Chapter 10 - CHAPTER 10 CLASS AND COLLECTIVE ACTIONS

• Jurisdiction: Colorado

Chapter 10 CLASS AND COLLECTIVE ACTIONS

A class action is a lawsuit brought on one's own behalf and in a representative capacity on behalf of others similarly situated. The Colorado Supreme Court has said that in our system of justice, "class actions serve a number of important functions," including providing "a fair and economical method for disposing of a multiplicity of claims in one lawsuit," "access to judicial relief when [plaintiffs] might not otherwise have such access," and "protect[ing] defendants from inconsistent obligations," leading Colorado to favor "'the maintenance of class actions.'"¹

The Colorado Court of Appeals has expressly approved class actions on behalf of unit owners for damage to common elements in a condominium complex.² Such formal class actions are probably no longer necessary in most cases in light of Colorado's Common Interest Ownership Act, which expressly confers standing on homeowners' associations to pursue damage claims on behalf of two or more unit owners with respect to matters affecting the "common interest community."³

Homebuilders and their material suppliers vigorously resist class actions by single-family homeowners affected by the same faulty construction technique or defect, and such suits meet limited success. One Colorado district court certified a class action on behalf of over 1,600 homeowners for claims arising from cement slab-on-grade flooring systems in basements over expansive soils, where the homeowners alleged that the flooring systems rendered the basements unsuitable for finishing due to differential movement of the floors caused by the underlying soils.⁴ The Colorado Supreme Court refused to exercise its jurisdiction under C.A.R. 21 to consider the propriety of the class certification order.⁵ Eventually, the case proceeded to trial and the jury returned a verdict for the homeowner class on their negligence, breach of implied warranty, and violation of the Colorado Consumer Protection Act claims. The case settled while post-trial motions were pending, and before individual bifurcated trials on damages and affirmative defenses. Similar class actions brought against other builders all settled on similar terms, involving "slab repair and replacement" programs for over 16,000 homes.⁶ One settlement also included a 10-year structural warranty to replace a warranty issued by a third-party warrantor that became insolvent.⁷

In another case, a district court certified a class action on behalf of over 300 lot and home purchasers asserting tort, contract, and state and federal statutory claims. The purchasers premised their motion for class certification on allegations that the developer, who was also a "declarant" under Colorado's Common Interest Ownership Act, had misled them regarding the...