Chapter 18 - § 18.11 • LIABILITY BASED ON STATUTES AND CODES

• Jurisdiction: Colorado

§ 18.11 • LIABILITY BASED ON STATUTES AND CODES

In some cases, plaintiffs have attempted to impose liability on contractors based upon alleged violations of certain duties created by statutes and/or building codes. These cases include, among others, negligence per se claims and claims based upon alleged violations of the Colorado Consumer Protection Act. At other times, those involved in construction disputes attempt to avoid liability to contractors based upon the contractor's alleged failure to comply with statutes and/or codes. Cases in this category include instances where contractors have not obtained all necessary licenses necessary to complete the work. This section addresses the relatively few construction disputes where statutes and/or codes were implicated, including claims based on the Colorado Consumer Protection Act, failure to comply with building codes, and failure to comply with licensing requirements.²⁸⁵

§ 18.11.1-Consumer Protection Act

The Colorado Consumer Protection Act (Act) provides a lengthy list of activities that constitute "deceptive trade practices."²⁸⁶ The purpose of the Act is "to provide prompt, economical, and readily available remedies against consumer fraud."²⁸⁷ If an action is successfully brought for violation of the Act, the plaintiff is entitled to treble damages, together with reasonable attorney fees.²⁸⁸ It is the appeal of possible treble damages and attorney fees that makes an alleged violation of the Act a common claim in construction disputes, particularly those involving new home construction. The violations of the Act frequently alleged are that the contractor represented that the services it agreed to provide were "of a particular standard, quality, or grade" knowing that they were not,²⁸⁹ and/or that the contractor failed to disclose material information concerning its services, which information was known at the time of advertisement or sale, if such failure to disclose was intended to induce the consumer to enter into the transaction.²⁹⁰ If a contractor is required to have a license to do the work in question, the contractor may also be liable under the Act by failing to obtain that license.²⁹¹ To prevail on a deceptive trade practices claim under the Act a claimant must establish that

(1) the defendant engaged in an unfair or deceptive trade practice; (2) the challenged practice occurred in the course of the defendant's business, vocation, or occupation; (3) it significantly impacted the public as actual or potential consumers of the defendant's goods, services, or property; (4) the plaintiff suffered injury in fact to a legally protected interest; and (5) the challenged practice caused the plaintiff's injury.²⁹²

In any action against a "construction professional,"²⁹³ treble damages and attorneys fees under the Act are limited to $250,000.²⁹⁴

In Herman v. Steamboat Springs Super 8 Motel, Inc.,²⁹⁵ motel owners contended that an excavation contractor, who completed work without written change orders, had engaged in a deceptive trade practice based on the theory that the contractor's assurance that it would not complete additional work without written change orders was a misrepresentation about the price of its services. The court of appeals determined that the Act did not apply based upon the facts.²⁹⁶ Notwithstanding C.R.S. § 13-80-104, which generally requires that all construction defect claims be brought within two years of when they accrue,²⁹⁷ claims under the Act must be brought within three years of when they accrue.²⁹⁸ A manager of a limited liability company or an officer of a corporation may be personally liable for violation of the Act if he or she "approved of, directed, actively participated in, or cooperated in" the wrongful conduct.²⁹⁹ Finally, liability exists under the Act only if the contractor's violation of the Act caused the damage.³⁰⁰

§ 18.11.2-Failure to Comply with Building Codes

A contractor's alleged failure to comply with a building code is typically cast as a negligence per se claim. A party may be liable for negligence per se where a defendant's actions are contrary to a statute enacted for the public's safety and where the violation of the statute proximately caused the complained-of injury.³⁰¹ The plaintiff "must also show that he or she is a member of the class of persons whom the statute was intended to protect and that the injuries suffered were of the kind that the statute was enacted to prevent."³⁰² Although sporadic attempts have been made to impose liability based upon the doctrine of negligence per se by reference to building codes, those attempts have been largely unsuccessful. By statute, a negligence claim for a residential construction defect based upon a homebuilder's failure to comply with the applicable building codes is barred except under limited circumstances.³⁰³

Although not a construction dispute, the decision in Iverson v. Solsbery³⁰⁴ is nevertheless instructive regarding how courts evaluate negligence per se claims based upon alleged building code violations. In that case, Solsbery made a number of substantial improvements to a building without obtaining a building permit.³⁰⁵ A subsequent purchaser later learned that the...