Background
After two summer hailstorms damaged Mesa Ridge High School in the Widefield School District, the district and its self-insurance pool (SIP) engaged Rocky Mountain Construction Company (RMCC) to perform mitigation and repair work beginning in September 2018. RMCC submitted three estimates covering three phases of work, totaling $3,929,710.12, to be paid through progress payments as work was completed. The estimates spanned 498 pages and itemized 4,295 line items across more than 150 areas of the school.
During the second phase, the SIP’s claims adjuster requested documentation substantiating RMCC’s costs for materials, but RMCC’s CEO refused to provide it, insisting the estimates were sufficient. The SIP paused payments in January 2020, after having already paid $3,278,643.12. The school district and SIP then retained an independent consultant, whose April 2020 report found that RMCC had billed $846,318.88 for work never performed — primarily by listing rooms with drywall ceilings, which required no work, as rooms with drop ceilings, which required extensive repairs.
The school district and SIP filed suit in February 2023, alleging breach of contract. RMCC moved for summary judgment on statute of limitations grounds, arguing the three-year limitations period began when the estimates were provided and the breach should have been discoverable. The district court denied that motion, finding the accrual date was a disputed factual question. After a five-day trial, the jury found a contract existed, that RMCC breached it, and that RMCC failed to prove its statute of limitations defense. The court entered judgment for plaintiffs in the amount of $846,318.88. RMCC appealed the denial of its directed verdict motion and post-trial motion for judgment notwithstanding the verdict (JNOV).
The Court’s Holding
The Colorado Court of Appeals affirmed the judgment in full. On the contract existence issue, the court held that the district court properly denied RMCC’s directed verdict motion because substantial evidence supported the jury’s finding that a contract was formed — including evidence of RMCC’s exclusive engagement by the school district, mutual authorization and approval of work, progress payments totaling over $3.2 million, and a signed document memorializing the project scope. The court emphasized that where evidence is conflicting or subject to more than one inference, contract formation is a question for the jury.
On the statute of limitations, the court held that the accrual date was likewise a factual question properly left to the jury. Under Colorado law, a breach of contract claim accrues when the breach is discovered or should have been discovered through reasonable diligence. The court found sufficient evidence to support the jury’s rejection of RMCC’s limitations defense: the school district and SIP oversaw storm damage at more than twenty buildings, the estimates were voluminous and complex, RMCC refused to provide cost documentation, and both the operations manager and claims adjuster testified they first learned of potential overbilling only upon receiving the consultant’s April 2020 report. Because the evidence supported more than one reasonable inference about when the breach should have been discovered, the accrual date could not be resolved as a matter of law.
The court rejected RMCC’s attempt to recharacterize the limitations question as purely legal, reiterating that only in the clearest cases — where material facts are undisputed and reasonable minds could not disagree — should accrual date be taken from the jury. This was not such a case.
Key Takeaways
- Under Colorado’s discovery rule for breach of contract (§ 13-80-108(6)), the three-year limitations period begins when the breach is discovered or reasonably should have been discovered — and that accrual date is ordinarily a jury question unless the underlying facts are wholly undisputed.
- A contractor’s refusal to provide cost documentation, combined with the complexity and volume of project estimates, can support a jury finding that the owner exercised reasonable diligence even without independently auditing each line item during construction.
- Evidence sufficient to raise a jury question on contract formation — offers, authorizations, progress payments, and a signed scope document — will defeat a directed verdict motion even where the precise contract type (fixed-price vs. time-and-materials) remains unclear.
- An owner’s hiring of an independent consultant upon discovering irregularities, rather than immediately filing suit, does not necessarily trigger the limitations period where the parties remained in active dispute over whether overbilling occurred.
Why It Matters
This decision reinforces that Colorado courts will rarely take statute of limitations accrual questions away from juries in construction overbilling disputes, particularly where the plaintiffs lacked practical capacity to audit complex, multi-phase estimates in real time and the contractor itself obstructed verification by refusing to produce cost records. Owners and insurers who rely on contractors to bill accurately — rather than independently auditing every line item — can point to this case when facing limitations arguments premised on constructive discovery.
For contractors, the decision is a cautionary reminder that refusing to substantiate billing with documentation may ultimately undermine a limitations defense: the CEO’s repeated refusals to provide cost records figured directly into the court’s analysis of when the breach reasonably should have been discovered. The $846,318.88 judgment, affirmed unanimously, reflects the jury’s authority to weigh credibility and draw inferences from both sides’ conduct throughout the project.