Rippy faces strong foe on construction bill | AspenTimes.com
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Rippy faces strong foe on construction bill

Allyn Harvey
Aspen Times Staff Writer

Glenwood Springs Republican Greg Rippy may well have unleashed a force like none he’s ever faced.

Freda Poundstone, a Denver-area resident who has successfully convinced voters to pass three constitutional amendments, plans to lead the effort to roll back Rippy’s construction defects law that he wrote and ushered through the Legislature. Gov. Bill Owens signed the bill in late April.

Poundstone will be helped by Scott Sullan, a Denver lawyer who represents residential and commercial property owners when they sue contractors and other construction firms.

“We have homeowner associations waiting to get involved from heavily Republican districts,” Poundstone said. “They’re ready to undo what the people who are supposed to be representing them have done to them.”

What Rippy, along with most of the Republicans and a few Democrats in the Legislature, have “done” is pass a law that sharply limits the ability of property owners – both commercial and residential – to recover damages from unscrupulous or careless contractors or other so-called construction professionals.

On May 8, Poundstone and Sullan are scheduled to go before the state agency charged with helping citizens and legislators with drafting laws and initiatives and begin work on a title for their proposed initiative. Once a title is selected, amendment supporters will have six months to collect 67,500 signatures.

If they are successful, the proposed amendment, which will bar the Legislature from limiting property owners’ rights to sue for damages, will appear on the statewide ballot in November 2004.

Poundstone first entered the political scene here in the early 1970s, leading the effort to pass a constitutional amendment that limits the ability of cities and towns to annex surrounding, unincorporated areas. She helped pass another annexation initiative in the early 1980s and then led the citizen’s initiative to allow casino gambling in certain areas of the state.

“I’ll fight this one because it affects every homeowner, or anyone who ever contracts to have work done on their property,” she said yesterday.

Rippy did not return a message left on his cell phone seeking comment.

The Rippy law shifts the burden of proof away from the construction professionals – everyone from drywallers and electricians all the way up to architects, engineers and the prime contractor – and onto the victim of that professional’s shoddy workmanship, according to Sullan and others opposed to the law.

Under the old law, property owners had the same legal rights and alternatives as any other consumer. If, for instance, a foundation began to crack, the owner could attempt to negotiate a repair plan with the builder or, if that failed, sue for damages in court. The decision on whether to negotiate and when to sue belonged to the property owner.

Under Rippy’s law, property owners no longer have that freedom. Instead, the property owner is now required to list the defects and give the responsible construction professional the opportunity to either fix the problems or offer a monetary settlement. If an agreement can’t be reached, the property owner can then sue, but the Rippy law sharply limits what can be recovered to “actual damages.”

The cost of repairing the crack in the foundation is covered as actual damages, but no more. The Rippy law exempts the builder from having to replace the foundation or pay extra damages, as the previous law allowed, to cover future expenses for damage related to a defective foundation.

The law “eliminates recovery for `probable damage’ arising from violation of the building code. Now you have to let the building burn down before you can replace the faulty wiring,” attorney Sullan writes in a memo he’s prepared for the May 8 hearing.

The law also defines actual damages in the builder’s favor. Under the old law, damages were defined simply as the cost of repair. Under the new law, actual damages are defined as the fair market value of the property without the defects, replacement cost, or cost of repair, whichever is less.

“`Replacement cost,'” Sullan writes, “will almost always be estimated by the builder at his own cut rate pricing,” Sullan writes.

“This will be used to drive the homeowner’s legitimate damages claims down to what the builder defendant could `replace’ the home for – a number the homeowner could never actually replace the home for since he or she cannot hire the builder they have sued to build them a new home at cost,” the memo continues.

Sullan points out that the Rippy law’s definition of `actual damages’ presents numerous problems for property owners, but especially for condominium and townhome owners.

Writes Sullan: “Condominium Homeowner Associations own the `common elements’ which are typically comprised of the foundation and all other structural and exterior sheathing elements of the buildings (roofs, siding, windows, etc.).

“These common elements have no fair market value – they cannot be sold by the homeowners’ association,” the memo continues. “Because the common elements will always have a `fair market value’ of zero, shoddy builders will argue that homeowners’ associations should recover nothing even if the cost of repair is in the millions of dollars.”

Governments are similarly affected. The law “arguably precludes recovery where the property has no fair market value (for example a bridge or telephone pole),” Sullan writes in his memo.

Most of the press reports on the Rippy law, beginning back when it was first proposed, have focused on the impacts on homeowners. But Sullan points out that commercial property owners have lost even more protections.

“Residential property owners got the shaft, but commercial property owners really got the shaft – and they haven’t waken up to it yet,” Sullan said in an interview.

For instance, residential property owners are allowed to seek coverage of their attorney fees as part of their lawsuit, while commercial property owners are not, if Sullan’s interpretation is correct.

And while residents of a house or condo can be compensated for the cost of relocation and other costs associated with loss of use, retailers, accountants, florists and any other businesses affected by a construction defect will not be able to recover lost income while they are out of business, according to the language in the law.

The law also limits the punitive damages a victim or their family can recover in the event of injury or death resulting from shoddy work to $250,000. And it bars juries from awarding treble damages, as previously allowed by Colorado’s Consumer Protection Act, in personal injury cases.

In interviews for previously published stories, Rippy has said he is simply attempting to protect builders from unscrupulous lawyers who sue over minor issues that don’t actually affect the soundness of the structure.

And he has pointed out that there are many small contractors and subcontractors who can’t get insurance at all, because insurers are reluctant to back them.

Sullan agrees something was needed. And, he points out, attorneys like him have backed legislation in the past that have protected builders from aggressive lawyering. But he believes the Rippy law goes too far.

“I’ve heard from a lot of folks who are outraged,” he said.

[Allyn Harvey’s e-mail address is aharvey@aspentimes.com]


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