Ohio Supreme Court: All Claims for Defective Construction or Design Must Be Brought Within 10 Years of Substantial Completion

Source: https://www.jdsupra.com, July 19, 2019
The Court’s decision in New Riegel Local School District Board of Education, et al. v. The Buehrer Group Architecture & Engineering, Inc., et al.  [1] interprets Ohio’s Statute of Repose,  [2] which generally requires certain construction defect claims to be brought within 10 years of the date of substantial completion. At issue in the case was whether that statute applies only to tort claims (such as claims that the general contractor or architect negligently performed its work by failing to comply with the applicable standard of care), or also to breach of contract claims. In holding that the Statute of Repose applies to both types of claims, the Supreme Court reversed its own 1986 holding that the statute applied only to tort claims.
In the New Riegel case, the New Riegel Local School District filed a lawsuit against its architect, general contractor, roofing subcontractor, and a surety for damages arising out of condensation, moisture intrusion, and other deficiencies allegedly resulting from improper design and construction. The lawsuit was filed more than 10 years after substantial completion. At the time the lawsuit was filed, the statute of limitations for a breach of contract action was 15 years and the school district’s lawsuit was filed within that time period. (The statute of limitations for breach of contract claims has since been amended to 8 years.)  But because the school district’s claims were for breach of contract, it argued that the Statute of Repose did not apply and that its claims were not time-barred.
Benesch represented the surety, Ohio Farmers Insurance, at oral argument before the Supreme Court. Tracing the history of the Statute of Repose, the Court first determined that the legislature materially amended that statute after the Supreme Court’s original 1986 decision limiting the application of the statute to tort claims. That earlier decision, therefore, did not apply to the current version of the Statute of Repose, giving the Court an opportunity for a fresh look at whether the legislature intended for the statute to apply to tort claims only or to both tort and contract claims.  The Court held that the new statute’s language made it clear that the legislature intended for the statute to apply to both types of claims.  The Court then sent the case back to the lower courts to determine whether, in view of the Supreme Court’s new interpretation of the Statute of Repose, New Riegel’s lawsuit should proceed or be dismissed.
As a result of this decision, parties to a construction project should assume that claims for defective and unsafe conditions arising from the design or construction of an improvement to real estate will expire 10 years after substantial completion, subject to certain exceptions in the statute (including, for example, claims discovered within two years of the expiration of the 10-year period).  It no longer matters whether those claims arise out of a breach of the parties’ contract or the neglect of a duty under tort law.
[1] Slip Opinion No. 2019-Ohio-2851
[2] Ohio Revised Code Section 2305.131.

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