Appellant Shaw Construction (“Shaw”) was the contractor for the Roslyn Court condominium complex. Shaw hired a drywall subcontractor and a separate subcontractor to install roofs, gutters, and downspouts.
The City and County of Denver issued certificates of occupancy for each residential building for various periods, with the last certificate for the project being issued on March 10, 2004. The project’s architect certified completion of all known remaining architectural items by June 8, 2004.
The Plaintiff Roslyn Court at Stapleton Homeowners Association (“HOA”) alleged construction defects in the condominium complex. In 2007, Shaw received a notice of claim from the HOA, under the requirements of Colorado’s Construction Defect Action Reform Act (“CDARA”). Following the requirements of the act, Shaw and the HOA attempted to resolve their disputes without litigation, until finally, the HOA filed an action against the project developers, and added Shaw as a defendant. Shaw filed an answer and third-party complaint against its drywall and roofing subcontractors, among others, on March 29, 2010, and sent out a statutory notice of claim to these entities the following day.
The subcontractors moved for summary judgment, arguing Colorado’s six year statute of repose had run on any claims against them. They argued that substantial completion occurred no later than the date of the final certificate of occupancy, which was on March 10, 2004. Because the complaint was not filed until March 29, 2010, the claim was time-barred. Shaw argued that substantial completion did not in fact occur until the architect certified completion on June 8, 2004. Therefore, the complaint was timely. Shaw also argued that under the CDARA, the HOA’s notice of claim to Shaw tolled all claims associated with the project, even though Shaw’s subcontractors did not receive notice of the claim until Shaw’s complaint was filed.
The trial court granted summary judgment. On interlocutory appeal, the Colorado Court of Appeals affirmed the trial court’s findings.
The court of appeals rejected Shaw’s tolling argument. Shaw asserted because the CDARA did not require notice to every construction professional involved in the project, the first notice of claim tolled all construction defect claims arising from the project. Recognizing some ambiguity in the statute, the court nevertheless rejected this assertion as contrary to legislative intent. The purpose of the CDARA, the court noted, was to establish procedures facilitating out of court resolution of construction defect claims. Such intent would be entirely thwarted by tolling claims against parties who lacked any notice of the claims being asserted. Also, parties who received no notice may destroy records or cancel insurance in the mistaken belief that future claims against them were time barred. Looking at the overall context of the statute in connection with the policies it was designed to implement, the court refused to find that Shaw’s claims against its subcontractors were tolled by the HOA’s notice to Shaw.
As to the issue of substantial completion, the court first found that the last building constructed constituted an “improvement” under the statute of repose, the substantial completion of which triggered the statute of repose. The court found that substantial completion of that building occurred upon receipt of the final certificate of occupancy. As the court noted, receipt of the certificate demonstrated that the last unit was habitable. Shaw did not present any evidence that the subcontractors continued to work on the building after the certificate of occupancy was issued. Because the architect’s final certificate of completion did not address the final building at issue, but instead completion of surrounding pavements and exterior grounds, it was not dispositive of substantial completion. Thus, the claims were time barred.
Shaw Construction, LLC v. United Builder Services, Inc., 2012 Colo. App. LEXIS 172 (Colo. Ct. App. February 2, 2012).
Submitted by Anna Oshiro