Masaki Yamada and Ryanne Mathisen | Ahlers Cressman & Sleight
The construction statute of repose under RCW 4.16.310 bars any claims arising from construction, design, or engineering of any improvement upon real property that has not accrued within six years after substantial completion or termination of services, whichever is later, even if the injury has not yet occurred.
On June 20, 2023, Division One of the Washington Court of Appeals (Div. I) published its decision in Welch v. Air & Liquid Systems severely criticizing and rejecting the statute of repose reasoning contained in Maxwell v. Atlantic Richfield Co., 15 Wn. App. 2d 569, 476 P.3d 645 (2020), a Division Two (Div. II) opinion.
More than a mere difference of opinion, the courts in Welch and Maxwell reached different results as to whether claims asserted against Brand Insulations, Inc. were barred by the statute of repose despite involving (i) the same procedural posture, both appeals from summary judgment decisions; (ii) the same facility, Atlantic Richfield Corporation’s (ARCO) petroleum refinery at Cherry Point in Ferndale; (iii) the same activity of installation of asbestos laden insulation on pipes; (iv) the same type of injury, mesothelioma; and (v) application of the same test set forth in Condit v. Lewis Refrigeration Co., 101 Wn.2d 106, 676 P.2d 466 (1984).
Among the issues in Welch and Maxwell was whether Brand’s installation activities constituted an “improvement upon real property”—one of two requirements for the construction statute of repose to apply. Both divisions cited the same rule from Condit, that in order for an activity to constitute an “improvement upon real property” that activity must be for construction of structural aspects of a building or integral systems that are a normal part of that kind of improvement required for the structure to function as intended.
In 2020, the Maxwell court broadly interpreted and restated the rule from Condit as requiring that a construction company be “involved” in construction of structural improvements or integral system(s). By contrast, in 2023, the Welch court adopted a much narrower interpretation, reasoning that for the construction statute of repose to apply, a contractor must show all their work relating to the building contributed to the construction of either a structural improvement or integral system, which is a much higher standard.
As to Div. II, applying its broad “involved” interpretation, the Maxwell court held the lower court’s application of the statute of repose on summary judgment in favor of the contractors was appropriate as the contractors at issue had met the low bar of showing their “involvement” in the original structural construction of the ARCO plant, thus meeting the second element of the construction statute of repose.
As to Div. I, applying its narrower interpretation, the Welch court held summary judgment to be inappropriate, reasoning that the contractors at issue had not met their evidentiary burden of demonstrating that all of their installation activities contributed to construction of an ARCO plant structural improvement or integral system.
If the recent Welch opinion is timely appealed, the Washington State Supreme Court will have the option to take up review. However, while the interpretation conflict between Div. I and Div. II persists, which interpretation should apply to a particular case will likely be a contentious matter in cases involving the construction statute of repose.
Commentary: The construction statute of repose under RCW 4.16.310 offers certain contractors and certain building owners a date certain as to when the risk of many unforeseen claims would expire. Until the interpretation conflict between Division I and Division II is resolved, a useful risk management practice is to assume the narrower interpretation will apply, or put another way, hope for the best but prepare for the worst. The conflict in interpretation also presents a risk for those who contract with a contractor that performs some work that did not “contribute to the construction” of an improvement and relies on the statute of repose. It is unclear whether the Welch court intended or anticipated the consequence of contractors potentially using this decision as a tool to circumvent the statute of repose, which in most instances provide for a longer period of time for suit to be commenced than Washington’s statute of limitations.
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