June 27, 2017

Colorado Court of Appeals: Construction Defect Claims Filed Against Subcontractors were Time-Barred

The Colorado Court of Appeals issued its opinion in Sopris Lodging, LLC v. Schofeld Excavation, Inc. on Thursday, October 20, 2016.

Construction Defect—Summary Judgment—Time Bar.

TDC was the general contractor for construction of a hotel owned by Sopris Lodging (Sopris). On March 11, 2011, Sopris sent TDC a notice of claim regarding alleged construction defects at the hotel. On May 24, 2013, Sopris filed a complaint in district court asserting construction defect claims against one of the subcontractors of the hotel and against TDC’s individual principals, who had guaranteed TDC’s performance. On the same date, Sopris and TDC entered into an agreement to toll the statute of limitations for Sopris’s claims against TDC.

In 2014, TDC filed third-party claims against several subcontractors including Schofield and CEC for breach of contract, negligence, contribution, and indemnification. CEC and Schofield moved for summary judgment, asserting the claims were barred by the two-year statute of limitations in C.R.S. § 13-80-102. TDC did not dispute that the claims accrued on or before March 11, 2011 but argued C.R.S. § 13-80-104(1)(b)(II) tolled the statute of limitations for a defendant’s third-party clams until 90 days after a settlement or final judgment on the plaintiff’s claims against the defendant. The district court entered summary judgment in favor of CEC and Schofield.

On appeal, Sopris (standing in the shoes of TDC following a settlement and assignment of the third-party claims) argued it was error to find the claims time-barred. C.R.S. § 13-80-104(1)(b)(II) gives a contractor the option to bring indemnity or contribution claims against subcontractors in a separate lawsuit after the underlying claims are resolved and tolls the statute of limitations for such claims. But because TDC asserted third-party claims in the original construction defect litigation, the tolling section does not apply. Thus TDC’s third-party claims were time barred.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

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