Highline Village Assocs. v. Hersh Cos., 98CA1886.

• Decision Date: 28 October 1999
• Docket Number: No. 98CA1886.,98CA1886.
• Citation: 996 P.2d 250
• Parties: HIGHLINE VILLAGE ASSOCIATES, a California limited partnership, and Greensview Associates, a California limited partnership, Plaintiffs-Appellants, v. HERSH COMPANIES, INC., a Florida corporation, f/k/a Hersh National Painting Co., Defendant-Appellee.
• Court: Colorado Court of Appeals

996 P.2d 250

HIGHLINE VILLAGE ASSOCIATES, a California limited partnership, and Greensview Associates, a California limited partnership, Plaintiffs-Appellants, v. HERSH COMPANIES, INC., a Florida corporation, f/k/a Hersh National Painting Co., Defendant-Appellee.

No. 98CA1886.

Colorado Court of Appeals, Div. II.

October 28, 1999.

As Modified on Denial of Rehearing December 23, 1999.

Certiorari Granted April 17, 2000.

Silver & DeBoskey, P.C., Joe L. Silver, Martin D. Beier, Denver, Colorado, for Plaintiffs-Appellants.

Faegre & Benson, LLP, J. David Arkell, Jessica F. Toll, Denver, Colorado, for Defendant-Appellee.

Opinion by Judge CRISWELL.

Plaintiffs, Highline Village Associates and Greensview Associates, appeal from the summary judgment dismissing their claims for breach of contract and breach of express warranty, arising from two substantially identical contracts with defendant, Hersh Companies Inc., to repaint the exteriors of two large apartment complexes owned by plaintiffs. The judgment of dismissal was based upon the trial court's conclusion that the contractors' statute of limitations, § 13-80-104, C.R.S.1999, barred the assertion of those claims. Because we conclude that there exists a genuine issue of material fact as to whether that statute was tolled, we reverse and remand for further proceedings.

The contracts at issue, which were entered into in March 1992, contained an express warranty that defendant:

shall guarantee that all work executed shall be free from defects of material and workmanship for a period of five (5) year(s) from date of acceptance and shall further guarantee that [it] will, at [its] own expense, repair and replace all defective work ... which becomes defective during the term of the guarantee.

The painting was completed in August 1992. However, in November of that year, paint on some of the exterior doors began to peel. Upon plaintiffs' request, defendant repainted a portion of those doors, although it claimed that the peeling was not its fault.

Thereafter, commencing in June 1994 and continuing through November 1994, plaintiffs advised defendant of a number of other areas where the paint had begun to peel. By the latter date, defendant had repainted all of the items on a "punch list" which plaintiffs had previously prepared. Before this work was done, however, plaintiffs had provided written notice under defendant's guarantee that such work was required and had also warned defendant that, if such work was not done, plaintiffs would retain the services of a local painting contractor to perform the repainting and would then file suit to recover damages.

There is no evidence in the record that defendant made any express representations to plaintiffs that the areas it repainted would not peel again. Among the information submitted to the court with respect to the summary judgment, however, was some evidence that the areas repainted were satisfactory and needed no further repainting.

After the November 1994 repainting was accomplished, additional areas began to peel, so that, by March 1995, it was estimated that between 10% and 40% of the paint applied to the trim of both buildings had failed. Based upon the testing of the painted surfaces performed in August 1996, plaintiff ultimately concluded that the peeling of the trim areas was the result of defendant's alleged use of a paint different in quality from that specified in the contracts. In contrast, defendant asserted that the cause of the failure was to be found in the nature of the old paint that had existed on the trim when defendant's work commenced.

Sometime in the spring of 1995, defendant refused to repaint any of the other surfaces where the paint was failing. Plaintiffs then filed their complaint in October 1996, asserting, inter alia, the claims for breach of contract and breach of express warranty that are at issue here. The date of this filing was more than four years after defendant had initially completed its work under each contract, but was less than two years after defendant had last repainted a portion of the trim.

In determining that § 13-80-104 barred plaintiffs' claims, the district court concluded that the initial peeling of paint from a portion of the exterior doors of the two complexes in November 1992 was a "physical manifestation of a defect in the improvement" under § 13-80-104(1)(b), C.R.S.1999, so that, for purposes of this statute of limitations, plaintiffs' claims for relief arose at that time. In reliance upon Dean Witter Reynolds, Inc. v. Hartman, 911 P.2d 1094 (Colo.1996), the court also concluded that it could not engage in an equitable tolling of this statute because, under Colorado law, application of such doctrine was dependent upon the commission of a "wrongful act" and defendant's actions in repainting a portion of the peeled surfaces could not be classified as such.

I.

Plaintiffs first assert that the statute of limitations properly applicable to their claims is § 13-80-102, C.R.S.1999, which is the general statute of limitations for contract actions, rather than § 13-80-104, which is a statute of only limited application. We disagree.

The pertinent portion of § 13-80-104 (the "contractors' statute") provides that:

(1)(a) [A]ll actions against any ... contractor... performing ... supervision, inspection, [or] construction ... of any improvement to real property shall be brought within the time provided in section 13-80-102 [i.e., within two years after the cause of action accrues] ....

(b) A claim for relief arises under this section at the time the claimant ... discovers or in the exercise of reasonable diligence should have discovered the physical manifestations of a defect in the improvement which ultimately causes the injury.

(c) Such actions shall include any and all actions in ... contract ... for the recovery of damages for:

(I) Any deficiency in the ... construction... of any improvement to real property.... (emphasis supplied)

It is to be noted that the period of limitations under either § 13-80-102, which plaintiffs assert is applicable, or the contractors' statute is the same—two years after the cause of action or claim for relief accrues or arises. However, under the contractors' statute, a claim accrues when a physical manifestation of a defect appears, even though its cause is not known at that time. Unlike its predecessor, see Colo. Sess. Laws 1979, ch. 144, § 13-80-126 at 631-632, the present contractors' statute provides that a claim arises for purposes of its limitation period when the defect becomes manifest, even though the cause of that defect is not then known. See Criswell v. M.J. Brock & Sons, Inc., 681 P.2d 495 (Colo.1984)

In contrast, a claim for damages to property generally does not accrue until "both the injury and its cause are known or should have been known by the exercise of reasonable diligence." Section 13-80-108(1), C.R.S.1999.

Here, if it is assumed that the peeling of paint from the exterior doors in November 1992 was the manifestation of the same defect that caused the later peeling of the paint upon the trim—an issue not yet addressed, either by the parties or the trial court—the period of limitations would have started in November 1992 if the contractors' statute applies. However, because plaintiffs did not discover the alleged cause of any defect until August 1996, the period of limitations under § 13-80-102 would not have started until the latter date.

A.

Plaintiffs first assert that defendant's actions in repainting the two buildings did not involve the "construction of any improvement." They do not assert that painting is not a part of "construction" under this statute. Rather, they argue that re painting an existing structure is not an "improvement"; it is, they say, only a repair or maintenance function that does not result in any "improvement to real property" within the meaning of the contractors' statute. We reject this assertion.

There is no statutory definition of "improvement to real property." Hence, the phrase must be given its ordinary meaning. Enright v. City of Colorado Springs, 716 P.2d 148 (Colo.App.1985). However, because the statute was designed to protect those parties engaged in the construction industry, the focus in interpreting its provisions should be more upon the activities of the contractor than upon the resulting product. Stanske v. Wazee Electric Co. 722 P.2d 402 (Colo.1986).

Nevertheless, if the result of the construction is a product that is "essential and integral to the function of the construction project," that product is an improvement within the meaning of the statute. Two Denver Highlands Limited Partnership v. Dillingham Construction, N.A., Inc., 932 P.2d 827, 829 (Colo.App.1996).

Thus, activities such as the grading of a lot in preparation for construction, Embree v. American Continental Corp., 684 P.2d 951 (Colo.App.1984), and the attachment of personal property to realty, whether or not such attachment results in the creation of a fixture, Anderson v. M.W. Kellogg Co., 766 P.2d 637 (Colo.1988); Stanske v. Wazee Electric Co., supra,

are improvements under the contractors' statute.

On the other hand, activities not associated with the physical alteration of property do not constitute the construction of an improvement. See Gleason v. Becker-Johnson Associates, Inc., 916 P.2d 662 (Colo.App.1996)

("pre-buy" inspection of home by agent of buyer); Flatiron Paving Co. v. Great Southwest Fire Insurance Co., 812 P.2d 668 (Colo.App.1990) (moving historical monument from one location to another); Calvaresi v. National Development Co., 772 P.2d 640 (Colo.App.1988) (obtaining re-zoning and platting of property).

Even if we were to assume that some routine repairs to real property, although resulting in some physical alteration to that property, would not constitute an improvement to that property within the meaning of the contractors' statute, the activity engaged in by defendant...