SOUTH CONEJOS SCHOOL DISTRICT RE-10, Plaintiff-Appellee, v. WOLD ARCHITECTS INCORPORATED, d/b/a Wold Architects and Engineers, a foreign corporation, Third-Party Plaintiff-Appellant.
Court of Appeals No. 23CA0595
Colorado Court of Appeals, Div. I.
Announced September 21, 2023
541 P.3d 17 | 2023 COA 85
Opinion by JUDGE FOX
Conejos County District Court No. 21CV30001, Honorable Crista Newmyer-Olsen, Judge
Cardi & Schulte LLC, Timothy M. Schulte, Sharon L. Weikel, Lisa C. Zook, Daniel V. Woodward, Greenwood Village, Colorado, for Third-Party Plaintiff-Appellant
Opinion by JUDGE FOX
¶ 1 This
I. Background
¶ 2 This case arises from the construction of a kindergarten to twelfth grade school in Antonito, Colorado, and a subsequent flood at the school. The post-flood damage led the Colorado School District Self Insurance Pool (Self Insurance Pool) and the South Conejos School District RE-10 (the Distriсt) to believe that various elements of the construction were defective. So they sued their contractor, their architects, and various others involved in the school project.
¶ 3 They initially sued G.E. Johnson Construction Co., Inc. (the general contractor) in January 2021, and they added Wold Architects Incorporated (Wold), along with other involved parties, almost a year later. The Distriсt and the Self Insurance Pool settled with most defendants. Only the District‘s claims against Wold, which was hired to design the school and provide construction administration and observation services, remain.
¶ 4 Wold filed a motion for summary judgment on most of the claims asserted against it, arguing that the claims are time barred. According to Wold, the accrual of the District‘s claims should be governed by section
¶ 5 The district court granted Wold‘s summary judgment motion in part and denied it in part. The court found that, as to any “alleged defects concerning water resources,” the District had “knowledge of the substantial nature of the defects related to water resources sоmetime in 2017, making the deadline for bringing an action related to said defects sometime in 2019.” But the court found that, as to all other alleged defects, “genuine disputes of material fact” existed in terms of when the District “discovered” those defects.
¶ 6 In partially denying the summary judgment motion, the court agreed that the interplay between the accrual standard in the contract and the accrual standard in section
¶ 7 Dissatisfied with the district court‘s ruling, Wold moved to certify for interlocutory review the summary judgment order as to the accrual issue. The District opposed certification and argued that, even if section
¶ 8 Wold agreed that questions of fact remain and that granting interlocutory review will not end the litigation, but it explained that an interlocutory appeal would result in a more orderly disposition of the case because “the evidence at trial will vary depending on which accrual standard applies.” For example, according to Wold,
If the contractual standard of accrual governs, the relevant evidence would involve [the District‘s] actual notice of defective construction. In contrast, if the statutory accrual rules govern, the relevant evidence would involve physical manifestations of a defect.
¶ 9 Agreeing with Wold, the district court certified its order for interlocutory review.
II. Jurisdiction
¶ 10 Before addressing the merits of Wold‘s appeal, we explain why interlocutory review of the district court‘s order is appropriate.
¶ 11 Under section
¶ 12 We address factors one and two together because they are interrelated. It is undisputed that this issue presents a question of law. See Redden v. Clear Creek Skiing Corp., 2020 COA 176, ¶ 36, 490 P.3d 1063 (“Whether a private agreement violates public policy is a question of law that we review de novo.“). We must then decide whether the issue is controlling and may promote a more orderly disposition of the action. Affiniti Colo., ¶ 16 (concluding interlocutory review is appropriate when it would “directly affect the court‘s resolution” of an issue in the litigation). The issue presented here satisfies both.
¶ 13 Resolution of when the District‘s claims began to accrue will not result in immediate termination of the litigation, see, e.g., Indep. Bank v. Pandy, 2015 COA 3, ¶ 10, 383 P.3d 64 (An issue was controlling because if the “statute of limitations … bars the Bank‘s complaint, the litigation would be resolved without the need for a trial.“), aff‘d, 2016 CO 49, 372 P.3d 1047, because questions of fact remain under either accrual standard. But resolution of this issue will guide the evidence to be presented at trial. Adams v. Corr. Corp. of Am., 264 P.3d 640, 645 n.8 (Colo. App. 2011). And without interlocutory review, retrial would be certain if a division on appeal later concluded that the district court should have applied the standard in section
¶ 14 Although interlоcutory review would not be appropriate if other defendants and other claims remained in the case, see Tomar Dev., Inc. v. Bent Tree, LLC, 264 P.3d 651, 653 (Colo. App. 2011) (an interlocutory appeal would not promote a more orderly disposition when an order, dismissed only one claim and another remained), because Wold is the only defendant left, the applicable accrual standard affects all of the rеmaining proceedings.
¶ 15 As to the third factor, no published Colorado case has addressed the issue whether a contract provision is enforceable if it provides a more generous claim accrual standard than the one in section
¶ 16 Accordingly, we conclude that our review of Wold‘s appeal is appropriate under section
III. Analysis
A. Standard of Review and Applicable Law
¶ 17 We review a district court‘s order granting summary judgment de novo. Lewis v. Taylor, 2016 CO 48, ¶ 13, 375 P.3d 1205; W. Elk Ranch, L.L.C. v. United States, 65 P.3d 479, 481 (Colo. 2002). Summary judgment is a drastic remedy and is appropriate only when the pleadings and the supporting documentation show that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law.
¶ 18 Additionally, contractual interpretation and statutory interpretation present questions of law that we review de novo. Lewis, ¶ 14 (statutory interpretation reviewed de novo); Union Ins. Co. v. Houtz, 883 P.2d 1057, 1061 (Colo. 1994) (interpretation of contracts reviewed de novo).
¶ 19 “In construing a statute, our primary purpose is to ascertain and give effect to the legislature‘s intent.” McCoy v. People, 2019 CO 44, ¶ 37, 442 P.3d 379. “To do so, we look first to the language of the statute, giving its words and phrases their plain and ordinary meanings.” Id. “We read statutоry words and phrases in context, and we construe them according to the rules of grammar and common usage.” Id. “We must also endeavor to effectuate the purpose of the legislative scheme.” Id. at ¶ 38. “In doing so, we read that scheme as a whole, giving consistent, harmonious, and sensible effect to all of its parts, and we must avoid constructions that would render any words or phrases superfluous or lead to illogical or absurd results.” Id.
B. Contractual Accrual versus Statutory Accrual
¶ 20 Section 6.17.1 of the District and Wold‘s contract for architectural services contains the following accrual provision:
Unless a longer period is provided by law, any action against [Wold] brought to recover damages for deficiency in the design, planning, supervision, inspection, construction or observation of construction or fоr injury to person or property shall be brought within two years after the claim for relief arises and is discovered by [the District]; … “Discovered” as used herein means detection and knowledge by [the District] of the defect in the improvement that ultimately causes the injury, when such defect is of a substantial or significant nature.
(Emphasis added.)
¶ 21 CDARA provides that “a claim for relief arises … at the time the claimant … discovers or in the exercise of reasonable diligencе should have discovered the physical manifestations of a defect in the improvement which ultimately causes the injury.”1
¶ 22 Wold contends the district court erred by accepting the accrual provision in the contract rather than CDARA‘s accrual provision. Wold reasons that the accrual provision in section 6.17.1 of the contract is void as against public policy because it violates the policies underlying statutes of limitation generally and section
C. Discussion
¶ 23 We conclude that the district court committed no error.
¶ 24 Parties to a contract may agree on whatever terms they see fit so long as those terms do not violate statutory prohibitions or public policy. See Fox v. I-10, Ltd., 957 P.2d 1018, 1021–22 (Colo. 1998); USI Props. East, Inc. v. Simpson, 938 P.2d 168, 173 (Colo. 1997). As we discuss below, the operative statute does not prohibit extending the accrual date. And the public policies Wold invokes do not outweigh the parties’ rights to contract freely. Fox, 957 P.2d at 1022.
1. Section 13-80-104 Does Not Prohibit Modifications or Waivers
¶ 25 We cannot conclude from CDARA‘s plain text—providing that “a claim for relief arises … 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,”
¶ 26 If a statute of limitations can be waived or shortened, Lewis, ¶ 38 (time bars may be tolled by express agreement); Est. of Ramsey v. State Dep‘t of Revenue, 42 Colo. App. 163, 167, 591 P.2d 591, 595 (Colo. App. 1979) (statute of limitations is a personal bar that may be raised or waived); Grant Fam. Farms, Inc. v. Colo. Farm Bureau Mut. Ins. Co., 155 P.3d 537, 538 (Colo. App. 2006) (recognizing “that contractual and statutory limitations provisions are in conflict only if contractual shortening is prohibited by statute,” which was not the case there), it is difficult to see why, absent a contrary legislative direction, it cannot be extended.
¶ 27 Where the legislature has wanted to limit rights, it has done so expressly. In fact, the Homeowner Protection Act of 2007 (HPA),2
¶ 28 Having concluded that section
2. The Competing Public Policies Do Not Weigh in Wold‘s Favor
¶ 29 Wold next posits that the contractual accrual provision at issue violates the policies that undergird CDARA. According to Wold, CDARA was enacted to (1) streamline construction defect litigation; (2) encourage timely resolution of construction disputes; (3) decrease construction defect litigation; and (4) reduce the costs of insuring construction professionals.
¶ 30 Even if the policies claimed to underlie CDARA generally also apply to the accrual provision (section
¶ 31 Wold relies on First National Bank v. Mock, 70 Colo. 517, 203 P. 272 (1921), in arguing that Colorado does nоt allow contractual interference with limitations periods. In our view, Wold misreads Mock. While the court voided an agreement that permanently waived any statute of limitations—meaning claims would never be stale—the decision plainly stated that “waiver is generally held valid if it is for a reasonable time.” Id. at 519, 203 P. at 273. Mock does nothing to invalidate the challenged contract provision.
¶ 32 Wold highlights that the contrаct here tracked the language in an earlier version of section
¶ 33 We are equally unpersuaded by the out-of-state cases Wold relies on—some of which do not even deal with accrual, see Umpqua Bank v. Gunzel, 16 Wash. App. 2d 795, 483 P.3d 796, 810 (2021) (addressing a statute of limitations); W. Gate Vill. Ass‘n v. Dubois, 145 N.H. 293, 761 A.2d 1066, 1071 (2000) (same); Shaw v. Aetna Life Ins. Co., 395 A.2d 384, 386–87 (Del. Super. Ct. 1978) (same); Citizens Bank of Shelbyville v. Hutchison, 272 Ky. 195, 113 S.W.2d 1148, 1148 (1938) (same), and none of which binds us. See Madalena v. Zurich Am. Ins. Co., 2023 COA 32, ¶ 33, 532 P.3d 776. We note that the District similarly cites out-of-state cases to support its competing position.3 And еven where altering a limitations period has been prohibited, it does not necessarily follow that an altered accrual period will not be enforced. See, e.g., Harbor Ct. Assocs. v. Leo A. Daly Co., 179 F.3d 147, 151 (4th Cir. 1999) (applying Maryland law to enforce a construction contract‘s accrual provision); see also Gustine Uniontown Assocs. Ltd. v. Anthony Crane Rental, Inc., 892 A.2d 830, 836–37 (Pa. Super. Ct. 2006); Coll. of Notre Dame of Md., Inc. v. Morabito Consultants, Inc., 132 Md. App. 158, 752 A.2d 265, 272–73 (2000); Old Mason‘s Home of Ky., Inc. v. Mitchell, 892 S.W.2d 304, 307 (Ky. Ct. App. 1995); Oriskany Cent. Sch. Dist. v. Edmund J. Booth Architects, A.I.A., 206 A.D.2d 896, 615 N.Y.S.2d 160, 161–62 (1994), aff‘d, 85 N.Y.2d 995, 630 N.Y.S.2d 960, 654 N.E.2d 1208 (1995); Keiting v. Skauge, 198 Wis. 2d 887, 543 N.W.2d 565, 567 (Wis. Ct. App. 1995).
¶ 34 The public policies Wold touts to support its argument simply do not outweigh Colorado‘s significant interest in enforcing the agreement between two sophisticated parties. See Fed. Deposit Ins. Corp. v. Am. Cas. Co., 843 P.2d 1285, 1290 (Colo. 1992) (a public policy will invalidate a contractual provision only if the policy “clearly outweigh[s]” the interest in enforcing the contract).4 We need not decide whether contracting for a different accrual term is permissible under all circumstances. Where, as here, the operative term in section 6.17.1 of the contract does not violate any Colorado statute or public policy, we must respect the parties’ agreement. See Pierce v. St. Vrain Valley Sch. Dist. RE-1J, 981 P.2d 600, 603–07 (Colo. 1999) (enforcing the confidentiality provisions of a settlement agreement after holding they did not violate the First Amendment or Colorado public policy).
IV. Disposition
¶ 35 For these reasons, we affirm the district court‘s order and remand the case to the district court so the District‘s remaining claims may be resolved.
JUDGE DAILEY and JUDGE BROWN concur.