Colorado Senate Bill 13-052 Dies in Committee

On April 17, 2013, the Colorado Senate Judiciary Committee voted, along party lines, to postpone indefinitely SB 52. Here is a link to the Denver Business Journal's story regarding the bill and its untimely demise: "Lawmakers kill lawsuit limits on condo defects."

Unfortunately, it will be at least another year before the legislature will have the ability to provide some much needed relief to the Colorado construction industry. I would like to thank those who came out to support Senate Bill 52 and those who contacted legislators to urge their support. As noted by the Denver Business Journal, "[Senator ] Scheffel is a resilient legislator — this is the man who's brought bills pushing some form of business personal property tax relief for five straight years — and you can bet he'll be back with some effort at limited construction-defects tort reform next year." 

Until then, please feel free to contact me by e-mail at mclain@hhmrlaw.com or by telephone at (303) 987-9870 if you have any questions regarding construction law in Colorado. 

- David M. McLain

Update on Colorado Senate Bill 13-052

Here is an update regarding SB 52 from Amie Mayhew, Executive Director of the Colorado Association of Home Builders:

Yesterday, the Senate Judiciary Committee heard the proponents testimony on SB-52.  Because the Senate was due back on the floor by 5:00 they were not able to hear all of the opponents or to deliberate.  

SB-52 has been scheduled for tomorrow, Wednesday, April 17th at 1:30 p.m. In room 356 – the Committee will hear from the rest of the opponents and will then vote on the bill.  If you can't join us at the Capitol, you can listen to the hearing online by clicking here.  When you arrive on this page after 1:30 p.m. - you'll need to click on "Listen to Event."  

A huge thank you to all of the witnesses who testified in favor of SB-52 for us yesterday!  

• Mayor Marc Williams, Arvada
• John Covert, MetroStudy
• Tom Clark, Metro Denver Economic Development Corp., the Denver Metro Chamber of Commerce and C3, The Colorado Competitive Council
• Brittany Morse-Saunders – Downtown Denver Partnership
• Mike Fitzgerald – Denver South Economic Development Partnership
• Gary Frisch, Professional Independent Insurance Agents of Colorado
• Tony Milo - Colorado Contractors Association and Michael Gifford Associated General Contractors 
• Ken McLagan, Hyder Construction 
• Mike Wisneski and Kevin Eronimous – AIA Colorado
• Wendy Amann, American Council of Engineering Companies of Colorado, Allen Lisowoy, Colorado Association of Geotechnical Engineers, Andrew Kelsey, Structural Engineers Association of Colorado
• Mark Trenka – Colorado Association of REALTORS
• Chetter Latcham, Shea Homes
• Gary Godden, Godden, Sudek Architects 
• Chris Pressley, Meritage
• Eric Eckberg, Village Homes
• Rip Reid, Standard Pacific
• Tom Hall, Renaissance Homes
• Ryan Warren, Polsinelli Shughart 
• Dennis Polk, Holley, Albertson & Polk
• David McLain, Higgins, Hopkins, McLain & Roswell 

I believe that the names in bold are those witnesses who are members of the CAHB. I will provide an additional update after tomorrow's hearing. In the interim, please feel free to contact me with any questions you may have regarding Senate Bill 13-052 or construction litigation in Colorado. I can be reached by telephone at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.

- David M. McLain

Colorado Senate Bill 13-052 Has Been Scheduled for its First Hearing April 15th in the Senate Judiciary Committee

After a long wait, Colorado SB 13-52 has been scheduled for its first hearing in the Senate Judiciary Committee on Monday, April 15th at 1:30. The long delay in hearing was caused by a desire to wait for the release of a study to determine why there are so few construction professionals willing to build for-sale multi-family projects, particularly those along the Denver Metro Area's growing web of mass transit lines. Unfortunately, it appears as though there may be a wrench in the works with respect to this study, and it may not be forthcoming after all.  

As currently drafted Senate Bill 52 contains the following four parts:

Section 1 creates the "Transit-oriented Development Claims Act of 2013."

Section 2 institutes a right to repair for construction professionals that receive a notice of claim with respect to a construction defect in a transit-oriented development.

Section 3 institutes a binding arbitration requirement for claims against construction professionals with respect to transit-oriented development. This section also makes construction professionals immune to suit for environmental conditions including noise, odors, light, temperatures, humidity, vibrations, and smoke or fumes causally related to transit, commercial, public, or retail use.

Finally, with respect to construction defect actions in general, Section 4 clarifies that the 90-day tolling provision found within C.R.S. § 13-80-104 for third-party claims against downstream construction professionals tolls the running of the statute of limitation and the statute of repose applicable to those claims.

Current supporters of Senate Bill 13-052 include:

·       American Institute of Architects ·       Associated Builders & Contractors ·       American Council of Engineering Companies ·       Associated General Contractors of Colorado ·       Colorado Association of Geotechnical Engineers ·       Colorado Association of Home Builders ·       Colorado Association of Mechanical & Plumbing Contractors ·       Colorado Association of REALTORS ·       Colorado Civil Justice League ·       C3, the Colorado Competitive Council ·       Colorado Concern ·       Colorado Contractors Association ·       Denver Metro Chamber of Commerce ·       Denver South Economic Development Partnership ·       Denver Water ·       Douglas County Business Alliance ·       Downtown Denver Partnership ·       Hispanic Contractors of Colorado ·       Housing Colorado ·       Independent Bankers of Colorado ·       Independent Electrical Contractors of Colorado ·       International Electrical Contractors ·       Mayor Jim Gunning, Lone Tree ·       Mayor Bob Murphy, Lakewood ·       Mayor Marc Williams, Arvada ·       Mayor Heidi Williams, Thornton ·       Metro Denver Economic Development Corp. ·       Metro North Chamber of Commerce ·       NAIOP Colorado ·       Professional Independent Insurance Agents of Colorado ·       Rocky Mt. Chapter, National Electrical Contractors Association ·       Structural Engineers Association of Colorado

The Senate Judiciary Committee is made up of five members, including Senator Guzman, the Chairman, Senator Ulibarri, the Vice-Chairman, Senator Aguilar, Senator King, and Senator Lundberg. If you are available to come to support the bill on Monday, please make a point of it.

To learn more about SB 52 or construction litigation in Colorado, you can reach David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.

Travelers v. Larimer County and the Concept of Covered Cause of Loss

Travelers Indemnity Company (“Travelers”) recently won a decision against Larimer County regarding a claim for damage caused to the roofs of several buildings at the County Fairgrounds.  Travelers Indemnity Company v. Board of County Commissioners for Larimer County, Slip Copy, 2013 WL 238865, p. 1 (10^th Cir. 2013).  Larimer County alleged, in district court, that snowstorms and the weight of the snow build-up caused damage to the roof structures.  Id.  After the district court found for Travelers on a motion for summary judgment, Larimer County appealed the ruling, claiming that Traveler’s was obligated under the insurance policy to pay for repair costs to portions of the roofing structure.  Id.

The underlying claim for repairs originates with several snowstorms that caused damage to several buildings on the County Fairgrounds.  The damage claimed was widespread to the roof structures, evidenced by rolling and buckling purlins (horizontal beams running along the length of the roof, resting upon the principal rafters at right angles and supporting the ordinary rafters).  Travelers denied the claim based on its own investigation which concluded the damage was caused by design and construction defects, and therefore excluded from coverage under the insurance policy.

The relevant language of Larimer County’s insurance policy with Travelers (the “Policy”) states that Travelers will “pay for direct physical loss or damage” to the property if that damage is “caused by or resulting from a Covered Cause of Loss.”  Id.  Covered Loss is defined in the Policy as “risks of direct physical loss unless that loss is excluded” by other provisions in the Policy.  Id.  The language of the defective construction exclusion states, “in the event that an excluded cause of loss . . . results in a Covered Cause of Loss, [Travelers] will be liable only for such resulting loss or damage.”  Id. 

The Court focused on the specific language providing that where “an excluded clause of loss -here, defective construction- “results in a Covered Cause of Loss,” any resulting loss is covered.  Id. at 2.  Essentially, even though a construction defect is not covered by the Policy, if that defect causes (or results in) a Covered Cause of Loss, and then that Covered Cause results in property damage, the resulting property loss is covered.  Id.  In effect, the exception provides for coverage only when the excluded cause becomes a new causal agent that itself causes resultant damage.  Id. 

In relation to the facts of the case, the Court found that while the defective condition of the roof may have acted as a causal agent to damage the purlins, the purlins themselves are not a Covered Cause of Loss resulting in additional damage.  Id.  Larimer County was only claiming a loss for the damage to the purlins, not that the damage to the purlins caused some other loss or property damage.  Id. 

The Court stated that the claimed damage was the displacement of the purlins and the unambiguous language of the exclusion precludes coverage.  The Court agreed with the district trial court and affirmed the summary judgment. 

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