Statutes of Limitations and Repose in Construction Defect Cases-part I

• Publication year: 2004
• Pages: 73
• Citation: Vol. 33 No. 5 Pg. 73

33 Colo.Law. 73 Colorado Lawyer 2004.

2004, May, Pg. 73. Statutes of Limitations and Repose in Construction Defect Cases-Part I

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73

Vol. 33, No. 5, Pg. 73

The Colorado Lawyer
May 2004
Vol. 33, No. 5 [Page 73]

Specialty Law Columns
Construction Law Forum
Statutes of Limitations and Repose in Construction Defect Cases - Part I
by Ronald M. Sandgrund, Scott F. Sullan

This column is sponsored by the CBA Construction Law Forum Committee. The column addresses various construction-related issues in both public and private areas. The column editor and Committee encourage the submission of substantive law articles addressing issues of interest to practitioners in the field of construction law

Column Editor

James W. Bain of Benjamin, Bain & Howard, L.L.C Greenwood Village - (303) 290-6600, jamesbain@bbhlegal.com

Ronald M. Sandgrund Scott F. Sullan

About The Authors:

This month's article was written by Ronald M. Sandgrund and Scott F. Sullan, Greenwood Village, principals with Vanatta, Sullan, Sandgrund & Sullan, P.C. - (303) 779-0077. The firm often represents property owners in construction, development, and building materials defect litigation. The authors thank attorney Joseph F. Smith and legal assistant Dinae Hoem for their help on this article, and column editor Jim Bain for his expert editing.

This two-part article discusses Colorado's statutes of limitations and repose in connection with construction and materials defect litigation.

Colorado has a special statute of limitations and repose for claims arising from construction of improvements to real property, CRS § 13-80-104, which contains some of the shortest limitations periods in the United States. This statute has been amended over time in response to various court decisions. However, a construction professional's assertion of a statute of limitations defense may implicate other statutes.

Which statute applies depends on: (1) who is suing or being sued; (2) the claims asserted; and (3) the nature and cause of the construction defect. In addition, tolling and estoppel doctrines may prevent the defendant from raising the limitations bar. Thus, the facts triggering tolling and estoppel doctrines must be considered and the applicable doctrines applied when necessary.

This first part of the article explores CRS § 13-80-104 and other relevant statutes of limitations and repose. It also examines factors that trigger the running of these various statutes, as well as identifying which activities and claims are subject to these disparate limitations periods. In addition, the article describes the defects and conduct that may be subject to such statutes. Finally, it reviews recent changes to the laws wrought by the Construction Defect Action Reform Acts of 2001 and 2003.

The second part of this article, which will appear in this column in June 2004, examines potentially applicable tolling and estoppel doctrines and the constitutionality of certain statutes of limitations and repose. Part II also discusses the drafting of jury instructions that logically integrate these various principles.

Construction
Professionals Subject to
CRS § 13-80-104

The term "construction professional" is used in this article to describe generally the persons subject to the statute of limitations and repose pertaining to the construction of real property improvements. According to CRS § 13-80-104, this refers to

any architect, contractor, builder or builder-vendor, engineer, or inspector performing or furnishing the design, planning, supervision, inspection, construction, or observation of construction of any improvement to real property.1

Developers and subcontractors likely are subject to this statute as well when engaged in any of the listed activities.

Scope of CRS § 13-80-104

CRS § 13-80-104 provides statutes of limitations and repose for all actions in tort, contract, indemnity, contribution, or otherwise for the recovery of damages. It applies to any deficiency in the "design, planning, supervision, inspection, construction, or observation of construction of any improvement to real property."2 CRS § 13-80-104 applies when such a deficiency caused: (1) injury to real or personal property; or (2) injury to or wrongful death of a person.3

Applicable Claims
And Activities

CRS § 13-80-104 applies only to improvements to real property. The attachment of personal property to realty, regardless of whether such attachment results in the creation of a fixture, is an improvement subject to the statute.4 In short, CRS § 13-80-104 applies to activities relating to the process of building a structure.5

The Colorado Court of Appeals found that CRS § 13-80-104 applied to concrete poured to form part of a parking garage.6 Repainting the surface of an existing building - including preparing the surface to receive the paint, such as by sanding and caulking - may fall within the ambit of CRS § 13-80-104.7 However, an action for breach of a warranty to repair or replace deficient work is not subject to the statute.8

An "activity" involves construction of an improvement to real property if it is essential and integral to the function of the construction project.9 Another important factor in determining whether an activity constitutes an improvement to real property is the owner's intention.10 CRS § 13-80-104 focuses on persons whose activities relate to the construction or improvement of a building or other structure, in contrast to those who design, manufacture, supply, or service particular items placed within a building or part of it through the efforts of others.11 Thus, as noted earlier, CRS § 13-80-104 applies to activities relating to the process of building a structure.

In one case, a subcontractor's negligent operation of a sprinkler system in freezing temperatures created an icy sidewalk, invoking the limitations period of the predecessor statute.12 However, CRS § 13-80-104 was held inapplicable to a damage claim against a contractor arising from the contractor's use of heavy equipment in constructing a roadway, when vibrations from the work allegedly damaged a nearby home.13

A court must not only examine the label placed on the party who was involved in the building process, but also must look to whether the party's actions fall within the protected class of activities under CRS § 13-80-104. In one case, CRS § 13-80-104 applied to a "manufacturer" of pre-cast concrete building products for the structural framework of a parking garage, because the "manufacturer" also was engaged in substantial off-site and on-site roles in constructing the parking garage, including designing the garage columns and beams.14

Claims and Activities
Not Included

CRS § 13-80-104 is not applicable to claims against a developer or seller of unimproved lots.15 Examples of other activities that are not subject to this limitations period include the: (1) pre-purchase inspection of a home; (2) movement of a historical monument from one location to another; (3) re-zoning and platting of property; and (4) performance of a land or boundary survey that is not part of an improvement or building project.16

Two-Year Statute of
Limitations Under
CRS § 13-80-104

A statute of limitations sets a maximum time period during which certain actions can be brought or rights enforced.17 CRS § 13-80-104 provides that claims governed by this statute must be commenced within two years of the time the claimant or the claimant's predecessor in interest discovers, or in the exercise of reasonable diligence should have discovered, the physical manifestations of a defect in the improvement that ultimately causes the injury.18 The limitation of actions provided in CRS § 13-80-104(1)(a) is in derogation of the common law; therefore, it will be strictly construed to limit its application to the clear intent of the General Assembly.19

Statutes of Repose Under CRS § 13-80-104

A statute of repose limits potential liability by limiting the time during which a cause of action arises, regardless of the time of accrual of the cause of action or of notice of an invasion of one's legal rights.20 Unlike a statute of limitations, a statute of repose generally imposes an absolute bar to bringing suit after a prescribed period.21 There are two periods of repose covered by CRS § 13-80-104: (1) a six-year "conditional" period; and (2) an eight-year "absolute" period.

In addition to the two-year statute of limitations, CRS § 13-80-104(1)(a) provides that no action against any construction professional performing or furnishing the design, planning, supervision, inspection, construction, or observation of construction of any improvement to real property may be brought more than six years after the substantial completion of the improvement to real property.

The six-year period runs even if the aggrieved party, such as the owner, has no knowledge of the physical manifestation of a defect. Nevertheless, where the manifestation of the defect is first known (or should have been known) during the fifth or sixth year after substantial completion, suit may be instituted within two years of such actual or constructive knowledge. Thus, in such circumstances, it is permitted for a suit to be commenced during the seventh or eighth year following substantial completion.22 Barring extraordinary circumstances, CRS § 13-80-104 effectively imposes an absolute eight-year deadline on time for the commencement of suits arising from the construction of real property improvements.

The six-year period of repose begins only after "substantial completion of the improvement to real property," the determination of which involves...