A Deeper Look at Cdara's Scope
| Jurisdiction | Colorado,United States |
| Citation | Vol. 51 No. 8 Pg. 32 |
| Pages | 32 |
| Publication year | 2022 |
August, 2022
BY RONALD M. SANDGRUND AND LESLIE A. TUFT
This article expands on a previous article addressing the scope of Colorado's Construction Defect Action Reform Act. It takes a deeper look at inherent limitations on the Act's reach and examines the extent to which it applies to personal or bodily injury, wrongful death, and personal property damage claims.
A March 2021 Colorado Lawyer article titled "The Scope of CDARA: Time and Place Limitations" (hereinafter CDARA's Scope)[1] examined potential limitations on die reach of Colorado's Construction Defect Action Reform Act (CDARA or "the Act"). CDARA's Scope noted that while CDARA does not include explicit time or place limitations, some circumstances raise the question whether die statutory scheme contains inherent limitations. The article explored whether CDARA applies to construction defects observed early in die construction process, before die work-in-progress becomes a substantially completed real property improvement; and whether CDARA applies to construction defects located on one property that cause damage or injury on another property.
Shordy after CDARA's Scope was published, the Champlain Towers Condominiums in Surfside, Florida, collapsed on lune 24, 2021, killing 98 people.[2] The collapse may have been related to construction defects or construction on a nearby parcel.[3] If a similar tragedy were to occur in Colorado, how would CDARA affect die claims of those injured or killed? This article follows up on CDARA's Scope by looking more closely at die Act's time and place limitations and examining the extent to which CDARA applies to personal or bodily injury, wrongful death, and personal property damage claims.
Targeting CDARA's Scope
In 2020, die Colorado Court of Appeals decided Warembourg v. Excel Electric, Inc.,[4] which examined whether a personal injury claim was governed by CDARA, die Colorado Premises Liability Act (PLA),[5]or both. The case raises die following issues:
■ Does Warembourg affect whether CDARA applies to construction defects on one property that cause damage or injury on another property?
■ Does Warembourg affect whether CDARA applies only to claims asserted by the owners of property where defects occur?
■ Does CDARA apply to all personal injury and wrongful death claims caused by construction defects?
The Construction Defect's Location
CDARA's Scope questioned whether the Act applies to construction defects on one property that cause damage or injury on another property. In Warembourg, the Court concluded that CDARA did not apply to the plaintiff's personal injury claims, noting in dicta: "The General Assembly enacted CDARA to proscribe the rights and remedies of property owners who allege that [construction professionals] are responsible for construction defects on their property.” [6] However, because of its facts, Warembourg does little to clarify whether CDARA applies to construction defects on one property that cause damage or injury on another or to defects that injure persons who have no ownership or other beneficial interest in the defective property.
Warembourg involved a flooring subcontractor who was electrocuted after opening a temporary electrical box serving a home under construction. The Court characterized the case as a "quintessential premises liability action"[7] governed by the PL A. It rejected the defendant utility company's argument that CDARA's noneconomic damages cap applied to the verdict, holding that the temporary electrical box was not a permanent fixture and thus not a real property improvement subject to CDARA."[8]
The Court elaborated in dicta that CDARA did not apply because the plaintiff "was not a property owner and his claims did not arise from a defect impacting his property.” [9] The case made clear that the temporary electrical box "was located outside the home,"[10] but did not reveal its exact location. The defendant "presented evidence that [its employee] inspected and tested the box before installing it at the construction site";[11] and the Court vaguely referenced a "temporary power pole that was set up," suggesting the box may have been located off-site.[12] But the case did not make clear whether the box was on the subject parcel.
Accordingly, Warembourg's holding did not turn on whether the defective electrical box was located on the same property where the plaintiff was injured. Therefore, the Court's dicta does not shed light on whether an injury or damage must occur on the same property as the construction defect for CDARA to apply.
The Importance of a Property Interest
Considering Warembourg's holding, its dicta, and the opinion's unclear description of where the construction defect was located and who owned that parcel, the case does not offer clear guidance for whether CDARA only governs personal injury claims if they are asserted by the owner of the defective property. But Warembourg's dicta that CDARA did not apply to the plaintiff's personal injury claim because he "was not a property owner and his claims did not arise from a defect imp acting his property" [13] raises the question whether CDARA would apply to a construction defect claim where the claimant did not own the defectively constructed property.
CDARA's Scope observed that CDARA applies to personal and bodily injury claims based, in part, on CDARA's definition of "action" as "a civil action or an arbitration proceeding... brought against a construction professional to assert a claim... for... personal injury caused by a defect in the design or construction of an improvement to real property."[14] The Act's legislative declaration states an intent to preserve "adequate rights and remedies for property owners who bring and maintain [construction defect] actions."[15] However, CDARA's definitions of "action" and "claimant" encompass any person's damages claim against a construction professional "for damages or loss to, or the loss of use of, real or personal property or personal injury caused by a defect in the design or construction" of a real property improvement.[16]
If CDARA only applies when the claimant has an ownership or similar beneficial property interest in the defectively constructed property, many personal injury claims against construction professionals arising from construction defects, such as claims by invitees, licensees, non-owner occupants (e.g., family members and guests), or trespassers would not be subject to CDARA. And at least one commentator has suggested that if CDARA contains a property ownership requirement, it may not apply to disputes between and among general contractors and subcontractors, along with other construction process participants.[17]
As CDARA's Scope noted, at least two Colorado district courts have ruled that a property damage claimant must have a "beneficial interest" in the allegedly defective property for CDARA to apply.[18] And the U.S. District Court for the District of Colorado held in a personal injury case that "CDARA's notice of claim procedure applies to 'property owners who bring claims against construction professionals for damages to their property arising out of construction defects,'" and therefore it did not apply to the plaintiffs in that case, who were hotel guests on the property where the alleged defect occurred.[19] Given the limited judicial analysis of this issue so far, it remains unclear whether Colorado's appellate courts will approve this potential beneficial property interest limitation on CDARA's scope.
Significant consequences result if CDARA does not apply to personal injury claims caused by construction defects where the claimant does not own the defective property. First, the claimant would not need to satisfy CDARA's statutory notice of claim process and defect list requirements.[20] Further, the court could increase the claimant's personal injury damages caps to $500,000 (as adjusted for inflation) if justified by clear and convincing evidence,[21] an increase CDARA does not allow because it caps such damages at $250,000 (as adjusted for inflation). (However, as one unpublished Colorado Court of Appeals case held, even if CDARA does not apply in some circumstances, the real property statutes of limitations and repose may still apply, although CDARA's tolling provisions may not.[22] )
Potential PLA/CDARA Overlap
In some situations, either the PLA or CDARA, or both, may apply to the same injury (e.g., a slip and fall on a defectively constructed, unreasonably steep ramp that tends to ice up in cold weather due to poorly constructed surface drainage, and is not reasonably kept clear of ice by the ramp's owner). But the PL A and CDARA differ significantly, including in
■ recovery theories and liability proof requirements (e.g., the PLA contains different evidentiary requirements that depend on the plaintiff's status while on the property where the injury occurred);
■ persons potentially liable (e.g., "construction professionals" under CDARA, including prior owners of commercial property;[23] and a person and/or that person's authorized agent "in possession of," or "legally responsible for the condition of," property under the PLA);[24]
■ persons whose claims are subject to each law;[25]
■ applicable statutes of limitation and repose (e.g., the circumstances triggering each law's applicable statute of limitations differ, and only CDARA contains a statute of repose);[26]
■ pre-suit filing conditions (e.g., CDARA has a mandatory notice of claim process but the PLA has none);
■ recoverable damages (e.g., different noneconomic damages caps); and
■ applicable affirmative defenses and other limitations, such as CDARA's anti-waiver provisions.[27]
Given these distinctions, counsel for each party should determine each statute's applicability and the...
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