In Colorado, if you want to sue a builder or contractor for damages on a construction project, you generally follow the procedure in the Colorado Construction Defect Action Reform Act. Under this procedure, at least 75 days before bringing a lawsuit, you complete a notice of claim, informing the construction professional of your claim and giving it a chance to fix the issue. But what happens if the statute of limitations will run on your claim before you have a chance to complete that process? Can you still file the complaint? Will the statute of limitations continue to run until you’ve satisfied the notice of claim process? The answers to these, and many more, questions were examined by the Colorado Court of Appeals in Curry v. Zag Built LLC.1 This post summarizes that decision, and then highlights four key take-aways for practice.
Curry v. Zag Built LLC: The Facts
The Curry family hired Zag Built to build a custom home. But once the Family moved in around July 2013, they noticed several issues. The Family filed a complaint in Colorado state court against Zag Built in June 2015.
In Colorado, lawsuits against home builders are governed by the Colorado Construction Defect Action Reform Act. Under this Act, plaintiffs are supposed to go through a notice of claim process before filing their lawsuits. The notice of claim process is intended to give the construction professional advance warning of the issues, as well as a chance to fix them or work out the issues, before legal action commences.
In this case, the Family had not completed the notice of claim process before filing its complaint. They had filed their complaint when they did in order to stay within the statute of limitations and to allow an expert to review the defects in their home with the hopes of engaging in some sort of negotiation with Zag Built. But also citing these reasons, the Family did not immediately serve Zag Built with their complaint. Rather, they waited until May 2016 to serve an amended complaint, after they had completed the notice of complaint process.
Zag Built argued that the case should be dismissed. First, Zag Built claimed that under C.R.C.P. 4(m), the suit should be dismissed because the builder was not served within 63 days of the complaint being filed. Second, Zag Built also claimed that the statute of limitations had already run because the Family had not completed the notice of claim process before the statute of limitations expired. The trial court denied the motion, and the builder filed an interlocutory appeal with the Colorado Court of Appeals.
The Colorado Court of Appeals affirmed. The opinion is a great resource for explanation of the procedure inherent in these cases. While you should read it for yourself if you happen to find yourself in construction defect litigation, here are some of the highlights.
1. C.R.C.P. 4(m) does not automatically require a trial court to dismiss a case if the plaintiff does not serve the defendant within 63 days of filing.
Several years ago, Colorado’s rules about time for service of a complaint changed. Previously, there was no set time limit for when a plaintiff had to serve a defendant. It just had to be with a reasonable amount of time. In 2013, C.R.C.P. 4(m) established a 63-day timeframe within which a plaintiff must serve a defendant with a filed complaint. The question in this case was whether a trial court must dismiss a case without prejudice if a plaintiff fails to abide by that time limit.
A division of this court held it does not. Instead, the trial court can take one of three courses of action if the plaintiff fails to comply: (1) give the plaintiff notice that it is thinking of dismissing the case and to show good cause why it should not; (2) order that service be made within a set timeframe; or (3) dismiss the case without prejudice after giving notice.
In this case, the trial court did not give notice to plaintiffs regarding dismissal. And, as explained in more detail below, because the Family had filed its complaint without completing the notice of claim process, the case was automatically stayed, including staying the requirement for service.
2. A plaintiff is not required to complete the notice of claim process before filing a complaint involving the Colorado Construction Defect Action Reform Act.
While the Act expresses a preference that a plaintiff complete the process before filing a complaint, it is not a jurisdictional prerequisite to filing a complaint. This is because the statute contains an exception which results in a stay if the plaintiff files before completing the process. For these reasons, a case is not subject to dismissal if the notice of claim process is not met prior to filing.
3. If a plaintiff files a claim before completing the notice of claim process, the case is automatically stayed.
The Colorado Court of Appeals clarified that if a plaintiff files a complaint prior to completing the notice of claim process, the case is automatically stayed, rather than subject to dismissal. The effect of such a stay is that it puts all deadlines, requirements or other procedural clocks on hold until the procedure is completed.
4. Because completing the notice of claim process is not a prerequisite to filing an action, a construction defect case starts, and the statute of limitations stops running, when the plaintiff files the complaint, regardless of whether he or she has completed the notice of claim process.
In this case, the Builder argued that because the plaintiff had not completed the notice of claim process until more than 2 years after it discovered the alleged defects, the statute of limitations had run and the case should be dismissed. The problem with that argument, the appellate court explained, is that it ignores the fact that the notice of claim process is not a prerequisite to filing. Because of that fact, the normal rules applied—that the statute of limitations stops running, and a case commences, when the complaint is filed. In other words, even if the notice of claim process is ultimately completed well after the damages were discovered, as long as the complaint was originally filed within that timeframe, the case will not be barred by the statute of limitations.
1 2018 COA 66.
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