Colorado HB 10-1394 Passed out of Committee and Onto the Senate Floor

On Wednesday, the Senate Business, Labor & Technology Committee considered HB 10-1394 and referred the bill, unamended, to the Senate Committee of the Whole.  The bill is currently calandered for Second Reading in the Senate on Monday, May 3rd.

Prior to the hearing on Wedneday, stakeholders from all affected industries (homeowners, builders, subcontractors, insurers, and insurance brokers) met for about an hour and a half to discuss the concerns expressed by those opposed to the bill.  In light of the fact that the opponnts of the bill did not present any alternative language, the bill ultimately went to the committee unamended, and with no potential amendments produced.

The one thing that came to light during the meeting was that Trey Rogers has recently been hired by Crum & Forster to defeat the measure.  For those who don’t know, Mr. Rogers was, until March 1st of this year, Governor Ritter’s Chief Legal Counsel.  As of March 1st, Mr. Rogers returned to private practice with Rothergerber, Johnson & Lyons, where he had been a partner prior to his working for the Governor.  According to ColoradoPols.com, “Of course, Trey Rogers has been more than just ‘Chief Legal Counsel’ under Ritter. Rogers has always been one of Ritter’s closest advisors, on both political and policy questions, and his departure from the office will certainly change the way things are done (or not done) as the Governor enters his final 10 months in office.”

During his participation in the stakeholders meeting, Mr. Rogers made very clear that his client, Crum & Forster, was opposed to the bill and believed that the two cases in question, General Security and Greystone, were good law.  This is directly contrary to the comments made by Cathleen Heintz of Hall & Evans on behalf of her clients, which are lobbying organizations for the insurance industry.  During her testimony on the House side, Ms. Heintz conceded that General Security and Greystone “took this rule [i.e., the restriction on coverage for construction defect claims] too far. . .  This was a shock, not only to the construction industry, but also to the insurance industry.  This is not the rule of law.  This is not the way the courts have ruled in other jurisdictions.  The courts took it too far.”

Apparently, according to Mr. Rogers, the courts did not take their decisions too far for Crum & Forster.  The question I have is this, if Crum & Forster believes that General Security and Greystone are good law, and should be left alone, essentially eliminating coverage for construction defects altogether, under any circumstance, why would any construction company buy its policies?  I also wonder whether Mr. Rogers’ involvement on behalf of Crum & Forster will increase the chance that Governor Ritter will veto the bill, if passed by the legislature.

I understand that there are still discussions going on between the parties to address the carriers’ concerns regarding Section 1 of the bill pertaining to the “your work” exclusion.  They have proposed language drafted by the ISO to alleviate any concern that a CGL policy would be turned into some type of surety bond or warranty.  It will be interesting to see if these negotiations ultimately turn into a floor amendment on Monday.

For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.