Sunrise

Take a moment. Close your eyes.  Feel the sun on your face… shutterstock_228722404

Actually, this is not a Friday morning mediation.  But a title and tagline discussing “contracts law” would hardly promote readership.

The Colorado Supreme Court recently passed on the opportunity to consider whether sophisticated business entities could contractually modify the statute of limitations and agree upon an accrual period when constructing a project for residential use.  R.G. Brinkmann Company v. Broomfield Senior Living Owner, LLC and Sunrise Development. 2017SC351 September 5, 2017.

I had been watching this case with interest, not only because I was representing a subcontractor involved, but also because it could have far-reaching implications for all construction professions.  Frankly, the idea that sophisticated construction professionals could contractually modify the statute of limitation and agree to an accrual period for claims would have gone further in remedying the problems of the Colorado Construction Defect Action Reform Act and rising insurance cost than any action by the General Assembly last session.  The problem lay in the uncertain and amorphous concept of “substantial completion” and when/how defects are “discovered”.  Construction professionals face exposure for six or more years under the statute.  An attempt to contractually limit and define the period of exposure would be an obvious fix.  Although Justice Eid would have granted certiorari to review the questions presented by R.G. Brinkmann we have no other insight into the decision to leave the issues for another day.

Thus, we are left with the Colorado Court of Appeals decision and these takeaways: a commercially run senior assisted living facility is a “residential” project; even though none of the “residents” are homeowners, the project falls under the Homeowner Protection Act; and no matter how sophisticated the commercial entities are, they cannot modify the statute of limitations or agree to an accrual period for construction defect claims.

 

The Crippling Effect of ‘No’

At this point of the year, most architecture offices have either had a summer intern or have hired a recent graduate. These people come in with varying levels of experience, but for the most part, can be defined with a single term: enthusiasm. Most are younger and full of energy. They are coming from institutions that inspire and encourage thinking “outside the box”. The optimism is practically written across their foreheads.

Cut to a scene of a typical architecture office.

Most of us have lost a bit of the ‘fresh out of the box’ shine after a few years or even a few decades. We get bogged down by the limits of construction budgets, office politics, project schedules, and a myriad of other “they didn’t teach us this in school” subjects. It can be difficult to not project these extracurricular worries onto younger people that are fresher into the workforce. It can be hard not to see their optimism and eagerness and want to counter it with an underhanded comment about “in the real world” or “when you get further along in your career”. The biggest issue with countering enthusiasm with negativity is that it takes the momentum that people have and throws an emergency brake on it. Not only does it have the likelihood of curbing the current zeal for working in architecture, but it will also prove to be much more difficult to instill a sense of gusto in the future. People that have a sense of enthusiasm for work and the obvious want to do more should not have their energy stifled, but should be encouraged and guided.

This doesn’t just go for being a wet blanket when met with an overly peppy person. When they come to more experienced people within their offices with questions or ideas, the response should never be “ask someone else”, “we can’t do that”, or any other momentum killing “no” comment. It’s like the old adage of improvised comedy or acting: never say no. If someone comes to you with an idea in an improv sketch, you are not allowed to say no. Instead, you must take what the person has presented to that scene and play off of it in order to keep things moving forward.

We all have days (or mornings for some of us) where it’s difficult to find the enthusiasm and patience to deal with things that aren’t our own laundry lists of tasks. On the other hand, we have all been in the situation of being recent graduates and wanting more out of our careers and desperately wanting to prove that we are capable and worthy of being trusted.

We all have the responsibility of listening when people have questions, ideas, or just something to say and not shooting it down. Instead of stopping momentum in its tracks, we must guide it and turn it into productive learning because if we curb momentum early on, it will be just that much harder to start again later.

Construction Defect Disclosure Law Effective August 8, 2017

The Colorado Common Interest Ownership Act’s newest addition became effective August 8, 2017.  Colorado Revised Statute 38-33.3-303.5 (formerly HB 17-1279) was signed into law on May 23, 2017 and became effective this week.

The law requires homeowner association executive boards to satisfy new disclosure, meeting, and voting requirements before commencing an action against construction professionals under Colorado’s Construction Defect Action Reform Act (C.R.S. 13-20-803, et seq.).

Before beginning a construction defect action (defined broadly as any civil action or arbitration proceeding for damages….against a construction professional..for damages or loss to…real or personal property or personal injury caused by a defect in the design or construction of an improvement to real property…”), the executive board of a common interest ownership community must “mail or deliver written notice” to each owner AND to each construction professional against whom the action is proposed.  The construction professional must also be provided separate notice advising of the owner’s meeting.

The notice must contain a description of the  nature of the construction defect action, which identifies the alleged defects with reasonable specificity, the relief sought, a good-faith estimate of the benefits and risks involved, and any other pertinent information, including

Presumably, the notice of owner’s meeting would give the construction professional time to prepare a presentation, propose repair, or offer a monetary settlement to be made at the meeting.

Vague laundry lists of defects have been the norm in construction defect notices of claim and lists of defect.  While the new law could result in early notice and more full disclosure, there is no mechanism allowing the construction professional an inspection or to obtain greater detail and the new law lacks a strong enforcement mechanism.

The advisory notices need not be sent to any construction professionals identified after the first advisory notice is mailed, so construction professionals with discreet scopes of work may be left out in early stages.

As a practical matter, the new laws timing requirements may not provide construction professionals sufficient time to truly prepare a response to the allegations, much less rally the support of its insurance carrier and legal counsel before the owner’s meeting.  While there are benefits to open dialogue, construction professionals should participate in any owner meetings with caution: the association will clearly have retained counsel and has litigation on its mind; statements and presentations could be used as later evidence in a lawsuit; and early participation without the approval or involvement of your insurance carrier may also have coverage implications.

 

Out for Summer

capitol_vd_bobashThe First Regular Session of the Seventy-first General Assembly is Out for Summer having adjourned May 10, 2017, so it seemed an appropriate time to recap Construction Defect Reform across the State.

This session again saw an ambitious batch of Construction Defect reform bills – six in in fact. Both the Speaker of the House and President of the Senate highlighted reform in their opening speeches.  The bills ranged from defining “construction defect” to early allocation of costs among defendant litigants.

However, the only bill to garner enough support to make it to the Governor’s desk was HB 17-1279.  The bill requires that, before the executive board of a unit owners’ association (HOA) in a common interest community brings suit against a developer or builder on behalf of unit owners, the board must: Notify all unit owners and the developer or builder against whom the lawsuit is being considered; Call a meeting at which the executive board and the developer or builder will have an opportunity to present relevant facts and arguments; and Obtain the approval of a majority of the unit owners after giving them detailed disclosures about the lawsuit and its potential costs and benefits.

The hope is that it will reduce the risk of construction defect litigation just enough for insurance companies to lower their rates, allowing builders to re-enter the owner-occupied multi-family housing market in Colorado.

It will likely take a few years for insurance carriers to respond to HB 17-1279 with rate reductions, and another few years for builders and developers to feel confident that HB 17-1279 offers any true protection from overzealous litigants, but apparently, hope springs eternal among the General Assembly.

The Colorado Supreme Court’s recent ruling in Vallagio at Inverness Residential Condo Association vs. Metropolitan Homes Inc. will probably have more impact; reinforcing the power of a Declarant to bind future HOA members to arbitration of construction defect disputes.

In early June, the Court ruled that a homeowners association was wrong to sue a builder after disregarding bylaws that require binding arbitration to settle claims of construction defects.  The association’s key misstep, the court said in a 5-2 ruling, involved its bid to change the rules to allow litigation without getting the consent of the development’s builder.

“Because the unit owners did not obtain the Declarant’s written consent to remove the declaration’s arbitration provision, the attempted amendment was ineffective. Consequently, the Association remains bound by the arbitration agreement …”

Cities also continue to effectuate change on the local level.  Those that currently have Construction Defect ordinances include:

Arvada, Aurora, Castle Rock, Centennial, Colorado Springs, Commerce City, Denver, Durango, Fort Colins, Lakewood, Littleton, Lone Tree, Loveland, Parker, Westminster, and Wheat Ridge.

These ordinances include a combination of Notice-Repair language (pre-suit notice to construction professionals with a right to repair); Disclosure-Voting requirements (pre-suit disclosure to HOA members and lawsuit approval); Substantive Law changes (limitation of type or scope of a construction defect claim); or Plat Note language (allowing developers to record plat notes mandating arbitration).

As we enter the 2017 summer construction season, once again very little has changed from years past despite reform efforts at the General Assembly.  The General Assembly will convene once again in January 2018, and we will continue watching the circus for any true reform.

Special Thanks to @AxiomPolitics for working tirelessly and keeping the Colorado Defense Lawyer Association up to date on all legislative matters.

 

Filling the Gap

This week’s post is from our newest EP Blog contributor: Rachael Johnson. Rachel recently moved to Denver from Washington D.C. and brought with her an amazing program called the Christopher Kelley Leadership Development Program (CKLDP). 2016_ckldp_grad_slideshow

Filling the Gap by Rachael Johnson

As one of the few official “professions” – those jobs that require continuous improvement, evolution, innovation and training – lawyers and doctors have us architects beat when it comes to post-graduate school professional training and development. We emerge from a rigorous, often heavily theoretical education and begin our new professional lives as bathroom elevation trainees – interns. We learn and test our skills and knowledge until – BAM! – We’ve passed our tests and now have the credentials to do some real good (or damage – depending on how much we have actually learned and experienced). Aside from informal learning opportunities at an occasional lunch’n’learn with a vendor and those lucky chances to shadow a mentor, there is little regular and formal professional education built into an emerging professional’s early career.

Over the years, the professional architecture community here in Colorado has recognized this lack of guidance for interns and responded with various committees and programs including mentorship programs and testing support. There is still a gap, though. For freshly licensed folks who have collected mentors over the years and have exhausted many of the professional learning opportunities out there, there is still a gaping hole, an education void impeding the path to expertise, leadership and partnership. The knowledge needed to run a firm competently or reach a peak level in the profession is seemingly absorbed through osmosis (or perhaps through many iterations and subsequent failures and successes). I do not discount the hard work and raw talent that got our industry leaders where they are today, but I also recognize (and venture to guess that the architecture community at large agrees) that there is new talent out there that could not only enhance, but lead the next era of the practice of architecture. Let this serve as a call to action – We must empower and equip those eager to innovate and lead!

Enter stage right… the Christopher Kelley Leadership Development Program. This 9-month program serves as an opportunity for those bright, young professionals to think, dream and grow with like-minded young architects and leaders in the local community both within and outside the profession. Just by its inherent qualities and syllabus structure, the program has proven (over four years in Washington DC and now one in Denver) to be not only a plentiful environment for learning and exploring, but an incubator for daring, curious, diligent leaders. Each May, the local architecture and design community has the privilege of welcoming 16 empowered, fresh and enthusiastic candidates into the highly-qualified pool of leader candidates – the future of our profession.

Send us your best and brightest: scholars, speakers and collaborators!

*For more information – to sponsor, apply, contact – please visit: https://aiacolorado.org/ckldp