HHMR's Blog Listed in Construction Marketing Ideas' List of Construction Blogs

I am happy to announce that Colorado Construction Litigation, the blog by the attorneys at Higgins, Hopkins, McLain & Roswell, LLC is gaining traction by recently being listed in Construction Marketing Ideas' list of construction blogs.

According to that site, the author has sought "to link to any relevant blog (without expectation of reciprocation). In recent months, as the number of blogs has increased, I’ve tightened the rules somewhat. Blogs need to be established for at least a few months, updated at least weekly, and contain useful and relevant original information to qualify for free listings. If I sense the blog’s primary purpose is search engine optimization, I will invite the person posting to purchase a sponsored link/listing."  The icing on the cake is that we have qualified for a free listing.

If you are looking for other blogs related to the construction industry, this site has aggregated quite a list and serves as a useful tool.  I hope that for those of you in the construction industry will find this site useful.

If you have any questions regarding construction law or construction litigation in Colorado please contact David M. McLain by phone at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com. For an explanation of construction law in Colorado please visit our website or request a copy of our Overview of Construction Defect Litigation in Colorado.

Lafarge v. KECI and a Subcontractor's Duty to Defend

Subcontract agreements often include provisions requiring a subcontractor to defend and to indemnify a general contractor. If properly phrased in the subcontract agreement, the duty to defend can be triggered more easily than, and is distinct from, the duty to indemnify. In Lafarge North America, Inc. v. KECI Colorado, Inc., 2010 WL 726052 (Colo. App., March 4, 2010), a subcontractor was in breach of its agreement for failing to provide a defense to the general contractor, even though the subcontractor’s liability and duty to indemnify the general contractor had not been decided.

In that case, Lafarge was the general contractor for a Colorado Department of Transportation (CDOT) highway construction project, and KECI provided traffic control services pursuant to a subcontract with Lafarge. A motorcyclist, with his wife riding as a passenger, collided with a Lafarge vehicle parked on the only traffic lane of a highway entrance ramp. The motorcyclist was killed and the wife was seriously injured. The wife sued Lafarge, the Lafarge employee who parked the vehicle, and KECI for negligence.

Lafarge demanded that KECI provide a defense to, and indemnify, Lafarge, as required in the subcontract agreement. KECI refused to do either, stating that it was not at fault for the accident. Lafarge settled with the wife for $700,000 and sued KECI and its insurers for failure to provide defense and indemnity. At the trial court level, Lafarge won on summary judgment and the court ruled KECI breached both its duty to defend and duty to indemnify. KECI appealed.

The Colorado Court of Appeals found that KECI's duty to defend Lafarge was triggered more easily than, and existed independently of, its duty to indemnify. The indemnification and defense provision in the Lafarge/KECI agreement required KECI to indemnify Lafarge and defend it from any and all claims, suits, or liabilities for injuries arising in whole or in part of any act or omission of KECI. The wife’s complaint included the mere allegation that KECI was negligent. As such, the Court of Appeals found that the subcontract unambiguously required KECI to indemnify Lafarge where Lafarge’s liability arises out of any incident which was at least partially the result of KECI’s acts or omissions. The Court of Appeals agreed with KECI, however, that the district court erred in ruling that KECI was liable to Lafarge under a duty to indemnify. KECI’s liability for indemnity would be based on its actual fault, which was never determined.

The obligation to defend may arise from allegations in a complaint, which, if proven, would impose liability covered by the indemnification provision. It is not necessary to arrive at an ultimate determination of liability or indemnity for the duty to defend to be triggered. In the event a general contractor is sued, subcontractors, whose work is implicated in the plaintiff’s allegations, may already owe the general contractor a duty to defend. A subcontractor’s assertion that it did nothing wrong is insufficient at that stage to avoid its obligation to provide a defense for the general contractor.

A second issue in the case is also instructive. Lafarge’s contract required KECI to obtain liability coverage and name Lafarge as an additional insured. KECI provided Lafarge an insurance certificate which noted that any coverage provided to Lafarge was excess (i.e., that any coverage from KECI’s insurers would be required only after Lafarge’s own policies were exhausted). In deposition, a Lafarge representative stated that he obtained the certificate, but did nothing to require KECI to obtain primary coverage, as Lafarge had intended. The Court of Appeals reviewed the contract and found that it did not unambiguously require KECI to provide primary insurance. The Court of Appeals found that KECI did not breach its subcontract by failing to provide primary insurance. Therefore, if it is important for a builder or general contractor to have primary additional insured coverage, it must (1) explicitly require such in its subcontract agreements and (2) follow-up with subcontractors to ensure that the proper coverage is actually obtained. 

Also, while we are on the topic of additional insurance requirements, and although it was not discussed in the Lafarge case, it is important that builders and general contrators require that the additional insurance coverage supplied by subcontractors cover both ongoing and completed operations.  All too often we tender the defense of a case to a builder or general contractor's putative AI carrier only to find that the subcontractor obtained additional insured coverage for ongoing operations only.  While this may seem like a detail too small to be trifled with, it makes all the difference in the world if you find yourself on the wrong side of a lawsuit.

If you have any questions regarding the Lafarge opinion, please contact Bret Cogdill by phone at (303) 653-0046 or by e-mail at cogdill@hhmrlaw.com. For a more full explanation of construction law in Colorado please visit our website or request a copy of our Overview of Construction Defect Litigation in Colorado.

David M. McLain to Speak at a Construction Defect Claims Seminar in Colorado, June 24, 2010

I am happy to have been asked by Lorman Education Services to moderate and speak at its Construction Defect Claims seminar on June 24, 2010.  Information regarding the seminar can be found here.  Note: You can receive $50 dollars off if you register with priority code 15000 and discount code Z7745121.

Other speakers at this seminar will include Robert H. Pratt, FCPE, Vice President and Principal of Demand Construction Services, Inc., Chris Rhody, Esq. founding member of McKenzie Rhody & Hearn, LLC, Mr. David W. Rudy, Just Accord, Inc., and Mr. Clayton Sharkey, Director of the Construction Practice Group of IMA of Colorado, Inc.

Benefits
 
Stop construction claim nightmares in their tracks - get on the right track from the start.

Attend this enlightening seminar and stay abreast of the latest issues relating to construction claims in Colorado. Our seasoned professionals will provide practical answers to your most pressing questions about calculating damages. You'll get an inside look at how to respond to confusing issues surrounding additional insured coverage.

Take advantage of this opportunity to make sure you stay current and stay out of trouble. You'll hear proven techniques for getting results - and getting ahead.

Benefits for You

• Learn from recent cases that affect your job
• Delve deeper into the claim process - know how to handle trial issues
• Get up to speed on Colorado law on calculating damages
• Skillfully maneuver through insurance options such as wrap-ups
• Hear about recent legislation related to additional insured coverage

 Learning Objectives

• You will be able to review recent construction decisions.
• You will be able to explain the notice of claim process.
• You will be able to discuss insurance industry ramifications.
• You will be able to identify additional insured coverage for developers and general contractors.

Who Should Attend?

This seminar is designed for attorneys, project managers, presidents, vice presidents, owners, engineers, architects, contractors, subcontractors and contract managers.

Continuing Education Units

• AIA 6.5
• CC 1.0
• PMI 6.5
• CO CLE 8.0

I hope to see you there.  If you cannot make it to the seminar, of if you have questions regarding construction litigation in Colorado that you need answered before June, please view our website or contact me for a copy of our Overview of Construction Defect Litigation in Colorado. As always, I can be reached by telephone at (303) 987-9813, or by e-mail at mclain@hhmrlaw.com.

Registration is Now Open for the 17th Anniversary West Coast Casualty's Construction Defect Seminar

Sheri Roswell and I will be speaking at the 17th Anniversary West Coast Casualty's Construction Defect Seminar, to be held on May 13th and 14th at the Disneyland Hotel in Anaheim, California.  For those of you who have not had the opportunity to attend one of the first 16 seminars, the WCC seminar is "the largest seminar of its kind worldwide focusing on all of the elements of the prosecution, defense, coverage and technologies of construction defect claims and litigation from a national perspective."

Our panel, entitled "Standing . . . Who Really Has the Right to Bring an Action in Construction Defect Cases?", will be moderated by the Honorable Mark Gibbons, of the Supreme Court of Nevada.  Other panelists will include the Honorable Allan Earl, of the Nevada District Court, the Honorable Rex Hesseman, of the Los Angeles County Superior Court, the Honorable Pendleton Gaines, of the Superior Court of Arizona for Maricopa County, Mark Scheer, Esq. and Dirk Holt, Esq. of Scheer & Zehnder, LLP. 

Please let me or Sheri know if you will be attending the seminar, as we would like to see you in California.  If you will not be attending, and have questions regarding construction litigation in Colorado, please view our website or contact me for a copy of our Overview of Construction Defect Litigation in Colorado.  I can be reached by telephone at (303) 987-9813, or by e-mail at mclain@hhmrlaw.com. 

Strategies for Managing Your Risk

I was recently asked to write an article for the Colorado Builder Forum, the Journal of the Colorado Association of Home Builders.  Being an attorney that has devoted my career to defending Colorado homebuilders involved in construction defect lawsuits, the topic I chose was naturally strategies for minimizing the risks associated with building in Colorado and how to avoid construction defect litigation.  This article is now available online, and can be found here.

If you have any questions regarding construction defect litigaton in Colorado, please contact David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com. For a more full explanation of construction law in Colorado please visit our website or request a copy of our Overview of Construction Defect Litigation in Colorado.

Is a Legislative Attack on Colorado Homebuilders Imminent?

Below is the text of e-mail communication sent yesterday from Colorado's Democratic Leadership to Democratic Committeepersons attending tonight's party caucuses:

Subject: A Caucus Message from Colorado’s Democratic Leadership
An Important Caucus Message from the Democratic Leader’s of Colorado’s General Assembly

From:

President of the Senate Brandon Shaffer
Speaker of the House Terrance Carroll
Asst. House Majority Leader Andy Kerr
Senate Majority Leader John Morse

March 15, 2010

Dear Precinct Committeeperson:


First, we would like to thank you for the time and effort you consistently give to the Democratic Party and all of our Democratic elected officials and candidates. Over the last few election cycles Colorado Democrats have enjoyed a level of success we have never seen before in our state. Without the commitment of you and your fellow Committeepersons this would never have been possible. Thank you.

We have provided a link to a PDF version of the resolution to your County Platform Committee that we respectfully request your caucus adopt on Tuesday, March 16th.

Also, please visit an online video that we have produced to help the caucus attendees understand the issue and the importance of this resolution.

• Watch the Colorado Democratic Caucus Message Video

• Watch the Colorado Democratic Caucus Message on Youtube

• PDF Resolution to print and bring to your caucus

We would like all Colorado Democrats to hear directly from our mouths on why we believe this issue is important to our Party.


As Democratic leaders in the General Assembly we know that we could have pushed to have this issue addressed by the state Party. However, this issue affects the largest group of Colorado Consumers – Homeowners. It is an issue that we believe needs to be discussed on the grassroots level.


As the heart and soul of our Party it is YOUR commitment that will be instrumental in developing the wide-spread support necessary to bring equality and justice back to Colorado homeowners.


Sincerely,


Brandon Shaffer, President of the Senate
Terrance Carroll, Speaker of the House
Andy Kerr, Asst. House Majority Leader
John Morse, Senate Majority Leader

While the resolution itself gives little clue as to the intent of the Democratic Leadership, the video contains a few hints that they may be going after the prejudgment interest in construction defect suits, interest to which the Colorado Supreme Court ruled homeowners are not entitled in the Goodyear case.

It appears to me as though the Democratic Leadership has asked for caucuses to adopt the resolution so that they have some political cover when they push to reintroduce prejudgment interest into construction defect lawsuits.  There have been no rumblings thus far about when or how the Democratic Leadership will attempt to pass this legislation, but keep your eyes on Senate Bill 10-045, the Homeowner Protection Act of 2010.

If you would like to be added to my e-mail distribrution list, which will cover legislative issues in more depth, will share strategic information, and will contain specific calls for action, please e-mail me at mclain@hhmrlaw.com.

Statute of Limitations Applicable to Claims Brought Under the Governmental Immunity Act

In Cochran v. West Glenwood Springs Sanitation District, 223 P.3d 123 (Colo. App. 2009), the plaintiff-homeowner brought a claim against the sanitation district alleging that its negligent maintenance of a sewer line damaged her home.   Pursuant to the court's factual findings, the plaintiff's claim accrued, and she discovered her injury, on August 24, 2006.  She timely filed her notice of claim on November 21, 2006 and the 90-day waiting period for the sanitation district to respond expired on February 19, 2007.  The plaintiff did not file her complaint against the sanitation district until November 18, 2008.  The trial court dismissed the plaintiff's complaint for failure to comply with the two-year statute of limitations found in C.R.S. § 13-20-102 and the plaintiff appealed.

On appeal, the plaintiff argued that her claim was saved based on a tolling provision found within the Colorado Governmental Immunity Act ("CGIA" or "Act").  The Act requires that any person claiming to have been injured by a governmental entity to file written notice within 180 days after the date he or she discovers the injury, i.e., the date on which he or she knew or should have known of both the injury and its cause, as a jurisdictional prerequisite to filing suit.  After a claimant files a notice, he or she must wait to file suit until either he or she receives notice that the governmental entity has denied the claim or until 90 days have elapsed.  The provision of the CGIA on which plaintiff relied states that "Any action brought pursuant to this article shall be commenced within the time period provided for that type of action. . . relating to limitation of actions, or it shall be forever barred; except that, if compliance with the provisions of subsection (6) of this section [the 90-day waiting period] would otherwise result in the barring of an action, such time period shall be extended by the time period required for compliance with the provisions of subsection (6) of this section."

In ruling that this provision did not toll the running of the statute of limitations, the Colorado Court of Appeals held that "the CGIA provides that the statute of limitations is tolled only when the 180-day notice is filed and the 90-day waiting period begins within 90 days of the expiration of the applicable statute of limitations."  Because plaintiff did not fall into this scenario, the court concluded that "under section 24-10-109(5), a statute of limitations is not tolled when the 90-day waiting period required by the CGIA has expired prior to the expiration of the applicable statute of limitations."  The Court of Appeals affirmed the dismissal of plaintiff's claim.

If you have any questions regarding the Cochran case, or anything else pertaining to construction law or construction litigation in Colorado, please contact David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com. For a more full explanation of construction law in Colorado please visit our website or request a copy of our Overview of Construction Defect Litigation in Colorado.

A New Exception to the Complaint Rule for Determining an Insurer's Duty to Defend in Colorado

On February 2, 2010, the Tenth Circuit Court of Appeals issued its decision in AIMCO v. Nutmeg Ins. Co., 593 F.3d 1188 (10th Cir. 2010).  While not a construction defect case, this case is very interesting and will certainly have an impact on the determination of coverage (and in particular duty to defend cases) for construction defect claims. 

In AIMCO, Nutmeg Insurance Company moved for summary judgment that it had no duty to defend the claims against AIMCO based on the allegations contained in the specific complaints against it.  The Tenth Circuit described Colorado's complaint rule like this:

"Under Colorado law, 'when an insurer refuses to defend and the insured brings an action for defense costs,' the duty to defend is determined by application of the complaint rule.  Under this rule, a duty to defend arises when the underlying complaint 'alleges any facts that might fall within the coverage of the policy.'  The insured's actual liability is not considered; instead, the duty is based on 'allegations in the complaint, which if sustained, would impose a liability covered by the policy.'  This duty arises even when it is 'not apparent from the pleadings in the case against the insured, but the allegations do state a claim which is potentially or arguably within the policy coverage, or there is some doubt as to whether a theory of recovery within the policy coverage has been pleaded.'  An insurer seeking to avoid its duty faces a 'heavy burden' of proving that the underlying claim cannot fall within the policy coverage."  (Citations omitted).

The question addressed by the Tenth Circuit Court of Appeals was "whether, under Colorado law, a court may also consider evidence outside the complaints in making this determination."  In answering this question in the affirmative, the court held that an insurer may not, in determining its duty to defend, disregard its knowledge of facts outside an individual complaint but contained in related complaints and known to the insured.

In so holding, the court acknowledged the existence of an exception to the complaint rule requiring an insurer to consider facts of which it is aware in parallel complaints that tend to show a duty to defend.  The court then discussed this generally accepted exception to the complaint rule, stating:

"The generally accepted rule on this issue by those states that have considered it seems to be that, if at the time an insurer determines whether it has a duty to defend, the insurer is aware of 'information from which it appears that there might be coverage for any of the damages sought from the insured, [it] has a duty to defend even if the allegations of the complaint themselves would not give rise to such a duty.'"

"Indeed, 'the logic behind this rule is unassailable. An insurer should not be able to escape its defense obligation by ignoring the true facts and relying on either erroneous allegations in the complaint or the absence of certain material allegations in the complaint.'"

The application of this exception to the complaint rule to construction defect claims is quite clear. Under the recent cases of General Security and Greystone, courts have been going out of their way, it seems, to limit their analysis to the four corners of the complaints in finding that there was no allegations pertaining to covered claims.  I wonder if those decisions would be the same if the courts had considered documents such as expert reports, which undoubtedly covered all aspects of resultant damge caused by the construction defects. I find it hard to imagine that the results would not have been different.

In construction defect cases in which carriers will be determining their defense obligations, after the AIMCO decision, it will be very important for counsel to incorporate by reference extraneous documents into the complaints and to provide the carriers with the organic documents referenced so as to demonstrate the covered claims.

If you have any questions regarding the AIMCO case, or anything else pertaining to construction law or insurance coverage issues in Colorado, please contact David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.  For a more full explanation of construction law in Colorado please visit our website or request a copy of our Overview of Construction Defect Litigation in Colorado.

HHMR's Blog Listed in "55 Resources on State Construction Laws"

I am happy to announce Colorado Construction Litigation, the blog by the attorneys at Higgins, Hopkins, McLain & Roswell, LLC has recently been listed in "55 Resources on State Construction Laws." 

According to that posting:  "Over the past few years, there has been an increasing emphasis on construction law and trends in construction law. Therefore, if an individual is involved in the construction business or in an affiliated industry, it is important to have a basic understanding of these construction law trends at this point in time in the 21st century. Here are 55 sites, 5 general on one for each state that will help you in your quest for information. With sites from construction law news, blogs, to lawyers that can help if you need it. If you are in the construction fields, this is a list you want to keep track of." 

The link to our blog correctly points out that "Higgins, Hopkins, McLain & Roswell, LLC is highly regarded for its experise in construction law and the litigation of complex construction claims. HHMR provides its clients with advice and counseling regarding the best methods to avoid litigation in the first place."

By looking through this blog, it is easy to see that its author has compiled a very good referral list to construction laws throughout the 50 states, as well as listing excellent materials regarding general construction law. I hope that for those of you who deal with construction litigation outside of Colorado, or need information regarding construction laws in other venues, will find this information useful.

If you have any questions regarding construction law or construction litigation in Colorado please contact David M. McLain by phone at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.  For an explanation of construction law in Colorado please visit our website or request a copy of our Overview of Construction Defect Litigation in Colorado.