Supreme Court of Colorado

Case no.: 24SC537
Date filed: April 6, 2026

The Colorado Supreme Court has ruled that a “verified statement of claim” under the state Public Works Act may include disputed or unliquidated delay damages. The costs claimed, however, must relate to the performance of the construction work. They may not include purely consequential damages, such as lost profit.

The Regional Transportation District contracted with Regional Rail Partners to design and construct a light rail public works project between Thornton and Denver’s Union Station. Regional Rail Partners, which consisted primarily of Balfour Beatty Infrastructure Inc. and Graham Contracting Ltd., subcontracted a portion of the construction work to Ralph L. Wadsworth Construction Co. Inc.

The project experienced a number of delays and disruptions, which extended Wadsworth’s performance period and increased its cost of construction. Wadsworth asserted its rights under the Colorado Public Works Act.

The Public Works Act, Sections 38-26-101 to 110, C.R.S., is intended to provide payment security for contractors and subcontractors on public works projects, which are not subject to mechanic’s liens. The act tracks the language of the state lien statute in protecting a party “that has furnished labor, materials, sustenance, or other supplies used or consumed by a contractor or his or her subcontractor in or about the performance of the work contracted to be done or that supplies laborers, rental machinery, tools, or equipment to the extent used in the prosecution of the work.”

A section of the statute requires a claimant to submit a verified statement of claim to the public project owner. This statement essentially creates a lien against the undisbursed project funds. If the statement knowingly includes amounts not currently due, however, the statement is considered excessive and the claimant loses its rights under the Act.

Wadsworth submitted a verified statement of claim for approximately $12.8 million. The statement was supported by a report prepared by an expert, not identified in the court opinion. The majority of the claim consisted of increased costs caused by delay and disruption to the construction performance.

Regional Rail Partners argued the Public Works Act claim should be dismissed because the verified statement was excessive—Wadsworth had knowingly included delay damages, which were “unliquidated or disputed.” The Denver District Court refused to dismiss the claim and awarded Wadsworth over $3.7 million in damages, including delay and disruption costs.

The Colorado Court of Appeals reversed the trial court award, ruling that Wadsworth had knowingly included impermissible cost items in its verified statement of claim. Based on the expert’s report, the appellate court believed Wadsworth had expanded its claim to include not only labor and materials but also costs for disputed delays and charges, such as lost profit and extended time. These contested or unliquidated items rendered the verified statement excessive. Wadsworth appealed.

The Supreme Court of Colorado began by rejecting the argument that the Public Works Act prohibits inclusion of disputed or unliquidated amounts in the verified statement of claim. The purpose of the act, like the mechanic’s lien statutes, is remedial. It protects the payment rights of parties furnishing labor or equipment to public works projects. Nothing in the act expressly prohibits the inclusion of disputed amounts.

“Nowhere … does the statutory language prohibit a claimant from including disputed or unliquidated amounts in a verified statement of claim. Nor do we perceive any inconsistency in recognizing that an amount may be disputed or not yet determined and still have a reasonable possibility of being due.”

The court said the key question was whether the amounts claimed constituted labor or materials furnished to the public works project; in short, can “delay damages” be considered such costs? The court answered in the affirmative. Delay damages are frequently the increased cost of labor or materials caused by delay or disruption to the work.

“[D]elay and disruption damages may be included as long as they constitute claims for labor, materials, sustenance, rental machinery, tools, equipment, or other supplies used or consumed by a contractor or subcontractor in the performance or prosecution of the constructed work.”

The court clarified that because the Public Works Act applies to labor and materials, a verified statement of claim may not include “purely consequential” damages caused by delay or disruption, such as lost profit or idle time. The expert report submitted by Wadsworth had not been helpful in this regard, as it was not always clear regarding the calculation of claimed amounts. Yet there was nothing that expressly included such damages.

“The trial court … reviewed Wadsworth’s verified statement of claim and found that there was a reasonable possibility that the amount sought was due under the statute…. Because we cannot say that the trial court’s finding in this regard was unsupported by evidence in the record, we must defer to it…. We further conclude that the [Court of Appeals] erred in finding that Wadsworth’s verified statement of claim was excessive as a matter of law.”

When interpreting and applying public works payment statutes, it is common for courts to look to precedent regarding the state mechanic’s lien statutes. Both serve a similar purpose and the lien laws have been on the books much longer, resulting in a body of appellate precedent.

The court’s concern regarding the expert report is instructive. Actual delay and disruption costs can and should be distinguished from purely consequential damages. If the latter are impermissible in a particular situation, it should be clearly stated that they have been excluded.

Participants:
For Ralph L. Wadsworth Construction: Giovanni M. Ruscitti, Boulder, Colorado
For Regional Rail Partners: Sean Connelly, Denver, Colorado

Before: Judges Gabriel, Marquez, Boatright, Hood, Samour, Berkenkotter, and Blanco

Opinion by: Judge Gabriel

Outcome: Judgment of intermediate appellate court reversed

Source: Please click here to read the complete opinion.