Different States; Different Laws

Different States; Different Laws

Bruce H. Schoumacher - Querrey & Harrow, Ltd. – Chicago, Illinois

A recent Colorado case highlights the need for all design professionals and contractors to be aware of the significant differences among the laws of each of our states.  This need is more important today more than ever as more designers and contractors seek to expand their practice into other locales as more firms become truly national and global.

The Colorado case concerned the interpretation of the Colorado statute of limitations and statute of repose for construction cases.  A statute of limitations specifies the last date a party may file a lawsuit.  For example for contract cases, such a statute usually states that the lawsuit must be filed a specific number of years after the breach of the contract occurred.

A statute of repose states that no suit may be filed after a specific number of years, regardless when the act occurs giving the right for the plaintiff to file the suit.  In the Colorado case, the statute repose specified that the suit must be filed no later than six years after substantial completion of the work.  

In Colorado, the legislature adopted the AIA definition of the “substantial completion”  contained in the AIA’s A201 or general conditions.   The Colorado statute provides that substantial completion occurs when the owner receives beneficial use of the project.

In that case, a window manufacturer contracted with a general contractor to furnish and install windows for a project.  The manufacturer hired a contractor to install the windows. After completion of the project in 2002, the windows started leaking.  The installer only did repairs in 2004 and then ceased working on the project.  The manufacturer performed repairs from 2004 to 2011.

The owner then sued the general contractor and manufacturer for damages due to the leaking.  In 2014, the parties settled that case and the manufacturer sued the installed for indemnification.

The installer argued that the manufacturer’s suit against it was barred by the Colorado six year statute of repose which commences when the window installation was substantially completed in 2002.  The manufacturer countered relying on a provision of Colorado law which states that repairs of a construction defect can toll or suspend the timing of the statute repose so long as the manufacturer was working on repairs.  Accordingly, the manufacturer claims that the statute of repose did not start running until 2011, when it last did repairs to the windows.

On appeal, the court rejected the manufacturer’s argument and found in favor of the installer and dismissed the suit. The court noted that the manufacturer could not use its own repair attempts to extend the time to start running the statute of repairs, indicating that if the installer had continue making repairs into 2011 that the statute would start to run in 2011.

The Colorado case is noteworthy because it emphasizes that the construction statute of limitations and statute of repose is different for each state.  For instance, in Illinois, the statute of limitations for construction case is four years and the statute of repose is ten years, but can be extended to as long as fourth years less a day.

The case also is interesting because it holds that under Colorado law repairs to defective construction can extend the statutes of limitations and repose for the period of the repairs.

  However, not all states follow the same rule.  In Illinois, repairs will not extend the statute of limitations.

This case clearly points out that when you do business in states where you have not worked before that you have to talk to your lawyer about how you protect yourself from unknowingly getting tripped up by the laws of other states.  Your lawyer should advise you about what common issues you may run across in other states, such as the requirements for drafting contractual indemnification provisions.

Obviously, if you face a claim or a suit for defective design or construction for a project in another state you should be sure your response to the claim or suit affords you the best protection under the laws of that state.  Obviously, the decision of the installer to walk away from the window problem in 2004 turned out to be the correct decision.

For those of you who want to read the case, you can find it at Sierra Pacific Industries, Inc., v. Bradbury, Colo. App. No. 15CA1652, Sept. 8. 2016.

* This article was originally published in the December 2016 issue of Business Development, an electronic magazine for architects, engineers and contractors.

 

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