SENATE 3rd Reading Unamended May 9, 2016 SENATE Amended 2nd Reading May 6, 2016Second Regular Session Seventieth General Assembly STATE OF COLORADO REENGROSSED This Version Includes All Amendments Adopted in the House of Introduction LLS NO. 16-0897.03 Jerry Barry x4341 SENATE BILL 16-213 SENATE SPONSORSHIP Scheffel and Ulibarri, HOUSE SPONSORSHIP Singer and DelGrosso, Senate Committees House Committees State, Veterans, & Military Affairs Appropriations A BILL FOR AN ACT Concerning developing practices for construction defect litigation, and, in connection therewith, making an appropriation. Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://www.leg.state.co.us/billsummaries.) The bill establishes a construction defect litigation study group (study group) to investigate construction defect litigation and to create a report recommending statutory changes and a pilot program within the judicial department for managing construction defect claims. The study group shall report by March 1, 2017, to the judiciary committees of the general assembly and to the chief justice. The chief justice may adopt a pilot program through a chief justice directive. If adopted: The pilot program terminates December 31, 2018, unless extended by the chief justice; and The judicial department shall contract for a study of the pilot program to be completed within 15 months after the pilot program commences and, within 14 days after receiving the report, must forward it to the chief justice and the judiciary committees of the general assembly. The bill establishes a construction defect litigation cash fund to pay expenses for the study group, and, if adopted, the pilot program and report on the pilot program. Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, add 13-20-809, 13-20-810, and 13-20-811 as follows: 13-20-809. Construction defect litigation - legislative declaration - definitions - repeal. (1) The general assembly finds that: (a) There are concerns about construction defect claims throughout the state; (b) Protecting the rights of property owners and construction professionals, while at the same time making construction defect claims time- and cost-effective, is of paramount concern; (c) Recognizing the building industry as an important element of the state's growth while protecting property owners is an important concern of the general assembly; (d) Creation of a construction defect litigation study group may assist in resolving those claims quickly and at a lower cost to the litigants and the courts; and (e) The construction defect litigation study group shall investigate and may recommend statutory changes and a construction defect litigation pilot program that would result in a more time- and cost-effective means of handling construction defect claims. (2) Therefore, the general assembly declares that: (a) Issues concerning construction defect litigation are matters of mixed local and statewide concern; and (b) The establishment of the construction defect litigation study group in section 13-20-810 is necessary to provide recommendations for statutory changes and for a pilot program to provide a more time- and cost-efficient method of handling construction defect claims. (3) As used in this section and in sections 13-20-810 and 13-20-811, unless the context otherwise requires, "construction defect litigation" means a civil action for damages, indemnity, or contribution brought against a construction professional to assert a claim, counterclaim, cross-claim, or third-party claim for damages or loss to, or the loss of use of, real or personal property or personal injury caused by a defect in the design or construction of an improvement to real property. (4) This section is repealed, effective July 1, 2020. 13-20-810. Construction defect litigation study group - report - pilot program - repeal. (1) (a) There is established in the judicial department the construction defect litigation study group, referred to in this section as the "study group", to consider, study, research, and recommend procedures for potential use in construction defect litigation in district courts. (b) The following persons shall appoint members of the study group as follows: (I) The president of the senate shall appoint an attorney with experience representing construction professionals; (II) The speaker of the house of representatives shall appoint an attorney with experience representing plaintiffs in construction defect litigation; (III) The minority leader of the senate shall appoint an attorney with experience representing companies that provide insurance to construction professionals; (IV) The minority leader of the house of representatives shall appoint an attorney representing homeowners' associations or other multiple-owner entities in construction defect litigation; (V) The governor shall appoint: (A) An attorney with experience representing owners of single-family homes in construction litigation; (B) An attorney with experience providing insurance coverage to construction professionals; and (C) A representative of a trade organization of construction professionals; and (VI) The chief justice of the Colorado supreme court shall appoint three district court judges with experience presiding over construction defect litigation. (c) Members of the study group serve without compensation but may be reimbursed for expenses incurred out of the construction defect litigation cash fund created pursuant to section 13-20-811 (3). (d) Each appointing authority described in paragraph (b) of this subsection (1) shall make his or her appointments to the study group within sixty days after the effective date of this section. The chief justice shall select one of the district court judges appointed pursuant to subparagraph (VI) of paragraph (b) of this subsection (1) to serve as the chair of the study group. The chair of the study group shall convene the first meeting of the study group within ninety days after the effective date of this section. (e) The chief justice shall designate an individual to staff the study group, and the judicial department will provide staff assistance to the study group. (f) The study group shall investigate and may recommend procedures for conducting district court construction defect litigation limited to: (I) Recommendations for the establishment of a construction defect litigation pilot program, including changes to or new court rules and specialized case management orders for use in the pilot program, if the study group determines a pilot program is desirable; (II) Options and alternatives for discovery and preliminary issues; (III) Appropriate filing fees in construction defect litigation; and (IV) Statutory changes to provide a more time- and cost-efficient method of handling construction defect claims. (g) (I) On or before March 1, 2017, the study group shall submit a written report to the chief justice and to the judiciary committees of the senate and house of representatives, or any successor committees. If the study group cannot complete its report by March 1, 2017, the chief justice may grant the study group an extension of time. (II) The report may include recommendations for a construction defect pilot program, options and alternatives for discovery and preliminary issues, appropriate filing fees, and statutory changes for construction defect litigation. (2) The chief justice shall implement, to the extent possible, the recommendations of the study group. The chief justice shall determine by April 15, 2017, whether to adopt a pilot program through a chief justice directive, either as proposed by the study group or as modified by the chief justice. The chief justice may extend this deadline. (3) This section is repealed, effective July 1, 2018. 13-20-811. Construction defect litigation pilot program - creation - fund - notice to the revisor of statutes - repeal. (1) On or before May 10, 2017, the chief justice of the Colorado supreme court may establish through a chief justice directive a construction defect litigation pilot program in one or more judicial districts in the state, referred to in this section as the "pilot program"; except that the chief justice may extend the date for the adoption of the pilot program. The pilot program expires on December 31, 2018, unless extended by the chief justice. (2) If a pilot program is established pursuant to subsection (1) of this section, the judicial department shall contract for a study of the pilot program to be completed within fifteen months after the pilot program commences. The study must include a written report that must include an evaluation of the success of the pilot program as measured by the satisfaction of judges, attorneys, and litigants and may recommend changes to the pilot program or statutes. On or before fourteen days after receipt of the report, the judicial department shall forward the report to the chief justice and the judiciary committees of the senate and house of representatives, or any successor committees. The study must be paid for out of the construction defect litigation cash fund created pursuant to subsection (3) of this section. (3) (a) The construction defect litigation cash fund, referred to in this section as the "fund", is created in the state treasury. The fund consists of money that the general assembly may appropriate or transfer to the fund and any gifts, grants, or donations received by the judicial department to conduct the pilot program. (b) The state treasurer shall credit all interest and income derived from the deposit and investment of money in the fund to the fund. Money in the fund is continuously appropriated to the judicial department to pay expenses related to the pilot program. (4) This section is repealed, effective July 1, 2020. SECTION 2. Appropriation. For the 2016-17 state fiscal year, $79,368 is appropriated to the construction defect litigation cash fund created in section 13-20-811 (3) (a), C.R.S. This appropriation is from the general fund. The judicial department is responsible for the accounting related to this appropriation. SECTION 3. Safety clause. The general assembly hereby finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, and safety.