Written By Jean Meyer
On March 1, 2021, Governor Greg Gianforte signed into law Senate Bill 112 (the “Bill”) providing an amendment of M.C.A. § 30-14-133 and 70-19-427. Senate Bill 112 is significant for Montana construction defect litigants in that it materially constricts the scope of relief available to construction defect claimants. Namely, Senate Bill 112 forecloses the ability of Montana litigants to simultaneously assert construction defect claims under M.C.A. § 70-19-427 and Consumer Protection Act claims under M.C.A. § 30-14-133.
Senate Bill 112 forces litigants to elect prior to ever filing suit whether to assert a Consumer Protection Act claim or a construction defect claim. In a Montana House Floor Session occurring February 12, 2021, Republican Senator Ed Buttrey argued that the Bill was intended to prevent litigants from “double-dipp[ing]” on their claimed damages by seeking damages under both M.C.A. § 70-19-427 and M.C.A. § 30-14-133.” Senator Buttrey further argued that the Bill will “reduce litigation, related costs, and prevent contractors from being forced to settle because of the threat of a large judgment under the Consumer Protection Act.”[1]
Democratic Senator Andrea Olsen argued against the Bill noting that “that there really is no ability for anyone to ‘double dip’[as argued by Senator Buttrey].” Senator Olsen argued that litigants may permissibly assert alternative claims for relief, that may be developed during the course of litigation depending on the facts developed through discovery. Senator Olsen added that the Bill unfortunately deprives litigants from asserting alternative claims for relief.
A thorough reading of the Bill suggests, however, that both Senators Buttrey and Olsen misapprehended the real significance of the Bill as noted by Democratic Senator Robert Farris-Olsen.
Specifically, the Bill should neither be interpreted as preventing a claimant from “double dipping” on damages nor should it be interpreted as preventing alternative claims from relief. The reason being, Consumer Protection Act claims, and construction defect claims address different wrongful conduct providing for different damages.
That is to say, the facts giving rise to a Consumer Protection Act claim and damages resulting therefrom are inherently different from the facts giving rise to a construction defect claim. This reality was highlighted by Senator Farris-Olsen in his argument against the Bill when he noted a homeowner claimant may have multiple different claims and damages against a contractor concerning deceptive representations in addition to discrete claims concerning actual defects in the construction.
With the Bill going into effect on October 1, 2021, it is important to appreciate its consequences, some of which are highlighted below.
First, prospective litigants contemplating Consumer Protection Act and construction defect claims should assert their claims before October 1, 2021.
Second, as described above, after October 1, 2021, Claimants seeking to assert Consumer Protection Act claims and construction defect claims must elect their remedies prior to ever filing suit.
Third, it is unclear whether the Bill will actually achieve the stated legislative intent of seeking to reduce litigation. Considering the revisions to M.C.A. § 70-19-427 that “[a]ssertion of a claim under this section precludes a claimant from bringing or maintaining an action under 30-14-133,” prospective litigants could theoretically first assert a Consumer Protection Act claim, settle that claim, or secure a judgment, and then subsequently assert a construction defect claim, assuming the defect claim is still viable under the statute of limitations. Should this prove to be a successful litigation strategy for prospective claimants, the end result of Senate Bill 112 is that it may deliver the exact opposite outcome the Montana Legislature sought in enacting the Bill – more litigation, not less.
Considering the above, construction professionals defending against Consumer Protection Act claims should absolutely secure a release of construction defect claims in any Consumer Protection Act case, in the event of settlement, so as to protect against a series of lawsuits from homeowners.
Lastly, Senate Bill 112 may well be subject to legal and lobbying attacks in the future. The longevity of Senate Bill 112 will be evaluated in a future blog post.
For additional information concerning Senate Bill 112 or about construction defect litigation in Montana, generally, you may reach Jean Meyer by telephone at (406) 219-8422 or by e-mail at meyer@meyerconstructionlaw.com
[1] http://sg001-harmony.sliq.net/00309/Harmony/en/PowerBrowser/PowerBrowserV2/20170221/-1/41056?agendaId=227766