News

  • Home
  • /
  • Newsroom
  • /
  • 2011
  • /
  • Equitable Tolling in Arizona and Colorado: Diverging Perspectives
Search News




November 2011

Equitable Tolling in Arizona and Colorado: Diverging Perspectives

Arizona

In Arizona, A.R.S. 12-550 provides a 4 year statute of limitation in construction defect claims. A.R.S. 12-552, Arizona's statute of repose, holds that construction defect claims must be brought within 8 years, or 9 years, in the case of injury to real property or an improvement to real property, if the injury occurred during the eighth year after substantial completion, or in the case of a latent defect, was not discovered until the eight year after substantial completion.

The Arizona Supreme Court ruled that equitable tolling under American Pipe, as expanded by its progeny, does not apply to Arizona's eight year statute of repose in Albano, et al v. Shea Homes Limited Partnership, et al., Case No. CV-11-0006-CQ. 
 
In its ruling, the Court held that equitable tolling likely applies to statutes of limitation, but that the statute of repose was intended by the legislature to be a drop dead date for new claims. In considering whether equitable tolling was consistent with the legislative intent of the statute of repose, the Court stated, "Applying class action tolling to this case would thus permit a lawsuit to be commenced nearly ten years after substantial completion of the improvement. Tolling the statute here to permit such a result is simply not consistent with the legislative scheme of § 12-552."

The Court further held that if the Arizona state legislature intended for the statute of repose to be tolled, it would amend the statute to state as much. Accordingly , does not apply to toll the Arizona statute of repose in construction defect litigation. 

Colorado

Colorado construction defect claims are governed by the Construction Defect Action Reformation Act ("CDARA"), C.R.S. 13-80-104, et seq. The CDARA requires claims against construction professionals to be brought within two years after the claim for relief arises, and in no case after six years from substantial completion, unless the cause of action arises in the fifth or sixth year from substantial completion, then the claim must be brought two years after the date the claim is or should have been discovered.

Prior to 2010, Colorado courts recognized equitable tolling and the repair doctrine.  "[T]he running of the [limitations] period may be equitably tolled during the time that the seller or contractor engages in repair efforts under an express or implied representation that those efforts will remedy the defect." Highline Village Assoc. v. Hersh Companies, Inc., 996 P.2d 250, 255 (Colo. App. 1999).

 In 2010, the Colorado Supreme Court rejected the "repair doctrine" or "equitable tolling" for claims falling within the purview of CDARA, even when the alleged defect gave rise to personal injury.  Smith v. Executive Custom Homes, Inc., 230 p.3d 1186, 1192-1193 (Colo. 2010).  In Smith, the plaintiffs complained of defect allowing build-up of ice on front stoop and the builder repaired the gutter without the knowledge of the homeowners.  Mrs. Smith fell on ice and sustained personal injury after repairs were made, and plaintiffs filed suit two years after the injury but three years after defect originally discovered.  The trial court dismissed the case based on a statute of limitations defense, and the Ct of Appeal reversed under the equitable tolling doctrine. 

The Colorado Supreme Court found that a cause of action arises when the defect is or should have been discovered, even if personal injury does not occur until years later.  Thus, a personal injury can be time-barred before it even occurs.  The Court then held that equitable tolling is not permissible when it is inconsistent with the express text of a statute like the Construction Defect Action Reformation Act (CDARA).  CDARA already provides for statutory tolling under specific conditions, including the time when repairs are being conducted.  Thus, equitable tolling will not apply to claims after 2003 when CDARA added a notice of claim process.

A chart comparing the differences between the Arizona and Colorado laws for illustration purposes can be found below:

EQUITABLE TOLLING ON CONSTRUCTION DEFECT CLAIMS
IN ARIZONA AND COLORADO

 

             

Arizona

 

Colorado

Statute of Limitation

A.R.S. § 12-550 
4 Years

 

C.R.S. 13-80-104(1)(a),(2); C.R.S. 13-80-102
2 Years

Statute of Repose

A.R.S. § 12-552
8 years, or 9 years, in the case of injury to real property or an improvement to real property, if the injury occurred during the eighth year after substantial completion, or in the case of a latent defect, was not discovered until the eight year after substantial completion.

C.R.S. 13-80-104(1)(a),(2).
6 years from substantial completion, unless: The cause of action arises in the fifth or sixth year from substantial completion, then the claim must be brought two years after the date the claim is or should have been discovered.

Equitable tolling on Statute of Limitation

(Class Action Context)

Probably

 

No equitable tolling generally; only statutory tolling under Construction Defect Action Reformation Act ("CDARA"). Construction defect claims as class actions are extremely rare.

 

Equitable tolling on Statute of Repose

(Class Action Context)

NO

 

No equitable tolling generally; only statutory tolling under CDARA. Construction defect claims as class actions are extremely rare.

 

 

 

 

 

 

 

 

 

 

 

 

In Albano, et al. v. Shea Homes, et al., Case no. CV-11-0006-CQ, the Arizona Supreme Court "assume[d] without deciding that the timely filing of a class action complaint in Arizona tolls the applicable statute of limitations for all non-named putative class members from the date the complaint is filed until an order denying class certification is entered."

In Yacht Club II Homeowners Assoc., Inc. v. A.C. Excavating, et al., 94 P.3d 1177, 1180, the Colorado Court of Appeal know ledged that the Colorado Common Interest Ownership Act ("CCIOA") gave standing to homeowner associations to sue on behalf of their members and thus decreased the amount of class actions in Colorado.  "Here, the General Assembly enacted the CCIOA in 1991?whose purpose was to make 'clear that the association can sue or defend suits even though the suit may involve only units as to which the association itself has no ownership interest.'" [citations omitted.]  "The [CCIOA] follows the national trend acknowledging the representative capacity of the association and ends substantial difficulty on the standing issue in Colorado . . . enabling the association to represent more effectively its owners in such matters as construction defects . . . avoiding the necessity of assignment of claims, powers of attorney or class actions in many circumstances, [and] thereby simplifying and making more practical the prompt action in the association's and owners' common interests").

Please click here to view more summaries of recent significant case law.