Here comes #44: Owner’s Rights Initiative Seeks to Turn Back Building-Defects Law

By Nora Caley
Law Week Colorado

DENVER- Now no one’s happy: not the lawyers, not the homebuilders.

In April Governor Owens signed H.B. 1161, a law that limits the damages in lawsuits over construction defects. If a homeowner wants to sue a construction company for a defect in some building work, the homeowner must first ask the builder to remedy the situation. And the homeowner cannot receive treble damages- which are part of Colorado’s consumer-protection law- for more than $250,000.

Now a law firm, lobbyists, and state representative Jerry Frangas have launched an effort to put Amendment 44, Property Owner’s Rights, in the November 2004 ballot. The initiative would change the Colorado constitution to override the protections that builders get from H.B. 1161.

Ron Sandgrund, an attorney with Vanatta, Sullan, Sandgrund & Sullan, which represents homeowners in construction disputes, says the law is unfair to homeowners. “It stripped them of rights they have historically enjoyed since the time of the colonies,” he said. He and law partner Scott Sullan are working with lobbyists Freda Poundstone and Chuck Ford on the ballot initiative.

Sandgrund says his firm also expects to fight the new law in court. “That will come up on a case-by-case basis. We represent homeowners. Every time a homeowner has a defectively built home, they have to go to court, and they need a lawyer. If the developer raises provisions of HB 1161 to strip certain rights, we will in each case attack that law as unconstitutional.”

The Colorado Trial Lawyers Association is not involved in the ballot initiative, although Sarah L. Luna, Director of Communications, said the association did oppose H.B. 1161.

Chuck Ford, whose lobbying firm is Chuck Ford & Sons, said the issue has not been presented in the media the way it should have been. “I think it’s clear the way the Denver newspapers presented it was homebuilders vs. trial lawyers,” he said. “This is not about trial lawyers, it’s about consumers. This bill just trashed the Consumer Protection Act.”

But state representative Greg Rippy (Glenwood Springs) says the whole argument is about money. “The politics of money is what it is,” he said. “It’s, ‘We couldn’t get it done through our representative government system, so now we have to buy the answer we want.’”

Rippy says he worked on H.B. 1161 for three years. Although he owns an asphalt paving company, he said he wrote the bill not to protect his own business but to protect other owners of construction businesses. “I had a phone call from a constituent yesterday. He went out on his own as a contractor, and he could not get liability insurance. It wasn’t how much it cost, it was, ‘Sorry, we’re not doing that business.’”

Rippy had been quoted in the Glenwood Springs Post-Independent saying he knew one lawyer who made $10 million in 2002 by specializing in construction defect cases. But he declined to identify the lawyer. “Someone from the Denver Post gave me that number,” he says of the dollar figure.

Sandgrund declined to say whether he or someone in his firm was the $10 million lawyer. “All lawyers who represent homeowners do it on a contingency and they earn money doing that work,” he said. “The issue isn’t the cost and expense that homeowners incur trying to get their homes fixed through the legal process, but the cost they face with shoddy construction.”

On June 18, the Ballot Title Setting Board agreed on the language of the title. The opposition may appeal, and then the Colorado Supreme Court will approve the title or suggest changes.

Ford declined to say how much money the amendment backers have raised; the Rocky Mountain News in February reported Sullan had spent $36,000 so far. The group has not yet hired a firm to get the 67, 829 valid voter signatures. Neither side has begun campaign ads yet.

“I just hope they don’t get the signatures,” Rippy said. “I feel very good about what 1161 will do for the consumer. I think it is a pro-consumer bill.”

And it’s not about money, or at least not about reversing the treble damage limit, Sandgrund said. “It’s just directed at getting actual damages and reasonable compensation to owners to fix defects in homes and other buildings.”