In Michelle and Michael Parra v. Gillaspie Construction, Inc. and Johnson Excavation, Inc. (Colo. App. No. 18CA0800, Mar. 21, 2019), not selected for official publication, the Colorado Court of Appeals reaffirmed an essential principle for builders, homeowners, and insurers alike: under the Colorado Construction Defect Action Reform Act (“CDARA”), the statute of limitations begins to run when a homeowner first observes physical manifestations of a defect, not when the homeowner later learns what caused those problems or concludes they are “excessive.”
The case underscores how critical it is to identify, document, and evaluate early signs of construction distress, because waiting for confirmation of a defect can mean the difference between a viable claim and one that is time-barred.
Background: Cracks, Gaps, and Growing Concern
The Parras hired Gillaspie Construction and Johnson Excavation to build a custom home in Routt County. They moved in January 2010. Within the first year, they noticed cracks in walls, a kitchen backsplash pulling away, and flooring that was “[c]upping and gapping.” By 2013, additional cracking appeared in the office and hallway, gaps opened around the fireplace and hearth, and certain cabinet doors began to misalign.
Gillaspie Construction reportedly reassured the homeowners that such movement was “normal and expected” in new home construction. Taking that advice, the Parras delayed further investigation. It was not until 2015, after hiring a structural engineer who attributed the distress to abnormal differential foundation movement caused by water infiltration, that they concluded a defect existed. They filed suit in December 2016, alleging construction defects and breach of the implied warranty of habitability.
The Defense: Too Late to Sue
The defendants did not initially plead a statute of limitations defense, but after the homeowners admitted in deposition that they had seen cracks as early as 2011, the builders sought leave to amend their answer and assert the two-year limitation period under C.R.S. § 13-80-104(1)(a). The trial court allowed the amendment, finding the defense was raised promptly once new information emerged and caused no prejudice to the plaintiffs.
On summary judgment, the builders argued that because the Parras observed visible damage more than two years before filing suit, their claims were time-barred. The trial court agreed, and the Court of Appeals affirmed.
The Court’s Analysis: Discovery of Damage, Not Discovery of Cause
Colorado law provides that construction defect claims “arise at the time the claimant 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.” C.R.S. § 13-80-104(1)(b)(I).
The Court rejected the homeowners’ contention that they could not have “discovered” their claim until they realized the defects were serious or abnormal. It emphasized that the statute speaks of the manifestation of a defect, not its significance or cause. Cracks, shifting, and separations are the manifestations that trigger the clock, even if the homeowner reasonably believes they might be cosmetic.
The Court relied on Smith v. Executive Custom Homes, Inc., 230 P.3d 1186 (Colo. 2010), which held that CDARA was designed to encourage early resolution and prevent stale claims. By contrast, the earlier case Stiff v. BilDen Homes, Inc., 88 P.3d 639 (Colo. App. 2003), had suggested that limitations might not begin until damage became “greater than expected.” The Court of Appeals noted that Stiff had since been rejected by the Colorado Supreme Court and declined to follow it.
Because the Parras saw “widespread cracking” and “shifting” as early as 2011, and those same conditions formed the basis of their 2016 lawsuit, the Court held that their claims accrued no later than 2013. As a result, they were untimely under the two-year statute of limitations.
Key Takeaways for Builders and Insurers
1. Visible damage starts the clock. Any visible cracking, separation, or movement constitutes a “physical manifestation” sufficient to trigger the statute of limitations. The homeowner need not know the underlying cause, nor must the damage reach some subjective level of severity. Builders and insurers evaluating potential claims should document when such conditions first appeared and when the homeowner first noticed them.
2. “Normal settlement” is not a legal shield. Although it is common for builders to reassure homeowners that minor cracking or separation is typical, such statements do not stop the limitations period from running. Once the owner observes the condition, the two-year period begins, regardless of any reassurances or later expert opinions.
3. Prompt investigation protects everyone. For homeowners, waiting for conclusive proof of defect risks forfeiting the claim entirely. For builders and carriers, contemporaneous inspections, repair efforts, and written communications can provide critical evidence of timing and scope, supporting a statute of limitations defense if litigation later ensues.
4. Pleading diligence matters. The decision also illustrates the courts’ willingness to permit late amendments when the moving party acts promptly and without bad faith. The defendants’ amendment was allowed because they sought it immediately after learning new facts at deposition and because the plaintiffs could not show prejudice from the change.
The Broader Implication: Certainty and Finality in Construction Disputes
Parra v. Gillaspie Construction reinforces CDARA’s policy goals, encouraging early resolution, providing certainty to construction professionals, and preventing indefinite exposure for completed work. The decision reminds practitioners that accrual turns on what is seen, not what is later understood.
For Colorado’s construction industry, the message is clear: document early, investigate promptly, and never assume that “normal cracking” will wait for expert confirmation. Under CDARA, the clock is already ticking.
