Category Archives: Indemnification

April 18, 2017

Mitigation of Construction Defect Litigation- Top 10 Construction Contract Issues

By: Rebecca W. Dow, Esq.

When negotiating a construction contract with a general contractor (GC), the owner/developer should be aware of, and address, a number of issues to attempt to mitigate or limit the risk of construction defect litigation for a residential project, including multi-family and for-rent residential apartment and senior housing projects. The standard forms of construction contract—such as the American Institute of Architects (AIA) or ConsensusDocs—are more beneficial to the contractor than the owner in many respects.  A construction contract will need to be reviewed thoroughly and revised to better protect the owner, and in the case of residential construction, should in particular, address the following top 10 key issues:

1) Scope of Work—The scope of work should be well-defined, accurate, comprehensive and identify the basic components of the project. The scope should not be based solely on the drawings and specifications, which are never 100% complete, and the contractor should agree to reasonably infer the scope of work from the contract documents to produce the intended work.  If there is an inconsistency in the contract documents or between the drawings and specifications and contract documents, the contractor should provide the better quality or quantity of the work or materials. The contractor should be required to report any errors, omissions or inconsistencies in the contract documents to the owner.   Contractor’s work should be subject to inspection by the owner, applicable city, county or governmental entities, and any third-party inspectors retained by owner or construction lender for quality assurance and quality control.  Contractor should give advance notice to owner as to specified key system installations—such as soil, foundation, acoustical, exterior, building wrap, HVAC and structural components to allow review and inspection by such third-party inspectors.

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February 27, 2017

Colorado Supreme Court Cleans Up Indemnification Timing Mess

By Tim Gordon

The Colorado Supreme Court has finally weighed in and held that the 90-day tolling period for indemnification claims related to construction defects actions also tolls the statute of repose, ending years of confusion and making the tolling provision effective. Goodman v. Heritage Builders, Inc., 2017 CO 13.

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October 21, 2016

Statute of Limitations Can Bar Indemnification Claims If Brought Too Soon

By Tim Gordon

NOTE: BASED ON THE SUPREME COURT’S DECISION IN GOODMAN V. HERITAGE BUILDERS, INC., 2017 CO 13, THE HOLDING OF THIS CASE MAY NO LONGER BE GOOD LAW.  SEE HERE.

Piecemeal appellate-court decisions have put developers and contractors in a catch-22 with respect to the timing of indemnification claims against their subcontractors.  Their indemnification claims against subcontractors might be barred by the two-year statute of limitations unless they wait until after the underlying construction defects litigation is resolved in order to take advantage of the 90-day tolling period.  But waiting until the underlying construction defects litigation is resolved might result in their indemnification claims being barred by the six-year statute of repose.

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September 18, 2008

Court of Appeals Delivers A Blow To Pay And Chase In Colorado

By Tim Gordon

NOTE: BASED ON THE SUPREME COURT’S DECISION IN GOODMAN V. HERITAGE BUILDERS, INC., 2017 CO 13, THE HOLDING OF THIS CASE IS NO LONGER GOOD LAW.  SEE HERE.

Thermo Development, Inc. v. Central Masonry Corp. (Colo. App. Sept. 18, 2008)

The Colorado Court of Appeals rules that statute allowing the maintenance of an indemnification action within 90 days of settling an underlying lawsuit does not toll the six-year statute of repose.

Section 13-80-104(1)(b)(II)(B), C.R.S., provides the following 90-day tolling provision for indemnification claims related to construction:

[A]ll 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]rise 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 . . . [s]hall be brought within ninety days after the claims arise, and not thereafter.

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