Friday, October 30, 2015

HHMR Attorneys to Speak at an Upcoming CRG Lunch & Learn

Dave McLain, Sheri Roswell, and Lisa Bondy Dunn will be speaking at the final installment of a four-part series hosted by the Construction Resource Group's entitled "Everything You Need to Know About Risk Management Through the Life of Your Project and Beyond."  The November 11th Lunch & Learn, "You Did Everything Right - And You Still Got Sued. What Now?," will cover responding to a notice of claim, the litigation process, and the political environment and potential changes to the law.  

Registration is still open, through the link in the brochure below.  We hope to see you on November 11th!  

Thursday, September 10, 2015

David M. McLain named Law Week Colorado’s 2015 Barrister’s Best Construction Defects Lawyer for Defendants

It is my sincere pleasure to announce Law Week Colorado named my friend and partner, Dave McLain, as the 2015 Barrister’s Best Construction Defects Lawyer for Defendants.  Law Week Colorado’s summary of David’s accomplishments includes the following recognition: 
David McLain has set himself apart in the heated area of construction defects litigation as a founding member of his firm and as a member of several associations that serve developers.  As one of the most connected and most vocal members of this area of law, we certainly know whom to go to when the construction defects issue inevitably bubbles up again.
I can say with pride and certainty, that there is no one more deserving of such recognition in the legal and construction community than David.  I have had the honor of working side by side with David since he began practicing law.  Together, fourteen years ago, we founded Higgins, Hopkins, McLain & Roswell, LLC with a vision of serving the construction industry at the highest level.  Our firm’s Mission Statement states that “HHMR exists to embody and exemplify the principles of service and stewardship.  In everything we do, we focus on serving our clients selflessly and to the best of our ability.”  David lives our values each and every day. 

Throughout his general civil litigation career, David’s practice has focused on the representation of construction professionals and their insurers.  David has become one of the most sought after legal professionals in the region, both for his keen skills in construction litigation and for his unsurpassed leadership in professional organizations and legislative efforts.  When it comes to issues of risk management, David has an uncanny ability to evaluate exposures, identify the issues, and forge a path toward a positive outcome for his clients.  David brings intelligence, integrity and a sharp wit to all that he does.  Congratulations David; well done.

-          Sheri Roswell

Friday, August 14, 2015

Mr. David McLain to speak at the 2015 Claims College – School of Construction.

David M. McLain, Attorney, Higgins, Hopkins, McLain & Roswell, LLC will be speaking at the CLM 2015 School of Construction.  The 2015 Claims College will be held in Philadelphia, Pennsylvania, September 9-12.


Each school is comprised of three levels and successful completion of all levels in a particular school will earn participants a respected and sought after designation, which will become the industry standard for identifying top-notch claims professionals. For individual schools, levels consist of pre-course reading materials, in-class instruction, group projects and an exam. The Claims College is not an industry seminar or conference, this is a true educational experience designed to help educate and grow the claims profession.

David M. McLain is a founding member of Higgins, Hopkins, McLain & Roswell, LLC, a firm which specializes in construction law and construction litigation throughout Colorado.  Mr. McLain received his undergraduate degree from Colorado State University, graduating cum laude, and his law degree from the University of Denver, College of Law.  Mr. McLain completed the Claims and Litigation Management Alliance Litigation Management Institute, earning the designation from that organization as a Certified Litigation Management Professional. He has a general civil litigation practice with an emphasis on the defense of complex construction lawsuits on behalf of developers and general contractors.  As a result of the experience gained by defending some of Colorado’s largest residential construction defect lawsuits, developers, general contractors, and subcontractors seek out Mr. McLain to consult on risk avoidance and risk management strategies.  Currently among his clients are several of the state’s largest home builders, regional and custom builders, and numerous insurance carriers.  Mr. McLain is an AV® Preeminent™ Peer Review Rated attorney by Martindale-Hubbell and is a regular speaker at local, regional, and national seminars regarding construction defect litigation in Colorado.

About the CLM

The Claims and Litigation Management Alliance (CLM) promotes and furthers the highest standards of claims and litigation management and brings together the thought leaders in both industries. CLM’s Members and Fellows include risk and litigation managers, insurance and claims professionals, corporate counsel, outside counsel and third party vendors. The CLM sponsors educational programs, provides resources and fosters communication among all in the industry. To learn more about the CLM, please visit



Ms. Susan Wisbey-Smith, Communications Manager

Claims and Litigation Management Alliance

(847) 317-9103

Wednesday, August 12, 2015

Commerce City Enacts Reform to Increase For-Sale Multifamily Housing.

Many cities in Denver’s metropolitan areas are experiencing tremendous growth. For more than a year, Colorado has been reported to be in a building boom. However even with the noticeable expansion, some areas still suffer from a lack of housing options specific to multifamily developments. Sean Ford, Mayor of Commerce City, stated that “[the city] has not approved a new condominium or multi-family project since 2008.”[1] Those of us in the construction industry attribute this shortage, at least in part, to construction defect litigation, which is often drawn-out, complicated, and very costly to builders.

Predicting that light rail service will intensify the need for owner-occupied units among Commerce City residents, the city council enacted legislation to address this scarcity.  Ordinance No. 2060 which took effect August 1, 2015 provides “reasonable steps to encourage prompt and voluntary correction of construction defects … in order to enhance the health and safety of residents of Commerce City.”

The ordinance requires a homeowner who discovers a defect to provide written notice via certified mail or personal delivery to the responsible builder, contractor, engineer, or design professional. The notice may include requests for relevant construction documentation, maintenance recommendations, and warranty information. The builder must acknowledge receipt of notice and provide requested documents within 14 days.

After acknowledgement, the builder has a right to inspect the claimed defect then make repairs. If the builder fails to comply with these time-specified requirements for response and inspection, the protections of the ordinance will not apply and the homeowner may file a claim. Following the completion of repairs, a homeowner has 10 days to inspect the repairs and ensure the defect is resolved. A homeowner who believes in good faith that the repairs do not resolve the construction defects may proceed with filing a claim.

Homeowners also have a right to be informed by homeowners associations of any legal action regarding construction defects. A homeowners association must provide notice to each homeowner at least 60 days before filing a claim. Additionally, after issuing the notices, the association has 60 days to obtain written consent from homeowners holding at least a majority of the total voting rights.

The ordinance also provides guidance on homeowners associations’ governing documents that contain alternative dispute resolution provisions. It states that any subsequent amendment to the declaration that removes or amends the arbitration or mediation requirement is not effective for any construction defect claim based on an act or omission discovered before such amendment.

The City of Commerce City should be commended for enacting reforms to spur more industry activity. Like many growing Denver-metro cities, Commerce City recognizes how more balanced business regulation better serves residents and improves the quality of the community. If you have any questions about the Commerce City ordinance, or state laws concerning construction defect actions, you can reach Adria Robinson at (303) 987-9814 or by e-mail at

[1] Molly Armbrister, Another Colorado City Passes Construction Defects Ordinance, Denver Business Journal (Aug. 4, 2015),

Thursday, July 2, 2015

The Vallagio HOA Appeals the Decision from the Colorado Court of Appeals.

As highlighted in our most recent post, the Colorado Court of Appeals’ Vallagio decision upheld a declaration provision that prohibited the amendment of a mandatory arbitration clause without the consent of the developer/declarant.  Vallagio at Inverness Residential Condominium Association, Inc. v. Metropolitan Homes, Inc., et al., 2015COA65 (Colo. App. May 7, 2015).  This case protects a developer/declarant’s ability to arbitrate construction defect claims with a well-crafted declaration that requires declarant consent in order to amend the mandatory arbitration provisions for construction defect actions.

However, the Vallagio ruling still hangs in the balance while the Colorado Supreme Court considers the condominium association’s petition for certiorari review, filed June 18, 2015.  In its petition, the association argues that the declarant consent requirement violates public policy and four separate sections of the Colorado Common Interest Act (“CCIOA”). 

For instance, the association argued in the courts below that a declarant consent requirement violates section 217 of CCIOA, which governs unit owners’ voting percentage requirements and provides that declarations may not require more than 67% affirmative vote for amendments.  The Court of Appeals rejected this argument, reasoning that other provisions of section 217 contemplate consent requirements by parties other than unit owners, such as first mortgagees. 

In its petition, the association now asserts that the Court of Appeals applied the mortgagee consent provision much too broadly because, while the interests of unit owners and their mortgage holders are aligned with regard to holding developers responsible for construction defects, the interests of declarant developers and unit owners are more likely to be adverse.  More logically, CCIOA likely allows first mortgagees to approve or consent to certain amendments affecting their security interests because their interests with unit owners are likely to become adverse in certain circumstances as well.  According to the Court of Appeals’ reasoning, because the mortgagee consent protection does not violate the voting percentage requirements of section 217, the declarant consent protection does not violate that section.

The association also argues in its petition that the Court of Appeal incorrectly read sections 38-33.3-302(2) (prohibiting restrictions imposed on the association’s enumerated powers which are unique to the declarant) and 38-33.3-303(5) (dealing with the period of declarant control and allowing declarant to require its approval before certain actions of the association become effective).  To support its argument with respect to section 302(2), the association cites a Hawaii case where the court interpreted its own state statute.  The Court of Appeal did not find this authority persuasive in part because the case did not involve a declarant consent requirement to amend a declaration provision.  See Vallagio, 2015 WL 2342128 *6 (citing Association of Apartment Owners of Waikoloa Beach Villas v. Sunstone Waikoloa, LLC, 307 P.3d 132 (Haw. 2013)).  The case was simply not relevant to the provision at issue. 

To support its argument with respect to section 303(5), the association’s petition relies on a Nevada case where, again, the court interpreted its own state statute.  See Vallagio at Inverness Residential Condominium Association, Inc.’s Petition for Writ of Certiorari, pp. 14-15 (citing Boulder Oaks Community Ass’n v. B&J Andrews Enters., LLC, 215 P.3d 27, 33-34 (Nev. 2010)).  Once again, a declarant consent requirement to amend a declaration provision is not at issue in Boulder Oaks.  Still, the association argues that the Court of Appeals should have broadly interpreted these two CCIOA sections, effectively prohibiting any declarant protections in the declaration that do not apply to other persons and that remain effective after declarant turnover to the association.  If the Colorado Supreme Court grants the association’s petition, it will analyze whether these factually and legally distinguishable cases provide enough persuasive support to adopt the association’s sweeping interpretation of those sections.

In addition to these and other arguments, the association also warns of a slippery slope that will result if the declarant consent provision is upheld.  The association predicts that developers will work declarant consent requirements into every community declaration on any issue, each lasting in perpetuity.  Asserting similar statutory interpretation and slippery slope arguments, the Community Association Institute and Build Our Homes Right (“BOHR”) have submitted Amicus Curiae Briefs in support of the association’s petition for review.  The briefs of both community association advocate groups include ominous warnings that if the declarant consent requirement remains valid, developers will run amok and begin inserting consent requirements in every declaration and essentially immunize all declarant developers from liability for defects.  See BOHR Brief of Amicus Curiae, p. 14 (“The decision from the court below, . . . gives developers unfettered power to immunize themselves from liability by taking away every associations ability to remove self-serving provisions from its governing documents.”); CAI Brief of Amicus Curiae (arguing declarant consent provisions “could make it impossible for an association to remove declaration provisions limiting an association’s damages, adding additional delays to an association’s ability to pursue claims, or taking away an association’s ability to bring claims at all.”).  

Contrary to the association advocates’ arguments, the Court of Appeals decision in Vallagio fell far short of giving developers the ability to prospectively immunize themselves from construction defect liability via a well-drafted declaration.   Rather, it simply protects developers’ ability to arbitrate those claims.  As the Court of Appeals noted, “[a]rbitration is favored in Colorado as a convenient and efficient alternative to resolving disputes by litigation.”  In appropriate circumstances, plaintiff associations will still be able to rely on Colorado law that allows parties to circumvent arbitration provisions were enforcing the provision would prohibit a party from pursuing its claims.  See, e.g., Rains v. Foundation Health Systems Life & Health, 23 P.3d 1249 (Colo. App. 2001).  In other words, slippery-slope warnings are exaggerated and construction defect claims will still be asserted and adjudicated.  We must wait to see whether the Colorado Supreme Court grants the association’s petition for certiorari to know if declarant consent requirements will encourage more adjudication through arbitration.

For more information about the Court of Appeals’ Vallagio decision or the association’s petition for writ of certiorari to the Colorado Supreme Court, you can reach out to Shelby Woods by telephone at (303) 987-9815 or by e-mail at

Wednesday, May 13, 2015

Vallagio v. Metropolitan Homes: The Colorado Court of Appeals' Decision Protecting a Declarant’s Right to Arbitration in Construction Defect Cases

On May 7th, the Colorado Court of Appeals issued its much anticipated ruling in Vallagio at Inverness Residential Condominium Association, Inc. v. Metropolitan Homes, Inc., et al., 2015COA65 (Colo. App. May 7, 2015).  By way of background, the Vallagio at Inverness Residential Condominiums were developed by Metro Inverness, LLC, which also served as the declarant for its homeowners association. Metropolitan Homes was Metro Inverness’ manager and the general contractor on the project. Greg Krause and Peter Kudla served as declarant-appointed members of the Association’s board during the period of declarant control.
When it set up the Association, Metro Inverness included within the Association’s declaration a mandatory arbitration provision specifically for construction defect claims. This provision stated that it “shall not ever be amended without the written consent of Declarant and without regard to whether Declarant owns any portion of the Real Estate at the time of the amendment.”

In 2010, Metro Inverness turned control of the Association’s board of directors over to the project’s unit owners and it sold the last unit to a non-declarant owner in 2012. The next year, the project’s unit owners voted to amend the declaration to remove, among other provisions, the mandatory binding arbitration provision for construction defect claims. In doing so, the unit owners did not obtain Metro Inverness’ consent to amend that section. Soon after the unit owners amended the declaration, the Association filed a construction defect lawsuit in district court, naming as defendants, Metro Inverness, Metropolitan Homes, Greg Krause, and Peter Kudla.

The defendants moved to compel arbitration, relying on the arbitration provision for construction defect claims and arguing that the purported amendment to remove it was invalid because the unit owners did not obtain Metro Inverness’ consent for the amendment. The Association, in response, argued that the unit owners validly amended the declaration to remove the arbitration provision and that the declarant consent requirement violated the Colorado Common Interest Act (“CCIOA”).

The district court denied the defendants’ motion to compel arbitration, concluding that Metro Inverness’ consent was not required to remove the arbitration provision because, inter alia, the declarant consent requirement violated CCIOA and was, therefore, void and unenforceable. Specifically, the district court held that the declarant consent provision violated C.R.S. § 38-33.3-302(2), which provides: “The declaration may not impose limitations on the power of the association to deal with the declarant that are more restrictive than the limitations imposed on the power of the association to deal with other persons.” The court also found that the declarant consent provision violated C.R.S. § 38-33.3-217(1)(a)(I), which states:

[T]he declaration . . . may be amended only by affirmative vote or agreement of unit owners to which more than fifty percent of the votes in the association are allocated or any larger percentage, not to exceed sixty-seven percent, that the declaration specifies. Any provision in the declaration that purports to specify a percentage larger than sixty-seven percent is hereby declared void as contrary to public policy, and until amended, such provision shall be deemed to specify a percentage of sixty-seven percent.

The defendants then filed the interlocutory appeal of the district court’s order, which resulted in this decision.  In finding that the district court erred in this analysis, the Colorado Court of Appeals concluded that the provision requiring the declarant’s consent to amend the arbitration provision for construction defect claims did not violate CCIOA and was, therefore, enforceable.

With respect to C.R.S. § 38-33.3-302(2), the Court of Appeals held that the declarant consent provision does not violate that section because the Association has no power to amend the declaration itself. Under the terms of the declaration, the power to amend the declaration resides with the unit owners, not the Association, and, therefore, the declarant consent requirement does not impose any limitation on “the power of the association” under section 38-33.3-302(2).     

With respect to C.R.S. § 38-33.3-217, the Court of Appeals held that the statute does not prohibit a declaration from requiring declarant consent for an amendment. In so holding, the Court of Appeals pointed out that CCIOA does not explicitly preclude a declaration from imposing additional requirements for amendments and that, to the contrary, other provisions of section 217 contemplate requirements of consent or approval by parties other than unit owners. See C.R.S. § 38-33.3-217(1)(b)(I) (setting forth notification procedures applicable “[i]f the declaration requires first mortgagees to approve or consent to amendments”). On this topic, the Court concluded “that section 38-33.3-217(1)(a)(I) merely governs requirements for unit owners’ voting percentages and does not prohibit a declaration from imposing an additional requirement of declarant consent for amendments.”

Dispensing with the argument that the declarant consent requirement contravenes CCIOA’s purpose, the Court of Appeals pointed out that:

CCIOA endorses the use of alternative dispute resolution and specifically allows declarations to mandate binding arbitration. See § 38-33.3-124(3), C.R.S. 2014 (“The declaration . . . may specify situations in which disputes shall be resolved by binding arbitration.”); § 38-33.3-124(1)(a)(II) (“The general assembly hereby specifically endorses and encourages associations, unit owners, managers, declarants, and all other parties to disputes arising under this article to agree to make use of all available public or private resources for alternative dispute resolution.”). Given this statutory language and the public policy in Colorado favoring arbitration, see City & Cnty. of Denver, 939 P.2d at 1353, 1362, we cannot say that the declarant consent requirement in this case “evade[s] the limitations or prohibitions” of CCIOA, § 38-33.3-104.

For these reasons and others, the Court of Appeals concluded that the declarant consent provision was enforceable and consistent with CCIOA. “Because the unit owners did not obtain Metro Inverness’ written consent, their attempt to remove the declaration’s arbitration provision was ineffective. Accordingly, we conclude that the declaration still contains a valid and enforceable arbitration agreement as set forth in [the declaration].”

As a builder, the moral of the story here is that you need not rely on the Colorado Legislature to protect your ability to arbitrate construction defect claims asserted against you by homeowners associations. All you need to do is to include within your declaration a valid and enforceable declarant consent provision requiring your consent to amend out of the declaration the arbitration requirement for construction defect claims.

Congratulations to Marisa Ala, Mary Ritchie, and the rest of our friends at Palumbo Bergstrom and to Amy Hansen, Richard Murray, and Ryan Warren at Polsinelli on this outstanding result. The Colorado construction community owes you a big debt of gratitude for helping to preserve a builder’s ability to enforce arbitration provisions in construction defect cases.

For additional information regarding the Vallagio decision, its impact, or how to comply with its guidance, you can contact David M. McLain by e-mail at or by telephone at (303) 987-9813.

Tuesday, April 28, 2015

House Committee Kills Colorado's 2015 Attainable Housing Bill

Senate Bill 177, the Colorado housing community’s effort to reinvigorate the construction of attainable multi-family housing and quell construction defect lawsuits, was killed by the House State, Veterans and Military Affairs Committee on Monday evening on a party-line vote. Although the bill received significant bipartisan support in the Senate, a broad coalition of municipalities, builders, contractors, and non-profit organizations was unable to convince a pre-determined “kill” committee of the merits and benefits of the bill. 

We nevertheless expect an even stronger push for affordable housing and construction defect legislation in the next session.  For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at


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.