Source: http://www.donovanhatem.com, Design and Construction Management Reporter, January 2016
By: By Lucas M. Blackadar, Esq. and Jonathan A. Barnes, Esq.
In 1996, construction of the law school at the University of Connecticut(“University”) was completed. In 2008, the State of Connecticut (“State”) and the University sued the design professionals and contractors that worked on the University Law School project due to leaks that surfaced after construction was completed. Such lawsuits are common in the construction industry, but what makes this instance noteworthy is that the State waited approximately twelve years before it filed suit. Nonetheless, the State ultimately prevailed due to the Supreme Court of Connecticut’s ruling that no statute of limitation or repose was enforceable against the State.
The outcome of that matter was highly troubling to the construction industry, and design professionals and contractors alike decried the court’s decision. With an unlimited period of time for the State to file claims related to a construction project, any entity that routinely worked with the State on projects would now have to think twice about doing so.
Moreover, obtaining professional liability insurance for such projects would become incredibly difficult. Some insurance carriers would likely decide it wasn’t worth the risk, and those that would be willing to take the risk would hedge against that risk by drastically increasing premiums. Additionally, design professionals and construction companies would haveto retain their records in perpetuity to safeguard against the looming threat of litigation on any State-owned project that they ever touched. The cost of document storage would grow exponentially because no project documentation could be destroyed given the unlimited liability.
Fortunately, the State Legislature drafted Public Act No. 15- 28 (“Act”), which the governor signed into law in June 2015, despite the State failing to enact such legislation in the past. The Act pertains to State-owned projects substantially completed on or after October 1, 2017. With respect to those projects, the State will have 10 years to file claims concerning their design and construction. For projects completed prior to October 1, 2017, the State will be required to file suit by October 1, 2027.
While this appears to be a victory for designers and contractors, the Act still falls short. Ten years is still an excessive amount of time when one considers that non-State entities have seven years to file professional negligence claims and six years to file breach of contract claims. Given this added timeframe, the cost of obtaining insurance and storing records for Stateowned projects will still exceed the costs for privately-owned projects. This cost of doing business will likely be passed to the State, and then on to the taxpayers.
While the State Legislature’s action is a step in the right direction, it is not ideal. Time will tell how great of an impact the Act will have on the Connecticut construction industry.