Construction defects lawsuits in Vail’s 5th Judicial District and Aspen’s District 9 are tearing apart the fabric of our resort communities – a primary economic engine to Colorado.  Plaintiff attorneys for these cases claim that they are protecting innocent homeowners by filing construction defects lawsuits.  Rather, these lawsuits burden all taxpaying homeowners in our state. They are causing reputable businesses to close their doors.

The issue became a “sleeper” spotlight in a 2014 periodic performance review of the Fifth Judicial District Judge Hon. Fredrick Walker Gannet. The district is located in Eagle County, which encompasses the Vail Valley and saddles portions of Aspen’s Roaring Fork Valley.  These reports are typically unnoticed, which is what makes even more a sleeper brought to the spotlight. A bipartisan commission alternately reviews each district judge, which provides a basis for the public to decide whether to retain a judge or not.  Judge Gannet received high marks from evaluators, 3.53 out of 4. But there were noteworthy comments in his evaluation. The report stated the biggest complaint regarding Judge Gannett was the lack of timeliness with respect to his orders “though…[this] is partially related to his workload…”  The reference to Judge Gannet’s workload is articulated in the report: “Since the last retention cycle, Judge Gannet has been challenged with handling multiple, significant, large scale construction cases in addition to managing his regular docket.”

Click or paste the link to review the full report: www.coloradojudicialperformance.gov/retention.cfm?ret=880

Judge Gannet is to be commended for receiving high marks for “doing his homework,” knowledge of the law and his neutrality.  Construction litigation involving single family homes and attached homes (condominiums) in the Vail Valley and Roaring Fork Valley are typically not large national or volume building projects. The builders and subcontractors in Aspen and Vail are often small companies and citizens of these small communities.  A lawsuit can put these businessmen and women out of business while the Plaintiff’s attorneys line their coffers. GROUNDLESS SUITS? DELAY TACTICS? Arguably, Judge Gannet’s “lack of timeliness” is a reflection that he is simply doing his job.  As a member of the Ninth District Judicial Nominating Commission where Aspen is seated — and having a former interest in a legal support (court reporting) business — I am aware of the multi-year history of the high volume of construction defects cases plaguing Pitkin County Courts as well.

One problem remains: Who is watching out for this epidemic? There is no uniform way to evaluate whether a court’s dockets are plagued by construction defects cases and the related multiparty intricacies.  In a simple case, John Doe files a lawsuit against Betty Doe and there are a series of motions, responses and replies that can cumulatively reach hundreds of pages.  In a construction defects case cited by Judge Gannett’s performance review, it’s not uncommon to have up to 10 or more parties named in the lawsuit. They all have an opportunity to file motions, responses and replies.  The math is simple.  By example, say a normal case at the initial stages of a lawsuit would generate 200 pages the page count in a case that includes 10 parties would mushroom to more than 2,000 pages.  This does not include discovery, depositions, cross claims and all the related motions from each party.  It is nearly humanly impossible for a judge to gain a command of a construction defects case and manage his regular court docket without delay.  Putting pressure on a judge to quickly usher through orders in a district plagued with construction defects cases can result in unjust outcomes.  There are other solutions.

The fact is not every misfortune — or normal wear and tear — is a cause for litigation.  The home warranty process provides the first line of remedying problems when they do arise. Remember it’s the builder’s job to warranty the home not to maintain it.  Mediation can be a non-adversarial process that helps remove the defense armor of both parties to focus on solutions rather than to posture the best litigation strategy. When the parties cannot agree to a solution, arbitration helps control litigation cost and it relieves our public court system of the burden imposed by complicated construction defects cases.  In 2014, Senator Gail Schwartz of Snowmass (D-District 5) co-sponsored SB 14-220, the predecessor to SB 15-177.  Her reasoning, in part, was her concern about the crowded dockets due to construction defects litigation expressed to her by none other than the Hon. Mark D. Thompson, Chief Judge Judicial District 5.  Sen. Schwartz’s Senate district covers both Aspen and Vail, now held by Sen. Kerry Donovan of Vail.

Plaintiff’s attorneys pursuing construction defects cases want to play a shell game with lawmakers to deflect all of the negative social and economic impacts they have on Coloradans.  They argue condos are not being built in Denver and the Front Range due to market demand for apartments rather than the proven negative impacts of groundless construction defects lawsuits.  How do they answer to the negative impacts such lawsuits have on Colorado’s resort communities, their citizens, resort businesses and the court system?  The argument shifts a bit from Colorado’s Front Range construction defects dilemma, where homeowners association members are thrust into a lawsuit after plaintiff attorneys convince their Board of Directors it is the right thing to do. These tactics are often “file a lawsuit and roll the dice.”  In Aspen, a modest 3,000 square foot home based on the average price per square foot today would cost $3.7 million.  Before 2008, it peaked to as high as three times that amount.  This is fertile ground to file a lawsuit if business is slowing down in Denver and on the Front Range because no one is building condos.

SB 177 is a welcome sign that lawmakers recognize frivolous and vexatious lawsuits have negative socioeconomic impacts on Colorado.  While SB 177 targets multifamily housing projects with HOAs, the fact is too many frivolous construction defects lawsuits plague our court system statewide.  Mediation provides a means for all parties to land on their feet after arriving on terms based on mutually agreeable solutions.  Mediation and arbitration can move disputes out of our public courts — which will in turn provide relief from burdensome, complex construction defects cases. That will lessen the overall court caseload and related costs to administer them. As a result, less complex cases will be able to move along quicker. This is good for all of Colorado’s taxpayers.