Plaintiffs’ claims in Barry v. Weyerhaeuser Company are likely to proceed after initial hurdle.

By: Frank Ingham

On December 18, 2018, Federal Magistrate Judge Scott T. Varholak recommended in a written opinion that the Motion of Defendant Weyerhaeuser Company (“Weyerhaeuser”) to Dismiss Amended Complaint Pursuant to F.R.C.P. 12(b)(6) be denied. Barry v. Weyerhaeuser Company, 2018WL6589786 (D. Colo. 2018). As such, we believe District Court Judge Christine M. Arguello will accept this recommendation and the lawsuit will proceed.

At interest in this lawsuit are TJI joists designed, manufactured, and sold by Weyerhaeuser for residential construction. Headquartered in Seattle, Washington, Weyerhaeuser is one of the world’s largest private owners of timberlands, owning or controlling nearly 12.4 million acres in the United States and managing 14 million acres in Canada. It is a public company that trades on the New York Stock Exchange with revenues of $7.2 billion in 2017.[1] In addition to managing forests, Weyerhaeuser has interests in energy, minerals, and wood products.[2] 

In this case, the joists were used in homes built at the Wyndham Hill subdivision in Weld County and the Dove Creek in Douglas County. A lawsuit was filed in Colorado District Court, case number 2018CV01641, Barry et al. v. Weyerhaeuser Company. The six Plaintiffs worked in various capacities during the construction of the homes within the two subdivisions. In addition, as discussed below, there are class action lawsuits against Weyerhaeuser in five other states regarding the TJI joists. The joists are composed of wood particles and treated with Flak Jacket coating, a proprietary coating designed by Weyerhaeuser. Barry at 1. The joists are installed during construction to support floors and ceilings within the home and are typically covered by drywall or the flooring. The joists look like typical I-beams with the vertical center made wood chips, covered with the Flak Jacket coating.

In December 2016, Weyerhaeuser began commercial production of a fourth generation of Flak Jacket known as “Gen 4,”which contained a formaldehyde-based resin. Barry at 1. As reported by the American Cancer Society, formaldehyde is commonly found in building materials, including various wood products, adhesives, many household products, and even added as a preservative to food.[3] Formaldehyde is also released in automobile exhaust and tobacco smoke. Id.  Four months after production of Gen 4 began, in April 2017, Weyerhaeuser received notice that homeowners were complaining of an odor in homes where these joists were installed. Barry at 1. Weyerhaeuser concluded the odor was related to formaldehyde “off-gassing” and on July 6, 2017, sent a letter to dealers, distributors, and home builders warning them of the odor related to the joists which contain formaldehyde. Id. In a second letter sent that same day, Weyerhaeuser warned builders that workers in basements in affected homes to contact Weyerhaeuser’s customer care line for guidance. Id. In July 2018, Weyerhaeuser announced it stopped production and sales of these joists and advised affected homeowners to vacate their homes until the Flak Jacket could be remediated. Id. 

The Amended Complaint states the Plaintiffs were unknowingly exposed to dangerous levels of formaldehyde. Barry at 2. They alleged coughs, shortness of breath, burning eyes, rashes, sinus issues, and increased risks of respiratory ailments and cancer. Id. The Complaint alleges that the Occupational Safety and Health Administration (“OSHA”) recognized formaldehyde as a cancer hazard and respiratory illness. Id. According to Plaintiffs, and as confirmed by OSHA,[4] OSHA set a permissible exposure to formaldehyde limit of .75 parts per million in an eight-hour time weighted average. Id. At 2 parts per million, the maximum exposure allowed is 15 minutes, and levels exceeding 100 parts per million are immediately dangerous to life and health. Id.  Plaintiffs alleged they were exposed to levels exceeding 2 parts per million for many hours per day, for months. Id. at 3.

Weyerhaeuser moved to dismiss the two claims of Strict Liability and Negligence pursuant to F.R.C.P. 12(b)(6), failure to state a claim upon which relief can be granted. Magistrate Varholak recommended this motion be denied. Barry at 5. Under this rule, the court must accept the factual allegations as true and in the light most favorable to the plaintiff. Id. (citing Casanova v. Ulibarri, 595 F.3d 1120, 1124 (10th Cir. 2010)). To survive the motion, the amended complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Id. (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). A complaint must contain enough factual matter to suggest that the plaintiff is entitled to relief. Id. (citing Bell Atl. Corp. v. Twombly, 550 U.S. 554, 556 (2007)). The court reviews whether there are sufficient alleged facts supporting all the elements necessary to establish an entitlement to relief under the legal theory proposed. Id. (citing Forest Guardians v. Forsgren, 478 F. 3d 1149, 1160 (10^th Cir. 2007)).

For both claims, Weyerhaeuser argued Plaintiffs failed to plausibly allege they sustained any damages or that the product caused any damages they did sustain. Barry at 3. For negligence, a plaintiff must prove the existence of a legal duty on the part of the defendant, breach of that duty, causation and damages. Id. at 5 (citing Davenport v. Cmty. Corr. of Pikes Peak Region, Inc., 962 P.2d 963, 966 (Colo. 1998). For strict liability, Colorado recognizes three areas of the manufacturing process that lead to strict liability claims: 1) physical flaws due to improper manufacture; 2) inadequate design; and 3) inadequate warnings for safe use. Id. (citing Union Supply Co. v. Pust, 583 P.2d 276, 280 (Colo. 1978)). For each of the three areas, a plaintiff must prove, among other elements, that the alleged defect caused plaintiffs’ injuries. Id. (citing Barton v. Adams Rental, Inc., 938 P.2d 532, 536-37 (Colo. 1997), Wollam v. Wright Med. Grp., Inc. 2012 WL 4510695 at 2 (D. Colo. Sept. 30, 2012); Oja v. Howmedica, Inc., 111 F.3d 782, 791 (10^th Cir. 1997)).

Magistrate Varholak noted that Weyerhaeuser itself recognized the dangers from the defective joists and instructed homeowners to vacate their homes with these joists. Magistrate Varholak found these allegations plausibly allege the ailments were caused by the defective joists and recommended the Weyerhaeuser motion to dismiss be denied. Id. at 4-5.

Class Action Lawsuit

Berger & Montague, P.C. filed six class action lawsuits in federal courts in Colorado, Delaware, Minnesota, New Jersey, New York, and Pennsylvania against Weyerhaeuser regarding the TJI Joist.[5] The Colorado case is styled, Smith et al v. Weyerhaeuser Company, case number 17CV01900, and seeks more than $5 million in damages, exclusive of interests and costs.[6] In the initial pleading, the class of plaintiffs lists only Alyse Smith and Ryan Smith, but purports to represent a class of hundreds or thousands of members. Locally, the Law Office of Franklin D. Azar & Associates, P.C. is listed as counsel for Plaintiffs. This lawsuit was filed on August 4, 2017. On August 3, 2018, the case was administratively closed by order granting Weyerhaeuser’s Motion to Compel Arbitration and Dismiss or Stay This Action. Plaintiffs’ home purchase agreements with the developer required arbitration for any supplier who provided labor, services, or materials to the project.  The Court agreed with Weyerhaeuser and ordered the matter to arbitration.

Conclusion

Magistrate Varholak merely issued a recommendation. However, in light of the actions taken by Weyerhaeuser to warn homeowners to leave their homes, along with the OSHA standards, we find it unlikely District Court Judge Christine M. Arguello will reject the recommendation and deny plaintiffs their day in court. It is not yet known if Weyerhaeuser will seek to enforce arbitration in the Barry lawsuit, or whether the cases will be joined into a single class action. We believe both to be likely scenarios to ensure judicial economy.

Concerning our developer clients, the arbitration provisions in the home purchase agreements between the developer and the home buyer were broad enough to benefit a material provider such as Weyerhaeuser.  We recommend broad arbitration provisions in construction contracts as arbiters tend to avoid the emotional issues regarding home defects, where juries tend to be more empathetic.  This is evident by the fact that Plaintiffs in the Smith class action lawsuit fought to prevent arbitration. 

For additional information regarding Barry et al. v. Weyerhaeuser Company or about construction defect litigation in Colorado, generally, you can reach Frank Ingham by telephone at (303) 653-0046 or by e-mail at ingham@hhmrlaw.com.

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[1] https://en.wikipedia.org/wiki/Weyerhaeuser

[2] https://www.weyerhaeuser.com/sustainability/our-commitment/our-story/

[3] https://www.cancer.org/cancer/cancer-causes/formaldehyde.html

[4] https://www.osha.gov/OshDoc/data_General_Facts/formaldehyde-factsheet.html

[5] https://bergermontague.com/cases/weyerhaeuser-lawsuit-tji-joists-with-flak-jacket/

[6] The amount of damages sought is likely much higher than $5 million.  This is the amount listed in the Complaint as required to give jurisdiction to the District Court of Colorado.[1] 

Two things to consider before making warranty repairs

By David M. McLain

In my last article: “What a construction defect ‘win’ looks like for a builder,” I made the point that builders should go to great lengths to work with homeowners to resolve legitimate problems through the entire statute of repose, in order to prevent the homeowners from involving attorneys.  Again, happy homeowners do not call attorneys and do not bring construction defect claims.  In this article, I want to address two ramifications of this strategy that builders should consider.  First, builders must be aware that any repairs performed will likely start anew the statutes of limitation and repose for the repairs.  Second, builders should inform and involve their insurers in this process so as to avoid running afoul of their carriers’ “voluntary payments” clauses.  In the long run, keeping homeowners happy is well worth the cost, especially if you keep in mind these additional considerations.  

 

In Colorado, an owner has two years after he or she first notices, or should have noticed, the manifestation of a defect in which to bring a claim, but in no event can any claim be brought more than six years after substantial completion unless the defect becomes manifest within years five or six, in which case the owner gets two more years to bring the claim.  For all intents and purposes, Colorado therefore has a two-year statute of limitation and a six-plus-two-year statute of repose.  Prior to 2010, the repair doctrine equitably tolled the running of any statute of limitation or repose while the builder performed repairs or promised to perform repairs.  As long as the owner relied on the promises in not suing, the tolling continued until the builder finished the repairs or stopped promising such repairs.  The Colorado Supreme Court did away with the repair doctrine in 2010 when it issued its decision in Smith v. Executive Custom Homes.

 

Today, there is no tolling if the builder merely promises, but does not perform repairs.  If an owner sends a notice of claim pursuant to C.R.S. § 13-20-803.5, and the builder actually performs repairs in response, the statutes of limitation and repose will be tolled until sixty days after the completion of the notice of claim process, including the repairs.  Whether the owner goes through the formal notice of claim process, or simply sends a warranty request, and the builder performs repairs, the owner may be able to successfully argue that the statutes of limitation and repose are reset as to the repairs themselves by bringing a claim for negligent repair.

 

An additional consideration to have in mind is the effect of making repairs on your insurance coverage.  Especially in situations where the cost of repair is substantial, builders should consider involving their insurance companies in the discussion and process so that any money spent on performing the repairs may be treated, if the repair is ultimately unsuccessful, as satisfying, either totally or partially, the deductible or self-insured retention.  If the carrier is not on board with the repairs beforehand, and a claim is filed afterward, carriers will likely argue that the money spent was done without their knowledge and consent and, therefore, paid voluntarily by the builder.  Voluntary payments do not satisfy deductibles or self-insured retentions.

 

Nothing contained in this article is intended to scare builders from spending the money necessary to keep homeowners happy.  To the contrary, that advice still applies.  Builders should know, however, that the repairs performed may restart the statutes of limitation and repose for those repairs.  Also, unless you want to get stuck holding the bag for more expensive repairs, involve your carriers early in the process and endeavor to get their agreement that any moneys spent to keep homeowners happy, if ultimately unsuccessful, can be treated as satisfying your deductible or self-insured retention.  Now go forth and keep the plaintiffs’ attorneys at bay.

 

For additional information regarding warranty repairs or about construction defect litigation in Colorado, generally, you can reach David  by telephone at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.

THE “RIGHT TO REPAIR” CONSTRUCTION DEFECTS IN THE ROCKY MOUNTAIN AND PLAINS REGION

In excess of 30 states have enacted tort reform legislation requiring property owners to notify construction professionals of the presence of alleged construction defects prior to the commencement of a lawsuit. These statutes also often permit construction professionals to make an offer of repair within a statutorily defined period of time after receipt of a notice of claim letter. Undoubtedly, the notice-of-claim process has played a meaningful part in bringing construction professionals and claimants to timely resolutions of construction defect concerns in isolated instances.

 

However, while these statutes are commonly referred to as “right of repair” legislation, their practical effect is often reduced to little more than procedural empty gestures serving as a prelude to litigation. This article will briefly survey the “right to repair” statutes in Colorado, Montana, North Dakota and South Dakota. In Nebraska, New Mexico, Utah and Wyoming there is no right to repair or notice-of claim statue.

 

COLORADO

Pursuant to C.R.S. § 13-20-803.5, the “right of repair” process begins when a property owner delivers a “notice of claim” letter to the construction professional. The construction professional then has 30 days to inspect the property, according to C.R.S. § 13-20-803.5(2). Upon completing the inspection, the construction professional has an additional 30 days to offer to settle the alleged construction defects by means of payment or by offering to remedy the alleged construction defects through remedial work. “A written offer to remedy the construction defect shall include a report of the inspection, the findings and results of the inspection, a description of the additional construction work necessary to remedy the defect described in the notice of claim and all damage to the improvement to real property caused by the defect, and a timetable for the completion of the remedial construction work” as stated in C.R.S § 13-20-803.5(3).

 

However, an owner is under no obligation to accept a construction professional’s offer of monetary compensation or repairs, regardless of how reasonable it may be based on C.R.S § 13-20-803.5(6). Recognizing the practical reality that the “right of repair” exists in name only for Colorado construction professionals, Colorado’s legislature introduced House Bill 17-1169 on February 6, 2017. HB 17-1169 would have statutorily permitted construction professionals to perform repairs in response to a notice of claim letter. In the words of the bill: “[i]f the Construction Professional [were to give] notice of an election to repair the defect in accordance with [the statute], the Claimant shall provide the construction professional with unfettered access to the subject property as necessary to correct the construction defect. . .” Unfortunately, on March 1, 2017, Colorado’s House Committee elected to postpone any vote on HB-1169 indefinitely. 

 

In sum, in Colorado, construction professionals have the right to offer to make a repair. Owners have no obligation to accept a construction professional’s offer of repair.

 

MONTANA 

Montana’s construction defect statute is substantially similar to that of Colorado’s. Specifically, M.C.A. § 70-19-427 requires a residential homeowner to serve a written notice of claim on the construction professional prior to the commencement of a lawsuit. The notice of claim must state that the homeowner is asserting a construction defect claim against the construction professional and must describe the claim in reasonable detail. Thereafter, the construction professional has 21 days to respond to the homeowner by proposing an inspection of the property, offering to compromise or settle through a financial settlement or repair, or denying liability. As with Colorado’s statute, the homeowner is under no obligation to accept a construction professional’s offer.

 

Additionally, M.C.A. § 70-19-427(3)(b) allows the homeowner to reject the inspection proposal. Nevertheless, if the homeowner elects to allow the construction professional to inspect the property, within 14 days following the completion of the inspection, the construction professional is obliged to provide the homeowner with an offer to compromise via a monetary payment, a written offer to remedy the claim through a combination of repair and monetary payment, or a written statement setting forth the reasons why the construction professional will not proceed to remedy the alleged defect. The homeowner must then, within 30 days, accept or reject the construction professional’s proposed resolution. If the homeowner rejects the offer of repair or settlement presented by the construction professional, the homeowner must serve written notice of the homeowner’s rejection to the construction professional. After delivery of the homeowner’s rejection of the proposed settlement, the homeowner is free to commence a lawsuit against the construction professional.

NORTH DAKOTA

North Dakota’s statutory construction defect notice and offer of repair requirements are unique compared to the foregoing states. Specifically, N.D.C. § 43-07-26 precludes residential homeowners from undertaking any repair, other than emergency repairs, or commencing a lawsuit prior to providing notice to the construction professional of the alleged defect. Thereafter, “within a reasonable time after receiving the notice, the contractor shall inspect the defect and provide a response to the purchaser or owner, and, if appropriate, remedy the defect within a reasonable time thereafter,” according to N.D.C. § 43-07-26. Compared to the language of the other states examined in this article, North Dakota has, by far, the most favorable statutory regime for construction professionals. The homeowner must allow the construction professional to inspect the property and the construction professional is actually afforded the “right to repair.”

 

SOUTH DAKOTA

Pursuant to S.D.C.L. § 21-1-16, South Dakota maintains a statutory regime requiring residential homeowners, prior to commencing an action, to serve a written notice on construction professionals setting forth the alleged construction defects present at the property. Additionally, the statute requires that the residential homeowner allow the construction professional to inspect the property within 30 days after service of the notice and allow the construction professional to make a written offer to repair or an offer of monetary settlement. While the homeowner is under no obligation to allow the construction professional to perform the repair offered, if any, the homeowner is required to wait until 30 days after the notice of claim is served on the construction professional or until the construction professional refuses to remedy the alleged construction defect prior to commencing suit.

 

CONCLUSION 

The statutory right to repair for construction professionals is often an illusory remedy under the current statutory framework. While the legislative intent in enacting construction defect reform statutes was presumably to streamline construction defect litigation, these right-to-repair provisions are often rendered ineffective as a result of property owners’ ability to refuse reasonable repairs.

For additional information regarding the construction professionals’ “right to repair" or about construction defect litigation in Colorado, generally, you can reach Jean Meyer by telephone at (303) 987-9815 or by e-mail at meyer@hhmrlaw.com and/or Sheri Roswell by telephone at (303) 987- 9812 or by e-mail at roswell@hhmrlaw.com.

Governmental Immunity Waived for Independent Contractor - Lopez v. City of Grand Junction

On July 12, 2018, the Colorado Court of Appeals announced its decision in Lopez v. City of Grand Junction, 2018 WL 3384674 (Colo. App. 2018). The Court considered whether immunity is waived under Colorado’s Governmental Immunity Act (“CGIA”), pursuant to section C.R.S. § 24-10-106(1)(f), in situations where the public entity hired an independent contractor to perform the work. The Court held that if the public entity would have been liable under the CGIA for the conduct that caused the injury, had it performed the work itself, then it is liable for the work performed by its independent contractor.

While the CGIA provides immunity to the government, pursuant to C.R.S. § 24-10-106(1)(f), the government waives immunity for injuries resulting from the operation and maintenance of any public sanitation or electrical facility. The City of Grand Junction contracted with Apeiron Utility Construction (“Apeiron”) to perform maintenance of a public traffic light. During such maintenance, Apeiron breached a natural gas line that leaked into a sewer main located nearby. The gas migrated to the plaintiffs’ home and entered the basement, resulting in an explosion and injuries. 

The city filed a motion to dismiss for immunity under the CGIA and the plaintiffs argued that the city waived its immunity under the CGIA because the explosion resulted from the operation and maintenance of a public sanitation facility. The trial court held a Trinity hearing and granted the city’s motion to dismiss. See Trinity Broadcasting of Denver, Inc. v. City of Westminster, 848 P.2d 916 (Colo. 1993) (holding that a court may hold a Trinity hearing where the injured plaintiffs bear the burden of proving the court’s subject matter jurisdiction under the CGIA and that immunity has been waived). Tidwell ex rel. Tidwell v. City & Cty. Of Denver, 83 P.3d 75, 85 (Colo. 2003). The Court of Appeals reversed in part, and affirmed in part, holding:

1. Reversed—the waiver of immunity applies even if the operation or maintenance was performed by an independent contractor. 
2. Affirmed—the dismissal of the negligence claim as to the city’s operation and maintenance of its sewer line as the evidence did not support an immunity waiver.

Waiver of Immunity for Work Performed by Independent Contractor

The Court of Appeals relied upon Springer v. City & County of Denver, 13 P.3d 794 (Colo. 2000). The CGIA establishes governmental immunity from suit for public entities and their employees in tort cases, but also waives immunity in certain circumstances. C.R.S. § 24-10-106; Springer at 792. The Court in Springer reviewed three aspects of section 1(c) of the CGIA and determined:

1. A public entity lacks immunity when it creates the acts, as well as its omission, in failing to reasonably discover and correct an unsafe condition. Id. at 801.
2. If the CGIA waiver were construed to exclude the acts or omission of the independent contractor, a public entity could avoid responsibility by contracting out its work to others, nullifying the purpose and effect of the waiver. Id. at 801-2.
3. The General Assembly’s intent, to hold a public entity responsible for the acts of its independent contractor, is consistent with longstanding principles of tort lability. Id. at 802 (citing Restatement (Second) of Torts § 422 (Am. Law Inst. 1965).

The Court of Appeals noted, “[A]s a logical matter, any attribution of Apeiron’s conduct to the City will only matter—for purposes of waiver—if the conduct would have waived the City’s immunity had the City itself committed this act.” If so, the city’s immunity is waived if plaintiffs can show the injuries resulted from the specific conduct. See C.R.S. § 24-10-106(1)(f); Tidwell at 86. This does not require a showing that the injuries were “caused by” the conduct. Tidwell at 86. Rather, there must be at least a “minimal causal connection’ between the injuries and the specified conduct. Id. The trial court found, by way of the undisputed facts, that the injuries resulted from the conduct of Apeiron striking and breaching the gas line. As such, this conduct would have waived the city’s immunity had the city itself committed this act.

While a person hiring an independent contractor is generally not liable for the negligence of the independent contractor, there are widely recognized exceptions to this rule, such as when a public entity retains possession of its premises during the contractor’s performance of its work on the premises. See Huddleston ex rel. Huddleston v. Union Rural Elect. Ass’n, 841 P.2d 282, 288 (Colo. 1992); Restatement (Second) of Torts § 422. Another widely recognized common law principle of liability attributed to the conduct of the independent contractor to the employer is when the maintenance is inherently dangerous. Restatement (Second) of Torts § 427.  The city did not dispute that it retained possession of the property during Apeiron’s work, or that the work was inherently dangerous.  Thus, the independent contractor exceptions applied.

The Court reversed, finding the city would have been liable for the alleged injuries under the CGIA had it performed the work itself.  Thus, immunity was waived under the CGIA in this instance.

Operation and Maintenance of the Sewer System

Plaintiffs argued that the sewer main was not in the same general state of repair as when it was installed. Plaintiffs contend that roots had grown into the sewer main creating gaps for the gas to enter. C.R.S. § 24-10-106(1)(f) waives immunity if the injury results from the public entity’s failure to keep the public facility “in the same general state of being, repair, or efficiency as initially constructed. C.R.S. § 24-10-103(2.5). 

The trial court found that at the time of the explosion, the sewer main was intact and in good condition, and functioned at or near the same efficiency in 2013 as it had been when installed in the 1940’s. The Court of Appeals deferred to the trial court’s factual finding, citing City & County of Denver v. Dennis, 418 P.3d 489 (Colo. 2018) (“On review, we defer to the district court’s factual findings unless they are clearly erroneous and unsupported by the record”). As the Court of Appeals did not find the factual findings erroneous and unsupported by the record, the Court affirmed the trial court, finding Plaintiffs did not meet their burden to prove a waiver under C.R.S. § 24-10-106(1)(f).

Conclusion

We believe Lopez to be potentially problematic for contractors hired by governments in situations where they have agreed to indemnify the governmental entity for claims arising from their work.  In those situations where the CGIA will not apply, contractors cannot rely on it to shield them from ultimately liability to the governmental entity.  With this in mind, this opinion was not released for publication as a petition for rehearing or a petition for certiorari in the Colorado Supreme Court may be pending. Thus, the Colorado Supreme Court may review this opinion.

For additional information regarding Lopez v. City of Grand Junction or about construction defect litigation in Colorado, generally, you can reach Frank Ingham by telephone at (303) 653-0046 or by e-mail at ingham@hhmrlaw.com.

Scholarships Available for the 2018 CLM Claims College – School of Construction

I am happy to have been asked to serve as an Executive Council member and instructor at this year's CLM Claims College – School of Construction, to be held at the Marriott Baltimore Waterfront in Baltimore, Maryland on Wednesday, September 5, 2018 through Saturday, September 8, 2018.

Overview of the 2018 School of Construction

Construction claims present  myriad complexities in claim handling. Construction defect lawsuits are often multi-party cases with cross claims and third-party claims between and among the numerous defendants. Insurance coverage is intertwined and complex due to the interplay of primary, excess, wrap, and additional insurers for the numerous defendants. All this is further complicated by statutes and regulations, inconsistent case law and procedural peculiarities throughout the United States. The economic stakes are high as the  damages claims can be in the multi-millions.

Competent construction claims handling requires an understanding of the distinct legal and practical  issues between commercial and residential claims. This is no place for the average adjuster and certainly no place for the adjuster who has not been properly trained.

The School of Construction will provide adjusters with the knowledge, tools, and understanding required to navigate these complex claims. Professionals seeking to expand their knowledge of construction risk concepts and seasoned professionals looking to move into construction claims are encouraged to attend.

Upon satisfactory completion of all three levels, graduates will receive the Certified Claims Professional (CCP) in Construction designation.

About the Claims and Litigation Management Alliance

The Claims and Litigation Management (CLM) Alliance is the only national organization created to meet the needs of professionals in the claims and litigation management industries. Founded in 2007, the CLM currently has more than 30,000 Members and Fellows — a number that grows by hundreds each month.

Scholarships Available

As an EC and instructor, I have the ability to offer three scholarships (registration fee only) to industry professionals (insurance - risk, adjusters, claims, etc. and corporate) to attend Claims College.  In order to attend, you need not to be a current CLM Fellow – however you will need to register (at no cost) to receive the scholarship. If you are interested in attending, please let me know by May 8th so that I can put you in touch with the proper person at the CLM to register.  I look forward to the event and hope that there are folks out there interested in taking advantage of the scholarships.

The Curious Case of the Three Year Statute of Limitations for Construction Earth Movers

On March 6, 2018, Judge Edward Moss of Adams County issued a noteworthy, if bizarre, order concluding that construction excavators and earthmovers are uniquely subject to a three year statute of limitations. By way of background, in Colorado, per C.R.S. § 13-80-104, those furnishing the design, planning, supervision, inspection, construction, or observation of construction of any improvement to real property (“Construction Professionals”) are subject to the two year statute of limitations as set forth in C.R.S. § 13-80-102.

However, it appears that things are not so simple in Adams County. In the case, Paul Heap, et al. v. Asphalt Specialties Co., Inc. et al., Case No. 2017CV30842 (Adams County, Mar. 6, 2018), the Court was presented with the following undisputed timeline: the Defendants began excavation related work and erosion control and flood mitigation on the construction project in March 2015; alleged defects with the Defendants’ work manifested on May 1, 2015, and; Plaintiffs filed their Complaint May 29, 2017. Based on a straightforward reading of the two-year statute limitations, the Plaintiffs’ claims should have been time barred.

However, the Plaintiffs, in their Response to the Summary Judgment Based on the Statute of Limitations, raised the argument that because the Defendants’ work included “the intentional use of excavators, earthmovers, trucks, and other motor vehicles to excavate, remove and relocate dirt,” the Plaintiffs’ claims should be evaluated under the three-year statute of limitations for “[a]ll tort actions for bodily injury or property damage arising out of the use or operation of a motor vehicle” as set forth in C.R.S. § 13-80-101.

As surprising as it may seem, the Court agreed with the Plaintiffs’ argument, remarking as follows: “[c]learly, there is some casual connection between the use of excavators, earthmovers, [and] trucks. . . to excavate, remove and relocate dirt.” Because the Court found that C.R.S. § 13-80-101 and C.R.S. § 13-80-102 were in conflict in the context of the facts before the Court, the Court applied the legal standards for conflicting statutes of limitations. Applying the legal standards for conflicting statutes of limitations, the Court concluded that three-year state of limitations prevailed and thus the Plaintiffs’ claims were timely.

Going forward, careful practitioners should be aware of and consider the nuance in Colorado’s statute of limitations now potentially applicable to earth mover Construction Professionals. For additional information regarding Colorado’s statute of limitations for Construction Professionals or about construction defect litigation in Colorado, generally, you can reach Jean Meyer by telephone at (303) 987-9815 or by e-mail at meyer@hhmrlaw.com.

Dave McLain to Speak at the MBA's Condominium Lending Workshop 2018

I am honored to have been invited to speak at the Mortgage Bankers Association Condominium Lending Workshop 2018.  I will be participating as a panelist on the Condo Defect Panel: The CO Perspective, along with Nate Santillanes, CRIS, Director - Risk Management, CoBiz Insurance and moderated by Katie Fritch, Bank Officer - UW Support Manager, Flagstar Bank.

Come learn what's new in condo lending.

Back by Popular Demand...

MBA's Condominium Lending Workshop is back!  We heard you loud and clean and are pleased to once again offer our one-day workshop on this specialized area of lending.  This workshop brings together strategic leaders of condo lending as well as project approval managers, with other experts, including government agency and GSE leadership.  Through panel presentations and interactive discussions, our expert speakers will cover the following topics:

• Update from FHA

• GSE and Lender Perspectives on Project Approvals

• Overview of Condo Markets

• Condo Litigation Challenges

• Flood and other Insurance Issues

• Lending on New Construction Condos

This is a unique opportunity to come together with others that specialize in condo lending to get the latest updates and discuss challenges and opportunities in an interactive setting.  The majority of the workshop agenda takes place on April 11th, kicking off with an evening networking reception on April 10th.

The next evolution in Colorado construction defect litigation? Single-family home builders could be in the crosshairs.

I recently had the opportunity to write an article for Colorado Builder Magazine, a snippet of which appears here.

Since the 1990's, construction defect litigation has focused on condominiums and townhomes. By representing homeowner associations instead of individual owners, plaintiffs' attorneys can more easily aggregate claims, thereby increasing exponentially the claimed damages.

*     *     *

In a new twist, the Latitude at Vista Ridge Homeowners Association in Erie filed a construction defect lawsuit claiming damages for construction defects in the single-family homes owned by its members.  This is the first instance, of which I am aware, in which an association has sued for alleged defects in single-family homes.

For additional information regarding the Latitude at Vista Ridge lawsuit or the disturbing new trend in Colorado construction defect litigation, you can visit the Colorado Builder website and view the entire article here.  You can also reach me by e-mail at mclain@hhmrlaw.com or by phone at (303) 987-9813.