The
Colorado Homeowner Protection Act of 2007 (“HPA”), codified at C.R.S. §
13-20-806(7), specifically voids express waivers of, or limitations on, a
residential property owner’s ability to enforce any rights, remedies, and
damages provided by law in a construction defect case. Practically speaking, this means that
limitation of liability provisions in contracts between construction
professionals and residential homeowners are void and will not be enforced in
Colorado. The HPA can extend even
further, however, to subcontractors on residential projects, as seen in a
recent District Court ruling.
The HPA was tested in Thacker v.
Gallery Homes, et al., v. Terracon Consultants, Inc., et al., Larimer
County District Court Case No. 2007CV1195.
Gallery Homes hired Terracon to provide geotechnical and structural
engineering services at the Colony Ridge subdivision in Loveland, Colorado. Terracon performed work for Gallery Homes
under three separate contracts, each of which included a provision limiting
Terracon’s total liability to Gallery Homes.
After the project was completed, two
homeowners filed suit against Gallery Homes for alleged construction defects
involving movement of their basement floor systems and foundations and damage
to porches, patios, garages, and driveways.
Gallery Homes sued Terracon as a third-party defendant, and Terracon
sought to enforce its limitation of liability provisions via a partial summary
judgment motion.
Judge Gregory M. Lammons denied Terracon’s
motion in an order dated April 7, 2010, stating that the HPA “expressly states
that any attempt of a construction professional to limit the amount of damages
for which they are liable for work done on a residential project is void as
against public policy.” The order also
affirmed the definition of a construction professional under C.R.S. §
13-20-802.5(4) as “an architect, contractor, subcontractor, developer, builder,
builder vendor, engineer, or inspector performing or furnishing the design,
supervision, inspection, construction, or observation of the construction or
any improvement to the real property.
Importantly, Judge Lammons noted that
the HPA does not state that only homeowners may enforce its provisions, and
that the HPA is applicable to Terracon as
a third-party defendant subcontractor on a residential project.
After the parties proceeded to trial,
the jury found that Terracon was not negligent in providing its services to
Gallery Homes. Gallery Homes appealed
the verdict and Terracon cross-appealed the denial of its motion to enforce its
limitation of liability clauses. In an
unpublished opinion dated May 31, 2012, Gallery Homes v. Terracon
Consultants, Inc., d/b/a Terracon Consulting Engineers & Scientists, the
Court of Appeals declined to rule on the enforceability of Terracon’s
limitation of liability provisions, finding instead that Terracon’s
cross-appeal was moot and should not be addressed.
For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.
