{"id":903724,"date":"2024-12-17T15:26:10","date_gmt":"2024-12-17T22:26:10","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=903724"},"modified":"2024-12-17T15:26:27","modified_gmt":"2024-12-17T22:26:27","slug":"colorado-decision-results-in-major-changes-for-public-and-possibly-private-construction-professionals","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/colorado-decision-results-in-major-changes-for-public-and-possibly-private-construction-professionals\/","title":{"rendered":"Colorado Decision Results in Major Changes for Public and (Possibly) Private Construction Professionals"},"content":{"rendered":"\n

Lance Collins and Michael Zehner | Brownstein Hyatt Farber Schreck<\/a><\/p>\n\n\n\n

A recent Colorado Court of Appeals sent ripples through the Colorado construction industry. In\u00a0Ralph L. Wadsworth Constr. Co., LLC v. Reg\u2019l Rail Partners et al.<\/em>\u00a0the Court of Appeals interpreted Colorado\u2019s Public Works Act to not only bar\u00a0any<\/strong>\u00a0right of recovery<\/a> for nonpayment claims to the extent a claimant submits an excessive verified statement of claim to the public project owner, but offered significant analysis that tends to make submitting a non-excessive claim that much harder. By excluding more categories of cost from \u201cappropriate\u201d costs for inclusion in such claims, the Court of Appeals has narrowed the eye of the needle to thread in making an acceptable claim<\/a>, a narrowing that may take a similar hold in decisions involving Colorado mechanics\u2019 liens, so long as the\u00a0Wadsworth<\/em>\u00a0decision stands.<\/p>\n\n\n\n

The Facts<\/h4>\n\n\n\n

Utah-based Ralph L. Wadsworth Construction Company, LLC (\u201cWadsworth\u201d) served as a subcontractor on a public project in Colorado involving the Regional Transportation District (\u201cRTD\u201d) as owner and Regional Rail Partners (\u201cRRP\u201d) as design-builder. Following a series of disputes on the project, Wadsworth filed a statutory verified statement of claim with the RTD for over $12.7 million. RTD challenged Wadsworth\u2019s verified statement of claim, asserting that the claim amount was excessive.<\/p>\n\n\n\n

In Colorado and under the Public Works Act, public works subcontractors and suppliers of any tier may file a verified statement of claim with the public owner of the project for any amounts \u201cdue and unpaid\u201d for services or materials they rendered to the public works project. C.R.S. \u00a7 38-26-107(1). Upon receipt of a verified statement of claim, the project owner is required to withhold funds sufficient to pay such claim from disbursements otherwise due and payable to the project prime contractor. C.R.S. \u00a7 38-26-107(2). However, to the extent any such project participant files a verified statement of claim \u201cfor an amount greater than the amount due without a reasonable possibility that the amount claimed is due and with the knowledge that the amount claimed is greater than the amount due … shall forfeit all rights to the amount claimed<\/strong> … .\u201d C.R.S. \u00a7 38-26-110(1) (emphasis added).<\/p>\n\n\n\n

Despite this language and following the trial, the district court awarded Wadsworth $5.7 million of its claim amount. RRP appealed, arguing that Wadsworth\u2019s claim was excessive and that it had accordingly forfeited its rights to any amount of the underlying $12.7 million including in the verified statement of claim.<\/p>\n\n\n\n

In short, the Court of Appeals agreed, overturning the $5.7 million award. In reaching this conclusion, the court read the statutory language regarding forfeiture of rights to any excessive amount claimed to mean a verified statement of claim may not include any claimed amounts that are not immediately and unequivocally due at the time of filing. The court further held that a verified statement of claim may not include unliquidated claims for costs like project delay, disruption, interference, design and access issues, as, according to the court, these amounts are not necessarily \u201cfor labor and materials actually provided.\u201d Critically, the court further declared that, if a verified statement of claim is found to be excessive, the statute requires the court to strip the claimant of not only its right to pursue the portion of its claim found to be excessive, but of the right to pursue any remedy for any or all of the entire<\/strong> claim amount.<\/p>\n\n\n\n

Implications of This Decision<\/h4>\n\n\n\n

The Court of Appeals has upped the statutory \u201cante\u201d\u2014sub-tiers on public projects must be more careful than ever about what amounts they include in a verified statement of claim. Until now, while an excessive claim may have resulted in loss of the ability to pursue that claim in accordance with the statute, courts stopped short of denying the claimant from pursuing the subject claim amounts, separately. With this ruling, that is exactly what claimants may expect, should they include amounts violative of the statutory prohibition on excessive claims.<\/p>\n\n\n\n

Further, this decision not only prevents claimants from including costs for things like delay and disruption in their claims, but it further militates against claimants including any amounts that are subject to dispute, even if such dispute is maintained in good faith. In practice, this will significantly narrow the extent of costs that may be included in the claim, as it is rare that a construction payment dispute does not involve finger-pointing in multiple directions.<\/p>\n\n\n\n

Moreover, many anticipate this decision\u2019s impacts will extend beyond public works projects and into private construction work. While the Court of Appeals drew distinctions between the statutory language in the Public Works Act and Colorado\u2019s General Mechanics\u2019 Lien Act (specifically noting that excessive mechanics\u2019 liens do not result in the same punishing effect the court determined for excessive public works claims, i.e., loss of all rights to seek recovery of any claim amount), much of the decision\u2019s findings find counterparts in the review of whether amounts on a private construction project are lienable. Effectively, the Court of Appeals has increased the burdens on construction professionals across the state, regardless of whether they are engaged in public or private work, to the extent they wish to use statutory mechanisms to protect themselves from\/respond to nonpayment.<\/p>\n\n\n\n

What\u2019s Next for Wadsworth<\/em>?<\/h4>\n\n\n\n

On Oct. 5, 2024, Wadsworth submitted a petition to the Colorado Supreme Court seeking a writ of certiorari<\/em> and corresponding Supreme Court review of the underlying appellate decision. Supreme Court Case No. 2024SC537. Since then, numerous organizations (including the Colorado Contractors Association, the Associated General Contractors of Colorado, the American Subcontractors Association of Colorado and the National Association of Utility Contractors of Colorado) have submitted amicus curiae<\/em> briefs in support of Wadsworth\u2019s petition.<\/p>\n\n\n\n

RRP has opposed the petition\u2014the parties await the Supreme Court\u2019s decision as to whether it will take the case. If it does not, the Court of Appeal\u2019s decision will remain (at least for now, absent legislative efforts or separate appeals of similar cases) the final word for Wadsworth and construction professionals throughout Colorado.<\/p>\n\n\n\n

\n\n\n\n

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Lance Collins and Michael Zehner | Brownstein Hyatt Farber Schreck A recent Colorado Court of Appeals sent ripples through the Colorado construction industry. In\u00a0Ralph L. Wadsworth Constr. Co., LLC v. Reg\u2019l Rail Partners et al.\u00a0the Court of Appeals interpreted Colorado\u2019s Public Works Act to not only bar\u00a0any\u00a0right of recovery for nonpayment claims to the extent… Continue reading Colorado Decision Results in Major Changes for Public and (Possibly) Private Construction Professionals<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[14],"tags":[],"class_list":["post-903724","post","type-post","status-publish","format-standard","hentry","category-construction-2","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nColorado Decision Results in Major Changes for Public and (Possibly) Private Construction Professionals - 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