Negligence lawsuit by project owner against its architect was barred by the three year statute of limitations, which accrued on the date the building permit was issued. The court rejected the owner’s argument that the statute of limitations period was tolled by its filing a demand for mediation pursuant to contract provisions. Section 8.2.1of the AIA contract in question provides that “Any claim, dispute or other matter in question arising out of or related to this Agreement shall be subject to mediation as a condition precedent to binding dispute resolution.” Section 8.1.1 of the contract provides that the parties “shall commence all claims and causes of action … in accordance with the method of binding dispute resolution selected in this Agreement within the period specified by applicable law.”
The requirement to file with the applicable statute of limitations is absolute. The court found that “The Architect Agreement expressly contemplates the filing of a protective action [litigation] during the pendency of mediation precisely to avoid issues with the statute of limitations.” Washington Tennis & Education Foundation, Inc. v. Clark Nexsen, Inc., 324 F.Supp.3d 128 (U.S. Dist. Ct., District of Columbia 2018).
The plaintiff in this case was a nonprofit organization, a tennis foundation, that had assigned all interest in its contract with the architect to a related but separate entity. Because all property rights in the tennis center, along with the architect contract, were transferred and assigned to this new entity, the court held that the original entity no longer had standing to file a breach of contract action against the architect. The only potential avenue of recovery, therefore, was a potential negligence claim against the architect if it could be demonstrated that the architect owed an independent duty of care that was separate from its duty under the contract. As a result of the late filing of the tort action, however, the plaintiff never got to present the merits of such a tort claim.
The statute of limitations begins to run from the time the right to maintain the action accrues – meaning when the action came into existence. The plaintiff argued that “the critical date for the statute of limitations is … the date on which [it] requested mediation … by certified letter under Section 8.2 of the contract.” It argued that because it made a mediation demand within three years, its subsequent filing of the action in court is timely.
The court’s explanation of the contract language and how it is to be interpreted and applied is best presented by quoting at length from the court decision as follows:
WTEF’s first argument is based on a complete misreading of the Architect Agreement. According to WTEF, section 8.2.1 provides that “[a]ny claim, dispute or other matter in question arising out of or related to this Agreement shall be subject to mediation as a condition precedent to binding dispute resolution selected in this Agreement within the period specified by applicable law.” Pl.’s Summ. J. Opp’n at 8–9. But that is not what section 8.2.1 says. Rather section 8.2.1 of the contract provides: “Any claim, dispute or other matter in question arising out of or related to this Agreement shall be subject to mediation as a condition precedent to binding dispute resolution.” Architect Agreement, Art. 8, *138 § 8.2.1. Full stop. Period.
That clause does not, as WTEF claims, go on to require that the mediation demand be made “within the period specified by applicable law.” See id. The additional text that Plaintiff quotes is contained not in section 8.2.1, but in section 8.1.1, a clause that pertains to the bringing of “claims and causes of action.” That section provides that the parties “shall commence all claims and causes of action … in accordance with the method of binding dispute resolution selected in this Agreement within the period specified by applicable law.” Id. § 8.1.1 (emphasis added).
Critically, the “binding dispute resolution” selected by the parties in the Architect Agreement is “[l]itigation in a court of competent jurisdiction.” Id. § 8.2.4. Thus, the entire premise of WTEF’s argument that the date of mediation is what counts for statute of limitations purposes is flat wrong.
A charitable reading of WTEF’s argument would be that its filing of the mediation demand equitably tolled the limitations period for its claims. But that assertion would be wrong, too. WTEF cites no authority whatsoever for that proposition, and the most analogous case that this court has found is to the contrary. See Shailendra Kumar, P.A. v. Dhanda, 426 Md. 185, 43 A.3d 1029, 1042–43 (2012) (rejecting equitable tolling during “the pendency of mandatory, non-binding arbitration”). Moreover, the Architect Agreement cannot be read to permit equitable tolling.
While Article 8 requires mediation as a condition precedent to filing suit, it clearly provides that a request for mediation “may be made concurrently with the filing of a complaint.” See Architect Agreement, Art. 8, § 8.2.2. In such circumstances, the Agreement provides that the filed action “shall be stayed for 60 days from the date of filing, unless stayed for a longer period by agreement of the parties or court order.” See id.
The Architect Agreement therefore expressly contemplates the filing of a protective action during the pendency of mediation precisely to avoid issues with the statute of limitations. Plaintiff’s counsel conceded as much during oral argument on the motion for reconsideration, admitting that the “better course in hindsight” would have been for Plaintiff to submit the mediation demand and concurrently file suit. Hr’g Tr., ECF No. 70, at 20. Accordingly, because the Architect Agreement itself cannot be read to equitably toll the limitations period during the pendency of mediation, the court rejects Plaintiff’s attempt to rely on July 14, 2014, as the operative date.
About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk.com Report, Vol. 21, No. 2 (Feb 2019).
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