July 13, 2005

CO: homeowners allowed to sue subcontractors for construction defects caused by negligence

The subcontractors were sued by the Yacht Club II Homeowners Association, which charged that the subcontractors were responsible for a host of building defects.

In the decision, handed down on June 26, the Colorado Supreme Court ruled that subcontractors, as well as builders, "owe homeowners a duty of care, independent of any contractual obligations, to act without negligence in the construction of homes."

This is important because builders don't actually build homes, said -McKenzie, principal of McKenzie Rhody & Hearn, a law firm that specializes in residential defect litigation. Instead, builders subcontract the work to framers, carpenters, electricians, plumbers and others.

Homeowners typically not only don't have contracts with the subcontractors, but they played no role in negotiating the contract between the builder and the subcontractors, -McKenzie said.

McKenzie said with this ruling, the court rejected what is known as the "economic loss rule," which generally limits homeowners' remedies to those specified in limited warranties or contracts between the builders and the subcontractors. Those contracts typically provide limited remedies to homeowners, he said.

The court also ruled that homeowner associations can bring negligence suits on behalf of the homeowners, McKenzie said.

"So if you have 100 condo units in a project, you don't need to file 100 individual suits, or file a class-action lawsuit," he said, because the association can file one suit on behalf of all of the owners. [Full Opinion]

Posted by joewest at 10:22 AM

June 28, 2005

Statute of Limitations

The Supreme Court has partly affirmed and partly reversed the Court of Appeals of Georgia in Scully v. First Magnolia Homes et al., S04G2110. Presiding Justice Leah Ward Sears wrote for the Court.

Appellants filed “suit alleging that the appellees negligently installed synthetic stucco siding on [their] . . . home.” The trial court in Fulton County granted “summary judgment in favor of the defendants, ruling that the breach of contract claim was barred by the applicable six-year statute of limitations [footnote omitted] and the tort claim was barred by the applicable four-year statute of limitations.” The Court of Appeals affirmed.

In partly affirming the Court of Appeals, the Supreme Court has ruled “that the statute of limitations for the Scully’s tort claim commenced running when the Scullys, through the exercise of reasonable diligence, should have discovered that their home was being damaged due to defective synthetic stucco siding.” However, in partly reversing the Court of Appeals, the Supreme Court has ruled “that the statute of limitations for the Scully’s breach of contract claim commenced running when a purchase and sale agreement was executed, rather than when the sale was closed.” [Full Opinion - PDF]

Posted by joewest at 1:09 PM