Monday, June 29, 2020

Colorado Legislative Update: HB 20-1155, HB 20-1290, and HB 20-1348

This year’s Colorado State Legislative session was cut short. However, in the period of time Colorado’s Legislature was in session, it passed and evaluated important legislation for Colorado homebuilders. This article highlights relevant legislation for Colorado homebuilders.

1.      HB 20-1155

This Bill creates new requirements on new homebuilders to offer renewable energy systems to the buyer of a new home. Specifically, the Bill requires homebuilders to offer each of the following:

  • A solar panel system, a solar thermal system, or both;
  • Prewiring or pre-plumbing for the above solar systems; and,
  • A chase or conduit for future installation of such systems.

The Bill further requires Colorado homebuilders to offer homebuyers one of the following:

  • An electric vehicle charging system;
  • Prewiring for the future installation for such a system; or, 
  • A plug-in receptacle in a place accessible to a vehicle parking area.

Colorado homebuilders must also offer a homebuyer an electrical heating system.

The Bill passed Colorado’s Legislature is currently awaiting signature of the Governor.

2.      HB 20-1290

This Bill sets forth additional requirements that an insurance carrier must prove in order to successfully plead a failure-to-cooperate defense in an action concerning an insurance policy providing first-party benefits or coverage. The conditions that must be present are the following.

  • The insurer submitted a written request to the insured for the requested information;
  • The information requested was necessary for litigation and was not available to the insurer without the assistance of the insured;
  • The insured was provided 60 days to respond;
  • The written request was for information a reasonable person would determine the insurer needed to adjust the claim filed by the insured or to prevent fraud; and
  • The insurer gave the insured an opportunity to cure within 60 days and provided notice to the insured within 60 days, describing, with particularity, the alleged failure to cooperate.

Additionally, the Bill does not relieve the insurer of its duty to investigate and any language in a policy that conflicts with this Bill is void.

The Bill passed the Colorado Legislature and is awaiting signature of the Governor.

3.      HB 20-1348

This Bill proposed expanding employer liability for the tortious actions of its employees. The Bill was in response to a 2017 Colorado Supreme Court decision which held that when an employer admits liability for the actions of its employee, the plaintiff cannot assert additional claims against the employer arising out of the same incident. The Bill intended to reverse the Colorado Supreme Court’s decision and allow a plaintiff, bringing a civil tort claim, to bring additional claims against an employer arising out of the same incident as the one involving an employee.

The consequence of the Bill would have been to prevent an employer from avoiding liability for negligent acts by admitting an employee was in the course and scope of employment when the tortious act was committed. 

Fortunately, for employers, the Bill failed to pass to the Colorado Legislature.




For additional information regarding any of the above Bills 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.




 


Thursday, June 18, 2020

Most Common OSHA Violations Highlight Ongoing Risks

In the 12 months from October 2018 through September 2019, the most recent period reported by OSHA,[1] the workplace safety agency cited the following standards[2] more than any other in the 28 states which do not have OSHA-approved state plans, including Colorado:

  1. 1926.501 – Duty to have fall protection – included in 459 citations, resulting in $2,475,596 in penalties ($5,393/citation);
  2. 1926.451 – General requirements for scaffolds – included in 265 citations, resulting in $834,324 in penalties ($3,148/citation);
  3. 1926.1053 – Requirements for ladders including job-made ladders – included in 164 citations, resulting in $354,853 in penalties ($2,163/citation);
  4. 1926.503 – Training requirements related to fall protection - included in 114 citations, resulting in $156,076 in penalties ($1,369/citation); 
  5. 1926.405 - Wiring methods, components, and equipment for general use – included in 93 citations, resulting in $150,821 in penalties ($1,621/citation);
  6. 1926.20 - General safety and health provisions – included in 85 citations, resulting in $328,491 in penalties ($3,864/citation);
  7. 1926.1052 – Requirements for stairways – included in 79 citations, resulting in $155,651 in penalties ($1,970/citation);
  8. 1926.102 – Requirements for eye and face protection - included in 67 citations, resulting in $165,595 in penalties ($2,471/citation);
  9. 1926.403 – General requirements for electrical conductors and equipment – included in 63 citations, resulting in $146,050 in penalties ($2,318/citation), and;
  10. 1926.100 – Requirements for head protection – included in 55 citations, resulting in $127,274 in penalties ($2,314/citation).

For those companies facing a slow-down in production related to the COVID-19 outbreak, it may be a good time to revamp safety programs.  A good place to start this process is the OSHA Compliance Assistance Quick Start webpage.[3] Note that pursuant to OSHA’s Multi-Employer Citation Policy,[4] construction jobsites can involve multiple employers (i.e., general contractors, construction managers, subcontractors, etc.), each of which may be liable for OSHA violations.  OSHA's construction standard 1926.20(b) requires construction employers to have accident prevention programs that provide for frequent and regular inspection of the jobsites, materials, and equipment by competent persons designated by the employers.

For those companies interested in instituting a safety & health program, or reevaluating the program they have in place, three good resources include OSHA’s Construction eTool: Safety & Health Program Component,[5] its Recommended Practices for Safety and Health Programs in Construction,[6] and its Recommended Practices for Safety and Health Programs.[7]

As OSHA states in the Foreword to its Recommended Practices for Safety and Health Programs in Construction:


Establishing a safety and health program at your job site is one of the most effective ways of protecting your most valuable asset: your workers. Losing workers to injury or illness, even for a short time, can cause significant disruption and cost - to you as well as the workers and their families. It can also damage workplace morale, productivity, turnover, and reputation. 

Particularly with respect to health and safety, an ounce of prevention is worth a pound of cure.  As Sergeant Phil Esterhaus admonished each week on Hill Street Blues, “Let’s be careful out there.”  In the construction industry, this starts with a good safety and health program; take this time to reevaluate yours now.    

.

For additional information regarding OSHA violations, or construction litigation in Colorado, you can reach out to Dave McLain by telephone at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.







Tuesday, June 9, 2020

Colorado Legislature Postpones Indefinitely SB 20-093

As previously reported, for certain consumer and employment arbitrations, Senate Bill 20-93 would have:

  • Prohibited the waiver of standards for and challenges for evident partiality prior to a claim being filed and required any waiver of such provisions after the claim is filed to be in writing;
  • Provided that the right of a party to challenge an arbitrator based on evident partiality is waived if not raised within a reasonable time of learning of the information leading to the challenge but that such right is not waived if caused by the opposing party;
  • Established ethical standards for arbitrators; and
  • Required specified public disclosures by arbitration services providers but included protections for certain confidential information.

The SB 93 would also have required an individual arbitrator for certain consumer and employment arbitrations to make additional disclosures of information that might affect the arbitrator’s impartiality.  The Bill also specified how attorney fees and other reasonable expenses are to be awarded if a court vacates an award because of an arbitrator’s evident partiality or failure to make required disclosures and clarifies when appeals of orders may be made in consumer and employee arbitrations.

The Bill also provided that for a standard form contract involving a consumer or employee:

  • Specified terms are unenforceable as against public policy;
  • Including an unenforceable term constitutes a deceptive trade practice under the "Colorado Consumer Protection Act"; and 
  • Determined how certain cost-shifting provisions are to be interpreted.

On June 4th, the House Finance Committee postponed indefinitely SB 93.  I assume that the bill was killed because it was not Fast, Friendly (i.e., lacking opposition), and Free.  Though enough amendments were made to ameliorate some of the most serious concerns raised by opponents, including the construction industry, to get it out of the Senate, enough resistance remained to violate the “Friendly” test for whether the Colorado Legislature would pass is this year.  Stay tuned next year, as this issue is sure to have a repeat performance.


For additional information regarding construction litigation in Colorado, or the legislative measure which may impact such litigation, feel free to reach out to David M. McLain by telephone at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.



 


Tuesday, June 2, 2020

Scholarships Available for the 2020 CLM Claims College

I am pleased to have been invited to serve on the Executive Council and Faculty for this year’s CLM Claims College – School of Construction, which will be held at the Marriott Baltimore Waterfront from Wednesday, September 9, 2020 through Saturday, September 12, 2020.  This year’s Level 1 courses are being held virtually, so there is no need to travel to Baltimore if you are interested in starting the three-year program this year.

As a result of my service on the Executive Council, I can offer scholarships (registration fee only) to industry professionals (insurance - risk, adjusters, claims, etc. and corporate) interested in attending. Please e-mail me if you would like to take advantage of the free registration scholarship offered by the CLM.

2020 Claims College Overview

The education of claims resolution professionals is important to the CLM. That is why CLM established the Claims College in 2012 and enlisted some of the industry’s best professionals to create and teach courses. Since its inception, hundreds of students have attended the Claims College, earning their CCP (Certified Claims Professional) designation.

The College presents courses in eight three-level specialty schools and three one-level schools with more on the horizon. Schools include:

Casualty Claims

Claims Mediation

Construction

Cyber Claims

Extra-Contractual Claims

Leadership

Professional Lines

Property Claims

Transportation

Workers Compensation

Students must pass all three levels of a school to earn their CCP. Each level consists of reading materials, in-class instruction, group projects, and an exam. 

2020 School of Construction Overview

Construction claims present complexities in claim handling, are often multiparty cases with cross claims and third-party claims between and among the numerous defendants, intertwined with issues involving insurance coverage. The stakes for these types of cases are high as the damages claimed 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. The construction claims world is an unfriendly place for the claims professional who has not been properly trained and exposed to these issues.

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.

About The CLM

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 45,000 Members and Fellows—a number that grows by hundreds each month.


For additional information regarding the CLM Claims College, you can reach out to Dave McLain by telephone at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.



Friday, May 29, 2020

Colorado Legislature Kills SB 20-138 – A Bill to Extend Colorado’s Statute of Repose

As previously reported, SB 20-138, “Concerning Increased Consumer Protection for Homeowners Seeking Relief for Construction Defects,” would have extended the Colorado statute of repose applicable to construction defect claims.  Senate Bill 20-138, if enacted, would have:

  1. Extended Colorado’s statute of repose for construction defects from 6+2 years to 10+2 years;
  2. Required tolling of the statute of repose until the claimant discovers not only the physical manifestation of a construction defect, but also its cause; and
  3. Permitted statutory and equitable tolling of the statute of repose.

Now that the legislature is back in session, it will be a shortened session because of Covid-19 and, other than dealing with budget shortfalls, it seems like any bills that are not free, fast, and easy to pass will likely die in this year’s session.  Perhaps in line with this thinking, Senator Robert Rodriguez, opted to kill Senate Bill 20-138.  On second reading in the Senate on May 28th, the bill was laid over until December 31st, effectively killing the bill.  While the battle may be over for this year, rest assured it will be back in the future as plaintiffs’ attorneys seek to attach recent construction defect reforms. 


For additional information regarding SB 138, or construction litigation in Colorado, you can reach out to Dave McLain by telephone at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.

Friday, May 22, 2020

Don’t Conspire to Build a Home…Wait…What?

In 1986, the Colorado General Assembly enacted the Pro Rata Liability Act, codified at C.R.S. § 13-21-111.5, which eliminated joint and several liability for defendants in favor of pro rata liability.[1] The statute was “designed to avoid holding defendants liable for an amount of compensatory damages reflecting more than their respective degrees of fault.”[2] However, the following year, the Colorado legislature carved out an exception to preserve joint liability for persons “who consciously conspire and deliberately pursue a common plan or design to commit a tortious act.”[3] Because of this conspiracy exception, plaintiffs try to circumvent the general rule against joint and several liability by arguing that construction professionals defending construction defect cases were acting in concert, as co-conspirators. Plaintiffs argue that if they can prove that two or more construction professionals consciously conspired and deliberately pursued a common plan or design, i.e., to build a home or residential community, and such a plan results in the commission of a tort, i.e., negligence, the defendants may be held jointly and severally liable for all of the damages awarded.

Since 1986, Colorado courts have construed the “conspiracy” provision in § 13-21-111.5(4), but some have disagreed as to what constitutes a conspiracy for purposes of imposing joint liability.

Civil Conspiracy

In Colorado, the elements of civil conspiracy are that: “(1) two or more persons; (2) come to a meeting of the minds; (3) on an object to be accomplished or a course of action to be followed; (4) and one or more overt unlawful acts are performed; (5) with damages as the proximate result thereof.”[4]

With respect to the fourth element, Colorado adheres to the view that “[t]he gist of [a civil conspiracy] action is not the conspiracy charged, but the tort working damage to the plaintiff.”[5] In Contract Maintenance Co. v. Local No. 105, the Colorado Supreme Court stated “the purpose of the conspiracy must involve an unlawful act or unlawful means.”[6]

In Pinon Sun Condo. Ass’n, Inc. v. Atain Specialty Ins. Co., a condominium association hired a public adjuster for the claims process and a construction company to conduct estimates and repairs after the condominiums sustained hail damage.[7] After a dispute over the amount of the claims paid, the association sued the insurers for breach of contract, among other claims.[8] The insurers counterclaimed, alleging fraud and civil conspiracy against the association, the public adjuster, and the construction company.[9] In its Order Granting in Part and Denying in Part Motions for Summary Judgment, the court granted summary judgment in favor of the association, public adjuster, and construction company on the fraud claim because the insurers failed to prove one of the elements of fraud.[10] Noting that the fourth element of a civil conspiracy requires an unlawful overt act, the court also granted summary judgment in favor of the association, public adjuster, and construction company on the civil conspiracy claim because the insurer failed to prove fraud, which was critical to showing an unlawful overt act.[11] Thus, although the association, public adjuster, and construction company acted in concert with one another, no conspiracy existed because no unlawful act or unlawful means in furtherance of a conspiracy existed.

Conspiracy in the Construction Context

However, in construction defect cases, the fourth element of civil conspiracy is not so clear.

In Resolution Trust Corp. v. Heiserman, the Colorado Supreme Court opined that “although the execution of a common plan or design may in many circumstances not result in wrongful conduct causing injury or damages,” . . . it may in some circumstances result in a tort such as negligence, causing injury or damages.[12] Thus, joint and several liability may be imposed on two or more persons pursuant to C.R.S. § 13-21-111.5(4), even when the conspiracy results in the tort of negligence.

Although the language of Heiserman appears to say that one may “conspire” to be negligent and thus be held jointly and severally liable, trial courts will not equate lawful contracting to do construction and design work with tortious conspiracy, absent some other evidence of tortious conduct. Indeed, Heiserman held that for joint and several liability to be applied, the trigger for liability had to be based on something other than a breach of contract.[13] The following cases help define the contours of this issue.

Rivergate Lofts Condo. Owners Ass’n v. Rivergate Lofts Partners, LLP: A tort must be reasonably foreseeable to result from the agreement.

On a partial summary judgment motion regarding joint and several liability in a construction defect case, La Plata County District Court Judge David Dickinson concluded the Colorado Supreme Court’s discussion in Heiserman regarding whether an agreement must include intent to commit a tort is dicta.[14] Judge Dickinson further concluded “as a result of the agreement, it must at a minimum be reasonably foreseeable that the agreement will result in the commission of tortious acts in furtherance thereof.” Id. at *7. Thus, due to a lack of evidence of agreement to violate the building code in the design-build agreement, Judge Dickinson found no conspiracy existed and granted partial summary judgment in favor of the construction company defendant. Id.

Villas at La Campanella Property Owners v. Hunnahs, LLC et al.: Benign cooperation does not establish joint liability.

In another La Plata County case, on a defendant’s motion for determination of a question of law regarding joint and several liability, Judge William Herringer determined that construction defect defendants would not be held jointly and severally liable because the plaintiff homeowners association was unable to establish facts to show the defendants agreed, in any way, to engage in tortious conduct.[15] More specifically, the judge acknowledged that the plaintiff presented factual evidence that the defendants worked together and coordinated closely on the construction project. However, the judge stated:

[That defendants worked together] is unsurprising and would be expected for a project of this nature. However, the mere fact that there were cooperative efforts and communication is insufficient for the imposition of joint liability. While the Plaintiff does not need to show that the defendants had the “specific intent” to commit a tortious act, the Plaintiff must produce some evidence of a “common plan or design” that results in the commission of a tort. Benign cooperation with a tortfeasor does not make a defendant jointly responsible for the tortfeasor’s misconduct. One who innocently, and carefully, does an act which happens to further the tortious purpose of another is not acting in concert with the other.”[16]

Polmer et al. v. Hi Point Home Builders LLC et al.: Lawful contracting to build a home is not in and of itself a C.R.S. § 13-21-111.5(4) conspiracy.

In Polmer v. Hi Point Home Builders, El Paso County District Court Judge William Bain also ruled on a motion to determine a question of law regarding joint and several liability in a construction defect case.[17] In this case, RMG engineers designed the grading and excavation plans for a new development, conducted soils testing, and provided the structural designs and observation and compliance services for construction of the homes.[18] Ruling against joint and several liability, Judge Bain found that the plaintiff provided insufficient evidence that RMG “conspired” with the other construction defendants to recommend a new design, or that the construction defendants conspired to market the home fraudulently or build it defectively, based merely on the fact the parties lawfully contracted with each other.[19]

Conclusion

Taken together with Heiserman, the cases are clear on this point: Parties cannot be said to conspire when they have merely engaged in lawful contracting.[20] However, each case presents “unique factual circumstances” and “detailed factual findings will be necessary” to make a determination of whether any given contractual relationship among construction professionals will rise to the level of conspiracy under C.R.S. § 13-21-111.5(4).[21]



[1] James W. Avery, The Pro Rata Liability Act and Imposition of Joint Liability Against Physicians, Colo. Law., 2/98, at 89.

[2] B.G.’s, Inc. v. Gross ex rel. Gross, 23 P.3d 691, 694 (Colo. 2001).

[3] C.R.S. § 13-21-111.5(4). This is also known as “actions in concert,” which is broader than civil conspiracy, not requiring express agreement or proof of intent to commit a tortious act. Resolution Tr. Corp. v. Heiserman, 898 P.2d 1049, 1056-57 (Colo. 1995).

[4] Loughridge v. Goodyear Tire & Rubber Co., 192 F. Supp. 2d 1175, 1186 (D. Colo. 2002).

[7] Pinon Sun Condo. Ass'n v. Atain Specialty Ins. Co., No. 17-cv-01595, 2019 WL 4747673, at *1 (D. Colo. Sept. 27, 2019).

[8] Id. at *2.

[9] Id.

[10] Id. at *4-6.

[11] Id. at *9.

[12] Resolution Tr. Corp. v. Heiserman, 898 P.2d 1049, 1055 (Colo. 1995).

[13] Heiserman, 898 P.2d at 1055 (“We conclude that the term ‘tortious act’ appearing in section 13–21–111.5(4) includes any conduct other than breach of contract that constitutes a civil wrong and causes injury or damages.”).

[14] Rivergate Lofts Condo. Owners Ass'n v. Rivergate Lofts Partners, LLP, No. 10CV19, Order on Motion for Partial Summary Judgment of Defendants Okland and Sill, at *6 (La Plata Ct. Dist. Ct. Oct. 4, 2011).

[15] Villas at La Campanella Property Owners v. Hunnahs, LLC et al., No. 13CV30099, Order Granting Defendant ABC Welding, Inc.’s Motion for Determination of a Question of Law Regarding Joint and Several Liability, (La Plata Ct. Dist. Ct. Aug. 21, 2015).

[16] Id. at *2-3 (internal citations removed & emphasis added).

[17] Polmer et al. v. Hi Point Home Builders LLC et al., No. 2013CV30763, Order: (Proposed) Order: re: Motion for Determination of a Question of Law Regarding Joint and Several Liability, (El Paso Ct. Dist. Ct. Oct. 15, 2015).

[18] Polmer et al. v. Hi Point Home Builders LLC et al., No. 2013CV30763, First Amended Complaint at ¶¶ 16-19, (El Paso Ct. Dist. Ct. Oct. 15, 2015).

[19] Polmer et al. v. Hi Point Home Builders LLC et al., No. 2013CV30763, Order: (Proposed) Order: re: Motion for Determination of a Question of Law Regarding Joint and Several Liability, at *2 (El Paso Ct. Dist. Ct. Oct. 15, 2015).

[20] See also Logixx Automation, Inc. v. Lawrence Michels Family Trust, 56 P.3d 1224, (Colo. App. 2002) (“[W]e conclude that there can be no conspiracy by two or more parties to a contract to breach that contract.”); In re Stanley, 2011 WL 10656536 (E.D. Cal. July 1, 2011) (“[A] party to a contract cannot be bootstrapped into a conspiracy tort.”). “The claim of civil conspiracy . . . requires proof of an unlawful intent.” Nelson v. Elway, 971 P.2d 245, 250 (Colo. App. 1999). Joint and several liability cannot be imposed “for doing in a proper manner that which they had a right to do . . . .” Id.

[21] Resolution Trust Corp. v. Heiserman, 898 P.2d 1049, 1057 (Colo. 1995).


For more information regarding joint and several liability in construction defect cases, you can reach Ben Volpe at (303)-987-7140 or by e-mail at volpe@hhmrlaw.com

Monday, April 13, 2020

HHMR will work for diapers!



This year, HHMR is stepping up to help HomeAid Colorado’s Builders for Babies Diaper Drive.  As you can imagine, the requirement for support to families in need is now greater than ever. Due to the critical shortage of diapers available to those who require help, the annual Builders for Babies Diaper Drive will be running through June 21st!



Normally, Builders for Babies is a one-day collection event. This year, HomeAid Colorado kicked off early to help address the dire need for diapers for struggling families.  All donations collected during this campaign will be distributed to our nonprofit partners that focus on alleviating poverty and ending homelessness.  Diapers purchased now will be allocated to diaper banks around Colorado in a timely manner.  HomeAid Colorado has partnered with ABBY & FINN, a Colorado owned company, to simplify the process and distribution of diapers.

This year, HHMR will provide up to three hours of general consulting, risk management consulting, or contract review to Colorado construction professionals which donate a ¼ pallet of diapers (2,625 diapers) through ABBY & FINN’s donation page.  At a cost of $682.50, this is a substantial discount off of our normal hourly rate.  Please reach out to David McLain at (303) 987-9813 or mclain@hhmrlaw.com if you are interested.  Before purchasing diapers, we want to ensure that we can clear a conflict check and determine that your needs fit within our core competencies.  We are excited to work with you to help alleviate Colorado’s terrible diaper shortage.  If you are not interested in this offer, we still urge you to click on ABBY & FINN’s donation page to support this incredible effort.  Please note that this offer may be limited at any time, depending on demand.  

Thursday, April 9, 2020

Colorado Legislative Update – Coronavirus Adjournment Edition

In any other year, we currently would be about one month away from the end of the regular legislative session, but this is not any other year.  In mid-March, and in response to growing concerns over the COVID-19 pandemic, the Legislature temporarily adjourned, 67 days into our Constitutionally-mandated 120-day legislative session.  The Legislature sought guidance from the Colorado Supreme Court, asking:

[W]hether language in article V, section 7 of the Colorado Constitution limiting the length of the regular legislative session to “one hundred twenty calendar days” requires that those days be counted consecutively, or whether the legislature may, during the exceptional circumstance of a public health disaster emergency, count only “working calendar days” toward the 120-day maximum.   

On April 1st, the Colorado Supreme Court issued its order on this question, holding that:

[T]he General Assembly reasonably resolved the ambiguity in article V, section 7 through its unanimous adoption of Joint Rules 23(d) and 44(g), which together operate to count the 120 calendar days of a regular session consecutively except during a declared public health emergency disaster, in which case only days on which at least one chamber convenes count toward the 120-day maximum. Because the General Assembly’s interpretation is consistent with the constitutional text and fully comports with the underlying purposes of article V, section 7, the supreme court concludes that Joint Rules 23(d) and 44(g) are constitutional.

Therefore, once the Legislature reconvenes, it will have the remainder of the 120-days allotted for the session in which to conduct regular business.  Another Constitutional issue at play this year is that the Legislature must adopt its annual budget by June 30th.  The recent Supreme Court decision did not address this requirement.

Following is a summary of the status of previously-reported bills as of the time of the Legislature’s temporary adjournment.

HB 20-1046 – Private Retention Reform

On Tuesday, February 18th, the Colorado House Business Affairs & Labor Committee voted 10-0 to postpone indefinitely House Bill 1046.  If it had been enacted, HB 1046 would have required for all construction contracts of at least $150,000:
  • A property owner to make partial payments to the contractor of any amount due under the contract at the end of each calendar month or as soon as practicable after the end of the month;
  • A property owner to pay the contractor at least 95% of the value of satisfactorily completed work;
  • A property owner to pay the withheld percentage within 60 days after the contract is completed satisfactorily;
  • A contractor to pay a subcontractor for work performed under a subcontract within 30 calendar days after receiving payment for the work, not including a withheld percentage not to exceed 5%;
  • A subcontractor to pay any supplier, subcontractor, or laborer who provided goods, materials, labor, or equipment to the subcontractor within 30 calendar days after receiving payment under the subcontract; and
  • A subcontractor to submit to the contractor a list of the suppliers, sub-subcontractors, and laborers who provided goods, materials, labor, or equipment to the subcontractor for the work.

The bill did not apply to contracts with public entities or to a contract concerning one multi-family dwelling of no more than four units or one single-family dwelling. A person who failed to make a required payment would have been required to pay 1.5% interest per month until the debt is fully paid. In a lawsuit to enforce the bill, the prevailing party would have been awarded attorney fees and costs. 

HB 20-1155 - Concerning requirements that builders of new residences offer buyers options to accommodate higher efficiency devices.

As previously discussed, current law requires a home builder to offer to a buyer of a new home one of the following:
  • A solar panel system or a solar thermal system;
  • To prewire or preplumb the home for these systems; or
  • A chase or conduit to wire or plumb the home for these systems in the future.

Section 1 of the House Bill 1155 changes this to require that the home builder offer each of these options.

Section 2 requires a home builder to offer one of the following options to a buyer of a newly constructed residence:

  • An electric vehicle charging system;
  • Upgrades of wiring to accommodate future installation of an electric vehicle charging system; or
  • A 208- to 240-volt alternating current plug-in located in a place accessible to a motor vehicle parking area.

Section 2 also requires the home builder to offer electric heating options. These requirements apply to both traditional detached, single-family homes and buildings that contain owner-occupied condominium units.

The House passed House Bill 1155, with amendments, on February 21st.  The bill passed the Senate, with its own amendments, on March 11th.  On March 13th, the House considered, but did not concur with the Senate amendments, requesting a conference committee to reconcile the version of the bill passed in each body.  You can find the rerevised version of the bill, with all previously approved amendments, here.

HB 20-1290 – Restrictions on the Use of Failure to Cooperate Defense in First-Party Claims

If the bill were to pass, in order to plead or prove a failure-to-cooperate defense in any action concerning first-party insurance benefits, the following conditions must be met:

  1. The carrier has submitted a written request for information the carrier seeks to the insured or the insured’s representative, by certified mail;
  2. The written request provides the insured 60 days to respond;
  3. The information sought would be discoverable in litigation;
  4. The written request provides citations to the specific policy language entitling the carrier to the information requested.  A general statement of a duty to cooperate would be deemed insufficient.
  5. The insured’s failure to cooperate had made the carrier’s performance under the policy impossible;
  6. The carrier has given the insured an opportunity to cure, which must:
    • Include the furnishing of written notice to the insured of the alleged failure to cooperate, describing with particularity the alleged failure, within 30 days of the alleged failure; and
    • Allow the insured 60 days after receipt of the written notice to cure the alleged failure to cooperate.

House Bill 1290 also states that the existence of a duty to cooperate in a policy does not relieve an insurer of its duty to investigate or to comply with C.R.S. § 10-3-1104.  Finally, the Bill states that any language in a first-party insurance policy that conflicts with the Bill’s language is void as against public Policy.  If enacted, the new law would apply to any litigation that occurs on or after the applicable effective date of this act.  

On March 10th, HB 20-1290 passed out of the House Judiciary Committee, with minor amendments yet to be approved by the House, and was referred to the House Committee of the Whole for Second Reading.  It was laid over until March 30th prior to the Legislature’s temporary adjournment.

HB 20-1348 – Additional Liability Under Respondeat Superior

On March 17, 2017, the Colorado Supreme Court issued its decision in a case entitled Ferrer v. Okbamicael, holding that “where an employer acknowledges vicarious liability for its employee's negligence, a plaintiff's direct negligence claims against the employer are barred.”  On March 5th, Representative Kennedy introduced HB20-1348, to legislatively overturn the Ferrer decision and to allow a plaintiff to bring additional negligence claims against an employer after it has admitted liability for its employee’s negligence.  The bill was assigned to the House Judiciary Committee, where it waits for its first hearing.

SB 20-093 - Concerning protections related to mandatory agreement provisions, and, in connection therewith, enacting the "Consumer and Employee Dispute Resolution Fairness Act."

As previously reported, for certain consumer and employment arbitrations, the Bill:

  • Prohibits the waiver of standards for and challenges for evident partiality prior to a claim being filed and requires any waiver of such provisions after the claim is filed to be in writing;
  • Provides that the right of a party to challenge an arbitrator based on evident partiality is waived if not raised within a reasonable time of learning of the information leading to the challenge but that such right is not waived if caused by the opposing party;
  • Establishes ethical standards for arbitrators; and
  • Requires specified public disclosures by arbitration services providers but includes protections for certain confidential information.

The Bill also requires an individual arbitrator for certain consumer and employment arbitrations to make additional disclosures of information that might affect the arbitrator’s impartiality. The Bill specifies how attorney fees and other reasonable expenses are to be awarded if a court vacates an award because of an arbitrator’s evident partiality or failure to make required disclosures and clarifies when appeals of orders may be made in consumer and employee arbitrations.

The Bill also provides that for a standard form contract involving a consumer or employee:

  • Specified terms are unenforceable as against public policy;
  • Including an unenforceable term constitutes a deceptive trade practice under the "Colorado Consumer Protection Act"; and
  • How certain cost-shifting provisions are to be interpreted.

On March 9th, the Bill passed Third Reading in the Senate, with amendments, and is yet to be introduced in the House. 

You can find the most recent version of the Bill here.  Of all of the amendments made to the Bill in Committee or on the Senate Floor during Second Reading, only one seems to be aimed at alleviating the construction industry’s concerns with the Bill.  On Second Reading, Senator Foote offered Amendment No. L.010, which added a legislative declaration, reading: “The general assembly declares that nothing in this act is intended to approve, disapprove, modify, or overrule Vallagio at Inverness Residential Condo. Ass’n v. Metro Homes, Inc., 2017 CO 69, 395 P.3d 788.”  While this is nice, it does not do enough to remove the chilling effect on arbitration that the Bill will have.     

SB 20-138 - Concerning increased consumer protection for homeowners seeking relief for construction defects.

As previously discussed, if enacted, Senate Bill 20-138 would:

  1. Extend Colorado’s statute of repose for construction defects from 6+2 years to 10+2 years;
  2. Require tolling of the statute of repose until the claimant discovers not only the physical manifestation of a construction defect, but also its cause; and
  3. Permit statutory and equitable tolling of the statute of repose.

The Senate Judiciary Committee passed SB 138 out of committee unamended, on a 3-2 party-line vote, on February 12th, sending the Bill to the Senate Floor, where it has been continually laid over for Second Reading up until the temporary adjournment.  This makes me question whether there are enough votes in the Senate to pass a floor vote.

It still does not appear that there is a sponsor for this Bill in the House.  If you haven’t already done so, it is imperative that you contact your State Senator to ask him or her to oppose SB 20-138.  You can find the contact for your Senator here.

Initiative 122

Perhaps the only good news to come from the state-wide shut down caused by the Coronavirus is that Daniel Hayes, the proponent of this year’s Initiative 122 effort, reportedly told a Colorado Sun reporter that his signature drive is over, blaming the COVID-19 pandemic.  Initiative 122, if it made it onto November ballot and if it passed, would have limited growth along the Front Range from Weld County down to Colorado Springs to no more than 1.3% per year, with everything over 1% reserved specifically for affordable or senior housing. Initiative 122 would also have allowed smaller cities and counties to enact such a rule as well, and the law could not be rescinded until 2023 and only then by local citizen initiative.

You can read the actual story reflecting that the signature drive for Initiative 122 is over here.  I hope this is not a head-fake on the part of Mr. Hayes.  Even if this comes back to life in the future, at least it appears as though it is a non-issue for now.

For additional information regarding the 2020 Colorado legislative session, or construction law in Colorado, please feel free to reach out to David McLain by telephone at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.

Disclaimer

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.