Every state has deadlines which bar the commencement of legal proceedings after a certain period of time has elapsed. These laws are called "statutes of limitations."
The reason for these laws is to prohibit the tardy assertion of claims when exhibits, witnesses and memories are likely to be lost and therefore unavailable to the party against whom a stale claim is asserted There is a collateral benefit in permitting parties to dispose of old records and old memories and relax in the knowledge that after a certain length of time they are claim-free.
For instance, Colorado has a variety of limitations statutes. Suit deadlines are fixed for different types of claims. Claims against contractors, builders, architects, engineers and others involved in the construction industry generally must be brought within two years following discovery of the defect causing injury and not more than ten years after substantial completion of the construction.
In dealing with statutes of limitations, it is essential to determine when the statutory period starts to run. Naturally that determination will depend upon the working of the particular statute involved.
Some statutes start the commencement with the time of the act causing the injury, others at a time when either the injury or the defect causing the injury is discovered by the injured party.
Many statutes which establish discovery as the starting time provide for either actual discovery or when, in the exercise of reasonable care, the party claiming injury could have discovered the condition.
A careful analysis of Colorado's statute of limitations relating to the construction industry was made by the Colorado Supreme Court in the case of Criswell v. M.J. Brock and Sons, Inc. 681 P.2d 495 (Colo. 1984). In that case, homeowners had observed cracking in the foundation walls of their home about two years after they moved in. But they brought suit more than two years after they first noticed the cracks.
The builder argued that the claim was time-based under the Colorado two-year statute of limitations, contending that the statute began to run when the homeowners observed the cracks, more than two years before they brought the action.
However, the Supreme Court noted that the Colorado statute specifically provides that the statute of limitation begins to run on construction-related claims when the claimant "...discovers, or in the exercise of reasonable diligence, should have discovered the defect in the improvement which ultimately causes the injury, when such defect is of a substantial or significant nature...."
Observing that the homeowners saw the cracks in their foundations earlier but did not discover the defect causing the cracks until a date within the two-year statutory period, the Supreme Court ruled that the statute of limitations would not have run on their claim until they discovered the defect.
The Court declared "...the General Assembly has distinguished discovery of the defect which 'causes' the injury itself." Under this analysis, an owner aware of a defect in the construction must bring an action within the two-year statutory limitation period instead of waiting until the defect manifests itself into a physical problem.
Litigants or potential litigants should pay careful attention to statutes of limitations. They may, and frequently do, stop lawsuits cold. That could be either good or bad-depending on which side you're on!
Update Note: Effective July 1, 1986, the Colorado legislature has effectively over-ruled the Criswell decision of the Colorado Supreme Court discussed in the above Brief. Under the new statutory amendment, the statute of limitations applicable to claims against architects, engineers, contractors and other construction industry participants starts to run when physical manifestations of the defect are discovered or could reasonably have been discovered. Section 13-80-104 (l)(b), Colorado Revised Statutes (1986 Cum. Supp.).