Smith v. Executive Custom Homes: Is the end of the repair doctrine in Colorado construction defect cases?

On May 10, 2010, the Colorado Supreme Court issued its decision in Smith v. Executive Custom Homes, Inc., 2010 WL 1840828 (Colo. May 10, 2010).  The facts and procedural history of the case are as follows:

The Smiths live in a newly-constructed “patio home” built by ECH, which is located in a retirement community managed by a homeowners association. The homeowners association employs a professional property management company, Z & R Property Management (“Z & R”), to maintain the community properties. The property manager furnished by Z & R apparently serves as a liaison between homeowners and ECH to handle complaints related to the construction of the residences.

On February 6, 2004, James Smith sent an e-mail to the property manager stating that he had noticed a sheet of ice accumulating on his sidewalk near the entrance to his home, which he felt was the result of a construction defect. The property manager then forwarded the e-mail to ECH asking ECH to look into the problem. ECH later responded by e-mail to the property manager that it had inspected the Smiths’ home and agreed that some repairs to the gutters were needed; however, ECH indicated that repairs could not be completed until the snow melted. ECH then arranged for the contractors who originally installed the gutters to make the necessary repairs, which took place between February and June of 2004. Neither the property manager nor ECH ever contacted the Smiths regarding the repairs, and the Smiths had no personal knowledge that the repairs took place. 

On February 2, 2005, Judith Smith sustained injuries after she slipped on ice that accumulated on the front walkway of the Smiths’ home. The Smiths then contacted ECH directly by letter to notify it of the accident. In response, ECH informed the Smiths of the repairs to the gutters and denied liability for Judith Smith’s injuries. On January 17, 2007, nearly two years after the accident, the Smiths filed a complaint against ECH alleging damages for personal injuries caused by a construction defect. ECH responded by filing a motion for summary judgment, asserting that the undisputed facts established that the Smiths’ claims, which were filed almost three years after the Smiths first noticed the ice accumulation, were time-barred by the CDARA’s two-year statute of limitations located in section [13-80-]104. The trial court agreed, granted ECH’s motion for summary judgment, and dismissed the case.

The Smiths appealed to the court of appeals, which held that, although it agreed with the trial court that the Smiths’ claims for personal injury began to accrue on the date James Smith notified the property manger of the ice accumulation, genuine disputes as to material facts existed regarding whether the statute of limitations was equitably tolled by operation of the “repair doctrine” while ECH performed its repairs. See Smith, 209 P.3d at 1181. As a result, the court of appeals reversed the trial court order granting ECH’s motion for summary judgment. The Smiths and ECH both petitioned for certiorari.

In ruling that a personal injury claim, resulting from a construction defect, accrues when the claimant knew or should have known of the defect that ultimately causes the injury, the Supreme Court stated:

We agree with the trial court and court of appeals that the plain meaning of section 104 is clear. The statute contains both a list of specific claims to which the statute applies and the corresponding accrual standard for such claims. The list of claims explicitly includes “actions for the recovery of damages for … injury to or wrongful death of a person caused by any such deficiency.” § 13-80-104(c)(I)-(III). Regarding the accrual of such claims, the statute clearly states that “a claim for relief arises under this section at the time the claimant or the claimant’s predecessor in interest discovers or in the exercise of reasonable diligence should have discovered the physical manifestations of a defect in the improvement which ultimately causes the injury.” § 13-80-104(b)(I). Thus, it is plain from the language of the statute that claims under the CDARA, personal injury claims included, begin to accrue when the homeowner first discovers or should have discovered the defect.

A plain reading of section 104 clearly indicates that a homeowner’s claims under the CDARA may accrue and be forever barred by the statute of limitations before a personal injury occurs. And although this outcome may be equitable when viewed in terms of property damage, it certainly is quite harsh when viewed in the context of a serious and perhaps unforeseeable personal injury. Nevertheless, a harsh or unfair result will not render a literal interpretation absurd.

In ruling that the repair doctrine did not serve to toll the Smiths’ claims, the Supreme Court stated:

The repair doctrine tolls a limitations period while a construction professional undertakes repair efforts intended to remedy the defect. . .  Tolling continues until the date that the construction professional abandons its repair efforts, provided that the homeowner reasonably relied on the promises to repair and, as a result, did not institute a legal action against the construction professional.

The repair doctrine has not been formally adopted by this court, but it has been considered and applied in several Colorado cases. . . However, the repair doctrine is a form of equitable tolling, and “equitable tolling is not permissible where it is inconsistent with the text of the relevant statute.” . . .  We conclude that equitable tolling pursuant to the repair doctrine is inconsistent with the CDARA because the CDARA already provides an adequate legal remedy in the form of statutory tolling of the limitations periods under specific and defined circumstances, including during the time in which repairs are being conducted.  (referring to the tolling of the statute of limitations during the duration of the notice of claim process found in C.R.S. Sec. 13-20-803.5).

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Thus, because the General Assembly has already taken into account the need for extra time to complete repairs by allowing for statutory tolling while such repairs are made pursuant to the notice of claim procedure, we hold that equitable tolling under the repair doctrine would be inconsistent with the CDARA and consequently cannot be applied in this case.

The question remains, in my mind, whether the repair doctrine should have any place in construction defect disputes in situations where the claimant and construction professional have not engaged in a statutory notice of claim process.  The Construction Defect Action Reform Act specifically states that it is not intended to abrogate or interfere with express construction warranties or the warranty process. To be sure, C.R.S. Sec. 13-20-807 states specifically: “The provisions of this part 8 shall not be deemed to require a claimant who is the beneficiary of an express warranty to comply with the notice provisions of section 13-20-803.5 to request ordinary warranty service in accordance with the terms of such warranty. A claimant who requires warranty service shall comply with the provisions of such warranty.”

I can foresee a situation in which a construction professional may encourage a claimant to submit a normal warranty claim pursuant to an express warranty, instead of serving a formal notice of claim, then conduct minimal repairs or string the claimant along sufficiently to make the claim stale, then discontinue repair efforts and argue that any claim the owner later brings for construction defects is barred by the statute of limitations.  An accrual date would be easy to identify in this situation, you would have a warranty claim clearly identifying the issue.  If the construction professional’s repair efforts do nothing to toll the statute of limitations, an unwary claimant can find itself in an untenable situation, i.e., one in which the repair efforts of the construction professional were sufficient to keep the claimant from timely filing suit but insufficient to actually correct the problem.  This is specifically the situation that the “repair doctrine” had ameliorated.  Now that the doctrine is arguably no longer recognized in Colorado construction defect cases, claimants who do not know any better may pay the price.

Perhaps I am overly pessimistic; Only time will tell. . .

If you have any questions regarding the repair doctrine, or Colorado construction defect law, generally, please contact David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.  Alternatively, you can check out the firm’s website at www.hhmrlaw.com where you can learn more about Higgins, Hopkins, McLain & Roswell, and you can request a copy of our Overview of Construction Defect Litigation in Colorado.