Not All Construction Defect Actions Exempt from the Pilot Project on Civil Procedure Rules

At least one Denver District Court judge held that the Civil Access Pilot Project Rules, effective January 1, 2012, are applicable in some construction defect actions.  Adopted to reduce the expense of litigation in business actions, the Pilot Project contains the framework for a stringent discovery protocol.  Chief Justice Bender explained the purpose of the Pilot Project in his January 14, 2011 State of the Judiciary Address before the Colorado General Assembly:

Individuals and businesses alike are finding it increasingly difficult to use our civil justice system. The high cost of legal services and the growing complexity of the civil discovery process have made the cost of civil litigation prohibitive. As a result, the number of civil trials has dramatically diminished and many civil disputes are not resolved by a jury of peers. Just, speedy and inexpensive determination of civil cases is increasingly rare. To address this problem, the five chief judges in the Denver Metro area have requested that the Supreme Court approve a two-year pilot project to increase mandatory disclosure of information by the parties to their opponents and to streamline discovery procedures in both business cases and medical malpractice claims.

In October 2010, The Colorado Pilot Project Committee proposed this set of efficiency-enhancing discovery rules.  The preliminary version listed general types of actions subject to the Pilot Project (Breach of Contract Actions, Business Torts, Commercial Class Actions, etc.), and did not specifically exempt any types of actions from the Project.  After inviting public comment and holding a public hearing concerning the proposal, the Committee narrowed the scope of the Pilot Program.  The October 2011 finalized version of the Colorado Civil Access Pilot Project contains a lengthy list of actions that are not subject to the Pilot Project Rules including “actions involving construction defect claims.”  The exclusion of construction defect actions from the Pilot Project appears to be a blanket exemption.  The Rules do not further elaborate upon what constitutes an action involving construction defect claims, and there is no evidence illuminating why the Committee specifically exempted construction defect actions.

Despite the seemingly unambiguous exemption, a Denver District Court judge recently held that a construction defect action filed under the Colorado Construction Defect Action Reform Act is subject to the Pilot Project Rules.  The case was filed by the owner of a single-family home against a general contractor and an engineer.  In denying the Plaintiff’s Motion for Exemption from the Pilot Program, the judge reasoned:

The exclusion of “construction defect” cases from the Pilot Project is in general intended to cover multi-party cases where (for example), a general contractor and multiple sub-contractors and sub-sub-contractors are sued, with multiple lawyers and, because of the scope of the claimed damages and number of counsel involved, limitation on discovery may not be appropriate.

This holding may prove to be anomalous, but may have implications—positive and negative—for smaller-scale construction defect actions.   In the event that other construction defect actions are litigated under the Pilot Program, these cases will be subject to the following variations from the Colorado Rules of Civil Procedure, among many others:

• A heightened pleading standard in which the complaint must contain all material facts known that support a claim or affirmative defense and each remedy sought, including any known monetary damages;
• Presumptive denial of motions for continuances and extensions absent a showing of extraordinary circumstances;
• A restriction to one expert witness per discipline absent a showing of extraordinary circumstances;
• A requirement that the substance of the expert’s direct testimony be fully addressed in the expert’s report.  No depositions or other discovery of experts is permitted.

In addition to this construction defect action, Law Week Colorado reports that approximately 80 other cases have been filed under the Pilot Project Rules since January 1, 2012.  See full article here:http://iaals.du.edu/images/wygwam/documents/news/20120220_IAALS-Reprint.pdf  For more information on the trial court order discussed in this article, see LexisNexis File and Serve Transaction 42893076.