Sopris Lodging, LLC v. Schofield Excavation, Inc. , 2016 Colo. App. LEXIS 1490 ( 2016 )

COLORADO COURT OF APPEALS 2016COA158
Court of Appeals No. 15CA1959
Garfield County District Court No. 13CV30033
Honorable Gail H. Nichols, Judge
Sopris Lodging, LLC, a Colorado limited liability company, assignee of the
claims of TDC/BEI Joint Venture, LLC, a Colorado limited liability company;
Charles R. Lakin, an individual; and Tyler Casebier, an individual,
Third-Party Plaintiffs-Appellants,
v.
Schofield Excavation, Inc., a Colorado corporation; and Colorado Engineering
Contractors, Inc., a Colorado corporation,
Third-Party Defendants-Appellees.
JUDGMENT AFFIRMED
Division VI
Opinion by JUDGE RICHMAN
Bernard and Fox, JJ., concur
Announced October 20, 2016
Wolf Slatkin & Madison, P.C., Albert B. Wolf, Jonathan L. Madison, Denver,
Colorado, for Third-Party Plaintiffs-Appellants
Markusson, Green & Jarvis, H. Keith Jarvis, Daniel R. Coombe, Anne K.
McMichael, Denver, Colorado, for Third-Party Defendant-Appellee Schofield
Excavation, Inc.
Stuart D. Morse & Associates, LLC, Stuart D. Morse, Matthew J. Bayma,
Greenwood Village, Colorado, for Third-Party Defendant-Appellee Colorado
Engineering Contractors, Inc.
¶1 In this construction defect case, Sopris Lodging, LLC, assignee
of the claims of third-party plaintiffs TDC/BEI Joint Venture, LLC
(TDC), Charles R. Lakin, and Tyler Casebier, appeals the district
court’s entry of summary judgment in favor of third-party
defendants, Schofield Excavation, Inc. (Schofield), and Colorado
Engineering Contractors, Inc. (CEC). Because we conclude that the
third-party claims at issue are time barred, we affirm.
I. Background
¶2 TDC was the general contractor for the construction of a hotel
owned by Sopris Lodging. On March 11, 2011, Sopris Lodging sent
TDC a notice of claim regarding alleged construction defects at the
hotel. On May 24, 2013, Sopris Lodging filed a complaint in district
court asserting construction defect claims against one of the
subcontractors of the hotel, and against the TDC’s individual
principals, Lakin and Casebier, who had guaranteed TDC’s
performance. On the same date, however, Sopris Lodging and TDC
entered into an agreement to toll the statute of limitations for Sopris
1
Lodging’s claims against TDC. Sopris Lodging later amended its
complaint in August of 2013 to add claims against TDC.1
¶3 In 2014, while those claims were pending, TDC filed third-
party claims against several subcontractors, including Schofield
and CEC, for breach of contract, negligence, contribution, and
indemnification. CEC and Schofield moved for summary judgment,
asserting that TDC’s third-party claims were barred by the two-year
statute of limitations set forth in section 13-80-102, C.R.S. 2016,
and made applicable to TDC’s claims through section
13-80-104(1)(a), C.R.S. 2016. CEC and Schofield argued that those
claims accrued on or before March 11, 2011, when Sopris Lodging
sent the notice of claim to TDC. Because TDC did not file its third-
party claims until 2014, CEC and Schofield asserted that the claims
were time barred.
¶4 In its response, TDC did not dispute the date of accrual.
However, it asserted that section 13-80-104(1)(b)(II) tolled the
statute of limitations for a defendant’s third-party claims until
1 Hereinafter, we refer to TDC and its principals collectively as
“TDC.”
2
ninety days after a settlement or final judgment on the plaintiffs’
claims against the defendant.
¶5 After briefing, the district court entered a detailed written
order ruling that the third-party claims were time barred. Relying
on CLPF-Parkridge One, L.P. v. Harwell Investments, Inc., 105 P.3d
658 (Colo. 2005), the court concluded that section 13-80-
104(1)(b)(II) did not apply to TDC’s third-party claims and that
those claims were barred by the limitations period in section
13-80-104(1)(a). Accordingly, the court entered summary judgment
in favor of CEC and Schofield.
¶6 Thereafter, Sopris Lodging and TDC reached a settlement
agreement. TDC assigned its third-party claims to Sopris Lodging,
and Sopris Lodging, standing in the shoes of TDC, filed this appeal.
II. Discussion
¶7 Sopris Lodging contends that the court misapplied section
13-80-104 in ruling that the third-party claims of TDC were time
barred. We disagree.
A. Standard of Review
¶8 We review a trial court’s order on a summary judgment motion
de novo. Gibbons v. Ludlow, 2013 CO 49, ¶ 11. Summary
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judgment is appropriate when the pleadings and supporting
documents establish that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a
matter of law. Id.
¶9 Statutory interpretation is a question of law that we review de
novo. Klinger v. Adams Cty. Sch. Dist. No. 50, 130 P.3d 1027, 1031
(Colo. 2006). Our task is to give effect to the intent of the General
Assembly. Id. To do so, we look first to the language of the statute.
Id. We construe words and phrases according to their commonly
accepted and understood meanings. A.S. v. People, 2013 CO 63,
¶ 10. Where the language is clear and unambiguous, we do not
resort to other rules of statutory construction. Klinger, 130 P.3d at
1031.
B. Applicable Law
¶ 10 Section 13-80-104(1)(a) provides that the two-year statute of
limitations set forth in section 13-80-102(1) applies to construction
defect claims:
Notwithstanding any statutory provision to the
contrary, all actions against any architect,
contractor, builder or builder vendor, engineer,
or inspector performing or furnishing the
design, planning, supervision, inspection,
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construction, or observation of construction of
any improvement to real property shall be
brought within the time provided in section
13-80-102 after the claim for relief arises, and
not thereafter, but in no case shall such an
action be brought more than six years after the
substantial completion of the improvement to
the real property, except as provided in
subsection (2) of this section.
¶ 11 Section 13-80-104(1)(b) provides:
(I) Except as otherwise provided in
subparagraph (II) of this paragraph (b), 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.
(II) Notwithstanding the provisions of
paragraph (a) of this subsection (1), all claims,
including, but not limited to indemnity or
contribution, by a claimant against a person
who is or may be liable to the claimant for all
or part of the claimant’s liability to a third
person:
(A) Arise at the time the third person’s claim
against the claimant is settled or at the time
final judgment is entered on the third person’s
claim against the claimant, whichever comes
first; and
(B) Shall be brought within ninety days after
the claims arise, and not thereafter.
5
¶ 12 In CLPF-Parkridge One, the supreme court held that section
13-80-104(1)(b)(II) does not bar a defendant contractor from
asserting third-party claims for indemnity or contribution against
subcontractors before the resolution of the underlying construction
defect claims. 105 P.3d at 663-65. The court concluded that
section 13-80-104(1)(b)(II) is not a ripeness provision but instead
“toll[s] the otherwise applicable statute of limitations in order to
allow indemnity or contribution claims to be brought in a separate
lawsuit . . . within ninety days after settlement of or judgment in
the construction defect lawsuit.” Id. at 665. Thus, a defendant in a
construction defect lawsuit may either (1) bring appropriate
cross-claims or third-party claims in the same lawsuit or (2) wait to
file a separate suit within the ninety-day period after a settlement or
judgment in the construction defect lawsuit in accordance with
section 13-80-104(1)(b)(II). Id. at 664-65.
C. Analysis
¶ 13 Relying on CLPF-Parkridge One, Sopris Lodging asserts that
section 13-80-104(1)(b)(II) tolled the statute of limitations for the
third-party claims that TDC asserted against subcontractors in this
case. We disagree.
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¶ 14 As set forth in CLPF-Parkridge One, section 13-80-104(1)(b)(II)
gives a contractor the option to bring indemnity or contribution
claims against subcontractors in a separate lawsuit after the
underlying claims are resolved, and it tolls the statute of limitations
for such claims. Here, however, TDC did not wait to file claims
against subcontractors in a separate lawsuit. It chose instead to
assert third-party claims in the original construction defect
litigation. Thus, we conclude that section 13-80-104(1)(b)(II) does
not apply to TDC’s third-party claims.
¶ 15 CLPF-Parkridge One did not address the statute of limitations
applicable to third-party claims brought in the original construction
defect lawsuit. Nonetheless, we conclude that those claims are
subject to the two-year statute of limitations in section
13-80-104(1)(a) and the accrual provision in section
13-80-104(1)(b)(I).
¶ 16 Section 13-80-104(1)(a) provides that all construction defect
actions must be brought within two years (the time provided in
section 13-80-102) after “the claim for relief arises.” See also
§ 13-80-104(1)(c) (such actions include actions for indemnity and
contribution). Section 13-80-104(1)(b)(I) states that, except as
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otherwise provided in section 13-80-104(1)(b)(II), a claim for relief
“arises” when the claimant discovers or should have discovered the
physical manifestations of the defect. Thus, the only exception to
the generally applicable accrual provision is for claims against third
parties filed in a separate lawsuit in accordance with section
13-80-104(1)(b)(II). See CLPF-Parkridge One, 105 P.3d at 663-65.
Because that exception is inapplicable here, TDC was required to
comply with sections 13-80-104(1)(a) and 13-80-104(1)(b)(I) in filing
its third-party claims.
¶ 17 Our interpretation is supported by Nelson, Haley, Patterson &
Quirk, Inc. v. Garney Companies, Inc., which concluded that the
accrual language currently found in section 13-80-104(1)(b)(I)
required indemnity claims to be brought within the same period of
time as the underlying construction defect claims. 781 P.2d 153,
155 (Colo. App. 1989). That case was decided before the General
Assembly amended the statute in 2001 to add section
13-80-104(1)(b)(II) to permit the filing of contribution and indemnity
claims within ninety days after the entry of a settlement or
judgment. However, as explained above, TDC did not pursue its
third-party claims in accordance with section 13-80-104(1)(b)(II).
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Therefore, like the division in Nelson, we conclude that TDC’s third-
party claims were governed by the same limitation period and
accrual provisions applicable to the underlying construction defect
claims.
¶ 18 It is undisputed that TDC received notice of the alleged defects
on March 11, 2011, when Sopris Lodging sent TDC a notice of
claim. Under section 13-80-104(1)(b)(I), the claims accrued and the
two-year limitations period began to run on that date. Apart from
section 13-80-104(1)(b)(II), which we have deemed inapplicable,
Sopris Lodging does not contend that any other tolling provision
applied to TDC’s claims. Therefore, the limitations period expired
with respect to those claims on March 11, 2013. Because TDC did
not file its third-party claims until 2014, the claims were time
barred.
¶ 19 We acknowledge that this analysis leads us to the somewhat
anomalous conclusion that the statute of limitations applicable to
TDC’s third-party claims could have expired before Sopris Lodging
filed the underlying construction defect claims against TDC.2
2 However, in this case the statute of limitations may have been
tolled with respect to Sopris Lodging’s underlying claims against
9
Nevertheless, TDC had several options available to preserve its
third-party claims against subcontractors. When TDC received
Sopris Lodging’s notice of claim, it could have sent its own notices
to subcontractors, thereby tolling the statute of limitations during
the notice of claims process pursuant to section 13-20-805, C.R.S.
2016. See Shaw Constr., LLC v. United Builder Servs., Inc., 2012
COA 24, ¶ 28. It also could have sought a tolling agreement with
those subcontractors. Alternatively, TDC could have waited to file
indemnity or contribution claims against subcontractors until after
Sopris Lodging’s underlying claims against it were resolved, in
accordance with section 13-80-104(1)(b)(II).3 TDC did not pursue
any of these options.
TDC for some time during the notice of claim process pursuant to
section 13-20-805, C.R.S. 2016, and possibly pursuant to the
tolling agreement between those parties. Although TDC filed a
motion seeking to dismiss Sopris Lodging’s claims pursuant to the
statute of limitations, the motion was not ruled upon by the district
court.
3 As the district court noted in its order, this option carries the risk
that the claims will be barred by the six-year statute of repose in
section 13-80-104(1)(a), C.R.S. 2016, if the underlying claims are
not resolved within that time. See Thermo Dev., Inc. v. Cent.
Masonry Corp., 195 P.3d 1166, 1168 (Colo. App. 2008) (concluding
that section 13-80-104(1)(b)(II) does not act as a tolling provision for
the six-year statute of repose). However, we are not persuaded that
10
¶ 20 Therefore, for the reasons set forth above, we conclude that
TDC’s third-party claims were time barred. In reaching this
conclusion, we apply the express language of the statutes, and the
interpretation of the statutes as explained in CLPF-Parkridge One.
It is not our role to rewrite the statutes, as that is the function of
the General Assembly.
III. Sopris Lodging’s Separate Lawsuit
¶ 21 After Sopris Lodging settled its claims against TDC, Sopris
Lodging, as TDC’s assignee, brought indemnity and contribution
claims against CEC and Schofield in a separate lawsuit purportedly
under section 13-80-104(1)(b)(II). CEC and Schofield request that
we dismiss the complaint in that case and rule that Sopris
Lodging’s claims are barred by the doctrine of claim preclusion.
However, those claims are the subject of a separate case and are
not before us in this appeal. With exceptions not applicable here,
our jurisdiction is limited to appeals from final judgments, see
§ 13-4-102(1), C.R.S. 2016, and no appeal of a final judgment in
that case is before us. Accordingly, we do not address those claims.
the potential effect of the statute of repose should alter our analysis
of the applicable statute of limitation.
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IV. Attorney Fees
¶ 22 We also reject CEC’s request for an award of appellate attorney
fees. C.A.R. 39.1 requires a party requesting attorney fees to state
the legal basis that justifies an award of fees. CEC asserts that
Sopris Lodging was “on notice that its separate claims were futile
and this appeal would be unsuccessful.” To the extent that this
argument refers to the grounds for an award of fees stated in
section 13-17-102(4), C.R.S. 2016, and C.A.R. 38, we do not deem
the appeal frivolous, groundless, or vexatious under those
provisions. See Mission Denver Co. v. Pierson, 674 P.2d 363, 366
(Colo. 1984) (an appeal is not frivolous merely because it is
ultimately unsuccessful).
V. Conclusion
¶ 23 The judgment is affirmed.
JUDGE BERNARD and JUDGE FOX concur.
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