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Layton Construction Co., Inc. v. Shaw Contract Flooring Services, Inc.

Court of Appeals of Colorado, Fourth Division

October 20, 2016

Layton Construction Co., Inc., a Utah corporation, Plaintiff-Appellant,
Shaw Contract Flooring Services, Inc., d/b/a Spectra Contract Flooring, a Georgia corporation, Defendant-Appellee.

         City and County of Denver District Court No. 14CV34053 Honorable Morris B. Hoffman, Judge.

          The Holt Group LLC, L. Tyrone Holt, Kevin P. Walsh, Kevin D. Poyner, Denver, Colorado, for Plaintiff-Appellant

          Hall & Evans, LLC, Darin J. Lang, Brian Molzahn, Elizabeth K. Olson, Denver, Colorado, for Defendant-Appellee


          JONES, J.

         ¶ 1 Plaintiff, Layton Construction Co., Inc. (Layton), appeals the district court's summary judgment for defendant, Shaw Contract Flooring Services, Inc. (Shaw), based on the doctrine of claim preclusion. Because we conclude that all of Layton's contentions challenging the district court's application of that doctrine are without merit, we affirm.

         I. Background

         ¶ 2 Layton was the general contractor responsible for construction of a hotel in Vail, Colorado. It hired Shaw, and many other subcontractors, to perform work on the project.

         ¶ 3 In June 2009, the property owner (referred to by the parties as BCRE) terminated its contract with Layton and, not too long thereafter, gave Layton notice of numerous construction defects in the project, a few of which related to Shaw's work. Layton sued BCRE alleging that BCRE had failed to pay for work, seeking over $27 million in damages. After BCRE asserted counterclaims against Layton for defective workmanship (seeking more than $25 million in damages), Layton added claims against various subcontractors, including Shaw.

         ¶ 4 Pursuant to an indemnification clause in the subcontract, Layton's sixth claim for relief sought indemnification from Shaw for "all damages and costs" arising from any liability it might have to BCRE.[1] In response to Shaw's interrogatory (Interrogatory 8) asking Layton to "identify all material facts upon which [Layton] based [the indemnification] claim, " Layton stated, under oath, that those facts included "Shaw's failure to provide a defense or pay Layton's costs to defend against [BCRE's] claims that relate to or arise out of Shaw's allegedly deficient or defective work." In responding to another interrogatory (Interrogatory 4) asking Layton to describe every breach of the indemnification clause, Layton specifically noted "Shaw's failure to provide a defense or pay Layton's costs." Layton's response to Interrogatory 8 expressly incorporated its response to Interrogatory 4.[2]

         ¶ 5 Layton also asserted a claim for contribution against Shaw (the seventh claim for relief), alleging that if Layton was found to be liable to BCRE for "the tortuous [sic] acts of" Shaw, Shaw should be required to contribute payment for such liability. At Layton's request, the district court dismissed that claim without prejudice in March 2011.

         ¶ 6 Later, after BCRE specifically identified Shaw's allegedly defective work (totaling about $9, 000 in value), Layton moved to voluntarily dismiss its indemnification claim against Shaw "with prejudice." Layton's motion said that the dismissal would include "those claims that have been or could have been asserted in this lawsuit." (Emphasis added.) The motion purported not to seek dismissal of "any new or future claims, " which it defined as those "that may arise or be asserted in the future in any other lawsuits or circumstances, which may be subject to the indemnification provision." The proposed order Layton submitted with its motion repeated these parameters and said that each party would bear its own attorney fees and costs. The district court did not sign Layton's proposed order, but instead entered a written order on June 6, 2011, saying only, as now relevant, that Layton's claims were dismissed with prejudice.

         ¶ 7 The case between Layton and BCRE (in which several subcontractors remained parties) continued. In July 2014, following a bench trial, the court awarded Layton just over $5 million on its claims against BCRE, which was far less than Layton had sought. The court also ruled that Layton was not liable to BCRE for defective work because BCRE had materially breached the contract by failing to give Layton contractually required notices of defective work and an opportunity to correct the work. With respect to the subcontractors remaining in the case, the court found that they were liable to Layton under the indemnification provisions in their subcontracts (which were identical to the provision in Shaw's subcontract) for the expenses (including attorney fees and costs) that Layton had incurred in defending against BCRE's claims, to the extent those expenses were attributable to work performed by each subcontractor.

         ¶ 8 Shortly thereafter, Layton filed this case against Shaw and several other subcontractors. It asserted claims against Shaw for contractual and common law indemnity and declaratory judgment seeking an award of "attorney fees, costs and expenses" it had incurred in defending against BCRE's claims in the prior case.[3] Layton asserted that it could seek indemnification from Shaw pursuant to a provision in the Construction Defect Action Reform Act (CDARA), section 13-80-104, C.R.S. 2016, which allows claims for indemnification against subcontractors to be filed within ninety days of a final judgment against a contractor. § 13-80-104(1)(b)(II), (1)(c) (indemnification claim "[s]hall be brought within ninety days after [settlement of or final judgment against the contractor in]" the construction defect claim).[4]

         ¶ 9 Shaw moved for summary judgment. It argued that Layton's indemnification claims are barred by the doctrine of claim preclusion because the court in the prior case had dismissed those claims with prejudice. The district court agreed, rejecting Layton's contrary arguments in a thorough written order.

         II. Standard of Review

         ¶ 10 Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." C.R.C.P. 56(c). We review de novo an order granting summary judgment based on claim preclusion. Loveland Essential Grp., LLC v. Grommon Farms, Inc., 2012 COA 22, ¶ 13.

         ¶ 11 To the extent Layton's contentions require us to construe CDARA, that presents a question of law that we also review de novo. Sperry v. Field, 205 P.3d 365, 367 (Colo. 2009). In interpreting a statute we strive to discern and give effect to the General Assembly's intent. Hassler v. Account Brokers of Larimer Cty., Inc., 2012 CO 24, ¶ 15. To do this, we look first to the statutory language itself; we give the words and phrases used therein their plain and ordinary meanings, and we read the language in the dual contexts of the entire statute and the comprehensive statutory scheme. Id.; Jefferson Cty. Bd. of Equalization v. Gerganoff, 241 P.3d 932, 935 (Colo. 2010); BP Am. Prod. Co. v. Patterson, 185 P.3d 811, 813 (Colo. 2008). After doing this, if we conclude that the statutory language is unambiguous we apply it as written and we do not resort to other rules of statutory construction. Reno v. Marks, 2015 CO 33, ¶ 20; Klinger v. Adams Cty. Sch. Dist. No. 50, 130 P.3d 1027, 1031 (Colo. 2006).

         III. General Law of Claim Preclusion

         ¶ 12 "Claim preclusion works to preclude the relitigation of matters that have already been decided as well as matters that could have been raised in a prior proceeding but were not." Argus Real Estate, Inc. v. E-470 Pub. Highway Auth., 109 P.3d 604, 608 (Colo. 2005); accord Lobato v. Taylor, 70 P.3d 1152, 1165 (Colo. 2003). It serves two primary purposes: protecting litigants from the burden of relitigating issues against the same party (or its privy) and promoting judicial economy by preventing needless litigation. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979); Lobato, 70 P.3d at 1165-55.

         ¶ 13 "For a claim in a second judicial proceeding to be precluded by a previous judgment, there must exist: (1) finality of the first judgment, (2) identity of subject matter, (3) identity of claims for relief, and (4) identity or privity between parties to the actions." Argus ...

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