By: Joanne Dekker, J.D., ConstructionRisk, LLC
Homeowners sued a construction contractor alleging that the Contractor had negligently constructed the house in such a manner that allowed significant water intrusion into the house causing continuous damage for a period of at least five years up until the time they filed suit. The trial court held that the Homeowners’ action was barred by the Statute of Repose which required that a claim be made within 12 years of the completion of construction. The court dismissed the case on the Contractor’s motion for summary judgment and Homeowners appealed. On appeal, Homeowners argued that the Contractor’s actions were “unlawful” and therefore not covered by the Statute of Repose. In the alternative, the Homeowners claimed that they were entitled to a two-year extension of the Statute of Repose because the “injury” began within 12 years and was ongoing. The appellate court dismissed the Homeowners’ appeal on all issues. Johnson et al. v. Toll Brothers, et al., 302 A.3d 1231 (2023).
The Pennsylvania Statute of Repose at issue (42 Pa.C.S. § 5536(a)) provides:
A civil action or proceeding brought against any person lawfully performing or furnishing the design, planning, supervision or observation of construction, or construction of any improvement to real property must be commenced within 12 years after completion of construction of such improvement to recover damages.
In this case, the Contractor completed the construction of the house on October 18, 2004. The certificate of occupancy was issued on the same day and the house was also conveyed to the original homeowners on that date. This established the end of the twelve-year period as October 18, 2016. Homeowners bought the house from the original owners on September 13, 2016 and filed suit against the Contractor on August 21, 2018, well outside the twelve-year Statue of Repose.
The court stated:
A party asserting a Statute of Repose defense must, therefore, show that (1) the project involved a lawful improvement to real property; (2) over 12 years have elapsed from the completion of the improvement to commencement of the action; and (3) the party is in the statute’s protected class.
On appeal, Homeowners argued that the Contractor’s negligent construction was “unlawful” and therefore the statute of repose did not apply. However, the court held that the Contractor acted lawfully because at the time it constructed the house it was properly authorized to do business, it was a licensed homebuilder and the Commonwealth issued a certificate of occupancy. In other words, Contractor “lawfully” constructed the house.
The Statute of Repose also provides that a claim based on a construction defect may be filed within 14 years of completion of construction “if an injury or wrongful death shall occur more than ten and within 12 years after completion of the improvement.” Homeowners argued that even if the Statute of Repose applied, that they were still entitled to this two-year extension which would extend their filing time from October 18, 2016 to October 18, 2018, thereby making their August 21, 2018 initiation of their lawsuit timely. Homeowners presented expert evidence that the damage to the house began no later than 2012 (within the 12 years) and argued that the defects and damage to the house constituted a “continuing injury” that extended the Statute of Repose.
The court disagreed.
. . . it is clear that the injury contemplated in the exception of part (b) was meant to be one that “shall occur” or arise for the first time no earlier than the tenth year of the filing period. It was not meant to refer to a recurring or continuous injury that began years prior to that three-year range.
Thus, if the roof began leaking or there was a problem with the foundation that occurred after Homeowners bought the house, then they would be entitled to the two-year extension for the Statute of Repose.
About the author: Article written by Joanne Dekker, J.D., ConstructionRisk, LLC. This article is published in ConstructionRisk Report, Vol. 26, No. 2 (February 2024).
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