Wood Bros. Homes, Inc. v. Howard, 92SC226
| Decision Date | 15 November 1993 |
| Docket Number | No. 92SC226,92SC226 |
| Citation | 862 P.2d 925 |
| Parties | WOOD BROS. HOMES, INC., Petitioner, v. Dennis L. HOWARD and Deborah R. Howard, Respondents. |
| Court | Colorado Supreme Court |
Holley, Albertson & Polk, P.C., Dennis B. Polk, Karen Roan Novotny, Golden, for petitioner.
Frank & Finger, P.C., Robert D. Mendenhall, Evergreen, for respondents.
In this case we are called upon to decide whether homeowners alleging the negligent construction and design of their home by a builder/vendor can be barred from recovery under the applicable statute of limitations. Petitioner Wood Bros. Homes, Inc., a builder/vendor of residential homes, appeals the decision of our court of appeals affirming a judgment entered on a jury verdict for the homeowners, Dennis L. and Deborah R. Howard, arguing that section 13-80-104(1)(a-b), 6A C.R.S. (1987), and not the predecessor limitation statute, applies to the claims asserted against it. Wood Bros. Homes, Inc. also challenges the court of appeals decision that the cause be remanded to the trial court for the imposition of attorney fees. We granted certiorari on these issues and now affirm the court of appeals decision upholding the jury verdict for the homeowners, but reverse the court of appeals decision awarding attorney fees and court costs.
Wood Bros. Homes, Inc. ("Wood Bros."), a builder/vendor of single family homes, completed construction on one of its residential homes in May 1978, and soon thereafter sold the home. In December 1979, the original purchasers sold the home to Stephen and Donna Blake. On or around January 5, 1984, the Blakes noted some deterioration in the home and on March 30, 1984, they filed a "structural defects claim" with their insurance company under their homeowners warranty policy. On the claim form, the Blakes characterized the deterioration as follows:
South wall in family room is cracking. Fireplace on same wall is cracking. Bricks are separating from the mortar. Bricks can actually be removed from the hearth. Stairway leading to upper level is sinking/moving down. Family room floor is sinking (so far approximately 2"'). Basement floor on south end is constantly wet.
In response to this claim, the Blakes' insurance company conducted an investigation of the purported defects, but denied coverage on the basis that the problems were not structural in nature, but were merely "cosmetic."
Soon afterward, in August, 1984, respondents Dennis L. and Deborah R. Howard ("the Howards") purchased the home from the Blakes. During the sales negotiations the Blakes informed the Howards about the structural defects warranty, the claim they filed with their homeowners insurance carrier, and the fact that their insurance carrier had denied the claim on the grounds that the deterioration consisted of cosmetic or superficial problems.
In July 1985, less than a year after having purchased the home, the Howards noticed "some drywall cracking that was more than just hairline cracking," as well as an increase in the "sinking of the family room floor slab." These problems reportedly continued to advance, and in an effort to identify their source, the Howards retained an engineering firm to conduct an analysis of the structural integrity of the home, and also submitted a major structural defects claim to their homeowners insurance company. That claim was denied, and consequently, the Howards initiated this action in the district court.
The Howards filed their complaint on June 16, 1986, naming their sellers, the Blakes, and the builders, "M.D.C., Inc., f/k/a Wood Bros. Homes" as defendants and alleging among other claims, negligent design and construction of their home. Shortly after the complaint was filed, the defendant builder/vendor filed a motion to dismiss the complaint asserting that "M.D.C. Holdings, Inc., upon whom service was alleged is a separate and distinct corporation from Wood Bros. Homes, Inc.," and "[t]hat Wood Bros. Homes is not a corporate body and should be correctly designated as Wood Bros. Homes, Inc." 1 On July 29, 1986, the Howards filed a combined response and motion to amend the complaint to substitute Wood Bros. as the builder/vendor defendant. On July 31, 1986, the district court ordered the filing of the Howards' amended complaint substituting petitioner Wood Bros. Homes, Inc., as a new party defendant and dismissed the complaint against M.D.C. Holdings. 2
On June 8, 1988, holding the action was time-barred by section 13-80-104(1)(a-b), the district court granted summary judgment in favor of Wood Bros. 3 The district court held, as a matter of law, that because "[t]he proper statute of limitations is contained in C.R.S. 13-80-104(1)(a) and (b), as amended in 1986," which "shall apply to claims for relief arising after [July 1, 1986,]" and because "[t]he claim for relief against Wood Bros. ... first arose on March 30, 1984," the Howards "commenced their action on July 31, 1986, by an Amended Complaint." Accordingly, that court held that the Howards were barred by the statute of limitations from proceeding against Wood Bros. by virtue of the two-year limitation on claims against builder/vendors set forth in section 13-80-104(1)(a-b), 6A C.R.S. (1987).
The Howards appealed and in Howard v. Wood Bros. Homes, Inc., Nos. 88CA1084 and 88CA1328, slip op. (Colo.App. Sept. 28, 1989) (not selected for official publication) ("Howard I "), 4 the court of appeals reversed the district court's summary judgment because, as that court noted, the statute of limitations invoked by the district court, i.e., section 13-80-104(1)(a-b) "governs only those claims for relief arising on or after July 1, 1986," and here, "the Howards filed [their] action to recover for [the] alleged structural defects ... on June 16, 1986." Slip op. at 1 (emphasis added). Hence the court of appeals concluded that section 13-80-104(1)(a-b) was inapposite to the Howards' claim because they had filed their action on June 16, 1986, a date prior to the July 1, 1986, effective date of that section. 5
Continuing, the court of appeals observed that the trial court should have invoked Ch. 144, sec. 1-2, § 13-80-127(1)(a-b) Colo.Sess.Laws 631-32 (approved June 7, 1979) (hereafter section 13-80-127(1)(a-b)), the predecessor statute to section 13-80-104(1)(a-b), 6A C.R.S. (1987). Noting that under section 13-80-127(1)(a), a claim for relief arises "at the time the damaged party discovers or in the exercise of reasonable diligence should have discovered the defect in the improvement which ultimately causes the injury," the court of appeals applied the principle established by Criswell v. M.J. Brock & Sons, Inc., 681 P.2d 495 (Colo.1984), i.e., that in the case of "construction projects, discovery of the physical manifestation of a defect [in the improvement] is not necessarily equivalent to discovery of the defect itself," slip op. at 2. The court of appeals thus concluded that because it was unclear as to when the Howards, as the damaged parties, actually discovered, or should have discovered "the defect itself," as that term is contemplated under Criswell, a genuine issue of material fact "remained for resolution as to when the Howards knew or should have known of the alleged defect, as distinguished from some physical manifestation thereof," slip op. at 2-3, for the specific purpose of determining whether the Howards' claim fell within the statutory time limitation. Accordingly, that court remanded the cause to the district court for resolution of the time preclusion issue under section 13-80-127(1)(a-b).
On remand, the district court ruled that the action against Wood Bros. was commenced by the Howards on July 29, 1986, 6 that the Howards first became aware of the physical manifestations of the structural defect in the home in August, 1984, and finally, that because the evidence, when viewed in a light most favorable to Wood Bros. did not support a conclusion that the Howards' predecessors in interest, the Blakes, had knowledge of the underlying structural defect before the Howards first learned of the defect, the Howards' action was not time-barred by section 13-80-127(1)(a). The trial resulted in a jury verdict in favor of the Howards, and the trial court subsequently entered judgment against Wood Bros. in the amount of $42,500, plus statutory interest of $19,882.93 and costs of $9,299.50.
Wood Bros. appealed the trial court's verdict to the court of appeals, and the Howards cross-appealed. Howard v. Wood Bros. Homes, Inc., 835 P.2d 556 (Colo.App.1992) ("Howard II "). 7 Wood Bros. argued, inter alia, that the trial court erred in ruling that the statute of limitations did not begin to run when the Howards' immediate predecessors in title, the Blakes, discovered the defects in the home, regardless of which statute of limitations, section 13-80-127(1)(a-b) or section 13-80-104(1)(a-b), is applied. Specifically, Wood Bros. asserted that the date the Blakes first discovered the defects, as set forth in their structural defects claim, i.e., January 5, 1984, was the date that the statute of limitations necessarily began to run, on the theory that the Blakes' knowledge should be imputed to the Howards. Additionally, Wood Bros. asserted that the date the statute began to run was a question for jury resolution and not a question of law.
The court of appeals rejected Wood Bros.' argument on the grounds that the controlling statute of limitations in this case is section 13-80-127(1)(a-b); 8 the court also stated that because Wood Bros. "submitted no new evidence" nor "any evidence which would present a factual issue for determination by the jury," there was no evidence that the Howards could have discovered the physical manifestations of the defect prior to August, 1984, when they first viewed the home. Next, that court pointed out that, even assuming the Howards knew or should have known that, at the time of their initial viewing of...
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