Monday, June 24, 2019


By Jean Meyer

On May 30, 2019, Judge Richard Brooke Jackson of the United States District Court for the District of Colorado offered an insightful lesson to the parties in Auto-Owners Insurance Co. v. Bolt Factory Lofts Owners Association, Inc.[1] on the importance of ripeness in declaratory judgment insurance actions and bad faith counterclaims. The case arrived in front of Judge Jackson based on the following fact pattern.

A homeowner association (Bolt Factory Lofts Owners Association, Inc.) (“Association”) brought construction defect claims against a variety of prime contractors and those contractors subsequently brought third-party construction defect claims against subcontractors. One of the prime contractors assigned their claims against a subcontractor by the name Sierra Glass Co., Inc. (“Sierra”) to the Association and all the other claims between all the parties settled. On the eve of trial involving only the Association’s assigned claims against Sierra, the Association made a settlement demand on Sierra for $1.9 million. Sierra asked its insurance carrier, Auto-Owners Insurance, Co. (“AOIC”), which had been defending Sierra under a reservation of rights letter, to settle the case for that amount, but AOIC refused. This prompted Sierra to enter into a “Nunn-Agreement” with the Association whereby the case would proceed to trial, Sierra would refrain from offering a defense at trial, the Association would not pursue any recovery against Sierra for the judgment, and Sierra would assign any insurance bad faith claims it may have had against AOIC to the Association. (“Nunn-Agreement”)

Sierra informed AOIC about the existence of the Nunn-Agreement for the first time on the Friday before the trial was set to commence. On the following Monday, AOIC petitioned the trial court to intervene in the lawsuit and continue the trial in the hopes of protecting its rights under its insurance policy. A hearing was held, and the trial court judge held that the Agreement was valid under Nunn v. Mid-Century Ins. Co., 244 P.3d 116 (Colo. 2010). A two-day bench trial followed, and the court awarded the Association $2,489,021.91 (“Judgment”).

Two months after the trial, AOIC filed a declaratory action in the United States District Court for the District of Colorado seeking a declaration that AOIC did not owe any obligations or payments to Sierra or the Association, a declaration that Sierra breached the relevant insurance policy by failing to cooperate with AOIC, and a declaration that the Judgment was not enforceable against AOIC (“Declaratory Action”). Shortly after filing the Declaratory Action, AOIC also filed an appeal with the Colorado Court of Appeals asking the Court of Appeals to reverse the trial court’s denial of its petition to intervene and asked the Appellate Court to vacate the Judgment. Adding to the mix, the Association and Sierra contemporaneously answered the Declaratory Action and filed counterclaims alleging that AOIC was liable for breach of contract and statutory and common law bad faith claims.

AOIC thereafter moved to dismiss Sierra and the Association’s counterclaims in the Declaratory Action arguing that the claims were not ripe for review considering the pending appeal. After providing a thorough review of relevant authorities, Judge Jackson concluded that not only were the counterclaims premature considering the pending appeal, the Declaratory Action itself was also untimely and he dismissed the Declaratory Action in its entirety without prompting by either Sierra or the Association.

Judge Jackson reasoned that because the ripeness doctrine asks whether a controversy is certain and not contingent on future events, the Declaratory Action counterclaims were premature considering the pending appeal. If the Appellate Court were to overturn the trial court’s decision and vacate the Judgment, the Declaratory Action counterclaims would be rendered moot. In his own words, “[b]ecause the injury will remain speculative until the final decision of Colorado’s appellate court is issued, these counterclaims are unripe.” Because the grounds for Sierra and the Association’s counterclaims was the imposition of excess judgment, which remained uncertain until the Appellate Court ruled on AOIC’s petition to vacate the Judgment, any claims that relied on that Judgment were premature. Similarly, because AOIC filed an appeal seeking a ruling that the Judgment was not enforceable against AOIC, if AOIC were to be successful in its appeal, part of the relief requested in the Declaratory Action would no longer be necessary.

In summary, practitioners should neither rush to file insurance bad faith claims nor declaratory judgment actions following a Nunn-Agreement and subsequent judgment before the time for filing an appeal has expired. Parties should not file either claim where there is a pending appeal challenging the underlying judgment. 

For additional information regarding Nunn-Agreements or about construction defect litigation in Colorado, generally, you can reach Jean Meyer by telephone at (303) 987-9815 or by e-mail at

[1] 18-CV-01725-RBJ, 2019 WL 2299756, at *1 (D. Colo. May 30, 2019)

Monday, April 29, 2019

2019 Legislative Session

Two bills under consideration as the end of the session nears contain significant changes to Colorado’s Consumer Protection Act (“CCPA”).  The bills broaden remedies, make more conduct a breach of the CCPA, and include purely private transactions in the type of conduct that falls within the scope of the CCPA.  The bills are House Bill 19-1289 (“House Bill”) and Senate Bill 19-237 (“Senate Bill”).  As of April 29, 2019, the House Bill has passed the House.  The Senate Bill has not progressed past introduction.  It is unclear if both houses of the legislature will have an opportunity to vote on either or both bills before the session ends.

The House Bill makes a person liable for CCPA violations based on conduct engaged in “recklessly,” not just knowing conduct.  No definition of the term “recklessly” is provided in the House Bill, but Colorado’s attorney general testified “recklessly” “means a company or person acted with reckless disregard for the truth.  (Page 2).  No explanation was given of what the word “reckless” in the definition of “recklessly” meant in this context.

Another provision of the House Bill adds a “catch all” prohibition that labels as a deceptive trade practice knowingly or recklessly engaging in any unfair, unconscionable, deceptive, deliberately misleading, false or fraudulent act or practice.  There is no indication how a person could “recklessly” engage in “deliberately misleading” acts or practices.

Another change to Colorado law in the House Bill is the removal of the significant public impact requirement.  That change would subject purely private disputes for transactions in the course of a person’s business, vocation or occupation to the CCPA.  CCPA remedies include treble damages if bad faith is shown by clear and convincing evidence.

The House Bill allows recovery of interest from the date the claim accrued.  One of the accrual dates available to a claimant is the date the false, misleading, or deceptive act or practice occurred.  C.R.S § 6-1-115.  Thus, on its face the House Bill may allow construction defect plaintiffs to collect pre-judgment interest on CCPA claims, perhaps overturning Goodyear v. Holmes, 193 P.2d 821 (Colo. 2008) in circumstances where the action remains timely even given an early accrual date.  Reasonable attorneys’ fees, with some limits in certain cases, are also available on a CCPA claim.  Due to the substantial broadening of the scope of the CCPA and the remedies available under the CCPA, use of the CCPA in civil litigation will likely increase significantly if the House Bill passes.

The Senate Bill allows private plaintiffs to recover $500 per violation if that amount is greater than actual damages or three times actual damages where bad faith is shown by clear and convincing evidence.  It also allows recovery in a class action of actual damages sustained by the class, reasonable costs and fees; and injunctive or declaratory relief.  CCPA remedies are currently not available in class actions.

For more information regarding Colorado’s Consumer Protection Act, or construction litigation in Colorado, you can reach Steve Heisdorffer by telephone at (303) 653-0044 or by e-mail at

Friday, April 26, 2019

Scholarships Available for the 2019 CLM Claims College - School of Construction

I am pleased to have been invited to serve on the Executive Council and Faculty for this year’s CLM Claims College – School of Construction, which will be held at the Marriott Baltimore Waterfront from Wednesday, September 4, 2019 through Saturday, September 7, 2019.

As a result of my service I am able to offer scholarships (registration fee only) to industry professionals (insurance - risk, adjusters, claims, etc. and corporate) interested in attending. Please e-mail me by if you would like to take advantage of the free registration scholarship offered by CLM.

The education of claims resolution professionals is important to the CLM. That’s why CLM established the Claims College in 2012 and enlisted some of the industry’s best professionals to create and teach courses. Since its inception, hundreds of students have attended the Claims College and nearly 300 have earned their CCP (Certified Claims Professional) designation.

The College presents courses in eight three-level specialty schools and three one-level schools with more on the horizon. Schools include: Casualty Claims, Claims Mediation, Construction, Cyber Claims, Extra-Contractual Claims, Insurance Fraud, Leadership, Professional Lines, Property Claims, Transportation, and Workers Compensation. Students must pass all three levels of a school to earn their CCP. Each level consists of reading materials, in-class instruction, group projects, and an exam. 

Construction claims present complexities in claim handling, are often multiparty cases with cross claims and third-party claims between and among the numerous defendants, intertwined with issues involving insurance coverage. The stakes for these types of cases are high as the damages claimed can be in the multi-millions

Competent construction claims handling requires an understanding of the distinct legal and practical issues between commercial and residential claims. The construction claims world is an unfriendly place for the claims professional who has not been properly trained and exposed to these issues.

The School of Construction will provide adjusters with the knowledge, tools, and understanding required to navigate these complex claims. Professionals seeking to expand their knowledge of construction risk concepts and seasoned professionals looking to move into construction claims are encouraged to attend.

The Claims and Litigation Management (CLM) Alliance is the only national organization created to meet the needs of professionals in the claims and litigation management industries. Founded in 2007, the CLM currently has more than 45,000 Members and Fellows—a number that grows by hundreds each month.

Thursday, March 14, 2019

What are the most commonly claimed issues in construction defect litigation?

By: David M. McLain

As a lawyer that has spent his career defending against construction defect claims, one of the most common questions I get when counseling clients regarding risk management is: “What are the most commonly claimed issues in construction defect litigation?” Until very recently, my answer to this question has been based on my own experience and knowledge on the subject, and only vaguely reliant on empirical data.

Recently, two engineers, Elizabeth Brogan and William McConnell, along with Caroline Clevenger, an associate professor at the University of Colorado, Denver, wrote a paper entitled “Emerging Patterns in Construction Defect Litigation: A Survey of Construction Cases.” The authors analyzed 41 multifamily construction defect cases litigated in 2015, 2016 and 2017, mostly in the Denver metro area.

The authors classified the 55 most prevalent alleged defects into the following categories: structural issues; civil issues; building envelope issues; roof issues; deck, balcony and porch issues; fire protection issues; and miscellaneous issues. The authors then identified the 10 most commonly claimed construction defects, which occurred in over half of all of the cases analyzed. These defects included:

Civil Issues:
  • Inadequate grade adjacent to foundation (68%)
  • Inadequate slope grading (improper management of concentrated flows) (61%)
  • Flatwork or structures inhibiting drainage (59%)
Building Envelope Issues:
  • Non-compliant clearance between siding, stone veneer or stucco and hard surfaces or grade (73%)
  • Non-compliant weep mechanism in stone or stucco at horizontal terminations (71%)
  • Non-compliant flashing (base, head, sill, clearance, blocked or improperly sloped) (68%)
  • Improper water table construction (rowlock, stone, stucco, EIFS, precast or other) (71%)
  • Non-compliant moisture management integration (weather resistive barrier, self-adhered membrane or other) (71%)
  • Non-compliant isolation to penetration and dissimilar materials (76%)
Roof Issues:
  • Non-compliant roof flashing (diverter, rake, head, chimney, air handling units, jacks, etc.) (54%)
The authors further investigated each of these issues to describe specifically what the homeowners associations claimed to be non-compliant; the potential damage, issue or concern with the non-compliance; the code allegedly violated; and the repair proposed by the homeowners associations’ experts. Needless to say, this paper is full of valuable information for any home builder, developer, contractor, architect or subcontractor who is interested in improving its risk management program.

To the extent that you are already working with a third-party QA/QC provider during the design and construction phase of your projects, or are considering doing so, I think it would make sense to review this with those inspecting your projects to ensure that there is a high correlation between the items for which they are inspecting and those things that appear with the most frequency in construction defect litigation.

For additional information or about construction defect litigation in Colorado, generally, you can reach David M. McLain by telephone at (303) 987-9813 or by e-mail at

Thursday, February 28, 2019

Colorado House Bill 19-1170: Undefined Levels of Mold or Dampness Can Make a Leased Residential Premises Uninhabitable

By Steve Heisdorffer

One of the 407 bills the Colorado legislature is considering as of the date of this blog post is House Bill 19-1170, the Residential Tenants Health and Safety Act, which can be found at and clicking on the link for the recent bill text.  The bill passed the House on February 26 and is in the Senate for consideration. The bill currently adds two substantive conditions to those conditions that make a residential premises uninhabitable.  One is the lack of functioning appliances that conformed to applicable law when installed and that are maintained in good working order. The second is “mold that is associated with dampness, or there is any other condition causing the premises to be damp, which condition, if not remedied, would materially interfere with the health or safety of the tenant…,”  referred to here as “the mold or dampness provision.”  The bill also amends various procedural provisions of Colorado law to make enforcement by a tenant easier and broadens tenant remedies.  The bill grants jurisdiction to county and small claims courts to grant injunctions for breach.  This article focuses on the mold or dampness provision.

The mold or dampness provision is vague and will likely lead to abuse.  First, there is mold everywhere.  While expert witnesses routinely testify about the level of exposure that is unacceptable, no generally accepted medical standards for an unacceptable level of mold exposure currently exist, and each person reacts to mold differently.  There is no requirement in the bill that mold exposure exceed levels that are generally considered harmful by experts in the field, or even in excess of naturally occurring background levels.  Second, some sources estimate that there are over 100,000 different species of mold.  No harmful effects have been shown for many species of mold, while other species of mold are considered harmful.

It could be argued that the provision that the condition “materially interfere with the health or safety of the tenant…” provides the standard for the level of exposure and the type of mold.  Unfortunately, there are wide disagreements about what level of exposure would “materially interfere” with health or safety, and what may be completely benign to the average person may interfere with the health and safety of a specific individual.

More troubling, our society’s general concerns about mold have helped create a cottage industry of self-proclaimed mold experts willing to make dubious claims under oath.  The medical community in general has been slow to discipline doctors that are willing to testify without any scientific support that cancer, memory loss, autism and other diseases or conditions were caused by mold exposure. The same general concerns about mold have led to the creation of several laboratories that provide mold test results of no known medical value-- for the right fee.  In short, in the current climate, the limitation that the alleged mold or dampness materially interferes with the health or safety of the tenant is no limitation at all.

For additional information regarding House Bill 19-1170 or about construction defect litigation in Colorado, generally, you can reach Steve by telephone at (303) 653-0044 or by e-mail at

Tuesday, February 26, 2019

HHMR Seeks Full Time Office Clerk/Receptionist

Higgins, Hopkins, McLain & Roswell, LLC, has an immediate opening for a full time Office Clerk/Receptionist. The position requires a candidate who will enthusiastically welcome the opportunity to learn new skills and energetically assist other staff members and attorneys as a team player. The right candidate must have a professional and courteous demeanor. Office experience a plus.

Skills and qualifications:
  • Knowledge of Microsoft Word, Excel, and Outlook
  • Able to work independently
  • Self-motivated
  • Highly organized
  • Solid verbal and written communication skills

Additional Duties (may include but not limited to):
  • Light kitchen duties
  • Supply ordering
  • Answering phones
  • Greeting clients
  • Filing/clerical
  • Creating miscellaneous notebooks
  • Assisting attorneys and legal assistants as requested

Interested candidates should submit their resume and references to:
Ms. Lauren Parks,



The information contained in this blog is provided for informational purposes only. It is not legal advice and should not be construed as providing legal advice on any subject matter.