HERITAGE VILLAGE OWNERS v. GOLDEN HERITAGE, 02CA0985.

• Decision Date: 11 March 2004
• Docket Number: No. 02CA0985.,02CA0985.
• Citation: 89 P.3d 513
• Parties: HERITAGE VILLAGE OWNERS ASSOCIATION, INC., a Colorado nonprofit corporation, Plaintiff-Appellee, v. GOLDEN HERITAGE INVESTORS, LTD., a Colorado limited partnership; Townhomes Heritage, LLC, a Colorado limited liability company; and WW Construction Management, Inc., a Colorado corporation, Defendants-Appellants.
• Court: Colorado Court of Appeals

89 P.3d 513

HERITAGE VILLAGE OWNERS ASSOCIATION, INC., a Colorado nonprofit corporation, Plaintiff-Appellee, v. GOLDEN HERITAGE INVESTORS, LTD., a Colorado limited partnership; Townhomes Heritage, LLC, a Colorado limited liability company; and WW Construction Management, Inc., a Colorado corporation, Defendants-Appellants.

No. 02CA0985.

Colorado Court of Appeals, Div. I.

March 11, 2004.

Benson & Associates, PC, Jesse Howard Witt, Arvada, Colorado, for Plaintiff-Appellee.

Godin & Baity, LLC, Edward J. Godin, Darrell D. Collett, Denver, Colorado, Defendants-Appellants.

Opinion by Judge MARQUEZ.

In this construction defects case, defendants, Golden Heritage Investors, Ltd., Townhomes Heritage, LLC, and WW Construction Management, Inc., appeal the judgment in favor of plaintiff, Heritage Village Owners Association, Inc. We affirm.

The Association is the homeowners association for Heritage Village, a sixty-three-unit townhome community. Defendants were involved in the development, construction, and sales of that community.

The Association filed a complaint alleging numerous construction defects in both individual units and common areas. The amended complaint included claims for negligence per se, negligence, breach of implied warranty, deceptive trade practices in violation of the Colorado Consumer Protection Act (CCPA), and negligent nondisclosure or concealment.

The trial court ruled on the Association's motion in limine that the Association has standing under the Colorado Common Interest Ownership Act, § 38-33.3-101, et seq., C.R.S.2003 (CCIOA), to assert construction defect claims for individual owners' units, as well as for the common areas. The Association presented evidence of damage in individual units resulting from water intrusion at windows and structural defects in exterior decks and floor slabs.

The jury found for the Association on all claims and determined damages in the amount of $3,618,000. After trebling damages, the trial court entered a judgment for $9,879,000 plus interest, costs, and fees. The trial court later entered an amended judgment. This appeal followed.

I.

Defendants first contend that the trial court erred in finding that the Association had standing to assert claims for construction defects in both the individual units and the common areas. We disagree.

The CCIOA was enacted in part to establish "more certain powers in the association to sue on behalf of the owners." Section 38-33.3-102(1)(b), C.R.S.2003. These powers are enumerated in the statute: "[S]ubject to the provisions of the declaration, the association, without specific authorization in the declaration, may ... [i]nstitute, defend, or intervene in litigation or administrative proceedings in its own name on behalf of itself or two or more unit owners on matters affecting the common interest community." Section 38-33.3-302(1)(d), C.R.S.2003.

The "common interest community" is defined as "real estate described in a declaration with respect to which a person, by virtue of such person's ownership of a unit, is obligated to pay for real estate taxes, insurance premiums, maintenance, or improvement of other real estate described in a declaration." Section 38-33.3-103(8), C.R.S.2003.

Section 38-33.3-103(30), C.R.S.2003, defines a "unit" as a "physical portion of the common interest community which is designated for separate ownership."

A.

Defendants contend that the CCIOA does not grant standing to assert claims related to windows, decks, and floor slabs because these claims are not matters affecting the common interest community. Citing § 38-33.3-103(5)(b), C.R.S.2003, which defines "common elements" as "real estate within a planned community owned or leased by an association, other than a unit," defendants assert that the Association has standing only to assert claims for matters affecting the "common interest community" outside the individual units. We disagree.

Here, the trial court ruled before trial that individual units are part of the common interest community property and thus, the Association had standing to assert claims on behalf of the homeowners for defects to individual units. While this appeal was pending, a division of this court decided Yacht Club II Homeowners Ass'n v. A.C. Excavating, ___ P.3d ___, 2003 WL 22722946 (Colo.App. No. 02CA0645, Nov. 20, 2003), which holds that (1) § 38-33.3-302(1)(d) confers standing upon associations to pursue damage claims on behalf of two or more unit owners with respect to matters affecting the "common interest community," and (2) individual units are part of the common interest community.

We conclude that the CCIOA's plain language including individual units in the common interest community and Yacht Club make clear that the Association has standing to assert claims of individual unit owners.

B.

We also reject defendants' assertion that the Association's Declaration of Covenants, Conditions, and Restrictions denies the Association any responsibility for or interest in windows, decks, and floor slabs of individual units.

Under the CCIOA, a homeowners association's standing to institute litigation does not require specific authorization under a declaration. See § 38-33.3-302(1)(d). Further, "[i]n the event of a conflict between the provisions of the declaration and the bylaws, the declaration prevails, except to the extent the declaration is inconsistent with this article." Section 38-33.3-203(3), C.R.S. 2003.

We read § 38-33.3-203(3) to provide that the CCIOA prevails over any inconsistent provision in the Declaration.

Here, defendants point to sections of the Declaration apportioning maintenance duties between the Association and the owners of individual units. However, the Declaration specifically states that "declarant submits the Property to the provisions of the [CCIOA]" and that the Association has all the "powers, authority and duties permitted under the [CCIOA] which are necessary and proper to manage the business and affairs of the Community." Provisions stating that the Association and individual owners have separate maintenance duties under the Declaration have no bearing on the Association's standing under the CCIOA.

C.

We also disagree with defendants' assertion that pursuant to Villa Sierra Condominium Ass'n v. Field Corp., 787 P.2d 661 (Colo. App.1990), the Association lacked standing to assert a claim for breach of the implied warranty of habitability.

In Villa Sierra, a division of this court held that a condominium owners association had associational standing to assert a claim for breach of implied warranty for damage to areas under common ownership, but stated that lawsuits seeking damages on behalf of individual owners would normally require the participation of those owners.

However, Villa Sierra was decided before the CCIOA was enacted, and here, defendants do not argue that the plain language of the CCIOA excludes the breach of implied warranty claim. Nothing in the plain language of the CCIOA or in the rationales of Villa Sierra or Yacht Club II precludes the Association's standing for the breach of implied warranty claim. See Yacht Club II Homeowners Ass'n v. A.C. Excavating, supra (reversing trial court's ruling that Villa Sierra prevented homeowners association's standing under CCIOA in negligence claim).

II.

Defendants also contend that the trial court erred in ruling that the proper measure of damages was cost of repair rather than diminution of value. We disagree.

The selection of the appropriate measure of damages in each case is within the discretion of the trial court. The trial court must take as its principal guidance the goal of reimbursement of the plaintiff for losses actually suffered. Bd. of County Comm'rs v. Slovek, 723 P.2d 1309 (Colo.1986).

Different measures of damages, including the cost of restoring the property to its original condition, may be appropriate under certain circumstances if the actual loss suffered is to be fully compensated. Bd. of County Comm'rs v. Slovek, supra.

Here, in ruling that the proper measure of damages was the reasonable cost of repairing or rebuilding the property, the court explained that the townhomes were livable and determined that it would be inappropriate to "base a measure of damages on diminutions or arbitrary increase in the market value over the period of time for homes that ... both sides have stated or presented to the jury are in need of repair."

Defendants concede that the trial court had discretion to apply a measure of damages other than diminution in value, but argue that doing so in this case was economically wasteful because the Association's damage estimate of approximately $6.5 million exceeded defendants' original construction cost. We are unaware of any authority that imposes this test for economic waste. See Bd. of County Comm'rs v. Slovek, supra

(refusing to impose a damage cap that would prevent repair cost damages greater than original value when repair costs are not wholly unreasonable and evidence demonstrates that payment of market value likely will not adequately compensate property owners for personal or other special reasons).

We conclude that the trial court did not abuse its discretion in determining that cost of repair would best compensate the Association.

III.

We also disagree with defendants' contention that the trial court erred by excluding testimony of defendants' real estate appraisal expert as to the appreciation in value of individual townhomes.

Rulings on the relevancy of proffered evidence are within the sound discretion of the trial court and will not be disturbed on review absent an abuse of discretion. KN Energy, Inc. v. Great W. Sugar Co., 698 P.2d 769 (Colo.1985).

Evidence is relevant if it has any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence. CRE 401. Although relevant, evidence may be...