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 1^st, 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 30^th.  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 18^th, 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 21^st.  The bill passed the Senate, with its own amendments, on March 11^th.  On March 13^th, 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 10^th, 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 30^th 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 5^th, 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 9^th, 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 12^th, 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.