Is it Applicable to Contract Claims and Post-Construction Services?
James McLaughlin, Associate, Smith, Currie & Hancock LLP
Contractors and design professionals face a unique level of exposure for lawsuits over their work compared to other professionals. With the growing complexity of construction projects, the longevity of buildings, and the increasing inclination for plaintiffs to file lawsuits over construction defects years down the road, one might ask when exposure for a completed project really ends. Many states have addressed this problem by enacting statutes of repose specifically dealing with claims arising from the construction or design of real property.
A statute of repose is a law that fixes an absolute deadline for bringing a lawsuit running from the date of a particular event, regardless of when a legal injury accrues. In many states, the time period to bring a claim arising from the construction or design of real property ranges somewhere from 5 years to 15 years, with the clock to file a lawsuit beginning to run from the date of substantial completion of the project, the time of completion, the time of occupancy, or some other fixed event. The statute of repose can insulate contractors and design professionals from claims that have become stale through the passage of time. Courts, however, have struggled in their application of the statute of repose to particular claims, including those involving design or construction of real property.
For example, courts in Ohio and Georgia have recently considered whether their statute of repose applies to breach of contract claims. On July 17, 2019, the Ohio Supreme Court in New Riegel Local School District Board of Education v. Buehrer Group Architecture & Engineering, Inc. interpreted Ohio’s statute of repose in the context of a defective design claim. Ohio’s statute of repose states that it applies to “cause[s] of action to recover damages for bodily injury, an injury to real or personal property, or wrongful death that arise[ ] out of a defective and unsafe condition of an improvement to real property.” The Ohio Supreme Court interpreted this language and held that Ohio’s statute of repose was not limited to tort claims and also applied to breach of contract claims.
It had appeared that Georgia was going to follow Ohio’s lead until a recent turn of events. The Georgia Court of Appeals in Southern States Chemical, Inc. v. Tampa Tank & Welding, Inc. on October 31, 2019, held that Georgia’s statute of repose, like Ohio’s, applied to breach of contract claims. More recently, however, on July 1, 2020, the Georgia legislature amended Georgia’s statute of repose to specifically exclude breach of contract claims. As of today, Georgia’s statute of repose no longer applies to breach of contract claims.
Some other states have recently addressed a different interpretation issue regarding their statute of repose — whether their statute of repose applies to certain categories of construction services. For example, on May 10, 2019, Florida’s Fifth District Court of Appeal in Manney v. MBV Engineering, Inc. interpreted Florida’s statute of repose, which states that it applies to actions “founded on the design, planning, or construction of an improvement to real property.” Florida’s Fifth District held that the language “founded on” meant that Florida’s statute of repose does not apply to claims arising from post-construction services.
As these recent decisions in Florida, Georgia, and Ohio illustrate, while the statute of repose can provide a barrier for contractors and design professional from stale lawsuits over construction projects that were completed a long time ago, it is not a given that the statute of repose applies to every type of construction claim. If you are involved in a lawsuit over a project completed a long time ago, you should carefully compare the claims and allegations asserted in the complaint to the language of the applicable statute of repose and the case law interpreting the statute of repose to determine whether the statute of repose applies to your claim.
Copies of the cases cited herein are available from the author upon request.
Smith Currie provides comprehensive legal services to all parts of the construction industry across the nation. Smith Currie lawyers have decades of demonstrated success representing construction and federal government contracting clients “From the Ground Up,” including procurement matters, contract formation and negotiation, project administration, claims prosecution and, when necessary, in litigation and other forms of dispute resolution.
Reprinted with permission from ConsensusDocs, Volume 7, Issue 5, May 2021
[The views expressed in this article are not necessarily those of ConsensusDocs. Readers should not take or refrain from taking any action based on any information without first seeking legal advice.]