Monday, December 27, 2010

New Laws to Take Effect January 1, 2011

Last week's Capitol Close-Up, a weekly legislative update from the Colorado Association of Home Builders, included a great synopsis of two new laws, which will become effective January 1, 2011.  The update reads as follows:

Capitol Close-Up
Monday, December 20, 2010

Below is information on two pieces of legislation that will become effective January 1, 2011 that directly affect home builders in Colorado. Please review the information below and attached and contact your legal council with any questions you might have.


HB10-1278 (attached) creates an HOA Information & Resource Center to be housed within the Colorado Division of Real Estate and overseen by the HOA Information Officer. The purpose of the Resource Center is to “provide information on the rights and duties of unit owners, developers and associations under the Colorado Common Interest Ownership Act.”

The costs associated with the HOA Information & Resource Center and the HOA Information Officer will be paid for through a mandatory registration for HOAs. The effective date of the registration process is January 1, 2011; however because of delays in setting up the registration process, the Division of Real Estate adopted emergency rules on December 15, 2010 that grant a temporary registration to all HOAs that is valid until March 1, 2011. A copy of the emergency rules is attached to this email as is a memo from the newly appointed HOA Information Officer.

Every association (whether or not they are declarant controlled), except voluntary associations, will be required to register on a yearly basis; however, the following categories of associations will not be required to pay the registration fee:

• Associations with annual revenue of $5,000 or less; and

• Associations not authorized to levy assessments and do not have any revenue.

Associations that fail to register or keep a registration current are subject to the following steep penalties, including not being permitted to foreclose upon the association’s statutory liens or enforce existing covenants.

Please make sure that any HOAs that you control are ready to comply with this requirement by March 1, 2011. Please contact your legal council with any questions you have or for additional information.


HB10-1358 (attached) requires that, effective January 1, 2011, every person that builds a new single-family detached residence for which a buyer is under contract shall offer the buyer the opportunity to select one or more Water Smart Home options for the residence. Please see the attached bill for a list of options that satisfy this requirement be sure that your contracts include this option by January 1, 2011. Please contact your legal council with any questions you have or for additional information.
If you would like any of the referenced attachments, please call me at (303) 987-9813 or send me an e-mail at  To learn more about the Colorado Association of Home Builders, you can visit its website here.

Monday, December 20, 2010

The Case Behind Colorado HB 10-1394?

If you have followed the events in Colorado’s legislature this year related to the construction industry, then you’re most likely familiar with the recent passage of HB 10-1394. HB 10-1394, now codified at C.R.S. § 10-4-110.4 and C.R.S. § 13-20-808, provides courts guidance when interpreting commercial general liability policies issued to construction professionals. Interestingly, although the bill may be inextricably linked with General Security Indemnity Co. of Arizona v. Mountain States Mutual Casualty Co., 205 P.3d 529 (Colo. App. 2009) and Greystone Construction, Inc. v. National Fire & Marine Ins. Co., 649 F. Supp. 2d 1213 (D. Colo. 2009), it may very well be that the lesser known United States Fire Insurance Company v. Pinkard Construction Company, Civil Action No. 09-CV-01854-MSK-MJW, and its underlying dispute, Legacy Apartments v. Pinkard Construction Company, Case No. 2003 CV 703, Boulder County Dist. Ct., was the driving force behind the bill.

The Pinkard cases arise from allegations of defective construction of an apartment complex in Longmont, Colorado. Pinkard, as the builder of the apartment complex, demanded that its general liability insurers, including United States Fire Insurance, defend and indemnify it against the claims brought against it by the apartment owners. United States Fire moved for summary judgment against Pinkard, arguing that Colorado law does not construe property damage caused by poor workmanship to constitute an occurrence under the standard language in general liability policies—the same substantive argument that we’ve become familiar with via the General Security and Greystone cases. Along with responding to United States Fire’s summary judgment argument, Pinkard implored the United States District Court to certify the issue to the Colorado Supreme Court.

The United States District Court denied Pinkard’s motion to certify because the same substantive question, “Is damage to nondefective portions of a structure caused by conditions resulting from a subcontractor’s defective work product a covered ‘occurrence’ under Colorado law?” had already been certified by the 10th Circuit Court of Appeals. The Court also denied United States Fire’s motion for summary judgment on the basis that the Colorado Supreme Court’s answer to the certified question would most likely resolve the parties’ dispute. Unfortunately, the Colorado Supreme Court has since declined to accept the certified question, thereby leaving the resolution of this issue unsettled to this day. Even so, given that the issue remains on appeal in Greystone, as well as in United Fire & Casualty Co. v. Boulder Plaza Residential, No. 06-cv-0037-PAB-CBS, a resolution to the question may not be that far off.

For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at 

Thursday, December 9, 2010

Colorado Court of Appeals Defines Actual Damage Claims Under CDARA

The Colorado Court of Appeals in Hildebrand v. New Vista Homes II, LLC, 08CA2645, 2010 WL 4492356 (Colo. App. Nov. 10, 2010) held that part-time resident/owners of a home can receive inconvenience damages arising from the negligently built home. This case, which is an excellent example of how to prove many issues in construction litigation,[1] may now be the leading case in the area of construction defect damages.

Mark A. Hildebrand (Junior) and Mark L. Hildebrand (Senior) purchased a home built by New Vista Homes II, LLC (New Vista). After the basement floor was damaged from ground movement, they sued both New Vista and Richard Reeves, a manager of New Vista, for a variety of issues, including negligence and the Construction Defect Action Reform Act (CDARA).

Junior was a full-time resident of the home. In addition to the severely cracked slab, Junior was distressed because the home in its current condition was no longer his sanctuary. He also had been angry and sleepless over the condition of his home and could not allow his children near the stairs. The court held that Junior was entitled to inconvenience damages under CDARA.

Senior did not live in the home, or in the state of Colorado, but he would “periodically come out to visit.” Senior also testified he would have liked to put his ping-pong and pool tables down in the basement, but could not because of the condition down there. The Court held that enough evidence of derivative inconvenience damages was present for a jury to decide what damages Senior suffered for his limited use of the home.

The court explained that the plain language of CDARA limits the amount of damages against a construction professional to “actual damages.” C.R.S. § 13-20-806(1). Those in construction defect litigation can readily recite that actual damages means the lesser of: 1) the fair market value of the real property without the alleged construction defect; 2) the replacement cost of the real property; or, 3) the cost to repair the alleged construction defect. C.R.S. § 13-20-802.5(2).

However, the court explained, CDARA also allows for personal injury damages, limited by C.R.S. § 13-20-806(4). C.R.S. § 13-20-806(4), allows non-economic loss and derivative non-economic loss, defined by C.R.S. § 13-21-102.5, up to $250,000. Finally, C.R.S. § 13-21-102.5 defines non-economic loss to include pain and suffering, inconvenience, emotional distress, and impairment of the quality of life.
Therefore, if you follow the trail of definitions that begins in CDARA, you have a case for inconvenience and derivative inconvenience damages under CDARA.

That said, this case does not answer all questions about non-economic damages under CDARA. The instant case involved only one single-family home. There are arguments for both future plaintiff and defense attorneys regarding whether homeowners associations have standing to bring non-economic damage claims for their residents. The Hildebrand court also differentiated an owner/visitor, such as Senior, from a traditional landlord. Because a landlord does not have an equal right of enjoyment of the property due to the lease, a landlord cannot recover non-economic damages. Hildebrand at *13. Yet, this analysis begs the question regarding whether an investor with full rights of enjoyment to a home could recover for non-economic damages for an empty home with construction defects.

In conclusion, I still must ask rhetorically if this ruling on non-economic damages, especially derivative non-economic damages, is in the spirit of tort reform that the Colorado Legislature intended with CDARA. Although this recent case can be limited on its facts, it certainly has opened a door when it comes to plaintiffs’ claims of emotional harm under CDARA.

For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at

[1] The court also discussed negligence, negligent misrepresentation, soil disclosure, implied warranty of habitability, CCPA, and pre-judgment interest.

Thursday, November 25, 2010

Reflections on my recent trip to South Africa: There are no construction defect suits for tin shacks.

I recently returned to Colorado from a two week trip to South Africa.  The main purpose of the trip was to attend the Entrepreneurs' Organization's Cape Town University, which was a phenomenal experience.  I was able to listen to exceptional speakers such as Lee Berger, Denis Goldberg, Gayton McKenzie, and Ian Thomas.  After spending a few days at at the conference and touring around Cape Town, I questioned whether there is any industry in South Africa similar to the construction defect industry in the United States.  I did a limited amount of research and discovered that, in fact, there is not a construction defect epidemic in South Africa.  I left Cape Town after the conference to go on safari and to visit Johannesburg.

Upon visiting Soweto, outside of Johannesburg, and  Guguletu, later when I returned to Cape Town, I witnessed first hand the abject poverty suffered by millions of individuals and families in South Africa.  What I came away with was that if you live in a tin shack and have to worry daily regarding the health and safety of your family, you have bigger problems than whether the exterior synthetic stone on your house lacks adequate clearance from your heated driveway.  Seeing how people live in these townships certainly puts things into perspective.  I do not think that the experience made me any less empathetic to people who suffer from true construction defects, but I do believe I will be less tolerant in the future of homeowners who claim that having only four nails per shingle on their roof instead of six has ruined their lives.

I also came back from South Africa with a deeper appreciation for the United States of America.  I am happy to have had the experiences I did in South Africa, but I am glad to be home.  

I spent the last week in mediation and trying to catch up.  Hopefully we will have our blog up and running again next week.  In the interim, if you have any questions regarding construction litigation in Colorado, please feel free to call me at (303) 987-9813 or send me an e-mail at


Saturday, October 23, 2010

HHMR welcomes Heather Anderson, Brady Iandiorio, and Chad Johnson to our firm.

Higgins, Hopkins, McLain & Roswell is happy to welcome Heather Anderson, Brady Iandiorio, and Chad Johnson to our firm as associates.  They will all specialize in the litigation of complex construction claims and construction defect cases.

Heather Anderson

A graduate of the University of Denver, College of Law, Heather has been licensed to practice law in Colorado since October 2001. Previously, Heather’s practice included appellate work, insurance defense, personal injury defense, and toxic tort litigation. Heather returned to the University of Denver, Sturm College of Law to obtain a Master of Laws in Environmental and Natural Resources Law and Policy Law and Policy in May 2009. Heather is a Colorado native and avid skier.

Brady Iandiorio

A native of Massachusetts and having attended undergraduate school at Colorado College in Colorado Springs, Brady has recently graduated from University of Oregon School of Law class of 2010. Brady owned his own construction business, finishing single-family homes and lived in Hawaii previous to attending law school.

Chad Johnson

Chad is a recent graduate of the University of Denver, Sturm College of Law. During his studies, Chad was a member of the University of Denver Civil Litigation Clinic and was awarded the Student Bar Association award for the “Most Outstanding Academic.” In addition to his legal experience, Chad is an avid soccer player and youth-soccer coach.

Thursday, October 21, 2010

An Arapahoe County District Court Refuses to Apply HB 10-1394 Retrospectively

In that there is no appellate law at this point interpreting or applying the recently enacted HB 10-1394, I find even district court orders on the topic to be very interesting. In Colorado Pool Systems, Inc., et al. v. Scottsdale Insurance Company, et al., The Honorable Christopher C. Cross set forth the pertinent facts as follows in an October 4, 2010 order:
Plaintiff Colorado Pool Systems (“Colorado Pool”) claims for breach of contract and negligent misrepresentation arise out of a general commercial liability insurance policy, No. CLS1112693, purchased from Scottsdale (“Policy”). The Policy’s effective date was from April 25, 2005, to April 26, 2006. Colorado Pool made a claim under the insurance policy for the costs to repair a defectively constructed swimming pool. As of September, 2006, Colorado Pool had a contractual agreement with White Construction Group, LTD, to construct a swimming pool that was ultimately defective because metal bars were protruding through the concrete. Because the contractual agreement with White Construction required remedy for the defective pool, Colorado Pool requested preapproval from Scottsdale to be reimbursed for losses resulting from demolishing and reconstructing the pool. The relevant parts of the Policy provide:
This insurance applies to “bodily injury” and “property damage” only if:
(1) The “bodily injury” or “property damage” is caused by an “occurrence” that takes place in the “coverage territory”;
Policy at Page 1 of 15.

The Policy defines the word “occurrence” as follows:
“Occurrence” means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
Policy at Page 14 of 15.

The Policy does not define the word “accident.” However, Black’s Law Dictionary defines accident as follows:
1. An unintended and unforeseen injurious occurrence; something that does not occur in the usual course of events or that could not be reasonably anticipated. 2. Equity practice. An unforeseen and injurious occurrence not attributable to mistake, neglect, or misconduct.
Black’s Law Dictionary 15 (7th ed. 1999).

Colorado recently adopted new legislation relating to insurance coverage for construction defects. C.R.S. § 13-20-808 (promulgated in H.B. 10-1394). The new law essentially states that faulty workmanship constitutes an “occurrence” and, thus, construction defect claims generally fall within a general liability policy’s insuring agreement. In light of the enactment of this new legislation, the Court requested briefs on how the new legislation affects these proceedings, and invited comment on whether liability coverage under the insurance policy is a question of law or fact. The Parties have briefed these issues in full and the Court will now address these issues.
The briefs referred to were Scottsdale’s Combined Renewed Motion for Summary Judgment and Brief Regarding Colorado H.B. 10-1394 and Colorado Pool’s Motion for Partial Summary Judgment. By this order, Judge Cross granted Scottsdale’s Motion and denied that of Colorado Pool. In doing so, Judge Cross provided the following background regarding C.R.S. § 13-20-808 and the issues, as framed by the parties:
The legislature, in passing H.B. 10-1394 determined that construction defect claims present the most significant liability risk for construction professionals and found that such claims are the primary reason why construction professionals purchase general liability insurance. Therefore, the passage of HB 10-1394 is of importance to the construction industry as it directly addresses the question of coverage for the industry’s principal risk.

Section 13-20-808 (IV) provides that one of the intents of the new legislation is “[f]or the purposes of guiding pending and future actions interpreting liability insurance policies issued to construction professionals…” Moreover, Subsection 1 of the Editor’s note in C.R.S. § 13-20-808 provides that “Section 3 of chapter 253, Session Laws of Colorado 2010, provides that the act adding this section applies to all insurance policies in existence as of, or issued on or after May 21, 2010.”

Plaintiff argues that the statute applies in this matter because its claims are “pending” before the Court and are therefore controlled by C.R.S. § 13-20-808. Defendant maintains that because the statute does not apply retroactively to expired policies, the new legislation does not apply to Plaintiff’s policy. The Court agrees with Defendant. The Policy was in effect for a one year period beginning April 25, 2005. The Policy expired by its own terms on April 26, 2006. The statute refers to policies currently in existence or policies issued before the effective date of the statute but not yet expired.

Plaintiff’s policy expired on August 26, 2006. Although Plaintiff has pending claims stemming from the period when the Policy was in effect, it would be an impermissible retrospective application of the statute to apply its provisions to this action.
After setting forth the general rules regarding contract interpretation in Colorado, Judge Cross continued by stating:
The Policy covers claims for bodily injury or property damage caused by an occurrence. An occurrence is defined in the Policy. Colorado Pools seek coverage under the policy for faulty workmanship causing a defective product (pool). In its previous Motion, Scottsdale relied on the case of General Security Indem. Co. of Arizona v. Mountain States Mut. Cas. Co., 205 P.3d 529 (Colo. App. 2009) as determinative of whether Colorado Pool had coverage under the Policy. In that case, the court found that commercial general liability policies are intended to exclude coverage for poor workmanship because poor workmanship is a business risk to be borne by the insured, not a fortuitous event. Id. at 535-36.
Colorado Pool’s claim under the Policy was for faulty workmanship by Colorado Pool’s subcontractors in constructing the pool, which required Colorado Pool to incur costs to demolish and rebuild the pool. The Court concludes that the General Security case is directly analogous to the case at bar, and also finds that substandard workmanship, standing alone, is not a “fortuitous event” that results in an “occurrence” triggering coverage under the Policy as a matter of law. Furthermore, the Court finds that no “property damage” occurred, because the cost for which Colorado Pool was seeking reimbursement from Scottsdale were for repairing the defective workmanship on the pool. In other words, there was no damage to any property beyond Colorado Pool’s own work product itself, which cannot alone trigger coverage. The Court reconsiders its previous ruling that this issue is a question of fact (where there are disputed interpretations of the facts) and now concludes that the coverage issue is a matter of law. The Court concludes, as a matter of law, that there was no “occurrence” or “property damage” which would trigger coverage in this matter.
Until there is any appellate case law on the subject, I expect that there will be continued interest in any and all trial court orders interpreting or applying HB 10-1394. If you would like a copy of the order discussed in this entry, please send me an e-mail at Also, if you have any additional orders on point, I would very much like to see them. Please send me any orders you may have.

Tuesday, October 5, 2010

Thinking of lending money to your business? Think again. It could cost you a lot more than you think.

In AC Excavating v. Yale, 2010WL3432219 (Colo. App. September 2, 2010), Donald Yale, a 44% shareholder of Antelope Development, LLC realized that his golf course development and management company was in trouble. Antelope had a bank account balance of just under $100,000 and liabilities to subcontractors and general business expenses of over $250,000. Yale decided to loan $157,500 of his own money to Antelope in hopes of getting out of the red. Antelope used that money to both pay general business expenses and some of the subcontractor debts.

Several months later, Yale gave up on Antelope, withdrew the last $50,000 in Antelope's bank account, and foreclosed on the collateral for the loans he made to the company. AC Excavating, a subcontractor that Antelope owed approximately $40,000, filed suit against Yale for violations of the Colorado Mechanics’ Lien Trust Fund Statute [1] and civil theft [2].

Colorado’s Mechanics’ Lien Trust Fund Statute mandates that all funds disbursed to any contractor or subcontractor under any building, construction, or remodeling contract or on any construction project shall be held in trust for the subcontractors, laborers, and material suppliers of the project. The statute also requires the money to be “for which such disbursement is made,” meaning for the project the plaintiff-subcontractor worked on.

The statute’s purpose is to prevent general contractors from taking payment for subcontractor work and not paying its subcontractors. The statute establishes a trust of all money paid to the general contractor for a project. In addition, if a person is in complete control of the finances of the general contractor, that person can be held personally liable for any breaches of the statute.

The court broke the Trust Fund Statute analysis into three parts: 1) the source of disbursements; 2) the purpose behind disbursements, and; 3) the project itself. The court then analyzed AC Excavating’s claim of civil theft.

Yale’s first argument was that because the funds were his own voluntary contribution to the struggling company, that they should not be within the scope of the statute. However, contrary to the trial court ruling, the Court of Appeals held that the legislature did not intend to limit the source of the funds because they used the language “all funds disbursed.”

Yale’s next argument was that because he intended the money to be used only for general business expenses, not subcontractor debt, it was not within the scope of the statute. The court held that using a subjective intent of the source of money would defeat the purpose of the statute, to protect subcontractors.

Yale’s final argument was that the loan was not made specifically for the development that AC excavating worked on. However, the court pointed out that Antelope had only one development and it used a single bank account for all of its operations. Therefore, the money was for that development.

Last, the court ruled that Yale was also liable for the civil theft statute because when he withdrew the last of Antelope’s bank balance, he knowingly used the money in a manner that would deprive AC Excavating of its use or benefit.

I do not know Donald Yale, but I assume that he did not know he was breaking any laws when he reached into his pockets in an attempt to save his company. He certainly was entitled to keep his money and let the company sink. Instead, he is now personally liable for the debts Antelope owed to AC Excavating and any other subcontractor that files suit. Make sure you and your clients learn from this harsh lesson.

For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at

[1] C.R.S. § 38-22-127.
[2] C.R.S. § 18-4-401.

Sunday, October 3, 2010

David M. McLain to speak at next week's Rocky Mountain Builder Conference & Expo

I am honored to have been asked again this year to present at the Colorado Association of Home Builders' Rocky Mountain Builder Conference, to be held October 6 - 9 at the Park Hyatt Resort & Spa in Beaver Creek.  Each year, the RMBC provides an amazing and fun opportunity for builders and those in related trades to gain valuable education, to learn about the newest and hottest products and services, and to network with others in the industry from around the state.

This year, Jon Lindstrom, with Willis of Colorado, and I will be discussing the latest developments and trends regarding construction defect litigation and coverage available to protect builders. If you haven't yet registered, it's not too late.  Sign up here and we will see you in Beaver Creek. 

Wednesday, September 22, 2010

HBA of Metro Denver speaks out about Colorado House Bill 10-1394.

In a recent edition of the Home Builder Advocate, the Home Builders Association of Metro Denver included an article entitled, "What was accomplished by the passage of House Bill 1394? What does it mean to our industry?" In defense of the HBA's support of the bill, the article states:
Since the signing of House Bill 1394 by Gov. Ritter, some members have heard from a few fellow construction professionals that they have experienced an increase in their general liability insurance rates. The Colorado Association of Home Builders (CAHB), believes that rates for some policies have in fact increased, but they also believe that for those construction professionals with appropriate general liability insurance coverage prior to the passage of HB-1394, there were no significant changes in their premiums or coverage.

To adequately explain why CAHB supported the measure and why it was so important to our industry, we have attached two documents provided to us by CAHB which will help answer any questions that you may have regarding the provisions of HB-1394 or if you feel like you have been adversely affected by the new law. The summary of the two documents, “Colorado Instructs Courts on How to Interpret Liability Policies Issued to Contractors,” and a legal opinion from the law firm of Sherman & Howard, are particularly important. We encourage you to read both documents (see attachments) for a clear explanation of what was accomplished by the passage of House Bill 1394.

One issue addressed that is of particular importance is making clear why the exit from Colorado of some insurance companies due to the passage of HB 1394 will increase consumer protection and provide construction professionals with the general liability insurance that they thought they had actually purchased – an improvement for both the industry and the consumer. The last paragraph in the Sherman & Howard document states “while certain insurers have announced intent to vacate the Colorado construction market as a result of the new law, we believe these insurers never intended to provide coverage for construction defect claims.” Many of the policies written with a “super Montrose” exclusion, were never intended to provide insurance protection but rather a certificate of coverage which would have failed to protect both its purchaser and the public at large.

Should you have any questions regarding this bill, please do not hesitate to contact Rob Nanfelt, Executive Vice Officer of CAHB at or at 303-691-2242. Or if you’d like perspective regarding CAHB’s own general liability insurance program, please contact Jon Lindstrom at 303-765-3635.

Most importantly, you should be aware that this legislation has saved several Colorado contractors from bankruptcy since, with its passage, the insurance companies that had issued policies to them are now involved in defending the companies and paying damages where appropriate.

To access the final version of the bill, go to
To obtain copies of any of the documents attached to this edition of the Home Builder Advocate, please contact David M. McLain by e-mail at or by phone at (303) 987-9813.


Monday, September 20, 2010

Sheri H. Roswell to Speak at MC Consultants' 16th Annual West Region Construction Defect and Insurance Coverage Conference

Later this week, our own Sheri Roswell, will moderate and participate in a panel discussion regarding Rocky Mountain Coverage and Current Trends.  Other panelists will include:

  • Robert N. Clark, Esq., Robertson Clark, LLP; 
  • Edward J. Godin, Esq., Godin & Baity; 
  • Michael A. Hearn, Esq., McKenzie Rhody & Hearn; 
  • Brad Ramming, Esq., Sweetbaum, Levin & Sands, P.C.; 
  • Ivan A. Sarkissian, Esq., McConaughy & Sarkissian, P.C. 
  • Clayton Sharkey, IMA of Colorado, and; 
  • Bradley N. Shefrin, Esq., Pryor Johnson Carney Karr Nixon
This panel will discuss recent case law affecting coverage for construction defect cases in Colorado, including the General Security and Greystone decisions as well as the recent, controversial, legislation affecting coverage, Colorado House Bill 10-1394.  The panel will also discuss the practical ramifications of the new legislation and ways in which insurers may attempt to write around the new law.

About Sheri H. Roswell:

Ms. Roswell is a founding member of Higgins, Hopkins, McLain & Roswell, LLC. For the past fifteen years her practice has focused on the defense of a complex construction defect lawsuits on behalf of developers, general contractors, and other construction professionals. Ms. Roswell’s practice also frequently includes providing consulting and risk management services to clients in both residential and commercial construction matters. Her clientele includes a variety of construction professionals, from Fortune 400 companies to single contractor entities.
Ms. Roswell received her undergraduate education at the University of Colorado, School of Business in Boulder, Colorado and her Juris Doctorate from the University of Denver, College of Law. 
Ms. Roswell speaks locally and nationally on topics pertinent to the construction industry; lecturing to attorneys, construction professionals, and insurance organizations.  To contact her, call (303) 987-9812 or e-mail


Wednesday, September 15, 2010

Tougher for Insurance Carriers to Reserve the Right to Recoup Litigation Costs in Wyoming.

The United States Court of Appeals for the Tenth Circuit, interpreting Wyoming law, recently held that a reservation-of-rights letter from an insurance company to its insured was not sufficient to allow the insurer to recoup the costs of defending the insured in construction litigation.  Rather than relying on a reservation-of-rights letter to seek recoupment of defense costs, an insurance company subject to Wyoming law should deny defense of companies at the outset if they do not agree to bear the costs.

In Emp’rs Mut. Cas. Co. v. Bartile Roofs, Inc., 2010 WL 3473382 (C.A.10 (Wyo.)), the insurance company (“EMC”) agreed to defend Bartile based on the commercial general liability (“CGL”) insurance policy it issued to Bartile.  At the same time, EMC reserved its right to “recoup defense costs from Bartile should it be determined that EMC had no duty to defend Bartile in this litigation.”

Ruling on EMC’s motion for summary judgment, the District Court for Wyoming determined that EMC had no duty to defend Bartile. However, the court also held EMC could not recover its costs of defending Bartile. The 10th Circuit Court of Appeals affirmed the decision.[1]  The Court of Appeals first noted that the CGL insurance policies issued to Bartile contained no provision for recovering defense costs from Bartile. The court then pointed to Wyoming case law that supported its decision. In Shoshone First Bank v. Pac. Emp’rs Ins. Co., 2 P.3d 510 (Wyo. 2000), the court held that a reservation letter cannot unilaterally change an insurance contract. Further, "if an insurance carrier believes that no coverage exists, then it should deny its insured a defense at the beginning instead of defending and later attempting to recoup from is insured the costs of defending the underlying action."  Am. States Ins. Co. v. Ridco, Inc., No. Civ. 95CV158D, 1996 WL 334001184.

Wyoming follows the minority position regarding reservation letters and recoupment of costs. EMC attempted to change that in its reply brief. First, EMC argued that its reservation letter is enforceable because it was immediate, explicit, and provided adequate notice of the possibility of reimbursement. Next, EMC argued for enforcement because it was an implied-in-fact contract. Last, it argued for enforcement because the defense was provided under the reservation letter, not the CGL policy.

Unfortunately for EMC, the court did not weigh in on these issues because EMC waived them by not raising them at the District Court level.  Also worth mentioning, the term “accident” (the event that triggered EMC’s duty to defend under the CGL) was not defined in the CGL policy. The court looked to state law for the definition and found that Wyoming and Utah define the term “accident” differently when interpreting CGL policies. “Wyoming law focuses on the unexpectedness of the event, while Utah law focuses on the unexpectedness of the result or injury.” Emp’rs, at 15. Nonetheless, the court held that difference immaterial because neither definition would have triggered coverage under the CGL policy.

For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at

[1] The Court of Appeals also went into detail about the procedural issues raised by Bartile. Those issues were personal jurisdiction, venue, and choice of law. However, the most noteworthy issues for purposes of this blog are the recoupment-of-costs and “accident” issues.

Wednesday, August 25, 2010

Lessons learned from a recent trial. Be careful about the evidence you are creating.

I recently had the opportunity to represent a general contractor in a trial, defending against claims both of construction defects and of delay related damages.  Ultimately the case settled during the trial and we were able to achieve a favorable result.  Looking back on the trial, what stayed with me was the troublesome evidence introduced by the claimant, not related to the alleged construction defects, but related to the delay related damages.

Blown up on a 4' by 6' poster board for use during opening statements and throughout the trial was a copy of an article printed in my client's internal newsletter recounting the difficulties on the project and, specifically, how those difficulties resulted in delays and cost overruns.  What made this especially problematic was that the article's author engaged in a certain amount of exaggeration and hyperbole in order to make his points.  This was very compelling evidence and posed an almost insurmountable obstacle when trying to refute the claims for delay related damages.

The purpose of this blog post is not to suggest that companies should not learn from their mistakes, even if that means publishing an article in an internal newsletter.  In the long run, I think that it is of utmost importance that companies learn from their mistakes.  What I am suggesting is that companies should be careful in the manner in which they communicate, even internally, about those mistakes.  The lessons to be learned from an internal newsletter would be no less valid if the article is published after the active or anticipated litigation is resolved.  To the contrary, the lessons may be better received if the article is also able to include a description, not only of the mistakes made, but also of the ensuing dispute and its outcome.  Regardless of when such an article is published, it is of paramount importance that it be absolutely and completely accurate in the description of the facts.  It is exceedingly hard to defend against such evidence at the time of trial by arguing that the author engaged in exaggeration and hyperbole.

Be sure to learn from your mistakes, but do not repeat those reported here.

For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at

Saturday, August 14, 2010

Unsigned Arbitration Agreements: Can They Be Enforced?

Most lawyers know that a lack of signature on a written agreement does not necessarily negate the existence of a contract. Following the common law, if both parties mutually assent to an agreement then it may be legally enforced. Also, under the common law, if one party performs under the unsigned contract it may be legally enforceable. Logically then, such unsigned agreements are given the full weight of the law. But, does the common law cover unsigned subcontracts that include provisions for mandatory arbitration? According to the Colorado Court of Appeals in E-21 Engineering, Inc. v. Steve Stock & Assoc., Inc., --- P.3d ----, 2010 WL 3035168 (Colo. App. August 5, 2010), the answer is yes.

In E-21, the Colorado Court of Appeals was faced with a matter of first impression in which E-21 Engineering, Inc. sent Steve Stock & Associates, Inc. a letter of intent to enter into a subcontract which included a clause requiring mandatory arbitration. Neither E-21 nor Stock signed the subcontract and Stock began work according to the subcontract. E-21 subsequently wrote stock, rescinding the letter of intent claiming that neither party executed the subcontract and thus no agreement exists. Stock replied, informing E-21 that such rescinding of the letter constituted a breach of contract. Stock then filed a demand for arbitration, as per the subcontract, with the American Arbitration Association. After a few years and following settlement discussions, E -21 filed a response seeking to stay arbitration primarily arguing that there existed no agreement to arbitrate between the parties. The trial court agreed with E-21 and based its decision on the fact that Colorado case law did not support compelling a party to arbitrate if that party did not sign a written agreement.

The Court of Appeals disagreed. First, the Court of Appeals reviewed the agreement to arbitrate de novo. Lane v. Urgitus, 145 P.3d 672, 677 (Colo. 2006). Next, analyzing the Colorado Uniform Arbitration Act (CUAA), the court found that the act, although requiring that an arbitration agreement must be contained in a record, does not specifically require signatures by the parties. C.R.S. § 13-22-206(1); see C.R.S. § 13-22-201 to -230. Since the CUAA is silent on signature requirements, the court determined that the statute is ambiguous and must be interpreted according to legislative objectives. Cork v. Sentry Ins., 194 P.3d 422, 425-26 (Colo. App. 2008). Finally, the court found that state law principles permit contract formation without signatures and govern the “[determination of] whether parties have agreed to arbitrate.” Lane v. Urgitus, 145 P.3d at 677; see Smith v. Multi-Financial Sec. Corp., 171 P.3d 1267, 1272 (Colo. App. 2007) (holding that arbitration agreements may be binding on parties in some circumstances notwithstanding their lack of signature).

The court further noted that under the Federal Arbitration Act (FAA) 9 U.S.C § 2 other courts have held that a signature is not a necessary requirement for a binding arbitration agreement. See, e.g., Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1369 (11th Cir. 2005); Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 846 (2d Cir. 1987); Med. Dev. Corp. v. Indus. Molding Corp., 479 F.2d 345, 348 (Colo. App. 2007). The court cited these federal cases despite the fact that they are not controlling because the FAA and CUAA share the substantially similar language. Ingold v. AIMCO/Bluffs, LLC Apartments, 159 P.3d 116, 120 (Colo. 2007).

The court concluded that a mere lack of signature does not nullify an otherwise viable, enforceable agreement to arbitrate. Left up for interpretation in the E-21 case is whether the underlying subcontract was enforceable, but for now any forgetful general contractors may retain the ability to compel arbitration should they miss a signature line. Of course, prudence recommends signing all agreements one wishes to enter into, if only to avoid the courtroom.

For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at

Thursday, August 12, 2010

Scope of Arbitration Clauses and Waiver of Rights to Arbitration

In some cases, plaintiffs may be able to force a dispute into a court proceeding even though an arbitration agreement between the parties controls and even though the defendants may argue that an arbitration clause divests the court system of its jurisdiction over the dispute seeking to have the matter resolved through arbitration instead of a trial by jury. The pros and cons for having disputes heard in mediation, arbitration, or judicial proceeding will be the topic of a future Colorado Construction Litigation blog entry. The following discusses the court’s method for determining the scope of an arbitration agreement and whether or not a party has waived its rights to enforce the arbitration clause. These were the issues in the recent U.S. District Court decision, Stone v. Vail Resorts Development Co., 2010 WL 2653314, 5 (D.Colo.).

In that case, the plaintiffs purchased a condominium from defendants and alleged that they were promised assigned parking spaces, but that defendants secretly substituted a document that only provided for valet parking. Plaintiffs’ allegations included breach of contract and violation of the Colorado Consumer Protection Act (“CCPA”) claims, among others. After plaintiffs instituted the lawsuit, defendants filed a motion, arguing that an arbitration clause in the Condominium Declarations governed “all claims arising out of the interpretation, applications or enforcement” of the Declaration. In response, plaintiffs argued that their claims did not arise out of the arbitration agreement, that defendants waived their right to arbitration, and that plaintiffs’ CCPA claims were not subject to arbitration.

In its order, the court discussed the broad support for arbitration agreements, citing prior cases referring to a “strong federal policy encouraging the expeditious and inexpensive resolution of disputes through arbitration.” The order further stated that “Courts must interpret arbitration clauses liberally, and all doubts must be resolved in favor of arbitration.”

In deciding whether [laintiffs’ claims were subject to the arbitration agreement, the court began its analysis as to whether the particular clause was narrow or broad. If the clause is narrow, then only the limited subject is subject to arbitration and other disputed matters would be determined to be outside the arbitration agreement’s purview. If the clause is broad, then a presumption arises of arbitrability, including even collateral issues. The Declaration called for “all Claims arising out of or relating to the interpretation, application, or enforcement of this Declaration. . . .” Plaintiffs argued that their claims did not arise out of the Declaration, but out of promises by defendants related to parking rights. The court disagreed, focusing on the phrase "arising out of or relating to," as evidence of the parties intent to apply the clause broadly, and that plaintiffs’ claims fell within the scope of the arbitration provision.

Plaintiffs argued that defendants waived their rights to compel arbitration because defendants did not assert their right to arbitration as an affirmative defense in their answer to plaintiffs’ complaint. The court cited six factors to consider when determining whether a party has waived such rights:

(1) whether the party's actions are inconsistent with the right to arbitrate;
(2) whether “the litigation machinery has been substantially invoked” and the parties “were well into preparation of a lawsuit” before the party notified the opposing party of an intent to arbitrate;
(3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay;
(4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings;
(5) “whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place”; and
(6) whether the delay “affected, misled, or prejudiced” the opposing party.

The court remarked that defendants filed their motion to compel arbitration approximately 75 days after being served with plaintiffs’ complaint, and that defendants raised the issue of arbitration in initial disclosures and a scheduling conference. Therefore, the court found that defendants acted consistently with their rights to arbitration, that the defendants did not request arbitration as a delay tactic or to mislead or prejudice the plaintiffs.

Although plaintiffs argued without citing any persuasive authority or support that their CCPA claim was not subject to arbitration, the court disagreed. The court stated that plaintiff’s claims were based on promises regarding parking rights set out in the purchase of their condominium and the Declaration, and found that these claims were also subject to arbitration.

Stone v. Vail Resorts Development Co. is a recent example of numerous decisions where arbitration clauses are a favored method of dispute resolution. This is a trial court order only in and is not binding authority, but it is instructional, nonetheless. An earlier Colorado Supreme Court case, City and County of Denver v. District Court In and For City and County of Denver, 939 P.2d 1353 (Colo. 1997), utilized the same six factors in its determination that an alternate dispute resolution provision in a contract had not been waived.

Courts generally will resolve doubts in favor of arbitration. However, when preparing a contract with an arbitration clause, one should take care that the clause is as broad as needed. Further, if named as a defendant in a dispute where an arbitration agreement may govern, the defending party should assert early and often its right to arbitration, in order to enforce and preserve that right.

For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at

Thursday, July 29, 2010

H.B. 10-1394: New Law Governing Insurance Coverage for Construction Defect Claims

In the August 2010 volume of The Colorado Lawyer, Ronald M. Sandgrund and Scott F. Sullan wrote an article entitled, "H.B. 10-1394: New Law Governing Insurance Coverage for Construction Defect Claims."  This article provides a unique perspective on the law, from two of its proponents.  What follows is the text of the article by Messrs. Sandgrund and Sullan.

Reproduced by permission of the Colorado Bar Association Vol. 39, August, 2010, pg. 89-96, (c) Colorado Bar Association 2010.  All rights reserved.

House Bill 10-1394, codified at CRS §§ 10-4-110.4 and 13-20-808, significantly affects insurance coverage for construction defect claims. This article discusses this new law’s technical provisions and examines its important implications for Colorado liability insurers, construction professionals, and construction defect claimants.

In response to concerns regarding how courts were applyingthe insurance coverage case General Security Indemnity Co. of Arizona v. Mountain States Mutual Casualty Co. (General Security),1 and the broadening scope of insurance policy "loss in progress" and "known loss" provisions, House Bill (H.B.) 10-1394, codified at CRS §§ 10-4-110.4 and 13-20-808: (1) provides courts guidance when interpreting liability policies issued to construction professionals; (2) deems property damage resulting from construction defects, including damage to a construction professional’s own work, an "accident," unless the construction professional intended and expected the resulting damage; (3) requires insurers to defend notices of potentially covered claims under Colorado’s Construction Defect Action Reform Act (CDARA);2 and (4) prescribes that "loss in progress" and "known loss" provisions are effective only if they apply to damage or injury known to the insured construction professional before the policy’s inception date. This article provides an overview of this new law.

Act Summary

H.B 10-1394 (Construction Professional Commercial Liability Insurance Act or Act) amends CDARA and the Colorado Insurance Code by codifying certain interpretive rules for occurrence-based liability policies insuring construction professionals. The Act allows courts to consider: (1) an insured’s objective, reasonable expectations concerning coverage; and (2) insurance industry and internal insurance company explanatory materials to help interpret and apply certain policies.3 The Act declares that an insurer’s duty to defend is triggered if a potentially covered liability is described in a CDARA notice of claim.4

The Act also declares that property damage, including damage to construction work performed by an insured, is presumed to be an "accident" unless the damage was intended and expected by the insured.5 It clarifies and confirms that the "duty to defend" is a first-party insurance benefit and, thus, likely subject to CRS §§ 10-3-1115 and -1116, sometimes referred to as Colorado’s "prompt payment" statute.6 This law provides for double damages and attorney fees in the event an insurer unreasonably delays or denies payment of insurance contract benefits to a first-party claimant.7 Finally, the Act declares that Montrose8 provisions, purporting to exclude coverage for damage or injury that begins before a policy’s inception date and that continues into, worsens, or progresses during the policy period, are ineffective unless the insured knew of the damage or injury before the policy’s inception.9

The new law applies to insurance policies in existence on or issued after the Act’s effective date that cover occurrences of damage or injury during the policy period and that insure a construction professional’s liability arising from construction-related work.10 The Act’s procedural and remedial aspects, such as its evidentiary and burden of proof provisions, probably will be applied retroactively; retrospective application of its substantive elements to previously existing insurance policies depends on the circumstances and awaits court review. If a court can resolve a coverage dispute under the common law and reach the same result provided by the statute, such retrospective analysis would be moot.

Although the Act applies only to liability policies issued to construction professionals, because the same, standardized wording is used in policies insuring most other Colorado business risks, the Act’s effects may broadly resonate. Colorado insureds can be expected to argue that the adoption of the Act supports the conclusion that some standardized insurance policies issued to construction professionals are adhesion contracts; Colorado courts appear to have already tentatively embraced this conclusion.11

The Act’s History

Support for the Act arose after a series of construction defect insurance coverage decisions issued, followed by a number of liability insurers relying on those decisions to deny any duty to defend or indemnify Colorado construction professionals against claims arising from construction-related defects.12 The first of these decisions, General Security, and two later U.S. District Court for the District of Colorado decisions, were the subject of a November 2009 article in The Colorado Lawyer.13 That article noted that the procedural posture of the General Security coverage appeal was unusual insofar as it involved only insurers. The article suggested that the parties did not bring pertinent legal arguments and Colorado precedent to the court of appeals’ attention, and that large parts of the opinion may constitute dicta.

Three U.S. District Court opinions followed, two of which read General Security broadly as precluding coverage for, and any duty to defend arising from, property damage to the insured’s previously performed work arising from construction defects.14 Both of these cases, Greystone Construction, Inc. v. National Fire & Marine Insurance Co. (Greystone),15 and United Fire & Casualty Co. v. Boulder Plaza Residential16 are on appeal. On June 3, 2010, the U.S. Tenth Circuit Court of Appeals certified the following question framed by the Greystone appeal to the Colorado Supreme Court for its consideration: "Is damage to non-defective portions of a structure caused by conditions resulting from a subcontractor’s defective work product a covered ‘occurrence’ under Colorado law?"17 On June 23, 2010, the Colorado Supreme Court declined to accept the certified question, and a ruling by the Tenth Circuit in Greystone may issue soon.18

The Act suggests that aspects of General Security were decided or were being viewed in a way that the legislature believed contravened Colorado precedent and public policy. Consistent with published insurance industry policy interpretive materials allegedly contradicting the insurers’ coverage position in Greystone,19 an insurance industry attorney and lobbyist testified during the legislative hearings that General Security and Greystone were a "shock" to the insurance industry and "not the rule of law," "not the way courts have ruled in other jurisdictions," and that the rulings "took it too far."20 The Act found bipartisan cosponsorship.21

Support for the Act also sprung from the insurance industry’s use of what are commonly referred to as Montrose provisions, intended to bar coverage when an insured knows before its policy’s inception date of damage or injury that later gives rise to a covered claim. These Montrose provisions morphed into what are now frequently referred to as super-Montrose provisions that bar coverage without regard to whether the insured knew of the injury or damage before the policy’s inception date, as long as the injury or damage, even if hidden and unknown to anyone, began before that date.

The Act’s Framework

The Act consists of two main parts. The first part, CRS § 13-20-808, formalizes certain rules for construing coverage for construction professionals under "occurrence-based" commercial liability insurance policies, such as commercial general liability insurance, multi-peril insurance, and liability coverages found in builder’s risk policies. Occurrence-based insurance coverage typically is triggered by the occurrence or happening of injury or damage during the policy period, but the statute’s reach is limited to policies that insure a "construction professional for liability arising from construction-related work."22 The Act was not intended to apply to errors and omissions coverage written on a "claims made" basis for persons such as design professionals.

The first part also addresses an insurer’s duty to defend a construction professional against a property owner’s notice of claim served under CDARA. The second part, CRS § 10-4-110.4, voids as against public policy under certain conditions insurance provisions that purport to exclude coverage for property damage that, unknown to the insured, begins before an occurrence-based policy’s inception date and that continues or worsens during the policy period.

First Part—Policy Construction and Duty to Defend

The Act begins by finding that insurance policies "have become increasingly complex, often containing multiple, lengthy endorsements and exclusions conflicting with the reasonable expectations of the insured."23 The Act codifies and modifies certain rules of insurance policy construction approved by the Colorado Supreme Court. The Act declares that insurance coverage and an insurer’s duty to defend shall be interpreted broadly in favor of the insured.24 The Act also provides:
If an insurance policy provision that appears to grant or restore coverage conflicts with an insurance policy provision that appears to exclude or limit coverage, the court shall construe the policy to favor coverage if reasonably and objectively possible.25
The Act requires courts to
presume that the work of a construction professional that results in property damage, including damage to the work itself or other work, is an accident unless the property damage is intended and expected by the insured.26
This provision was designed to parallel the holdings of the Texas and Florida Supreme Courts,27 to embrace the Colorado Supreme Court’s description of what renders an event "accidental" as expressed in Hecla Mining Co. v. N.H. Ins. Co.,28 and to negate any inference to the contrary that some might draw from General Security. This section, however, ensures that a court still should consider application of any relevant exclusions, because the statute is not intended to "create[] insurance coverage that is not included in the insurance policy."29 It also makes clear that the Act does not require an insurer to provide "coverage for damage to an insured’s own work unless otherwise provided in the insurance policy."30

The Act is directed specifically at the perceived failure of General Security to "properly consider a construction professional’s reasonable expectation that an insurer would defend the construction professional against an action or [a CDARA] notice of claim."31 The Act allows courts to consider a construction professional’s objective, reasonable expectations when there is a finding of an insurance policy ambiguity.32 In construing the policy to meet these reasonable expectations, a court may consider: (1) "the object sought to be obtained by the construction professional" in purchasing the insurance; and (2) "whether a construction defect has resulted, directly or indirectly, in bodily injury, property damage, or the loss of use of property."33 Because the purpose of the Act is to resolve reasonable doubts in favor of an insured construction professional’s liability coverage, construction professionals will argue that preexisting case law permitting courts to consider extrinsic evidence in making the threshold determination whether a policy is ambiguous likely was not intended to be supplanted by the Act.34

The Act also allows courts to consider as part of the evidentiary record in evaluating an insured’s reasonable expectations certain non-privileged writings generated, approved or adopted, or relied on by an insurer (or its parent or subsidiary) or an insurance rating or policy-drafting organization pertaining to the policy provision in dispute.35 Such writings specifically include matters published by the Insurance Services Offices, Inc. (ISO) or its predecessor or successor organizations, and may include the Fire, Casualty & Surety (FC&S) Bulletins issued by the National Underwriter Company.36

Consideration of these industry publications was mandated because the insurance industry had published materials construction professionals contended acknowledged coverage for consequential property damage to an insured’s own work as a result of defective construction rendered by the insured’s subcontractors;37 however, none of these materials was considered by General Security or cases construing General Security. These writings also might include internal company memoranda, training materials, and perhaps reservation of rights or coverage acknowledgment letters pertaining to substantially similar claims; however, locating and producing these materials may be burdensome or expensive and require safeguards against disclosure of a customer’s confidential information. Critically, such industry writings may not be used to restrict, limit, exclude, or condition coverage or the obligation of the insurer beyond that which is reasonably inferred from the words used in the insurance contract.38

The Act also declares which party—insurer or insured—bears the burden of proof, providing that if an insurer disclaims or limits coverage, it bears the burden of proving by a preponderance of the evidence that: (1) any policy limitation, exclusion, or condition bars or limits coverage for the insured’s legal liability in an action or CDARA notice of claim concerning a construction defect; and (2) any exception to the limitation, exclusion, or condition does not restore coverage.39 While (1) codifies a rule previously adopted by the Colorado Supreme Court, (2) imposes a burden of proof on insurers not previously and unambiguously imposed on them by prior case law.40

The Act then addresses an insurer’s duty to defend, providing that this duty is triggered by: (1) a potentially covered liability described by a CDARA notice of claim; or (2) a potentially covered liability described in a complaint, cross-claim, counterclaim, or third-party claim in a lawsuit or arbitration concerning a construction defect.41 To date, Colorado courts had not decided whether an insurer owes a duty to defend an insured against a CDARA notice of claim.42

In discharging its duty to defend, the insurer must reasonably investigate the claim and reasonably cooperate with the insured’s participation in CDARA’s notice of claim process regardless of whether other insurers owe a duty to defend.43 The insurer is not required to retain legal counsel for the insured or pay any sums toward settlement of the notice of claim not covered by its policy.44 This statutory imposition of a duty to defend a CDARA notice of claim was adopted, in part, to reduce defect litigation by enhancing pre-suit settlement possibilities, because the notice of claim process often had been rendered impotent due to a lack of insurer involvement.

An insurer may deny its duty to defend only if authorized by law, and it may not withdraw its defense or seek reimbursement from an insured of any defense costs expended unless permitted by law and unless the insurer previously reserved its right to do so in writing when it first accepted or assumed the defense.45 Also, the Act clarifies and confirms that the "duty to defend" is a first-party insurance benefit.46 Thus, the duty to defend likely is subject to the prompt payment statute, CRS §§ 10-3-1115 and -1116.47

Second Part—Loss in Progress

All insurance contracts implicitly embrace the "fortuity" or "accident" principle.48 Insurance generally is designed to insure against "fortuities"—that is, losses or liabilities that are not certain to occur:49
A fortuitous event . . . is an event which, so far as the parties to the contract are aware, is dependent on chance. It may be beyond the power of any human being to bring the event to pass; it may be within the control of third persons; it may even be a past event, . . . provided that the fact is unknown to the parties.50
The differences and distinctions among the "known loss," "known risk," and "loss in progress" doctrines are not well settled and often are confused.51 None of the doctrines has yet been expressly accepted in Colorado. However, in Hoang v. Monterra Homes LLC, the court of appeals noted, without expressly recognizing the known loss doctrine:
Under the ‘known loss’ doctrine, coverage will not be defeated unless, at the time it entered into the insurance contract, the insured had a legal obligation to pay damages to a third party in connection with a loss.52
The court affirmed the trial court’s refusal to apply the doctrine where the insured did not have actual knowledge of a covered loss or of any legal obligation to pay damages before inception of any of the policies.53

In response to uncertainty regarding the common law doctrine, many policies since 1995 have included language limiting coverage for property damage that began before the policy incepted.54 These limitations may be incorporated in the coverage grant or appear as a separate exclusion, and sometimes are referred to as Montrose provisions, after the California case whose holding they are intended to limit or negate.55 The limiting language takes many forms, some based on standardized ISO forms, others uniquely crafted by insurers. Most attempt to "telescope" coverage for long-term or progressive property damage that occurs across multiple policy periods into a single policy year. Only recently has a body of case law begun to emerge so as provide guidance to practitioners regarding the contours and reach of this limiting language. Courts have arrived at different results when applying Montrose (and even more onerous super-Montrose) exclusions, often turning on complicated facts and the unique policy language employed.56

As discussed during the Act’s debate, many insurers were coupling use of such Montrose provisions with the holding in Public Service Co. v. Wallis & Cos.57 to greatly circumscribe coverage. In Public Service Co., the court created a method for apportioning insurance liability for gradual or progressive harms across multiple policy periods, as well as uninsured periods.58
[W]here property damage is gradual, long-term, and indivisible, the trial court should make a reasonable estimate of the portion of the ‘occurrence’ that is fairly attributable to each year by dividing the total amount of liability by the number of years at issue. . . .59 The trial court should then allocate liability accordingly to each policy-year, taking into account primary and excess coverage, SIRs [self-insured retentions], policy limits, and other insurance on the risk.60
Public Service Co. instructed that courts generally should allocate liability according to the time-on-the-risk method, taking into account the degree of risk assumed where appropriate, and holding the policyholder responsible for self-insured retentions per policy year where applicable.61 The court added, however, that in some cases, such apportionment need not be "precisely attributed," and the court "should make a ‘reasonable estimate’ of the portion of the ‘occurrence’ that is fairly attributable to each year."62

By coupling these Montrose provisions with Public Service Co.’s apportionment rule, insurers, whose policies defined a covered occurrence as including property damage resulting from "continuous or repeated exposure to substantially the same general harmful conditions," were arguing that, in the event of the insured’s liability for $100,000 in damages for long-term, progressive property damage spanning, for example, three policy years, the Montrose or super-Montrose provision, as the case might be, barred coverage during the last two years while the Public Service Co.’s apportionment rule only allowed allocation of one-third of the damages ($33,333) to the first policy year.63 In light of the perceived unfairness of this result, the legislature effectively adopted its own statutory known loss and loss in progress rules that attempt to balance insurer and insured interests.

The Act provides that an insurer shall not issue a liability policy to a construction professional that includes a provision
excluding or limiting coverage for one or more claims arising from bodily injury, property damage, advertising injury, or personal injury that occurs before the policy’s inception date and that continues, worsens, or progresses when the policy is in effect [if the exclusion or limitation applies to injury or damage that] was unknown to the insured at the policy’s inception date.64
The terms "bodily injury," "property damage," "advertising injury," and "personal injury," are terms of art in the insurance industry and similarly defined by most standardized ISO liability policies; however, one may reasonably anticipate that these statutory terms will be construed broadly to include any damage or injury covered by an occurrence-based commercial liability policy.

If some other, separate injury or damage unknown to the insured continues, worsens, or progresses when the policy is in effect, presumably the exclusion would not apply to this distinct injury or damage. In the event of a dispute regarding whether certain injury or damage is sufficiently distinct to avoid application of the exclusion, the Act places the burden of proving this fact and any allocation between the covered and uncovered portions of the injury or damage on the insurer.65

Any liability insurance policy provision violating the Act is rendered "void and unenforceable as against public policy."66 Insurers may argue that noncompliant provisions should be reformed to satisfy the Act, while construction professionals may argue that such provisions must be stricken in their entirety because the Act provides that a court shall construe an insurance policy containing such noncompliant provision "as if the provision was not a part of the policy when the policy issued."67

Act’s Effective Date and Retroactive and Retrospective Effect

The Act applies to all insurance policies in existence or issued on or after the Act’s effective date of May 21, 2010.68 Insurers can be expected to argue that "in existence" means that the policy must have been "in effect" as of May 21, 2010. Construction professionals will argue that a policy was "in existence" if it had not been rescinded as of May 21, 2010, noting that an insurer’s duty to defend or indemnify under an occurrence policy often is triggered by a suit filed long after the policy period has expired and the policy no longer is "in effect," but the policy still is "in existence."

Presumably, the Act may be applied retroactively and retrospectively and, therefore, constitutionally, to the extent it effects changes that are remedial or procedural (such as evidentiary rules and burdens of proof),69 and such retroactive intent may be assumed unless a contrary intent is expressed by the legislature.70 To the extent the law "impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past," constitutional challenges may exist to its retrospective, substantive application to existing contracts or contract disputes.71 Disputes regarding the Act’s retrospective application will be mooted if the court finds that the same result would obtain under the common law predating the Act’s passage as would obtain if the Act was applied.

A law is not retrospective, however, "merely because the facts upon which it operates occurred before" its adoption.72 When a statute is found to be retroactive, the Colorado Supreme Court has prohibited retrospective application of the statute when the reasonable expectations and substantial reliance of a party vested before the enactment of the statute.73 An important factor in this analysis is whether a change in the law was reasonably foreseeable at the time of contracting, especially if the business or transaction at issue is highly regulated by Colorado statute.74

Construction professionals can be expected to argue that even if the Act in some specific instances allegedly impairs vested rights acquired under existing laws, or allegedly creates a new obligation or duty in respect to transactions or considerations already past, because Colorado insurers’ conduct is a highly regulated and ever-changing subject of legislative action, the law may be applied both retroactively and retrospectively.75 In addition, construction professionals likely will rely on the fact that the Act expressly provides that for purposes of "guiding pending and future actions interpreting liability insurance policies issued to construction professionals, what has been and continues to be the policy of Colorado is hereby clarified and confirmed" by the Act in the interpretation of policies "that have been and may be issued to construction professionals."76 Insurers will counter that they already have charged and accepted a premium commensurate with the risks insured by their existing policies, and that any retrospective broadening of the substantive scope of those risks is unfair and unconstitutional.


The Act is a narrowly drawn attempt to legislate commercial liability insurance coverage unique among the fifty states. The Act codifies and further details some long-standing common law rules of insurance policy construction and burdens of proof. It also describes the scope of an insurer’s duty to defend a pre-suit notice of claim under CDARA. The Act adopts a statutory version of the known loss and loss in progress rules that balances an insured construction professional’s reasonable expectation of coverage for fortuitous liabilities against an insurer’s legitimate concern that it not be required to insure against past events known to the insured that are deemed likely to result in the insured’s legal liability to pay damages. Some construction professionals testified during the legislative hearings that the Act might result in premium increases, the withdrawal of some insurers from the market, and stricter underwriting requirements, but they explained that the greater certainty and fairness the Act would afford was worth this cost.


1. General Security Indem. Co. of Ariz. v. Mountain States Mut. Cas. Co., 205 P.3d 529 (Colo.App. 2009).

2. CRS § 13-20-803.5.

3. CRS § 13-20-808(4)(a), (4)(b)(I), and (4)(c).

4. CRS § 13-20-808(7)(a)(I).

5. CRS § 13-20-808(3).

6. CRS § 13-20-808(1)(b)(II).

7. CRS §§ 10-3-1115(1)(a) and -1116(1).

8. Montrose provisions take their name from the California Supreme Court’s liability insurance coverage decision Montrose Chem. Corp. v. Admiral Ins. Co., 913 P.2d 878 (Cal. 1995).

9. CRS § 10-4-110.4(1) and (2).

10. H.B. 10-1394, Section 3 (Applicability); CRS §§ 13-20-808(2)(a) to (d) and 10-4-110.4(1) and (3).

11. See, e.g., Friedland v. Travelers Indem. Co., 105 P.3d 639, 645-46 (Colo. 2005) (adopting "notice-prejudice" rule due, in part, to the "adhesive nature of insurance contracts").

12. See generally, April 7, 2010 House Testimony on H.B. 10-1394 (Business Affairs and Labor Committee); April 28, 2010 Senate Testimony on H.B. 10-1394 (Business, Labor, and Technology Committee).

13. See Graves et al., "Shoddy Work, Negligent Construction, and Reconciling the Irreconcilable Under the CGL Policy," 38 The Colorado Lawyer 43 (Nov. 2009).

14. Compare Greystone Constr., Inc. v. Nat’l Fire & Marine Ins. Co., 2009 U.S. Dist. LEXIS 73055, 2009 WL 2568521 (D.Colo. Aug. 18, 2009) and United Fire & Casualty Co. v. Boulder Plaza Residential, No. 06-cv-00037-PAB-CBS, 2010 U.S. Dist. LEXIS 14257, 2010 WL 420046 ___ F.Supp.3d ___ (D.Colo. Feb. 1, 2010) (construing General Security’s holding broadly against coverage arising from construction defects) with Am. Family Mut. Ins. Co. v. Teamcorp, Inc., No. 07-cv-00200-WYD-MJW, 2009 U.S. Dist. LEXIS 87173, 2009 WL 3077836 (D.Colo. Sept. 22, 2009) (construing General Security’s "corollary" rule broadly in favor of coverage for consequential damage arising from construction defects).

15. Greystone Constr., Inc., supra note 14 (appeal filed Sept. 17, 2009, No. 09-1412).

16. United Fire & Casualty Co., supra note 14 (appeal filed Feb. 24, 2010, No. 10-1056).

17. "Certification of Question of State Law Order," Greystone Constr., Inc. v. Nat’l Fire & Marine Ins. Co., No. 09-1412, Doc. No. 01018433257 at *2 (10th Cir. June 3, 2010).

18. Order of Court, Greystone Constr., Inc. v. Nat’l Fire & Marine Ins. Co., No. 2010SA176 (Colo., June 21, 2010).

19. See Opening Brief of Appellants, Greystone Constr., supra note 14 at 39-47 (and Exhibits 5-7 thereto) (Nov. 18, 2009). One of the Greystone appellants was an insurance company.

20. See House Testimony on H.B. 10-1394 at *21 (lines 2-11) (April 7, 2010) (Business Affairs and Labor Committee).

21. The Bill’s co-sponsors were Representatives Joe Rice (D), Randy Fischer (D), Cheri Gerou (R), Jeanne Labuda (D), Spencer Swalm (R), Terrance Carroll (D), Liane McFadyen (D), and Senators Mark Scheffel (R), Morgan Carroll (D), Dan Gibbs (D), Lois Tochtrop (D).

22. See CRS § 13-20-808(2)(d). See generally Ballow v. PHICO Ins. Co., 875 P.2d 1354, 1357 (Colo. 1993) (distinguishing occurrence from claims-made policies on the basis that coverage under the former is triggered regardless of when notice of claim is received, and coverage under the latter depends on when the notice is received). See also Leprino v. Nationwide Prop. & Cas. Ins. Co., 89 P.3d 487, 490 (Colo.App. 2003) ("Occurrence policies protect an insured against claims made by third parties based on occurrences within the policy period that result in injury to the third parties’ property interests.").

23. CRS § 13-20-808(1)(a)(II).

24. CRS § 13-20-808(1)(b)(I) and (II).

25. CRS § 13-20-808(5).

26. CRS § 13-20-808(3).

27. See Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 S.W.3d 1, 8 (Tex. 2007); U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So.2d 871, 887 (Fla. 2007).

28. See Hecla Mining Co. v. N.H. Ins. Co., 811 P.2d 1083, 1087 (Colo. 1991), where the court said:
In general, what make injuries or damages expected or intended rather than accidental are the knowledge and intent of the insured. It is not enough that an insured was warned that damages might ensue from its actions, or that, once warned, an insured decided to take a calculated risk and proceed as before. Recovery will be barred only if the insured intended the damages, or if it can be said that the damages were, in a broader sense, "intended" by the insured because the insured knew that the damages would flow directly and immediately from its intentional act. . . . (emphasis added).
See also State Farm Mut. Auto Ins. Co. v. McMillan, 925 P.2d 785, 792-93 (Colo. 1996) (because policy term "accident" is not defined, the term is ambiguous and determination of whether an accident had occurred would be viewed from standpoint of the insured).

29. CRS § 13-20-808(3)(b).

30. CRS § 13-20-808(3)(a).

31. CRS § 13-20-808(1)(b)(III).

32. CRS § 13-20-808(4)(a).

33. CRS § 13-20-808(4)(b)(I) and (II).

34. See KN Energy, Inc. v. Great W. Sugar Co., 698 P.2d 769, 776-77 (Colo. 1985) (holding that a court may consider extrinsic evidence of usage and circumstances to determine whether ambiguity exists). See also Roberts v. Am. Family Mut. Ins. Co., 113 P.3d 164, 167 (Colo.App. 2004) (where a contract term has a special technical meaning or usage unique to an industry, parol evidence may be considered in giving meaning to the term), rev’d on other grounds, 144 P.3d 546 (Colo. 2006).

35. CRS § 13-20-808(4)(c).

36. Id. The Fire, Casualty & Surety (FC&S) Bulletins are "used by insurance agents and brokers to interpret standard insurance policy provisions." Fireguard Sprinkler Sys., Inc. v. Scottsdale Ins. Co., 864 F.2d 648, 652 (9th Cir. 1988).

37. See, e.g., Insurance Services Offices, Inc. (ISO) Circular, Commercial General Liability Program Instructions Pamphlet (July 15, 1986); FC&S Bulletins: Public Liability at Aa 16-17 (Sept. 1993); FC&S Bulletins: Public Liability, M.10-3 (Feb. 2002). Even had such materials been part of the record, absent this new law, Colorado’s parol evidence rule might have precluded their consideration. But see KN Energy, Inc., supra note 34 (extrinsic evidence of usage and circumstances may be used to determine whether ambiguity exists); Roberts, supra note 34 (parol evidence may be considered in giving meaning to contract term that has a special technical meaning or usage unique to an industry).

38. CRS § 13-20-808(4)(c).

39. CRS § 13-20-808(6)(a) and (b).

40. Cf. Public Serv. Co. v. Wallis & Cos., 955 P.2d 564, 568 (Colo.App. 1997) (insured bears burden of proving exception to pollution exclusion), rev’d on other grounds, 986 P.2d 924 (Colo. 1999).

41. CRS § 13-20-808(7)(a)(I) and (II).

42. Most ISO policies require that the insurer defend the insured against any "suit seeking damages because of property damage," and define "suit" as including a "civil proceeding in which damages are alleged because of property damage," or "any other alternate dispute resolution proceeding in which such damages are claimed and to which the insured must submit." Arguably, the Construction Defect Action Reform Act’s (CDARA) notice of claim process may qualify as an "alternate dispute resolution proceeding," a phrase typically undefined by commercial general liability policies.

43. CRS § 13-20-808(7)(b)(I)(A) and (B).

44. CRS § 13-20-808(7)(b)(II).

45. CRS § 13-20-808(7)(b)(III).

46. CRS § 13-20-808(1)(b)(II).

47. See CRS § 10-3-1115(1)(a) (an insurer "shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party claimant") and (b)(I) ("First-party claimant" means a person or entity "asserting an entitlement to benefits owed directly to or on behalf of an insured under an insurance policy"). But compare Stresscon Corp. v. Rocky Mtn. Struc., Inc., No. 09-cv-3252 (Denver District Court April 22, 2010) (liability insurer’s failure to defend subject to statute) with New Salida Ditch Co. v. United Fire & Cas. Inc., No. 08-cv-00391-JLK, 2009 WL 5126498, 2009 U.S. Dist. LEXIS 118377, (D.Colo. Dec. 18, 2009) (contra). Cf. Lennar Corp. v. Great Am. Ins. Co., 200 S.W.3d 651, 703 (Tex.App. 2006) (although liability policies are termed "third-party" policies, the duty to defend is a form of first-party insurance contained within the liability policy); Rx.Com Inc. v. Hartford Fire Ins. Co., 364 F.Supp.2d 609, 617 (S.D.Tex. 2005) (demand for defense was "first-party claim" under statute mandating prompt payment of claims). For a recent discussion of Colorado’s prompt payment statute, see Kristofco, "CRS §§ 10-3-1115 and -1116: Providing Remedies to First-Party Claimants," 39 The Colorado Lawyer 69 (July 2010).

48. "‘Insurance’ means a contract whereby one, for consideration, undertakes to indemnify another or to pay a specified or ascertainable amount or benefit upon determinable risk contingencies." CRS § 10-1-102(12) (emphasis added). See also General Security, supra note 1 at 534-35 (discussing implied "fortuity" condition).

49. General Security, supra note 1 at 529. Cf. Hunt v. Aetna Casualty & Surety Ins. Co., 387 P.2d 405, 406-07 (Colo. 1963); Adams–Arapahoe Joint School Dist. v. Cont’l Ins. Co., 891 F.2d 772, 774-75 (10th Cir. 1989).

50. See Adams–Arapahoe Joint Sch. Dist., supra note 49 at 775, quoting Texas E. Transmission Corp. v. Marine Office-Appleton & Cox Corp., 579 F.2d 562, 564 (10th Cir. 1978).

51. For a general discussion of these doctrines and their nuances, see Medaglia et al., "The Status of Certain Nonfortuity Defenses in Casualty Insurance Coverage," 30 Tort & Ins L.J. 943 (Summer, 1995). See also Stonehenge Engineering Corp. v. Employers Ins. Of Wausau, 201 F.3d 296 (4th Cir. 2000) (rejecting application of known loss doctrine in construction defect progressive damage case where notice of claim not proven to establish that insured knew that imposition of liability on it was substantially certain to occur in light of availability of various defenses and existence of other, potential causes of damage).

52. Hoang v. Monterra Homes (Powderhorn), LLC, 129 P.3d 1028, 1034 (Colo.App. 2003), rev’d on other grounds, Hoang v. Assurance Co. of Am., 149 P.3d 798 (Colo. 2007).

53. Id.

54. FC&S Bulletins, Public Liability, M.19-1 through M.19-10 (Nat’l Underwriter Co., Nov. 2003) (lengthy discussion of Montrose exclusion from insurance industry’s perspective).

55. This California case refused to imply such an exclusion into a liability policy. Montrose Chem. Corp., supra note 8 at 904-06 (discussing the loss-in-progress doctrine, and holding that as long as there is any contingency with respect to liability, an insurable interest exists). See also FC&S Bulletins, Public Liability, A.1-2 (Nat’l Underwriter Co., 2007) (referring to "known loss" (Montrose) exclusions); FC&S Bulletins, supra note 54 (discussing same).

56. See, e.g., Trinity Universal Ins. Co. v. Northland Ins. Co., No. C07-0884-JCC, 2008 U.S. Dist. LEXIS 72196 at *1-*7, 2008 WL 4386760 at *4-*6 (W.D.Wash. Sept. 23, 2008) (known loss provision precluded coverage for insured subcontractor where subcontractor had notice of water intrusion and damage to condominiums allegedly caused by its stucco work before insurance policy incepted); Essex Ins. Co. v. H&H Land Dev. Corp., 525 F.Supp.2d 1344, 1347 (M.D.Ga. 2007) (disputed issues of fact existed whether, under "known loss exclusion," complaints by one homeowner regarding groundwater contamination under his property were sufficient to make developer aware that such property damage was occurring on two other homeowners’ properties, especially where insured believed its prior remedial measures had eliminated the problem of excess runoff); Westfield Ins. Co. v. Sheehan Constr. Co., Inc., 580 F.Supp.2d 701, 716 (S.D.Ind. 2008) (damage to new homes constructed by insured general contractor was excluded from coverage only if insured knew before policy commenced that property damage had occurred).

57. Public Service Co. v. Wallis & Cos.,986 P.2d 924 (Colo. 1999).

58. Id. at 939.

59. Id. at 940.

60. Id. A "self-insured retention" (SIR) is like a deductible; it is an amount of money that the policyholder must pay before the insurer’s indemnity payment obligation is triggered.

61. Id. at 940-41. The Court also held that if liability is allocated according to the time-on-the-risk method, the insurer is not also entitled to a set-off for amounts the policyholder receives in settlement from other insurers. Id. at 935.

62. Id. at 940. Cf. Hoang, supra note 52 at 1032 (approving "front-loading" allocation of property damage to earlier policy periods when most significant repairs first became necessary, even if damage not obvious), rev’d on other grounds, Hoang v. Assurance Co. of Am., supra note 52 at 798.

63. Another inadvertent effect of Public Service Co.’s apportionment rule is to render it very difficult to trigger any excess or umbrella policies because they require exhaustion of the underlying limits, and such exhaustion rarely occurs if the primary coverage liability is prorated across policy periods and coverage under later policies is barred by Montrose provisions.

64. CRS § 10-4-110.4(1). The Act does not resolve the question of whether an insured’s knowledge of a third-party allegation or claim of the insured’s liability for property damage alone constitutes knowledge of any actual property damage itself; however, language expressly permitting insurers to exclude coverage based solely on the insured’s knowledge of a claim or suit was deleted from the bill during the amendment process.

65. See CRS § 13-20-808(6) (insurer bears burden of proving by preponderance of the evidence that policy provision bars or limits coverage). Cf. Bohrer v. Church Mut. Ins. Co., 965 P.2d 1258, 1264 (Colo. 1998) (when both covered and noncovered conduct "causes injury resulting in damages, and the excluded conduct has not occurred in close temporal and spatial relationship to the covered conduct," the exclusion will not defeat coverage); State v. Allstate Ins. Co., 201 P.3d 1147, 1165-67 (Cal. 2009) (questions of fact existed regarding coverage apportionment between covered and uncovered losses; if damages indivisible, all damages are covered; burden on insurer to prove divisibility of damages).

66. CRS § 10-4-110.4(2).

67. CRS § 10-4-110.4(3).

68. See H.B. 10-1394, Section 3 (Applicability), signed into law by Governor Bill Ritter on May 21, 2010. Historically, when a bill contains a "safety clause," as here in section 4, it is immediately effective on signing. See generally Van Kleeck v. Ramer, 156 P. 1107 (Colo. 1916). See also January 18, 2008, Legal Memorandum (Office of Legislative Legal Services).

69. See In re Estate of DeWitt, 54 P.3d 849, 854 (Colo. 2002). See also Day v. Madden, 48 P. 1053, 1056 (Colo.App. 1897) (right to have controversy determined by existing evidentiary rules not a vested right; evidentiary changes are not retrospective because they are to be applied in future trials and do not affect previous trials); United Securities Corp. v. Bruton, 213 A.2d 892, 893, 894 (D.C.App. 1965) (holding "[t]here is no vested right in a rule of evidence, and a statute relating solely to procedural law, such as burden of proof and rules of evidence, applies to all proceedings after its effective date even though the transaction occurred prior to its enactment.") The United Securities Corp. rule was adopted by the Colorado Court of Appeals in Krumback v. Dow Chemical Co., 676 P.2d 1215, 1218 (Colo.App. 1983).

70. See Suley v. Board of Ed., 633 P.2d 482, 483 (Colo.App. 1981).

71. In re Estate of DeWitt, supra note 69 at 854, quoting Denver S. Park & Pac. Ry. Co. v. Woodward, 4 Colo. 162, 167 (1878).

72. Id. at 855, quoting City of Greenwood Village v. Petitioners for the Proposed City of Centennial, 3 P.3d 427, 445 (Colo. 2000).

73. City of Golden v. Parker, 138 P.3d 285, 290 (Colo. 2006).

74. Dewitt, supra note 69 at 860 (retrospective application of law proper because insurance industry and probate process both highly regulated by statute). Cf. Alliance of Auto. Mfgs. v. Gwadosky, 304 F.Supp.2d 104, 115 (D.Me. 2004) ("[o]ne whose rights, such as they are, are subject to state restriction, cannot remove them from the power of the State by making a contract about them . . . courts look long and hard at the reasonable expectations of the parties [and] . . . examine whether the parties operated in a regulated industry") (internal quotes and citations omitted).

75. CDARA, of which the Act is a part, was adopted in 2001 and has been revised three times since then. Colorado’s insurance code, of which the Act also is a part, undergoes regular revision.

76. CRS § 13-20-808(1)(b)(IV).

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.