The Colorado Supreme Court recently issued a landmark ruling in the long-running dispute involving Ralph L. Wadsworth Construction Co. LLC and the RTD’s North Metro Rail Line. While many in the industry viewed this as a final victory, the legal reality is more nuanced: the high court has remanded the case back to the Court of Appeals, leaving the final monetary outcome unresolved but providing a critical new blueprint for how subcontractors must handle disputed costs.
For years, the construction industry operated under the fear that a single contested line item could “poison the well” of an entire payment demand. This ruling clarifies the stakes of the Colorado Public Works Act (PWA), specifically regarding how delay damages and “excessive” claims impact a contractor’s right to get paid.
The $5.7 Million Legal Pivot
The case originated from Wadsworth’s work on the $343 million North Metro Rail project. After Wadsworth filed verified statements of claim for significant cost overruns, the Court of Appeals initially wiped out their entire $5.7 million award. The appellate court’s logic was severe: by including unliquidated delay damages in their PWA claim, Wadsworth had supposedly forfeited their right to any recovery at all.
The Supreme Court stepped in to correct this “all-or-nothing” interpretation. The justices ruled that a subcontractor does not automatically lose all compensation rights just by attempting to recover disputed amounts for disruption. However—and this is the crucial distinction—the court maintained that knowingly filing an excessive claim still carries the ultimate penalty: the total forfeiture of all statutory remedies under the PWA.
The New Standard: “Used in the Prosecution of the Work”
One of the most significant aspects of the ruling is the Court’s focus on statutory language. Moving away from broader definitions, the court reinforced that for a cost to be recoverable under a verified statement of claim, it must involve labor, materials, or assets “used in the prosecution of the work.”
This distinction creates a high bar for what can be included in a statutory lien claim versus a general breach-of-contract claim. For businesses managing multimillion-dollar public projects, staying current on Colorado construction litigation updates is critical. You need to make sure verified statements of claim don’t inadvertently cross statutory boundaries.
Recoverability Under the Public Works Act
| Cost Category | Status | Legal Justification |
| Labor & Materials | Allowable | Directly used in the prosecution of the project. |
| Rental Machinery | Allowable | Tangible resources physically utilized on-site. |
| Good-Faith Delay Costs | Allowable | Recoverable if they represent actual resources used during the delay. |
| Excessive/Bad-Faith Claims | Forfeited | A knowing, excessive claim forfeits ALL statutory PWA remedies. |
| Lost Profits | Non-allowable | Speculative financial damages; not “used in the prosecution of the work.” |
| Idle Time | Non-allowable | Generally excluded if no active labor or machinery utilization occurred. |
The “Death Penalty” for Excessive Claims
Subcontractors must tread carefully. While the Supreme Court provided a “safety net” for honest disputes over unliquidated damages, it did not grant a license to overreach.
Critical Warning: If a court determines that a claimant knowingly filed an excessive claim under C.R.S. § 38-26-110, the claimant forfeits all statutory rights and remedies under the Public Works Act. This serves as a statutory “kill switch,” meaning the contractor loses the right to pursue their PWA lien remedies for the entire claim—even the valid, undisputed portions for labor and materials.
However, this forfeiture applies strictly to the contractor’s statutory PWA protections. The underlying base claim is not entirely lost, as the contractor retains the right to pursue a traditional breach of contract claim or other common-law remedies in court.
The statutory forfeiture provision functions as a binary switch. If a claim is overstated in good faith but later found to be incorrect at trial, no forfeiture occurs at all. If the elements of statutory excessiveness are not proven, the contractor forfeits nothing; the court simply reduces the final damages award to the correct amount. Total statutory forfeiture is triggered only when a claimant acts in bad faith by knowingly filing for more than what is due.
See also: Why Small Business Owners Benefit From Advisory Services
Strategic Defense and Claim Preservation
In a 2026 economic landscape where specialized trades face rising insurance costs and shifting liability laws, precision in accounting is no longer optional. To protect your claims during this period of “remanded uncertainty,” consider these tactics:
- Strict Alignment with Statutory Language: Ensure all verified statements of claim only include items “used in the prosecution of the work.” Avoid including anticipated profits or purely economic losses.
- Segment Your Claims: Clearly distinguish between statutory PWA claims (for labor/materials) and general contract claims for monetary relief. If the PWA claim fails due to a technicality, your general contractual rights may still remain intact.
- Pre-Filing Forensic Audits: Before filing a verified statement, conduct an audit to scrub any “idle time” or speculative damages. Because an “overage” that triggers a “knowing” overage triggers total forfeiture, the “guess and check” billing method is now a liability.
- Document the “Use”: Maintain time-stamped logs that prove exactly how equipment and labor were utilized during delay periods to meet the “prosecution of work” standard.
The Path Forward
The Wadsworth decision hasn’t ended the fight for the $5.7 million, but it has changed the rules of engagement. Project owners can no longer dismiss an entire claim based on a good-faith dispute over delay damages, but subcontractors must be more disciplined than ever.
By separating recoverable “prosecution of work” costs from non-allowable speculative damages, construction leaders can navigate the PWA without risking the total forfeiture of their hard-earned revenue.
