With the 2019 Colorado legislative session well underway, the construction industry is waiting with bated breath to see what the Democrat controlled legislature might do with respect to construction defect legislation. In recent years, having a split legislature has prevented any attempts to roll back positive changes in the law, either from the legislature or Colorado courts, that have been hailed by the construction community.
This year, odds are good that we will see at least one bill similar to two introduced last year that would hinder the ability to have disputes decided by binding arbitration. While not full frontal assaults on the Colorado Supreme Court decision in the Vallagio case, HB18-1261, the “Colorado Arbitration Fairness Act,” and HB 18-1262, the “Arbitration Services Provider Transparency Act,” would have negatively impacted the ability to resolve any type of case through arbitration. Anything that prevents the resolution of construction defect cases through arbitration will increase the judgments and settlements in such cases, ultimately increasing the costs of construction and for insurance for those in the industry.
There are also rumors floating around that plaintiffs’ attorneys may try to convince the legislature to overturn the Colorado Supreme Court’s decision in Goodyear Tire & Rubber Co. v. Holmes, which ruled that homeowners or homeowners associations are not entitled to prejudgment interest in situations where the measure of damages is in the form of cost of repairs not yet made. If such an attempt is successful, and prejudgment interest becomes recoverable, this will also increase judgments and settlements in construction defect cases.
When there is still a struggle to provide attainable housing in Colorado, either of these changes would also be a step in the wrong direction. We will continue to watch the goings on at the State Capitol and will report any changes to roll back past changes to Colorado law.