Navigating Construction Defect Claims and Statutes of Limitation: Key Lessons from Stoecklein v. Fayette Farms

In the recent Colorado Court of Appeals decision Stoecklein v. Fayette Farms, LLC (2024 WL 5098330), the Court addressed critical issues surrounding construction defect claims, statutes of limitations, and the interplay between the Colorado Consumer Protection Act (“CCPA”) and the Construction Defect Action Reform Act (“CDARA”).  This case underscores the importance of understanding the statutory framework governing construction defect litigation and highlights the complexities of determining when claims accrue under Colorado law.

Background of the Case

Lindsey and Chance Stoecklein entered into a contract with Redline Construction Corporation for the construction of a manufactured home.  Redline subsequently assigned its responsibilities to High Country Construction & Development, LLC, which then subcontracted Fayette Farms, LLC, to install the home.

The Stoeckleins moved into the home on June 14, 2019, and immediately identified significant defects, including foundation cracks, structural sagging, warped ceilings, and non-functioning doors and windows.  They reported these issues to High Country the next day and hired Steel Rhino Property to inspect the home.  The inspection report, issued on June 29, 2019, documented numerous defects and recommended further evaluation and repairs by qualified professionals.

Despite these early discoveries, the full extent of the alleged defects, including damage caused by Fayette Farms’ installation practices, was not identified until September 30, 2021, when the Stoeckleins’ engineering expert issued a report.  This report attributed foundational damage to Fayette Farms’ improper use of a crane during installation, among other errors.

Legal Proceedings

The Stoeckleins filed their initial lawsuit in February 2020 and amended their complaint in May 2022 to include claims against Fayette Farms.  They alleged violations of C.R.S. § 24-32-3316, negligence, and deceptive trade practices under the CCPA.  Fayette Farms moved for summary judgment, arguing that the claims were time-barred under CDARA’s two-year statute of limitations.  The trial court agreed, and the Stoeckleins appealed.

The Court’s Analysis

The Colorado Court of Appeals affirmed the trial court’s decision, providing a detailed analysis of the statutory framework and the accrual of claims.

1. Statutory Framework

The Court began by examining CDARA, which imposes a two-year statute of limitations for construction defect claims.  Under C.R.S. § 13-80-104(1)(a), this limitation period applies “notwithstanding any statutory provision to the contrary,” precluding the application of longer limitations periods under other statutes, such as the CCPA.

The court emphasized that the phrase “notwithstanding any statutory provision to the contrary” is intended to exclude, not incorporate, other statutes of limitation.  As a result, the CCPA’s three-year limitations period did not apply to the Stoeckleins’ deceptive trade practices claim, which was rooted in allegations of negligent construction.

2. Accrual of Claims

CDARA defines the accrual of a claim as occurring when the claimant discovers or should have discovered the “physical manifestations” of a defect.  The Court clarified that “physical manifestations” refer to perceptible, outward expressions of a defect, not the discovery of its underlying cause.

In this case, the court determined that the Stoeckleins were aware of the physical manifestations of defects as early as June 2019, when they moved into the home and observed cracking walls, sagging floors, and other structural issues.  By August 2019, they had received the Steel Rhino report, which documented additional defects and recommended further evaluation.

Although the Stoeckleins argued that they did not discover Fayette Farms’ specific installation errors until September 2021, the Court concluded that the statute of limitations began to run upon their initial discovery of the defects, not the identification of their precise cause. Consequently, their claims against Fayette Farms, filed in May 2022, were time-barred.

Key Takeaways

The Stoecklein decision highlights several important considerations for parties involved in construction defect disputes:

CDARA’s Preemption of Other Statutes:

• • CDARA’s two-year statute of limitations overrides other statutes, including the CCPA, for claims arising from construction defects.  Plaintiffs should carefully evaluate whether their claims fall under CDARA to avoid relying on inapplicable limitations periods.

Accrual of Claims:

• • Under CDARA, the clock starts ticking when an owner discovers the physical manifestation of a defect, not when the underlying cause is identified.  Homeowners must act promptly to investigate and address defects to preserve their legal remedies.

Documentation and Expert Reports:

• • While expert reports can provide critical evidence, they do not reset the limitations period if the physical manifestations of defects were previously known.

Conclusion

The Stoecklein case serves as a cautionary tale for homeowners, contractors, and legal practitioners navigating the complexities of construction defect litigation.  By understanding the interplay between CDARA and other statutes, parties can better protect their rights and avoid the pitfalls of time-barred claims.