss rule did not apply because plaintiffs alleged more than purely economic loss. In citing to Hildebrand v. New Vista Homes II, LLC, 252 P.3d 1159, 1172 (Colo. App. 2010), Judge Whitaker held the “Construction Defect Action Reform Act allows claims for personal and bodily injury including noneconomic loss or injury such as pain and suffering, inconvenience, emotional stress, and impairment to the quality of life.” James Coates, et al. v. Vision Development Group, Inc., et al., No. 14 CV 30372 (Douglas County Dist. Ct. February 16, 2016). Therefore, Judge Whitaker denied the builder defendants argument the economic loss rule barred the homeowner plaintiffs’ negligence claims because plaintiffs plead non-economic damages and a jury could award such damages.

Construction professionals will likely attempt to use the dicta from S K Peightal as an opportunity to chip away consumer rights. Judge Whitaker’s ruling is correct, but the District Court’s ruling could be narrowly read to only protect individual homeowner purchasers, and not HOAs or other corporate entities that hold title to homes because such entities cannot suffer non-economic losses. Further clarification of S K Peightal is still required, including how the Homeowner Protection Act of 2007 would trump any application of the common law economic loss rule.

This issue is of greatest importance in Colorado’s booming housing market where rapid growth of new developments leads to high numbers of original purchasers contracting with builders for newly constructed homes. There is no good reason (legal, policy, or otherwise) that Courts should exclude original homeowners from the ability to hold builders liable for their negligence.

If you have any questions about the S K Peightal decision, or the Douglas County District Court ruling interpreting it, please contact construction defect lawyer Chad Johnson at Chad@chadjohnsonlaw.com or 303.586.4829.