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Curry v. Zag Built LLC

Court of Appeals of Colorado, Seventh Division

May 3, 2018

Brock Curry and Lora Curry, Plaintiffs-Appellees,
Zag Built LLC and Mike Zagrzebski, Defendants-Appellants.

          Mesa County District Court No. 15CV30428 Honorable Gretchen B. Larson, Judge

          Hall & Evans, L.L.C., Todd H. Fleckenstein, Matthew J. Hegarty, Michael A. Paul, Denver, Colorado, for Plaintiffs-Appellees

          Wegener, Scarborough, Younge & Hockensmith, LLP, Benjamin M. Wegener, Grand Junction, Colorado, for Defendants-Appellants


          BERNARD, JUDGE.

         ¶ 1 This appeal presents us with two inquiries.

         ¶ 2 The first inquiry requires us to figure out how we should apply C.R.C.P. 4(m), which has only been in effect for about five years. It states as follows:

If a defendant is not served within 63 days (nine weeks) after the complaint is filed, the court--on motion or on its own after notice to the plaintiff--shall dismiss the action without prejudice against that defendant or order that service be made within a specified time. But if the plaintiff shows good cause for the failure, the court shall extend the time for service for an appropriate period.


         ¶ 3 Does this Rule automatically require a trial court to dismiss a case if a plaintiff does not serve a defendant within sixty-three days of when the plaintiff filed the complaint and the plaintiff has not shown good cause to explain the lack of service? We answer this question "no." Instead, applying the plain language of Rule 4(m), we conclude that a court has two options if a plaintiff has not served a defendant and the plaintiff has not explained the lack of service by demonstrating good cause: the court may dismiss the case without prejudice or it may order that the plaintiff serve the defendant within a specified time.

         ¶ 4 The second inquiry involves the Construction Defect Action Reform Act, sections 13-20-801 to -808, C.R.S. 2017. (When we discuss this statute generally, we will simply refer to it as the Act.) Section 13-20-805, C.R.S. 2017, concerns tolling of statutes of limitation and states as follows:

If a notice of claim is sent to a construction professional in accordance with section 13-20-803.5 within the time prescribed for the filing of an action under any applicable statute of limitations or repose, then the statute of limitations or repose is tolled until sixty days after the completion of the notice of claim process described in section 13-20-803.5

         ¶ 5 Section 13-20-803.5, C.R.S. 2017, describes the notice-of-claim process. Does section 805 mean that a plaintiff has to complete the notice-of-claim process described in subsection 803.5 before filing a claim? We answer this question "no." In section 13-20-803.5(9), the Act contemplates the situation in which a plaintiff may file a claim in court before sending a notice of claim to a prospective defendant. Subsection 803.5(9) states that "[a]ny action commenced by a claimant who fails to comply with the requirements of this section shall be stayed, which stay shall remain in effect until the claimant has complied with the requirements of this section."

         ¶ 6 When does a case commence for the purposes of subsection 803.5(9)? We conclude that a case generally commences when a plaintiff files its complaints in court.

         ¶ 7 Beginning the narrative of this case, these two inquiries arose in a lawsuit that involved the Act. In 2013, defendants Zag Built LLC and its owner, Mike Zagrzebski, to whom we will refer collectively as Zag Built, built a house for Brock Curry and Lora Curry, to whom we will refer as the Currys. Shortly after the Currys moved into the house in July 2013, they started noticing signs of damage, such as cracks in the drywall and "racked, " or sagging, doors. They filed a complaint, which named Zag Built and some others as defendants and which cited the Act, in late June 2015. (The other defendants are not parties to this appeal.)

         ¶ 8 Zag Built submits that (1) the Currys' claim accrued, at the latest, in early January 2014; (2) section 13-80-104(1)(a), C.R.S. 2017, states that claims under the Act are subject to the statute of limitations found in section 13-80-102, C.R.S. 2017; and (3) under section 13-80-102, the appropriate statute of limitations for this case was, therefore, two years. We will assume, for the purposes of our discussion, that the Currys' claim accrued in early January 2014.

         ¶ 9 Late June 2015 is obviously within the two-year window of the pertinent statute of limitations. So what is the problem, according to Zag Built? Zag Built submits that the Currys' filing of a complaint in late June 2015 was a nullity because the Currys did not serve Zag Built with process within sixty-three days of late June 2015. According to Zag Built, the trial court therefore should have, right then and there, dismissed the case without prejudice. Even though the court did not do so, it is Zag Built's position that the late June 2015 complaint had not commenced the case for purposes of subsection 803.5(9); in other words, there was no case in late June 2015.

         ¶ 10 According to Zag Built, the Currys did not take any action to commence the case until they filed an amended complaint in mid-May 2016, which was obviously more than two years after the early January 2014 date on which the claim accrued. The trial court should therefore have dismissed the case with prejudice, Zag built says, because the Currys' claim was, by then, barred by the statute of limitations.

         ¶ 11 Zag Built raised these points in the trial court, via a motion for summary judgment and in a petition for C.A.R. 4.2 review that it filed in the trial court. The court disagreed with Zag Built's position.

         ¶ 12 We granted the Zag Built's petition under C.A.R. 4.2 for interlocutory review of the trial court's order. We now affirm because we disagree with Zag Built's contentions.

         I. Background and Procedural History

         ¶ 13 Taking up our narrative again, the Currys filed a document that they described as a "status report" in mid-September 2015. The report stated that

. they had filed their complaint "in order to preserve the applicable statute of limitations";
. the claims raised in the complaint "likely f[e]ll under" the Act, which required them "to engage in [a] [n]otice of [c]laim process";
. they had retained an expert to review the alleged defects, and they were "attempting to coordinate with [Zag Built] with regard to the [n]otice of [c]laim and related inspection process"; and
. they asked the court for "an additional 120 days to engage in and complete the [n]otice of [c]laim process, before [requiring them] . . . to effectuate service of process" on Zag Built.

         ¶ 14 Not having heard from the trial court, the Currys did not file anything else until the beginning of March 2016. (The time between mid-September and the beginning of March was obviously more than 120 days.) They then submitted an update to the status report; they had not filed anything else after they had filed the status report in September. They reported that their expert had "complete[d] the inspection and review process, " and they attached a copy of the expert's report.

         ¶ 15 The update also stated that they would continue pursuing a "notice of claim" process. But, they added, if that process proved to be futile, they would, within ninety days, "proceed forthwith with formal service upon defendants, and proceed with litigation of this matter" within ninety days.

         ¶ 16 The trial court did not do anything in response to either the status report or the update.

         ¶ 17 In mid-May 2016, the Currys filed a second update. They informed the court that they had sent out notices of claim, but that Zag Built had not "requested to perform an inspection of the subject property."

         ¶ 18 They filed an amended complaint at the same time. They said that they would serve it on Zag Built "in the very near future."

         ¶ 19 They served Zag Built in late May. (We note that the return of service is not in the appellate record, but Zag Built admits that it was served.)

         ¶ 20 In early July 2017, Zag Built filed a motion for summary judgment. It contended that the trial court should dismiss the case for two reasons.

1. Citing Rule 4(m), Zag Built asserted that the Currys had not served it within sixty-three days of when they had filed the original complaint. And the Currys had not shown that there was good cause to allow them to serve Zag Built more than sixty-three days after they had filed the complaint.
2. The statute of limitations had already run because the Currys had not complied with the Act's notice-of-claim procedures for more than two years after their claim against Zag Built had accrued.

         ¶ 21 The trial court denied the motion. It decided that

. a provision of the Act automatically stayed the case when the Currys filed their original complaint toward the end of June 2015;
. this statutory stay lasted until mid-April 2016;
. "the necessity of complying with [the Act] would have constituted good cause for an extension of time under which to serve defendant pursuant" to ...

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