Chad Johnson to speak at Colorado Bar Association Continuing Legal Education Program on May 7, 2021

 

 

Johnson Law founder Chad Johnson has been selected to present at the Colorado Bar Association’s CLE program titled “Litigation Nuts & Bolts: Post-Trial and Appellate Issues.” Mr. Johnson was selected to educate Colorado lawyers regarding Colorado “Motions for Reconsideration – When, Why, and How.” For more information or to register for the event, please follow this link to the CBA CLE program website.

Johnson Law is looking for its next great attorney to add to the team

We are a busy boutique law office focusing on construction defect law, general construction, and real estate nondisclosure law. We are currently seeking a full-time attorney to join our firm.

Responsibilities include:

  • Draft pleadings, discovery, and dispositive motions
  • Client coordination from intake through trial
  • Defend and take depositions
  • Prepare for and try your cases either as first or second chair

Requirements:

  • Strong attention to detail
  • Admission to Colorado bar
  • 1-6 years of civil litigation experience

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

  • Prefers to represent people and small businesses rather than insurance companies and large businesses
  • Is a self-starter, has great organization skills, and superior customer service
  • Has great attention to detail
  • Experience in construction defect, general construction, commercial litigation, and/or real estate nondisclosure law
  • Deposition and/or trial/arbitration experience
  • 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 with offices across the state and ability to telecommute
  • A base salary commensurate with your experience and in the $75,000-100,000 range
  • The ability and expectation to pay bonuses beyond your salary
  • A health care benefits plan
  • A 401k plan with matching contributions
  • A comfortable, collaborative, and friendly work environment

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 base salary requirements) to apply@chadjohnsonlaw.com. All inquiries will be kept confidential.

Attorney Tessa DeVault has been named Partner at Johnson Law

Johnson Law is proud to announce that Tessa DeVault has been named a partner at the firm. Ms. DeVault began her legal career as a real estate paralegal then in-house counsel for a large commercial contractor, before joining Johnson Law in 2015. Since joining the firm, she has been assisting homeowners and other property owners with construction defect and payment litigation, in addition to handling many of Johnson Law’s construction professional clients’ payment disputes and contract drafting.  Founding attorney Chad Johnson said this of her promotion: “Tessa has shown a special ability to connect with our clients and vigorously advocate on their behalf. Particularly in the past few years I have witnessed her outsmart, outwork, and simply out-lawyer some very competent builders’ lawyers and get fantastic results for our clients through settlement, judgment, or arbitration award. Both our firm and clients are proud to have her on our side.”

New Colorado Caselaw on Default Judgments

You file a lawsuit four days before your statute of limitations runs on your claims. The defendant is served, but the never responds to the suit. You request default judgment from the court. However, the court denies your motion for default judgment saying you failed to follow the default judgment rules. You file another motion for default judgment attempting to correct any perceived error and the court again denies your request, except this time dismisses your case. Your case is over and you have no further recourse on your claims. These facts were at issue in the recent Colorado Court of Appeals decision dated January 16, 2020 entitled Spiremedia, Inc., d/b/a Spire Digital v. Wozniak, Case No. 18CA2098. Prior to Spiremedia, Colorado courts had never determined the issue of whether a trial court is required to tell a party when it denies a motion for default and dismisses a case for failure to comply with the rules. ¶ 2. The Colorado Court of Appeals held a trial court must tell the party what is wrong with a deficient motion for default so the party can take necessary steps to correct the deficiencies, especially when the trial court takes the extraordinary measure of dismissing the case. Id.

In Spiremedia, the trial court denied Spiremedia’s motion for default judgment stating that the motion failed to comply with the applicable motion for default rules, specifically Colorado’s Rules of Civil Procedure 121, § 1-14. However, the trial court did nothing further to explain how the motion failed to comply with that rule. ¶ 5. Spiremedia filed a second motion for default judgment, guessing that the trial court was alluding to Spiremedia’s failure to include an affidavit. Spiremedia attached an “affidavit equivalent” under the Uniform Unsworn Declarations Act, § 13-27-104(1), C.R.S. 2019 to its second motion for default judgment. The trial court again rejected the motion and dismissed the case for failure to comply with the court’s delay reduction order. ¶ 6.

The Court of Appeals found that both of Spiremedia’s motions for default judgment were deficient as determined by the trial court because they lacked necessary information regarding the request for attorney fees. Interestingly however, the Court of Appeals held that an affidavit under the Uniform Unsworn Declarations Act is sufficient and does satisfy the requirement for affidavits under the rules for default judgment. ¶ 27.

Ultimately, the Court of Appeals held that the trial court erred in dismissing the case. The Spiremedia Court relied on the Colorado Rules of Civil Procedure for default judgments stating that “[i]f further documentation, proof or hearing is required, the court shall so notify the moving party.” C.R.C.P. 121, § 1-14(2). Commentary for the adoption of this rule shows that its purpose was to minimize both court and attorney time by streamlining the motion for default process. The rule places obligations on both movants and judges and judges must explain their rationale especially when someone’s interests will be adversely affected without recourse. Thus, the Court of Appeals held that trial courts must “inform the parties of the defect that led it to deny the motion.” ¶ 33. Spiremedia must be permitted a reasonable opportunity to remedy any identified deficiencies before the trial court dismissed the case. Spiremedia represents the importance of knowing the rules defining the playing field before you jump in the game. It also highlights the importance and need for trial courts and parties to work together to prevent guessing games and, ultimately, injustice.

COVID19 and Construction Contracts

The world as we knew it changed in March 2020, the time many construction projects are gearing up for warmer more favorable weather. According to Colorado’s Public Health Order 20-24, construction was identified as a critical business that could remain open during the Stay at Home Order. However, construction was not immune from the economic fallout from COVID19.

Many construction contracts contain terms addressing unforeseen circumstances such as riots, government shutdowns, labor strikes, inability to obtain materials, etc. These contract clauses are often referred to as “force majeure” provisions. This contract clause becomes essential when the occurrence of an event, which is outside the reasonable control of a party, prevents a party from performing its contractual obligations.

A force majeure clause is interpreted within the context of the entire contract and may or may not expressly identify a global pandemic as a force majeure event. Thus, a construction professional who has experienced hardships due to the COVID19 pandemic is encouraged to review the contract for force majeure clause.

Even if the parties’ contract does not contain the term “pandemic” in the force majeure clause, the party looking for relief may want to argue the pandemic is an event beyond the reasonable control of the affected party preventing, impeding or hindering that party from performing its obligations. The affected party also wants to have taken all reasonable steps to avoid or mitigate the event or its consequences. A contractor may want to use this contract clause to renegotiate increases in contract time and contract price. An owner may argue the pandemic does not qualify as a force majeure event or negotiate an extension of time without increase in the contract sum.

While the full scope of the global pandemic has yet to be fully realized, having the right protections in your construction contract that protect you in unforeseen times may make all the difference for your business. Johnson Law regularly advises construction companies and drafts construction contracts to match company objectives. If you have any questions or concerns about how COVID19 has affected your projects or want to make sure your contract protects your company’s interest, Johnson Law’s attorneys are available for consultation.

Tessa DeVault selected as a Super Lawyers Rising Star

Johnson Law is proud to announce that attorney Tessa DeVault, has been recognized as a 2020 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.

Colorado Mechanic’s Lien Foreclosure Cases

Johnson Law assists its homeowner and construction professional clients with construction law, including mechanic’s liens and foreclosure cases. A lien is a legal right to the property of another until a debt is paid. There are many types of liens including those for unpaid taxes, mortgages, promissory notes, and judicial liens resulting from a judgment in a case. A mechanic’s lien is a statutory right that attaches an interest to the property of another for the non-payment of a debt owed to the party who improved the property of another through labor, materials, and equipment. See Johnson Law’s blog post regarding Mechanic’s Liens in Colorado.

While a mechanic’s lien is indeed a great tool in the tool box of every contractor, the mechanic’s lien must be enforced through a foreclosure action or the lien expires. Practically speaking, a contractor with a mechanic’s lien cannot take the mechanic’s lien to the debtor’s bank and get paid. Instead, the contractor must start a foreclosure case on the property identified in the mechanic’s lien to turn the mechanic’s lien into actual funds that will pay the outstanding debt.

A mechanic’s lien foreclosure case must start within six months after the later of the following: (1) the last date that work was performed; (2) the last date that materials were furnished; or (3) the date that the building or improvement on the property was completed. Mountain Ranch Corp. v. Amalgam Enters., Inc., 143 P.3d 1065, 1067 (Colo. App. 2005). The court will strictly apply the timelines for mechanic’s liens, which can get complex depending on the size and scope of each project. A contractor risks forfeiture of its mechanic’s lien rights should the mechanic’s lien or mechanic’s lien foreclosure action be untimely.

In addition to filing a case to foreclose on the real property at issue, the contractor must also record a notice of lis pendens in the real property records in the county where the property is located. The notice of lis pendens is a document that serves as notice to the public that a lawsuit is pending affecting interest in and/or title to the property. The notice of lis pendens must include the name of the court, parties, and a legal description of the real property at issue.

Starting a mechanic’s lien foreclosure action does not necessarily mean the property owner will lose title to his property, and potentially become homeless. The property owner has the ability to defend against a foreclosure action. The best immediate defense the property owner can take is to post a bond with the court in substitution of the mechanic’s lien. Such substitution bonds are typically 150% of the mechanic’s lien amount. The lien claimant then can substitute the bond for the mechanic’s lien that will clear up title to the real property. In other words, the case is no longer to force the sale of the home or property, it is now to get the bond money. If any defenses to the substance of the case still exist, those would still  be presented in a future court trial or arbitration to determine if all or part of the bond money is returned to the person who paid for it.

Substitution bonds are recommended for property owners with mortgages on their property because the terms of the mortgage often require that the property owner not allow any liens to be placed on the property. Some mortgagors go so far as charging the property owner the mortgagor’s attorney fees incurred in defending the mortgagor’s interest in the property against the mechanic’s lien by adding that amount to the mortgage. By substituting a bond for the mechanic’s lien a property owner is safeguarding his interest and the mortgagor’s interest in the real property.

During the foreclosure action, the contractor must prove the mechanic’s lien was perfected, meaning it is valid in notice, time, and amount as required by law. At the end of the foreclosure action, the court must find the mechanic’s lien is valid before sale of the property is authorized. The property subject to the mechanic’s lien is then sold at auction and the funds from the sale go to payment of the lien. Many cases do not reach this part of the legal process, but a contractor’s mechanic’s lien foreclosure action must establish the necessary elements at the beginning of the case should the case reach the point where title to the property is transferred so that a sale can occur and funds be collected in satisfaction of the mechanic’s lien debt.

With the short and strict deadlines as well as making sure anyone who has an interest in the real property is named in the foreclosure action, Johnson Law encourages those with mechanic’s lien rights or defending against a mechanic’s lien to consult with one of Johnson Law’s attorneys to discuss the facts of your case as soon as possible.

Statute of Repose Begins to Run Upon Completion of a Project as a Whole

In D’Allessandro v. Lennar Hingham Holdings, LLC, 2019 WL 5550629, *6 (D. Mass. Oct. 28, 2019), a Massachusetts court recently held that the improvement to real property for statute of repose purposes was the completion of an entire condominium project versus completion of each individual building.

The project at issue was a multi-phased 150 unit condominium project consisting of twenty-eight different buildings constructed between 2008 and 2015. For six of the buildings, the architect signed certificates of substantial completion and five of the buildings received their certificate of occupancy more than six years before the action commenced. Plaintiffs brought claims of negligence, among others, resulting in damage from deficient design and construction in the common areas of the condominiums.

The Massachusetts statute of repose prohibits actions in tort filed more than six years following substantial completion of the improvement and the taking of possession for occupancy by the owner. The D’Allessandro court considered what constituted an “improvement” that must be “substantially completed” for purposes of the statute of repose. More specifically, the court addressed the issue of whether a portion of a project can constitute completion of an improvement for triggering the repose period even while the project remains under construction. Plaintiffs argued the improvement was the condominium development as a whole and defendants argued each individual unit was the improvement for statute of repose purposes.

The court agreed with plaintiffs finding that the improvement was the condominium project as a whole because the scope of the project remained the same since inception; the same architect and general contractor were used throughout; and the project was defined legally as a single condominium with a single trust controlling the common elements. Thus, the project was not a series of improvements, but one improvement and the statute of repose commenced upon completion of the entire improvement. Partial completion of a project does not trigger the statute of repose when the overall project remains under way.

Colorado’s statute of repose is similar to Massachusetts. Colorado’s statute of repose states that claims shall not be brought more than six years after the substantial completion of the improvement to the real property which ultimately causes injury. Practitioners may consider similar arguments to those made in D’Allessandro when facing statute of repose arguments. Specifically, if a multi-unit project is defined as one whole project without discrete phases, an argument may be made the statute of repose is triggered upon completion of the entire project.

Colorado case law continues to develop regarding when the statute of repose commences and cases like D’Allessandro may provide guidance to Colorado courts in determining limitations issues. Johnson Law specializes in statute of repose and statute of limitations issues as they relate to construction. Contact a Johnson Law attorney today to discuss the facts of your individual circumstances.

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.