Stop Defeating Your Own Statute of Limitations Defense

We all know every construction project is built perfectly and owners never have a complaint after the last nail is hammered (read with heavy sarcasm).  In the event a construction defect is alleged after a project is complete, there is no reason to just hand claimants the ability to sue years after the expiration of Colorado’s two-year statute of limitations for construction defects.

Those involved in construction defect litigation in Colorado are likely well versed in the Construction Defect Action Reform Act, C.R.S. § 13-20-801 et seq. (“CDARA”).  In short, the purpose of CDARA’s notice of claim process is to encourage resolution of potential defect claims before litigation.[1]  The notice of claim process allows construction professionals an opportunity to remedy claimed defects prior to litigation, while tolling Colorado’s statute of limitations so homeowners can maintain their right to sue while the parties attempt to remedy claimed defects before initiating a lawsuit.[2]

In a pending lawsuit, homeowners learned of alleged construction defects in 2015 that were communicated to construction professionals approximately one month later.  Construction professionals inspected and attempted repairs over the course of the next year.  Approximately three years following the discovery of alleged defects, the homeowners then submitted a formal CDARA notice of claim to the construction professionals.  Six months later, the homeowners filed suit.

The construction professional defendants moved for summary judgment on the basis that a CDARA notice was not submitted until after expiration of the two-year statute of limitations.  Alternatively, if the early attempts at repairs were considered a notice of claim process, then the lawsuit was still untimely filed two and a half years after the last repairs were performed.  The Court denied summary judgment, reasoning that communications and inspections following repairs served to toll the statute of limitations for nearly three and a half years.

The courts in two unrelated and unpublished Colorado opinions also support the concept of communications tolling the statute of limitations.  The Court in Ajax Lofts Condo Association v. Ajax Lofts, LLC, No. 2011CV7763 (Colo. Dist. Ct. Nov. 16, 2012) determined correspondence and work performed relating to alleged defects served to toll the statute of limitations and repose for seven years.  That Court found no binding caselaw to qualify an e-mail as a CDARA notice of claim, but reasoned the e‑mails in that case qualified as they sufficienty notified the construction professional of alleged construction defects.  Similarly in Village West v. KB Home, No. 2014CV31232 (Colo. Dist. Ct. Sep. 14, 2015), the Court indicated it was provided no clear authority on the subject, but found nothing to preclude e-mails from commencing a series of independent CDARA notice of claim tolling periods.

The lesson: Any communication or meeting with an owner can potentially be construed to toll Colorado’s statute of limitations for construction defect claims.  While many construction professionals attempt to work with owners to resolve complaints, these communications may serve only to allow a lawsuit long after the completion of a project or after the statute of limitations would otherwise have run.  If an owner is alleging construction defects and those claims are disputed, be cautious of communications in response and hire counsel early to avoid inadvertently defeating your own defenses.

[1] Smith v. Exec. Custom Homes, Inc., 230 P.3d 1186, 1192 (Colo. 2010).

[2] C.R.S. § 13-20-803.5.