Colorado Construction Liability, Initiative 34 (2004)

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The Colorado Construction Liability Initiative, also known as Initiative 34, was on the November 2, 2004 ballot in Colorado as an initiated constitutional amendment, where it was defeated. The measure would have prohibited laws that limit or impair a property owner's right to recover damages caused by a failure to construct an improvement in a good and workmanlike manner.[1]

Election results

Colorado Initiative 34 (2004)
ResultVotesPercentage
Defeatedd No1,533,00276.55%
Yes 469,566 23.45%

Election results via: Colorado Secretary of State

Text of measure

The language appeared on the ballot as:[1][2]

An amendment to the Colorado constitution concerning recovery of damages relating to construction of real property improvements, and, in connection therewith, prohibiting laws that limit or impair a property owner's right to recover damages caused by a failure to construct an improvement in a good and workmanlike manner; defining "good and workmanlike manner" to include construction that is suitable for its intended purposes; and permitting exceptions for laws that limit punitive damages, afford governmental immunity, or impose time limits of specified minimum lengths on filing lawsuits.[3]

Background

The following background information was provided in the state Blue Book analysis:[2]

Currently, state law establishes a procedure to recover damages from a construction professional when construction is defective. Under this law, a property owner may sue the responsible construction professional after giving notice and providing an opportunity to fix the defect. Construction professionals include architects, contractors, developers, and others involved in the construction business. If an agreement to fix the defect is not reached within 75 days in the case of residential property, or 90 days in the case of commercial property, the property owner may sue the construction professional responsible for the defect.

A property owner who sues, and wins, may be reimbursed for the lesser of the following three dollar amounts:

1) the value of the property without the defect, 2) the cost to replace the property, or 3) the reasonable cost to repair the defect.

Medical expenses resulting from an injury are fully reimbursable. Awards for "pain and suffering" for bodily and personal injury are capped at $250,000. In addition, if the owner can show that the construction professional knowingly violated the law that protects consumers from fraud, he or she may be awarded up to an additional $250,000. Damage awards may also include the costs associated with moving, interest, or legal fees. Under this law, a lawsuit must be filed within two years from the date of discovering the defect or six years from the date the construction occurred.[3]

The proposal

The following proposal information was provided in the state Blue Book analysis:[2]

This proposal creates a new section in the state constitution that repeals current law. It removes limitations on the amount of money a property owner can collect in damages, except for punitive damages and lawsuits against governments. It also sets in the state constitution the current time frames for filing a lawsuit. Finally, the proposal eliminates the current requirement that a property owner and construction professional try to resolve the problem before bringing a lawsuit. In addition to these changes to current law, the proposal restricts the types of laws the legislature can pass in the future concerning construction liability.[3]

Arguments for

Arguments from the State Blue Book in favor of Amendment 34 included:[2]

1) The proposal protects property owners by ensuring they can be fully compensated for faulty construction. For the past three years, property owners have been limited in their ability to recover damages. Damages will be determined on a case-by-case basis in a court of law, rather than through a formula that treats all property owners the same. Property owners will be eligible for compensation for the pain and suffering caused by a defect.

2) The proposal changes a system that favors construction professionals at the expense of property owners. Individual property owners do not have the necessary time or resources to effectively negotiate with construction professionals or corporations that may be responsible. It creates constitutional standards that safeguard property owners from laws that limit their ability to collect damages.[3]

Arguments against

Arguments in the state Blue Book against Amendment 34 included:[2]

1) The proposal will drive up the cost of housing. An increase in the number of lawsuits, and the awards that result from those lawsuits, could make insurance costs prohibitive. In addition to construction professionals, this proposal allows for lawsuits against anyone who makes improvements to property, not just construction professionals. The proposal creates a fundamental change in liability to include construction professionals and non-professionals alike.

2) A process already exists for property owners and construction professionals to resolve construction defect disputes without immediately turning to the courts. The current system also defines damages in a way that is fair to both property owners and construction professionals: it compensates property owners for the actual cost of fixing their property but limits excessive compensation.[3]

Campaign finance

The Committee To Take Back Our Property Right, a group supporting the measure, spent a total of $734,469. Groups in opposition of the measure included Coloradan For REsponsible Reform who spent $3,995,504, Realtors Issue Political Action Committee who spent $202,837 and Builders Supporting Home Ownership Construction Defects who spent $7,850, all to defeat the measure.[4]

See also

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