A Homeowner’s Disclosure Obligations in Residential Real Estate Sales

In Colorado, prospective homebuyers should be provided a broad range of disclosures concerning their potential home’s present and past condition. The legislature and courts recognize the magnitude of investment an individual or family makes in purchasing a home and, accordingly, require transparency during the purchase process. The underlying rationale is that the seller is much more knowledgeable about the home than the buyer and withholding that knowledge may cause the buyer to purchase a damaged home that he or she did not bargain for.

A seller’s disclosure obligations come from two sources – the purchase contract and the common law.

In most home sales, the buyer and seller enter into a purchase contract approved by the Colorado Real Estate Commission. The typical Contract to Buy and Sell Real Estate (Residential) contains two major disclosure provisions, as well as disclosures related to specific conditions, such as lead-based paint.

First, Section 10.1 requires the seller to complete and provide the potential buyer a Seller’s Property Disclosure (sample form). This is the seller’s opportunity to formerly educate the buyer on the home’s condition. The form contains 146 separate categories of conditions and features that may apply to the home. If a particular condition or feature applies, the seller must select “Yes” on the form and, if necessary, write a short description of the issue or past occurrence of the issue. For example, Section B2 requires the seller to disclose any problems with roof leaking, even if the source of the leak was repaired before the home was listed for sale.

Second, Section 10.2 requires the seller to disclose in writing all adverse material facts known by the seller. This obligation includes information outside the categories listed in the seller’s property disclosure. A fact is “material” if the home buyer’s decision might have been different had the fact been disclosed. In effect, the seller must disclose any adverse fact that the seller is aware of and which might cause the buyer to terminate the purchase contract, negotiate for a lower price, or ask for a seller concession. For example, a seller should disclose that the home was involved in a prior construction defect lawsuit.

Colorado courts also impose disclosure obligations on sellers. In In re Estate of Gattis, the Colorado Court of Appeals defined a seller’s common law disclosure obligations. 318 P.3d 549 (Colo. App. 2013). A seller must disclose all known material defects, including latent defects in the home. A latent defect is one that it not observable upon reasonable inspection. These include issues not discovered during the pre-closing inspection performed by the buyer. For example, damage to a brick or poured concrete wall that is concealed by plaster or other building finishes must be disclosed. While the home buyer cannot discover the damage because it is concealed by the interior finish, the damage may pose a risk to the home’s structure and homeowner’s safety. Material defects are not limited to the physical structure of the home and may include environmental issues or unstable soils under the home.

A seller who fails to make these mandatory disclosures may be liable for nondisclosure, misrepresentation, breach of contract, or fraud. If seller fails to disclose its own negligent construction work or the negligent actions of its subcontractors, it may be subject to liability under the Colorado Construction Defect Action Reform Act.

A seller’s real estate agent is also subject to disclosure obligations. Agents are licensed by the State of Colorado and must undertake actions to protect buyers and sellers. While the seller’s agent is not required to personally investigate the home’s condition, the agent must disclose all adverse material facts of which the agent is actually aware. C.R.S. § 12-10-404(3)(a). This is an affirmative obligation and the Colorado Real Estate Commission endorses broad disclosure by licensed agents, stating that agents should err on the side of disclosing facts. Like the seller, the seller’s agent or buyer’s agent may be subject to liability if they fail to notify a buyer of known adverse material facts.

Home buyers should take reasonable steps to investigate a home before purchasing the home, including by carefully reviewing the seller’s property disclosure and conducting a pre-closing inspection. When that due diligence fails to reveal problems discovered only after the home purchase, a home buyer may consider taking legal action against the seller, seller’s agent, or even buyer’s agent.

Johnson Law regularly handles real estate nondisclosure and real estate broker liability law. If you have any questions about disclosures made by your home’s seller or seller’s agent – or the lack of disclosure – please give Johnson Law a call to speak with one of our attorneys about your legal rights.

Are attorney fees recoverable in Colorado construction and real estate cases?

The American Judicial System is time-consuming and expensive. Homeowners and small business owners can find themselves in a situation where they have been wronged in some way and are left asking “how can I afford to recover my damages?”

The default answer is that under the “American Rule” each party pays their own attorney fees. Despite the American Rule, there are still a few ways attorney fees can be recovered in Colorado construction and real estate litigation. We have summarized a few common scenarios below.

First, a party may recover attorney fees if a contract exists that permits an award of attorney fees. Contractual attorney fees provisions can be one-sided meaning that one party to the contract is awarded attorney fees. This type of clause can be concerning because one party may be required to pay the other party’s attorney fees. A legal argument can be made, however, that a party should not be rewarded for breaching the contract by recovering attorney fees incurred in defending against a claim.

Another common contractual attorney fees provision is that the prevailing party is entitled to recover their attorney fees. Under this standard, the party seeking attorney fees must establish that it is in fact the “prevailing party.” To be a prevailing party, a claimant (i) must have succeeded upon a significant issue in the litigation and (ii) must have achieved some of the benefits sought in the lawsuit. The difficulty with this type of attorney fees provision is that the party must request the court make a determination that it is the “prevailing party” and thus entitled to recover its attorney fees. Contractual attorney fees provisions can mean a claimant runs the risk of not only paying their own legal fees, but may also be forced to pay the other party’s legal fees effectively doubling the cost of litigation.

A second way a party may be entitled to recover attorney fees is when a statute or law permits recovery. For example, Colorado’s landlord/tenant laws permit recovery of attorney fees to promote access to the legal system and encourage attorneys to assist cases when damages may be in the hundreds of dollars or a few thousands of dollars. Other Colorado statutes such as Colorado’s Mechanic’s Lien Trust Fund, Civil Theft, and Insurance Bad Faith permit recovery of attorney fees as a punitive measure to punish violators of that specific law.

A third way a party may be entitled to recover attorney fees is when the court orders fees awarded as a sanction. This avenue to an award of attorney fees is rarely enforced and difficult to achieve. Essentially, courts follow the presumptive position that each side pays their own attorney fees. Unless the case involves major issues of delay, harassment, frivolousness, substantially groundless claims or substantially vexatious claims, the court is unlikely to award attorney fees. While attorneys and their clients may claim they should be entitled to attorney fees because a claim lacked substantial justification, courts rarely award attorney fees under these circumstances.

Even if a party is entitled to an award of attorney fees, such award is not automatic. First, an award of attorney fees is only considered at the very end of the litigation, after a trial or other determination on the merits. Second, the party seeking an award of attorney fees must request and obtain the court’s permission to receive the attorney fees, which permission may be denied. Third, the party seeking attorney fees has the burden of proving the fees were reasonable under several factors established by the courts. This analysis often results in the opposing party’s objection to the reasonableness of fees and a reduction in the amount awarded by the court.

At Johnson Law we understand the expenses our clients face in dealing with the unfavorable position of correcting a wrong, and we work with our clients to make the best out of bad situation. Johnson Law will not sugarcoat the realities of access to the American Judicial System or the potential risks associated with pursuing claims. Instead, our attorneys pride themselves on cultivating creative partnerships with our clients to achieve the best outcome for each individual client. Contact an attorney on our team to discuss the specific facts of your circumstances.

Contractors have a duty to maintain detailed expense records when using cost-plus contracts

Some construction contracts contain payment terms on a cost-plus basis, which is the cost of labor and materials plus an agreed upon percent for profit. A recent decision from the Iowa Court of Appeals in Olmstead Constr., Inc. v. Otter Creek Investments, LLC, 2019 WL 4678167 (Iowa Ct. App. 2019) held that contractors have a duty to maintain accurate and detailed expense records under a cost-plus contract. Keeping meticulous and accurate records allows the owner to check the contractor’s expenses. The Iowa court held this type of contract permits an owner to approve and audit the contractor’s accounting. In the event a dispute arises from a charge, the contractor has the burden of justifying and validating the charge.

The Olmstead Court held the owner was not obligated to pay a disputed invoice when the contractor failed to provide backup for the disputed invoice under a cost-plus contract and the owner’s nonpayment was not a default of the parties’ contract. While Colorado courts have not gone as far as Iowa, the Colorado Court of Appeals held an owner may be estopped from disputing charges when the owner continued to make payments until the work was completed. Extreme Constr. Co. v. RCG Glenwood, LLC, 310 P.3d 246 (Colo. App. 2012).

The Extreme Construction court held the defense of equitable estoppel could apply to an ambiguous contract term in the parties’ cost-plus contract. Specifically, the owner was estopped from claiming the contractor was required to charge actual costs for superintendence and labor when the owner paid invoices with full knowledge the invoices included charges for superintendence and labor at rates higher than contractor’s costs. The court reasoned that the owner’s behavior of remaining silent on its interpretation of the cost-plus contract payment terms induced the contractor’s continued performance under the contract. Thus, the owner could not claim the costs it had full knowledge of and paid were in excess of the costs contemplated in the contract after the contractor completed performance of the work.

Whether Colorado courts will interpret cost-plus contracts in a similar manner to the Iowa court in Olmstead remains unknown. If Colorado courts permit an equitable estoppel defense when an owner knowingly pays charges above actual costs and then is estopped from later arguing those charges were in breach of contract, Colorado courts may hold that an owner who disputes charges on an invoice within a reasonable time may be justified in not paying the invoice if the contractor cannot produce justification for the charges.

Practitioners may want to argue Iowa’s Olmstead is persuasive in factually similar cases. Practitioners may argue the reasoning in Colorado’s Extreme Construction suggests an unknowing payment of inflated costs shifts the burden to the contractor to prove its actual costs under a cost-plus contract. Both cases suggest a contractor should keep meticulous records to support charges under a cost-plus contract or the owner may be relieved of payment.

Johnson Law specializes in construction law from drafting and negotiating contracts, such as cost-plus contracts, to bringing claims protecting the interests of contractors and homeowners. If you have questions about construction cost-plus contracts or how they may impact your legal rights and remedies, give Johnson Law a call to speak with one of our attorneys.

LB Rose Ranch, LLC v. Hansen Construction, Inc., – clarification of effect of settlements on contribution claims

Settlement agreements are often meant to stop litigation and resolve outstanding claims. However, a recent Colorado Court of Appeals decision held that a settlement agreement does not relieve one settling party from a contribution claim made by a non-settling party under the joint tortfeasor pro-rata liability statute when the settlement did not cover common liabilities and the non-settling party had satisfied all common liabilities prior to the settlement.

In LB Rose Ranch, LLC v. Hansen Construction, Inc., 2019COA141, LB Rose Ranch and Hansen Construction were each found liable for construction defects in a multi-lot development project. The lot owners claimed LB Rose Ranch and Hansen Construction acted in concert and were jointly and severally liable for the construction defects. Claims against Hansen Construction were decided through arbitration. The arbitrator determined damages to each lot and Hansen Construction paid the arbitration award in full. Claims against LB Rose Ranch were decided at a jury trial. The jury also determined damages to each lot. LB Rose Ranch then entered into a settlement agreement with the lot owners for a lesser amount.

Both the jury and arbitrator apportioned a percentage of fault to each LB Rose Ranch and Hansen Construction. The trial court reviewed both the jury and arbitration awards for each lot and determined the amount of common liability between Hansen Construction and LB Rose Ranch. The trial court determined LB Rose Ranch was only liable for that portion of damages that was not already paid by Hansen Construction. Thus, Hansen Construction’s payment of the arbitration award satisfied LB Rose Ranch’s judgment on many of the lots and LB Rose Ranch was left to pay only a fraction of the total jury award.

Hansen Construction then brought a contribution claim against LB Rose Ranch for the amount of common liability to the lot owners that Hansen Construction had satisfied. The right of contribution exists when a party pays more than his pro rata share of the common liability. C.R.S. § 13-50.5-102(2). LB Rose Ranch argued its settlement and release with the lot owners discharged LB Rose Ranch from contribution liability to Hansen Construction under C.R.S. § 13-50.5-105(1)(b), which discharges a released tortfeasor from liability for contribution to other tortfeasors for the same injury.

The Court of Appeals rejected this argument because Hansen Construction was not a party to the jury trial and could not be bound by the jury’s determination of damages apportioned to LB Rose Ranch. The trial court determined that the amount settled between LB Rose Ranch and the lot owners was not common liability between LB Rose Ranch and Hansen Construction, but was the amount for which LB Rose Ranch was individually liable to the lot owners. Hansen Construction extinguished the shared common liability amount before LB Rose Ranch entered into the settlement agreement with the lot owners. The remaining amount due by LB Rose Ranch under the jury award were not caused by Hansen Construction as determined in the arbitration and could not be considered joint liability for the same injury. Thus, the settlement agreement applied to damages caused individually by LB Rose Ranch and not common damages between LB Rose Ranch and Hansen Construction.

Ultimately, the Court of Appeals determined Hansen Construction no longer had common liability with the lot owners at the time of settlement because it had satisfied the arbitration award in full that included the common liabilities between Hansen Construction and LB Rose Ranch. Therefore, the LB Rose Ranch’s settlement and release applied to damages LB Rose Ranch was individually responsible, and LB Rose Ranch was not relieved of its contribution to Hansen Construction for Hansen Construction’s satisfaction of judgment for the parties’ joint liabilities.

A new turn in enforcing arbitration clauses?

Construction contracts often require disputes to be handled through the arbitration process instead of in court. Under Colorado law, an officer of a corporation is personally liable in tort when the officer actively participates or cooperates, provides specific direction, or sanctions the tortious conduct. Hoang v. Arbess, 80 P.3d 863, 868 (Colo. App. 2003); Hildebrand v. New Vista Homes II, LLC, 252 P.3d 1159, 1167-1168 (Colo. App. 2010). Thus, claims of construction defect are often brought against the person swinging the hammer or supervising the work in addition to the
construction entity they work for or own.

Parties to construction contracts are generally the corporate entity and consumer. The person swinging the hammer or supervising the work or not often a party to the contract or contemplated as benefiting under the contract. Many construction professionals have successfully asserted that an arbitration provision within a construction contract applies to claims made against nonsignatories. This argument was based on the Colorado Court of Appeals decision Meister v. Stout, 353 P.3d 916, ¶¶ 6, 13-18 (Colo. App. 2015), which held when a signatory to the contract containing an arbitration clause asserts a claim arising from that contract against a defendant who was not a party to the contract, he may be estopped from avoiding arbitration and instead be compelled to arbitrate by and with the nonsignatory defendant.

The Colorado Supreme Court recently made clear in Santich v. VCG Holding Corp., 2019 CO 67, that nonsignatories to contracts with arbitration provisions must prove all four elements of equitable estoppel when enforcing the arbitration provision against a signatory. In proving the elements of equitable estoppel, the nonsignatory must prove detrimental reliance on the words or actions of the party against whom estoppel is sought. When no agreement exists between particular litigants, only a few limited circumstances exist where a nonsignatory to an arbitration agreement may compel arbitration, including equitable estoppel.

The Santich court was critical of the Meister decision for breaking precedent creating an alternative theory of estoppel for arbitration-specific cases. The Santich court reasoned: “Equitable estoppel is more properly viewed as a shield to prevent injustice rather than a sword to compel arbitration.” Quoting Hirsch v. Amper Fin. Services, 71 A.3d 849, 852 (N.J. 2013). Thus, nonsignatories to contracts must prove the element of detrimental reliance when bringing an equitable estoppel claim against a signatory to the contract. The Santich court acknowledged their holding could result in piecemeal litigation, but noted that policy reasons alone should not replace the foundation for application of equitable estoppel. For claimants seeking recovery against signatories and nonsignatories to contracts that contain arbitration clauses, counsel should ensure respondents are proving all the elements of equitable estoppel. When nonsignatories attempt to enforce the contract against signatories, they must prove the fact the nonsignatory detrimentally changed position in reasonable reliance on the other party’s actions through words, conduct, or silence. This is a high bar many nonsignatories to contracts will be unable to establish. Of course, there are additional arguments under contract principles that may apply, but the long-standing exception establishing in Meister is no longer enforceable.

If you have questions regarding your arbitration agreement or construction contract, please contact Johnson Law at 303.586.4829.


The economic loss rule no longer bars civil theft – a Colorado Supreme Court game changer in business litigation

The Colorado Supreme Court recently ruled the economic loss rule does not bar recovery for
damages on a civil theft claim in Bermel v. BlueRadios, Inc., 2019 CO 31. Chris Bermel, a former
employee of BlueRadios, Inc., forwarded company emails with proprietary information to his
personal email account, which breached various contracts he entered into with the company.
Bermel brought suit claiming lost earnings and the company counterclaimed based on breach
of contract and civil theft alleging the forwarding of emails was an unlawful taking of the
BlueRadios’ property.

Bermal knowingly forwarded thousands of emails and attachments from his business email
account to his personal email account that contained confidential and proprietary information,
including trade secrets, in violation of an agreement not to remove company materials from the
business premises and a confidentiality agreement. At trial, Bermel requested directed verdict
claiming BlueRadios’ civil theft claim was barred by the economic loss rule. The district court
held the economic loss rule could not bar a statutory cause of action and denied the motion.
BlueRadios prevailed at trial and Bermel appealed.

The Colorado Court of Appeals affirmed the district court’s holding and reasoned that the
economic loss rule is a “judge-made” rule intended to “maintain the boundary between the law
of contracts and torts.” Civil theft on the other hand is a “legislatively created cause of action.”
2019 CO 19 at ¶ 12. Thus, a judicially created rule cannot preclude a statutory claim, otherwise
such reasoning would run afoul of the separation of powers between the judicial and legislative
branches of government. Id.

Colorado’s economic loss rule bars a party from recovering pure economic losses suffered from
the breach of a contractual duty under tort claims unless an independent duty of care exists.
Town of Alma v. AZCO Constr., Inc., 10 P.3d 1256, 1264 (Colo, 2000). In BlueRadios, the
Colorado Supreme Court determined the economic loss rule does not bar recovery under a
statutory cause of action, specifically the civil theft statute where the theft also constitutes a
breach of the parties’ contract. 2019 CO 19 at ¶ 15.

Bermel argued the parties’ contracts provided redress for the forwarding of company emails, so
the economic loss rule should bar BlueRadios from asserting claims based in tort for the same
damages recoverable under the contract. 2019 CO 19 at ¶ 16. BlueRadios argued the economic
loss rule bars recovery for tort claims such as negligence and negligent misrepresentation, but
that civil theft is a statutory claim not sounding in tort, is independent of a contractual duty
under the parties’ agreement. BlueRadios argued a judicially created rule cannot bar a statutory
cause of action. Id. at ¶ 27.

The Colorado Supreme Court agreed and held “it would be particularly inappropriate to apply
the economic loss rule to bar statutorily imposed liability for intentionally wrongful conduct.”
Id. at ¶ 18. The legislature enacted the civil theft statute as a punitive measure to deter the
conduct. Id. at ¶ 35. The Colorado Supreme Court reasoned that the civil theft statute was
enacted and applied long before the common law economic loss rule. Id. at ¶ 38. Further, the
Court did not desire to abrogate a clear legislative act by reason of judicial policy because it
would offend the separation of powers, and there was no allegation the statute was
unconstitutional so there was no basis in law to limit the remedy the statute provides. Id. at ¶
37, 41. Finally, the Court reasoned the civil theft statute expressly makes available redress for
purely economic losses and thus cannot be barred by the economic loss rule. Id. at ¶ 42.

The reach of this new court decision was questioned in the dissent by Justices Gabriel and Hart
who expressed concern that future contract claims will be asserted as civil theft claims. Id. at ¶
44. Colorado practitioners may want to analyze each breach of contract case to see if the facts
of their case are similar to BlueRadios. Adding a civil theft claim will allow for treble damages
and attorney fees which may contribute to the value of each case.

It is not required to add 500 other unit owners in Owner v. HOA suit

In Accetta v. Brooks Towers Residences Condominium Association, Inc., — P.3d —, 2019 CO 11 (Colo. 2019), the Colorado Supreme Court determined that a single unit owner was not required to join all other unit owners of a condominium building in pursuing claims against the condominium association for dues allegedly improperly assessed. Mr. Accetta, a unit owner within the Brooks Tower Condominiums consisting of 566 residential units, 13 commercial units, and 297 garage units filed suit against the Brooks Tower Condominium Owners’ Association alleging his unit was being charged a disproportionate share of Association dues under a provision of the Brooks Tower Condominium Declaration that violates the Colorado Common Interest Ownership Act (CCIOA). The Association moved the court to dismiss Mr. Accetta’s claims arguing Mr. Accetta failed to join all of the other unit owners of Brooks Tower whose interests would be affected by Mr. Accetta’s requested relief.

The district court held that the nearly 500 other Brooks Tower unit owners were required to be joined in the lawsuit. The Colorado Supreme Court held that joinder of parties is not required when the interests of the absent parties were aligned with those of any present party to the case. ¶ 20. The court found (1) the interests of the absent Brooks Tower unit owners were adequately represented by the Association; (2) Colorado law permits the Association to represent the interests of its members; and (3) the Association is defending Mr. Accetta’s claims which would align with absent unit owners who wanted to preserve the status quo. ¶ 24-26.

The Colorado Supreme Court reasoned that a requirement to add over 500 parties to a case could complicate and otherwise prohibit access to justice in pursuit of Mr. Accetta’s claims effectively making his claims cost prohibitive. The court also reasoned that such a holding could affect condominium litigation throughout the state and was an issue of first impression. ¶ 12.

The legal rights and remedies of unit owners in condominium associations and the associations themselves are complex and numerous. Should you have questions about a condominium unit you own or conflicts with an association you belong, contact the attorneys at Johnson Law today to discuss the unique facts of your case.

When is it reasonably necessary to have a third-party present during attorney-client communications? The Colorado Supreme Court weighs in.

When is it reasonably necessary to have a third-party present during attorney-client communications? A new Colorado Supreme Court decision further defined the attorney-client privilege in In re Fox v. Alfini, 432 P.3d 596 (Colo. 2018). The Colorado Supreme Court held that the presence of a third party during an attorney-client communication will destroy the attorney-client privilege unless the third party’s presence was reasonably necessary to the communication. ¶ 29.

Ms. Fox was a 36-year old woman who experienced a stroke after visiting a chiropractor’s office. Thereafter, Ms. Fox and her parents sought out and obtained legal advice regarding a case against the chiropractic’s office. The initial consultation was recorded with the attorney, Ms. Fox, and her parents present. During a deposition in the legal malpractice case, the defendants discovered the initial attorney-client consultation between was audio recorded.

The defendants requested disclosure of the recording arguing the presence of Ms. Fox’s parents destroyed the attorney-client privilege of confidential communications. Ms. Fox’s attorney argued the presence of Ms. Fox’s parents was necessary to assist Ms. Fox in understanding the complex legal issues she was discussing with the attorney and to assist Ms. Fox in remembering and making well-reasoned decisions regarding her legal rights and remedies.

The district court ruled Ms. Fox did not have a diminished capacity at the time she met with the attorney such that the presence of her parents during the consultation was necessary. Thus, the district court held the attorney-client privilege did not protect the audio recording of the initial consultation.

The Colorado Supreme Court upheld the trial court’s decision citing that the trial court did not abuse its discretion in ordering the audio recording be disclosed. In support of its decision, the Colorado Supreme Court held a party’s presence is reasonably necessary when the party’s presence is necessary to facilitate an attorney-client communication or make the conference possible, such as communicating about a traumatic event or facilitating communication in a different language. ¶¶ 21-27.

The attorney-client privilege is a privilege that protects communications between the attorney and client by keeping such communication confidential. However, there are exceptions to the when the privilege applies. One exception is that the attorney-client privilege is waived when a third party is present during the communication. The court’s decision in Fox provides clarification on when a third-party is reasonably necessary to facilitate communication between a client and attorney such that the attorney-client privilege would remain intact.

Justice Hood specially concurred stating another privilege, the work-product privilege, would be applicable to protect the audio recording from disclosure. ¶ 46. The work-product privilege protects tangible things prepared in anticipation of litigation by or for another party and are discoverable only upon a showing the party seeking the information has a substantial need for the materials that they are unable to obtain otherwise without undue hardship. ¶ 42. Due to the particular rulings and nature of the Fox decision, the work-product privilege did not apply in this case, but may be helpful in other situations with similar legal issues.

Chad W. Johnson selected as a 2019 Super Lawyers Rising Star in Colorado Construction Litigation

Johnson Law is proud to announce that its founding member, Chad W. Johnson, has been recognized as a 2019 Colorado Super Lawyers Rising Star in construction litigation. Each year, no more than 2.5 percent of the lawyers in the state are selected by the research team at Super Lawyers to receive this honor. Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. Super Lawyers uses a multifaceted selection process, including nominations, independent research, and peer evaluations. For more information about Super Lawyers, visit SuperLawyers.com.

Chad W. Johnson

Rated by Super Lawyers

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New $25,000.00 Colorado County Court Jurisdiction Limit

The Colorado state legislature enacted Senate Bill 18-056, which is new legislation increasing the monetary cap on damages claimed in county court cases from $15,000 to $25,000. This change will be effective for cases filed on or after January 1, 2019. The legislation also changes the court’s filing fees, which are now based on levels established by the amount of damages being claimed. For example, a claim less than $1,000 is subject to a filing fee of $85; a claim of $1,000 or more but less than $15,000 is subject to a filing fee of $105; and a claim of $15,000 or more but less than $25,000 is subject to a filing fee of $135. These examples are for claims brought by a plaintiff. The legislation also changes the filing fees in responding to claims and asserting counterclaims, cross-claims, or third-party claims.

The increase in monetary value of damages for county court cases will likely allow more claimants to access the judicial system while avoiding the expensive and formal rules associated with cases brought in district court. The $25,000 threshold means that individuals who are seeking to recover damages of $25,000 or less can file in county court. This amount is exclusive of costs and attorney fees. If a claim for breach of contract is alleged and the contract includes an attorney fees provision, the attorney fees are not calculated in the total amount of the claim for jurisdictional purposes. The new $25,000 threshold also applies to lien foreclosure and forcible entry, forcible detainer, or unlawful detainer cases where the monthly rental value of the property does not exceed $25,000.

One major advantage of filing a case in county court versus district court is that cases are more likely to reach trial or resolution quicker than in district court. Further, pretrial procedure is less onerous in county court. For example, discovery such as written discovery, depositions, and expert disclosures, can be a costly phase of the case. See Johnson Law’s prior blog post “What is Litigation?” posted March 26, 2018 for a more detailed discussion on discovery and the phases of a case. Unlike in district court where a party is entitled to presumptive limits on discovery, in county court a party must request the court order discovery.

This legislation improves access to the judicial system and helps many parties seeking to recover damages without incurring costly legal fees associated with district court. If you have a legal question, please contact your qualified and specialized Colorado Construction Defect Lawyers at Johnson Law today to discuss your case.