In response to the increase in common-law claims against architects and contractors brought by third parties who lacked “privity of contract”, many states enacted a construction statute of repose. A statute of repose is intended to forever bar claims for certain injuries or damages after a set period of time following substantial completion. Subject to certain exceptions, the primary distinction between a statute of repose and statute of limitations is that a statute of repose begins to run regardless of whether one is aware of a defect.
Ohio’s statute of repose for claims arising from improvements to real property provides as follows:
Notwithstanding an otherwise applicable period of limitations specified in this chapter or in section 2125.02 of the Revised Code and except as otherwise provided in divisions (A)(2), (A)(3), (C), and (D) of this section, no cause of action to recover damages for bodily injury, an injury to real or personal property, or wrongful death that arises out of a defective and unsafe condition of an improvement to real property […] shall accrue against a person who performed services for the improvement to real property or a person who furnished the design, planning, supervision of construction, or construction of the improvement to real property later than ten years from the date of substantial completion of such improvement.
As set forth above, the statute specifies that no cause of action for damages to real property, resulting from improvement to that real property, can be brought more than 10 years after substantial completion. It would seem reasonable to conclude, then, that the statute of repose should bar all construction related claims brought more than 10 years after substantial completion. However, that is not the case in Ohio.
In Kocisko v. Charles Shutrump & Sons Co., 21 Ohio St.3d 98, 488 N.E.2d 171, 172 (1986), the Ohio Supreme Court held that “R.C. 2305.131 applies only to actions which sound in tort. Actions in contract continue to be governed by the [applicable] statute of limitations [for contract claims].” The Supreme Court’s holding in Kocisko that the statute of repose is limited to tort claims is significant because prior to 2012, Ohio recognized a 15-year statute of limitations for breach of written contract claims. Although R.C. 2305.06 was amended in 2012 to change the statute of limitations for such claims to eight years, the 15–year statute still applies to claims that accrued prior to September 28, 2012. Therefore, when asserting a claim for damages arising out of a construction project, a claimant is able to avoid the 10-year statute of repose by pleading the cause of action as a breach of contract claim so long as that claim accrued prior to September 28, 2012.
That is the exact result of a recent Third District case involving the construction of a new school building built as part of the Ohio Classroom Facilities Assistance Program. New Riegel Local School District v. Buehrer Group Architecture & Eng., Inc., et al., 3d Dist. Seneca, 2017-Ohio-8522. The project for the New Riegel school building was completed in March, 2004. However, problems with the building developed over time, including condensation and moisture intrusion allegedly caused by the contractor’s and architect’s defective work. In April, 2015, eleven years after the project was completed, the school board brought suit against the general contractor and the architect for breach of contract. The contractor and architect moved to have the case dismissed arguing that the statute of repose barred claims filed more than 10 years after the project had been completed. The trial court agreed and granted judgment in favor of the contractor and architect. The school board appealed.
On appeal, the Third District begrudgingly reversed the trial court’s decision, holding that the statute of repose was limited to tort claims and does not apply to claims for breach of contract. In its decision, the Third District expressed disagreement with the Ohio Supreme Court’s holding in Kocisko as contrary to the plain language of the statute, but also recognized that it is bound by that prior precedent unless and until the legislature or Supreme Court chooses to modify it. For now, the law in Ohio is that the 10-year statute of repose applies only to tort claims.
The New Riegel decision reminds us that whether you are asserting or defending a construction claim, it is critically important to be mindful of any applicable time limitations on the claim imposed by contract or law, and also recognize that the time limitations may vary depending on the type of claim asserted.
For additional information or questions, please contact Attorney Justin Alaburda, partner at Brennan, Manna & Diamond, and member of BMD’s Construction, Business, and Litigation Practice Groups. He can be reached at (330) 253-9134, or email@example.com.