The Complexities of the Statute of Repose in Construction and Related Litigation

11/8/2019


Perhaps one of the most critical issues to parties involved in—or threatened with— construction litigation is timing. As a plaintiff, failure to bring your claim within the required time limit can bar your claim. As a defendant, a plaintiff’s failure to timely bring a claim can protect you from a claim. In either case, knowing when a claim must be brought is an important aspect of construction defect litigation. This is particularly true, and complicated, when applying the statute of repose to construction defect claims. The statute of repose acts as both a bitter end to a plaintiff’s lawsuit before it begins and a shield for defendants against unlimited exposure to claims.

Tennessee Code Annotated (TCA) § 28-3-202 provides that a suit involving construction defects or injuries resulting from construction defects against “any person performing or furnishing the design, planning, supervision, observation of construction, or construction . . .” must be brought within four years of “substantial completion” of the construction. The statue of repose is not applicable to the owner or possessor of the property where the injury occurred. TCA§ 28-3-202. If the personal injury or property damage occurs after the statute of repose runs, and no exception applies, then no claim may be brought against the covered construction service providers or professionals involved in the design or construction of the improvement.

Putting aside defining what “substantial completion” means, this statute seems straightforward: claims must be brought within four years of substantial completion. However, TCA§ 28-3-203 provides an exception for any injuries to person or property that occurred in the fourth year after substantial completion. In those cases, the suit must be brought within one year from the date of the injury. For example, if an injury or damage occurred at three years and ten months after substantial completion, the plaintiff would have until four years and ten months after substantial completion to file suit.

The complexity does not stop there, however, because the statute also provides an exception for cases involving fraud. Specifically, the statute states that a person who committed fraud in the provision of construction services or fraudulently concealed the claim cannot use the statute of repose as a defense.

Tennessee Courts have elaborated on the application of the statute on several occasions. In Watts v. Putnam County, the Tennessee Supreme Court stated that because the statute of repose begins to run from substantial completion, when a defect is discovered is irrelevant to the application of the statute. In that case, the Court held that the personal injury claim, although filed within the one-year personal injury statute of limitation, was barred against those providing professional design and construction services due to the statute of repose because substantial completion had occurred more than four years before the personal injury. The Court recognized that though the result is harsh, the clear intent of the statute is to protect construction and design professionals from liability. The Court also noted that the statute was an outer limit of liability and that statutes of limitations for injuries to person and property still applied. Thus, just because a claim is filed within the statute of repose does not mean that it is within the time for other statutes of limitation. (525 S.W.2d 488, 493-94 (Tenn. 1975))

Furthermore, in Counts Company v. Praters, Inc. the Tennessee Court of Appeals held that the statute began to run, and continued to run, while a contractor attempted to repair defects in the construction. (392 S.W.3d 30, 86 (Tenn. CT.App. 2012)) Additionally, in Henry v. Cherokee Construction and Supply Company, Inc. the Tennessee Court of Appeals held that for purposes of the concealment exception, the wrongful concealment must be of the claim rather than concealment of some defect in the original construction. (301 S.w.3d 263, 267 (Tenn. Ct. App. 2009))

The lesson taken from reading the statute and the cases is that any person or entity involved in a potential construction defect claim—or personal injury arising from construction—will need to make a prompt evaluation of the date of substantial completion as the countdown clock of the statute of repose continuously runs from that date. A plaintiff cannot rely exclusively upon the date of injury or property damage to calculate the time for asserting a legal claim.

Those persons or entities providing construction or design services for construction should likewise be familiar with the statute of repose and the exceptions which may extend it beyond four years from substantial completion. Tennessee Courts have made it clear the statute is intended to protect construction and design professionals from unlimited exposure to liability and that it will be applied.

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