Thursday, January 14, 2010

Thermo Development v. Central Masonry Corp. Explained

In Thermo Development, Inc. v. Central Masonry Corp., 195 P.3d 1166 (Colo. App. 2008), the developers brought an action for contribution and indemnity against masonry and plaster subcontractors upon settling a water intrusion claim asserted by a condominium owner and condominium association. The developers argued that C.R.S. § 13-80-104(1)(b)(II)(B) permitted them to file claims against the subcontractors within ninety days of settling the underlying claims regardless of whether the applicable six-year statute of repose had expired. In response, the subcontractors argued that the ninety-day tolling provision provided by the statute served only to toll the statute of limitations, and not the statute of repose. The trial court agreed that the ninety-day tolling provision applied to the statute of limitations only and the developers appealed.

The Court of Appeals affirmed the trial court’s decision, determining that the plain language of C.R.S. § 13-80-104, the General Assembly’s intent when enacting the statute, and the preexisting case law all supported its interpretation that the ninety-day tolling provision afforded under C.R.S. § 13-80-104(1)(b)(II)(B) applies only when a claim arises, and must be brought, for purposes of the two-year statute of limitations under section C.R.S. § 13-80-102.

In light of the Court of Appeals’ decision, general contractors and developers should be particularly mindful of the timing issues associated with their claims against subcontractors and design professionals. The applicable statute of repose in Colorado, codified at C.R.S. § 13-80-104(1)(a) and (2), requires that all actions against any construction professional (including those providing design, planning, construction, supervision, inspection, or observation functions) must be brought no more than six years after substantial completion of the improvement to the real property, unless the claims arise during the fifth or sixth year after substantial completion, in which case the statute of repose is extended by two years. General contractors and developers are subject to the same statute of limitations and repose as are homeowners and homeowner associations. As such, a general contractor or developer which intends to bring claims against subcontractors or design professionals, in response to claims asserted by a homeowner or homeowner association, must ensure that their claims are brought within two years after a claim arises (or ninety days after settlement of the claim), an in no case after the applicable statute of repose has expired.

If you have any questions regarding the Thermo Development case, or anything else pertaining to construction law in Colorado, please contact Derek Lindenschmidt at (303) 987-9814 or by e-mail at Lindenschmidt@hhmrlaw.com. For a more full explanation of construction law in Colorado, please visit our website.

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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.