Tick Tock: Don’t Let the Statute of Repose or Limitations Time Periods Run on Your Construction Claims

Gus Sara | The Subrogation Strategist

In Wascher v. ABC Ins. Co., No. 2020AP1961, 2022 Wisc. App. LEXIS 110 (Feb. 9, 2022), the Court of Appeals of Wisconsin considered whether the plaintiffs were barred — by Wisconsin’s 10-year statute of repose for improvements to real property claims and the six-year statute of limitations for breach of contract claims — from bringing a lawsuit against the original builders of their home. The plaintiffs alleged negligence and breach of contract against the masonry subcontractors, asserting that they improperly installed the exterior stone cladding. The court found that the plaintiffs’ claims against the original builders were time-barred.

In 2005, the plaintiffs, Thomas and Pamela Wascher (the Waschers) retained Mathwig Builders (Mathwig) as the general contractor for the construction of their home in Greenville, Wisconsin. Mathwig subcontracted defendants Natural Surfaces, LLC (Natural Surfaces) and Carved Stone Creations (CSC) to install the stone cladding on the exterior walls and patio for the home. On November 3, 2008, the Township of Greenville inspected the home and granted the Waschers permission to occupy the residence. The Waschers moved into the home within the next few weeks. In early 2009, the Waschers discovered efflorescence on the stone cladding for the patio. In 2010, the Waschers hired CSC to repair the stone cladding. CSC removed some stone, which revealed that flashing had not been installed behind the stone, which caused water to infiltrate the stone and patio.

In 2012, the Waschers discovered stone falling off the exterior walls. That same year they hired CSC to perform repairs. While CSC claims that it completed the repairs in 2012, the Waschers alleged that CSC continued its repair work on the stone through 2017.

In August 2018, the Waschers sent Mathwig, CSC and Natural Surfaces notices of their claims related to the defective stonework on the home. The Waschers then initiated the subject lawsuit on November 20, 2018. The Waschers’ claims alleged negligence and breach of contract against each defendant and sought damages as well as an injunction ordering defendants to perform remedial work on the home.

The defendants moved to dismiss the complaint arguing, among other things, that the negligence claims were barred by the economic loss doctrine, and that all claims were barred by the statute of repose for improvements to real property and the six-year statute of limitations for breach of contract. The trial court dismissed the negligence claims based on the economic loss doctrine. However, the court denied the motion with respect to the statute of limitations and repose, finding that the Waschers adequately alleged equitable estoppel as a defense.

After discovery, the defendants filed a motion for summary judgment, at which time the court granted summary judgment on all claims related to the original construction.* The court did not find evidence supporting equitable estoppel and, thus, dismissed the claims on grounds that the statute of limitations and repose had expired. The Waschers filed an appeal of the court’s decision.

The Waschers made several arguments in support of their position that the statute of limitations and repose did not bar their claims. With regard to the statute of repose, Wisconsin Stat. § 893.89 states that no action can be commenced against any person involved in the improvement to real property after the end of the “exposure period.” The statute defines the term “exposure period” as “the 10 years immediately following the date of substantial completion of the improvement to real property.” The term “substantial completion” is not defined by the statute.

The court held that the convenient and fair measure of substantial completion is the date that the municipality authorized occupancy. Since the occupancy permit was issued on November 3, 2008, and the complaint was filed on November 20, 2018, the court concluded that the statute of repose expired 17 days before the lawsuit was commenced. The court rejected the Waschers’ argument that substantial completion could not be reached because the defendants omitted the flashing when installing the stone cladding. The court explained that accepting this argument would require it to focus on the quality of the work rather than whether the property was sufficiently completed for occupancy.

The court relied on long-standing precedent for its conclusion that the Waschers’ breach of contract claims were barred by the six-year statute of limitations. Contrary to the Waschers’ position that the statute of limitations did not begin running until the defect was discovered, the court concluded that a “90-year line of precedent” established that a contract cause of action accrues at the moment the contract is breached, regardless of whether the injured party knew or should have known that the breach occurred. In other words, the court held that the discovery rule does not apply to breach of contract claims.

Wascher establishes that, in Wisconsin, the statute of repose for improvements to real property begins to run on the date the municipality issues the permit of occupancy. The Court of Appeals also reiterated the longstanding precedent that the statute of limitations for contract claims begins to run at the time of the breach, not when the plaintiff discovered the breach. Subrogation professionals handling construction defect claims in Wisconsin should be mindful of the Wascher decision and immediately request the permit history for the property to determine when the certificate of occupancy was issued, and the period of time that remains before the statute of repose runs.


[*] The Waschers’ claims also related to subsequent construction, but those claims are not addressed herein.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Proposed Changes To Florida’s Statutes Of Limitations And Repose Would Greatly Impact Construction Defect Litigation

Elizabeth Ferguson and Taylor A. Naughton | Marshall, Dennehey, Warner, Coleman & Goggin

A new bill has been proposed in the Florida Legislature that would amend the statutes of limitations and repose greatly impacting construction defect litigation.

The original bill proposed to rewrite Fla. Stat. 95.11(3)(c) by completely eliminating the ten-year statute of repose for latent defects, instead requiring all actions founded on the design, planning, or construction of an improvement to real property to be filed within four years. The proposed four-year time period would begin from the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion of the contract or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is latest.

After introduction of the bill, the Committee on Community Affairs proposed a complete overhaul of 95.11, as it relates to construction defect litigation. The Committee proposes a new subsection be added to Fla. Stat. 95.11, subsection 12, titled “ACTIONS RELATING TO AN IMPROVEMENT TO REAL PROPERTY.” This new section lays out 4 categories of improvements:

Category 1 improvements cover detached single-family home, including pre-manufactured homes, or standalone building structures intended for use by a single business, occupant or owner, not exceeding three stories in height and related improvements to such homes, buildings or structures.

Category 2 improvements include single-family dwelling units not exceeding three stories in height which are constructed in a series or group of attached units or a commercial or nonresidential building not exceeding three stories in height and related improvements to such dwellings, buildings or structures.

Category 3 improvements include commercial or residential buildings or structures of four or more stories in height and related improvements to such buildings or structures.

Category 4 improvements is a catchall for any improvement that does not fall under Categories 1-3.

Further, the proposal amends the statute of limitations to read: “An action founded on the design, planning, or construction of an improvement to real property may be commenced within 4 years after the time to commence an action begins to run.” The repose period would be shortened to five years after the time for commencing an action begins to run for category 1 improvements; seven years for category 2 improvements; 12 years for category 3 improvements, and 10 years for category 4 improvements. The time to commence such an action would begin to run from the date of actual possession by the owner, the date of the issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion of the contract or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever date is earliest.

The proposed amendment contains a limited one-year extension of time for counterclaims, cross-claims, and third-party claims that arise out of the conduct, transaction, or occurrence set out or attempted to be set out in a pleading that the current statute contains. It also maintains that warranty work or correction or repair of defects to completed does not extend the period of time within which an action must be commenced.

If signed into law, these amendments would apply to any action commenced on or after July 1, 2022, regardless of when the cause of action accrued. However, any action that would not have been time barred before the amendments may be commenced before July 1, 2023. Any action not commenced by July 1, 2023, that is barred by the amendments is barred.

When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Florida’s Statute Of Repose – Elimination Of Stale Claims

Anthony S. Wong and Lee H Jeansonne | Wood, Smith, Henning & Berman

Big changes may be on the horizon for Florida statute of repose for construction claims. Florida SB 2022-736 proposes to amend Fla. Stat. §95.11(3)(c) to eliminate the distinction between patent and latent claims and apply a uniform four year statute of repose to protect the construction industry from stale claims and prolong litigation many years after control of the project has been turned over by the developer or contractors.

SB 2022-736 proposes to eliminate an often litigated issue: whether a defect is patent or latent, and apply a uniform statute of repose for construction claims. Additionally, as discussed below, SB 2022-736 seeks to give teeth to the right to repair with the intention to help the parties settle and resolve construction defect claims without having to engage in drawn out litigation.

The Current State of Florida’s Statute of Repose

Florida’s statute of repose is intended to provide finality and certainty to builders and other construction professionals by ensuring that claims are brought in a timely manner, and they are not subject to liability indefinitely. Different jurisdictions have established differing statutes of repose, but the goal is finality. Ten year statutes of repose are considered on the longer end of the spectrum, as defects in the as-built conditions would assuredly manifest well before that time. Distinguishing between true construction defects and maintenance/wear and tear issues is almost always a battle and more so as the building ages.

In Florida, a claim based on the design, planning, or construction of an improvement to real property is subject to a four year statute of repose starting from when the owner taking possession, the issuance of a certificate of occupancy, abandonment of the project if not complete or when the contract is completed or terminated, whichever is later. However, if the claim involves a “latent defect”, then the four year statute of repose operates as a statute of limitations and the claim is instead subject to a ten year statute of repose starting from when the owner taking possession, the issuance of a certificate of occupancy, abandonment of the project if not complete or when the contract is completed or terminated, whichever is later.

Although not defined by statute, Florida Courts have held that a latent defect is a hidden or concealed defect which is not discoverable by reasonable and customary inspection, and the owner has no knowledge. Significantly, the test for patency is not whether the condition was observable by the owner. Rather, the test for patency is whether the “defective nature” was apparent to the owner. This test results in difficult jury questions regarding when an owner knew or should have known of a defect and whether such a defect would be apparent to the owner. Additionally, the ten year exception for latent defects allow owners to conflate legitimate construction issues with normal wear and tear and lack of maintenance. As a result, developers and contractors are often forced to litigate the old claims and are denied the finality that the Legislature intended to provide when the statute of repose was first adopted.

What is the Difference Between a Statute of Limitations and a Statute of Repose

Both a statute of limitation and a statute of repose bar lawsuits from being filed after a certain amount of time has passed. However, the major difference in the two come in the way they are triggered. The more common statute of limitations typically being to run when the injury occurs and could be subject to the discovery rule if the injury is hidden. In contrast, a statute of repose is triggered by specific events and can being to run even before an injury occurs. For example, in a personal injury case, a person may be injured by a latent defect 11 years after the completion of the building; however, while the person would ordinarily have 4 years to bring a personal injury claim under the statute of limitations, the claim, to the extent it relates to the original construction would be barred by the statute of repose under current Florida law.

New Legislation Pending in the Florida Legislature Would Eliminate the Ten Year Exception to the Current Statue of Repose

SB 2022-736 proposes to amend Fla. Stat. § 95.11(3)(c) by eliminating the current latent defect exception to the statute of repose for construction defect claims. If the amendment is adopted, a four year statute of repose will apply to all construction claims regardless of whether the defect is patent or latent. This will ensure that legitimate construction claims are brought in a timely manner, provide finality to the construction industry and reduce the amount of claims related to maintenance and wear and tear.

New Provision for the Rejection of Settlement Offers

The proposed bill requires claimants who reject a valid settlement offer to do so in writing and include the reasons for rejecting the offer. The claimant must include details on any portions of their claim that they feel were not addressed in the settlement offer and must also identify any portions they find unreasonable and clearly state the reasons why the offer is unreasonable from their perspective.

After a written notice of rejection of the settlement offer, the opposing party must be given 15 days to propose a supplemental offer to repair and/or submit payment to cover claimed damages or losses. If the claimant also rejects the supplemental offer, that should also be in writing and include detailed reasons as to why the supplemental offer is not sufficient to cover the claim. Any action filed without following these procedures may be stayed by the court upon a timely motion by the opposing party.

Limitation of Attorney Fees

If a claimant chooses to reject a settlement offer or supplemental settlement offer to remedy a construction defect, under the new law this rejection will limit the claimant’s ability to recover attorney fees from the defendant. In order to overcome this limitation, the claimant will need to show by a preponderance of the evidence (more probable than not that the claim is true) that at the time of the offer, the repairs and payment offered were not sufficient to remedy the construction defects. Attorney fees stemming from a contract between the parties is not impacted by this section of the law.

Acceptance by Claimant of a Supplemental Offer

Under the provisions of the proposed law, claimants who accept the initial or supplemental offer by the contractor or other construction professional will be required to enter into a contract to define the terms by which the construction defect will be remedied. This contract must be in place within 90 days after the acceptance of the offer. In addition, the offeror or insurer must pay the contractor for the work directly and such repairs must be made within 12 months of entry into the contract between the parties, unless the parties agree otherwise.

Use of Experts

Once an action has been filed, the Court is required to appoint a neutral expert to inspect and opine on the validity or extent of the construction defect claimed. However, an expert will not be appointed if all of the parties object, or if the Court finds that the appointment costs will exceed any possible benefits to the successful determination of the case. Any experts appointed by the Court must communicate and coordinate the inspection of the construction defect with all parties as directed by the court. The expert must submit a written report to the Court within 15 days after the inspection defect, unless otherwise indicated by the court. The following is required of the expert and the parties:

  • A description of how the expert conducted the examination of the alleged defect.
  • Identification of the persons present at the site while the expert conducted the inspection.
  • Include photographs or other documentation of the alleged defect including any relevant test results.
  • State whether the damages claimed by a claimant are more likely than not the result of a construction defect, another identified cause, or a construction defect and another identified cause.
  • Address other matters related to the alleged defect as directed by the court.
  • If the expert concludes that the damages are wholly or partially the result of a construction defect, the report must state the actions necessary to repair the defect and any repairs related to the defect, provide an estimate of the reasonable cost of repairs, and state the anticipated time needed for the repairs under the current market conditions for construction services and materials.

The parties are responsible for compensating the expert, but the prevailing party is entitled to reimbursement from the non-prevailing party. The expert appointed by the Court may not be employed to repair the alleged defect or recommend contractors to repair the defect in order to prevent a conflict of interest.

Duty to Repair the Defect

Fla. Stat. §558.0046, imposes a duty to repair the construction defect once the claimant receives compensation to complete the repair. If the claimant fails to use the funds to fully repair the defect, the claimant will be liable to any purchaser of the property for any damages that occur due to the failure to completely repair the defect and not disclosing such defect.

Required Notice to Mortgagee or Assignee

Under the new statute, claimants will be required to provide notice to a mortgagee or assignee if a notice of claim alleging a construction defect is made with respect to real property to which a mortgagee or an assignee has a security interest. The claimant must, within 30 days after service of the notice of claim on the contractor, subcontractor, supplier, or design professional, provide the mortgagee or assignee with a copy of the notice of claim by certified mail, return receipt requested.

If repairs relating to the defect are completed after notice to a mortgagee or assignee is provided, or if any settlement, partial settlement, arbitration award, or judgment is obtained by the claimant, the claimant must provide an additional notice to the mortgagee or assignee, by certified mail, return receipt requested, within 60 days after completion of the repairs or any settlement, partial settlement, arbitration award, or judgement, whichever is later.

Noteworthy Takeaways

  • This law will effectively eliminate the current 10 year latent defect exception to the statute of repose.
  • It will remove the latent construction defect exception and require all construction defect claims to be raised within the standard four (4) year statute of repose that is in place for all other construction defect claims.
  • This reduced time to initiate claims will limit stale claims and reduce the amount of claims related to maintenance and wear and tear.
  • This elimination of the latent defect exception should give more strength to offers to repair alleged defects and reduce the number of claims engaged in drawn out litigation.
  • Plaintiff’s are likely to benefit from these changes as repairs will occur quicker and prevent additional damage while the case is in pending litigation.
  • The law will allow for the contractor to make an offer to repair the defects and if the Claimant rejects the offer, the contractor is permitted to make a supplemental offer.
  • If the claimant rejects the offers, they must explain in detail why they are rejecting the offer and list exact reasons including the fact that additional remedies were required and not satisfied by the offer to repair.
  • If a claimant rejects a supplemental offer they may not be able to collect attorney fees, unless claimant can prove additional repairs were necessary beyond the settlement offer.
  • If a settlement offer is accepted the claimant MUST enter into a contract with the correct, licensed contractors to remedy the defects and the party making the offer must make payments directly to the contractor, and repairs must be completed within 12 months of the agreement.
  • The court will now be required to appoint an expert to inspect the alleged defect and report back to the court as well as the parties.
  • The Plaintiff must provide notice of the defects claimed or repaired, to the mortgagee or assignee.

The previously discussed changes to the construction defect law appear on the surface to be designed to reduce the backlog of claims in the courts and encourage the parties to resolve the claims with repairs rather than litigation. Defect claims must be made in a tighter time frame and therefore, claims that have historically been based on maintenance or normal wear and tear will likely be reduced and the court’s time will be focused on cases where significant issues are at dispute.

The changes also put statutory requirements on homeowners who make claims. Homeowners will now be required to give actual reasoning as to why they are rejecting settlement offers from the contractor with accompanying proof; and if they do actually accept an offer to repair, they are required by statute to contract with an appropriate contractor for the repairs, and the party paying for the repairs pays that contractor directly instead of sending the settlement money to the homeowner.

These changes seem to be designed to strengthen the prelitigation 558 Notice of Claim process and the opportunity to repair, by giving more teeth to offers to repair made by developers and contractors and encourage plaintiffs to resolve claims outside of formal litigation. The removal of the latent defect exception is likely to reduce the large volume of claims that stem from normal wear and tear, along with lack of maintenance.

If one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.

Florida Legislature Proposes Significant Revisions to Construction Defect Statute

Ralf R. Rodriguez | Cozen O’Connor

PROPOSED AMENDMENT TO STATUTE OF LIMITATIONS ELIMINATING THE 10-YEAR STATUTE OF REPOSE

A new bill has recently been submitted to the Florida Senate (SB 2022-736) that proposes to amend Fla. Stat. § 95.11(3)(c) by eliminating the current statute of repose for latent claims, which requires an action be commenced within 10 years after the date of actual possession by the owner, the date of issuance of a certificate of occupancy, the date of abandonment of construction if not completed, or the date of completion of the contract or termination of the contract between the professional engineer, registered architect, or licensed contractor and his or her employer, whichever is latest. The proposed amendment eliminates the 10-year repose period, which would effectively allow latent defect claims to be brought beyond the 10-year period in the event of fraudulent concealment or facts supporting the tolling of the four-year statute of limitations applying to such claims.

PROPOSED CHANGES TO CONSTRUCTION DEFECT STATUTE REQUIRING WRITTEN NOTICE OF REJECTION OF SETTLEMENT OFFER AS TO WHY THE OFFER IS UNREASONABLE, ALLOWING SUPPLEMENTAL OFFER, AND REQUIRING THE COURT TO APPOINT AN EXPERT TO EXAMINE ALLEGED DEFECTS

The bill also proposes to amend Fla. Stat. § 558.004 by adding the following provision:

Requiring a claimant who rejects a timely settlement offer to provide a written notice rejecting the offer including the reasons for rejecting the offer within the notice serving to reject the offer. If the claimant believes the settlement offer omitted reference to any portion of the claim or was unreasonable in any manner, the claimant must identify the items that the claimant believes were omitted and state in detail all known reasons why the claimant believes the settlement offer is unreasonable.

The Proposed Revisions Provide for a Supplemental Offer to the Claimant Triggering the Obligation by Claimant To Respond to the Supplemental Offer

Allowing the person served with a notice of rejection of settlement offer to make a supplemental offer of repair or monetary payment, or both, to the claimant within 15 days of receiving the notice of rejection. If the claimant rejects the supplemental offer, the claimant must serve a written notice of the claimant’s rejection on the person making the supplemental offer. The notice must include all known reasons for the claimant’s rejection of the supplemental settlement offer.

Requiring the court to stay an action upon filing of a timely motion if the action is initiated by claimant without first accepting or rejecting the offer or supplemental offer.

Limiting the claimant’s rights to recover attorneys’ fees in the event a claimant rejects a timely settlement offer or supplemental offer to remedy the alleged construction defect at no cost to the claimant, in any action brought for that defect, unless the claimant proves by a preponderance of the evidence that, at the time of the offer, additional repairs beyond those offered were necessary to remedy the defect. The attorneys’ fee limitation does not apply to any claim for attorneys’ fees based on a contract between the claimant and the offeror.

Requiring a claimant who accepts the offer or supplemental offer to enter into a contract with one or more appropriately licensed contractors to correct the construction defect(s) within 90 days after acceptance. The offeror or insurer shall pay the contractor directly for the repairs and the repairs must be completed within 12 months after the claimant enters into a contract for the repairs, unless the offeror or insurer and the claimant agree otherwise.

New Requirement for Court To Appoint an Expert

Creating a new § 558.0045, Fla. Stat., which requires the court, in a civil action alleging a construction defect, to appoint an expert with experience in the type of construction that is the basis of the claimant’s claim to examine the alleged defect. The court may not appoint an expert if all the parties object, or if the court finds that the costs of the expert outweighs any potential benefits to resolution of the action. If an expert is appointed, the expert must coordinate and communicate with the parties as directed by the court. Within 15 days after conducting the examination, or as otherwise determined by the court, the expert shall submit a written report to the court and the parties that contains the expert’s findings. The report must include the following:

  • A description of how the expert conducted the examination of the alleged defect.
  • Information identifying the persons present at the site of the improvement while the expert conducted the examination.
  • Photographs or other documentation of the alleged defect including any relevant test results.
  • A statement of whether the damages claimed by a claimant are more likely than not the result of a construction defect, another identified cause, or a construction defect and another identified cause.
  • Information on other matters related to the alleged defect as directed by the court.

If the expert concludes that the damages are wholly or partially the result of a construction defect, the report must state the actions necessary to repair the defect and any repairs related to the defect, provide an estimate of the reasonable cost of repairs, and state the anticipated time needed for the repairs under the current market conditions for construction services and materials.

The parties shall compensate the expert, but the prevailing party is entitled to reimbursement from the non-prevailing party. The expert appointed by the court may not be employed to repair the alleged defect or recommend contractors to repair the defect.

Duty to Repair Construction Defect

Creating Fla. Stat. § 558.0046, establishes the duty to repair a construction defect if the claimant receives compensation for the repair. If a claimant receives compensation and fails to fully repair the defect, the claimant is liable to a purchaser of the property for any damages resulting from the failure to disclose the defect.

Notice to Mortgagee or Assignee of Claim Alleging Construction Defect

Creating Fla. Stat. §558.006, requires a claimant to provide notice to a mortgagee or assignee if a notice of claim alleging a construction defect is made with respect to real property to which a mortgagee or an assignee has a security interest. The claimant must, within 30 days after service of the notice of claim on the contractor, subcontractor, supplier, or design professional, provide the mortgagee or assignee with a copy of the notice of claim by certified mail, return receipt requested. If repairs relating to the defect are completed after notice to a mortgagee or assignee is provided, or if any settlement, partial settlement, arbitration award, or judgment is obtained by the claimant, the claimant must provide an additional notice to the mortgagee or assignee, by certified mail, return receipt requested, within 60 days after completion of the repairs or any settlement, partial settlement, arbitration award, or judgement, whichever is later.

Amendments if Enacted into Law Are Effective July 1, 2022

The amendments to 95.11(3)(c) if enacted as law will apply to any action commenced on or after July 1, 2022, regardless of when the cause of action accrued. However, any action that would not have been barred under the statute before the amendments may be commenced before July 1, 2023. If such action is not commenced by July 1, 2023, and is barred bythe amendments to the statute, the action is barred.

The amendments to 558.004, 558.0045, 558.0046, and 558.006 if enacted into law take effect on July 1, 2022 and apply to civil actions and proceedings for a construction defect that are initiated on or after July 1, 2022.

Summary of Impacts to Florida Law By the Proposed Amendments

The proposed amendments if enacted into law will significantly impact future construction defect claims, including eliminating the 10-year statute of repose. As a result, a latent construction defect claim could theoretically be filed well after 10 years under facts allowing for the tolling of the four-year statute of limitations applying to such claims. This change will obviously create additional exposure to contractors and their insurance carriers. The amendments also provide for a supplemental offer to be made in response to a claim, which if rejected by the claimant, could result in the claimant losing the right to recover attorneys’ fees associated with litigating the defect claims unless the claimant can prove by a preponderance of evidence that additional repairs were necessary beyond those contained in the offer or supplemental offer.

Finally, the amendments also require the court to appoint an expert to examine the alleged defects and prepare a report. The costs of retaining an expert will be paid by the parties but the prevailing party in litigation is entitled to recover these costs from the non-prevailing party. The changes are intended to help the parties settle and resolve construction defect claims without having to engage in protracted litigation.

Nevada Supreme Court Clarifies Retroactive Nature of 10-Year Statute of Repose for Construction and Design Defects

Brian K. Walters | Gordon Rees Scully Mansukhani

Does a legislative extension of a statute of repose for construction and design defect claims allow a claim to proceed even if the repose period in effect when the claim was filed barred that claim?

On October 28, 2021, the Nevada Supreme Court answered this question in the affirmative when it denied the appellants’ petition for rehearing in Dekker/Perich/Sabatini Ltd. v. Eighth Jud. Dist. Ct. in & for Cty. of Clark, 137 Nev. Adv. Op. 53 (2021) (“Dekker”).

Dekker was the culmination of an evolution of Nevada Revised Statute (“NRS”) 11.202, Nevada’s statute of repose for claims based on construction and design deficiencies. Prior to 2015, a claimant had from 6 to 10 years from the date of substantial completion of a property to file a construction or design defect action, depending upon the type of defect (6 years for “patent” defects, 8 years for “latent” defects, 10 years for “known” defects with no repose period for fraud).

However, on February 24, 2015, Nevada Assembly Bill 125 (“AB 125”) went into effect. AB 125 did away with the different repose periods for different types of defects in favor of a single six-year repose period for all defects (including claims for fraud) commencing from the date of substantial completion of a property. AB 125 dramatically shortened the time in which a claimant could bring a construction or design defect claim in Nevada.

Attorneys representing contractors and design professionals took advantage of the shorter statute of repose. For example, attorneys in GRSM’s Las Vegas office obtained dismissal of a $3,555,690.14 construction defect claim for a general contractor client based on a claimant’s failure to bring an action within 6 years based on the new statute of repose.1

However, on October 1, 2019, Nevada Assembly Bill 421 (“AB 421”) went into effect, extending the statute of repose back to ten years. AB 421 also made the 10-year limitation period retroactive to actions in which the substantial completion of the property occurred before October 1, 2019.

The new, longer statute of repose and its retroactive nature created some uncertainty. Did retroactivity mean that a claim that had already expired under the previous six-year repose period comes back to life after passage of AB 421?

The Dekker Court addressed this specific question. In Dekker, the City of North Las Vegas (“CNLV”) brought an action for construction defects against a contractor that built a fire station for the City. The fire station was substantially completed on July 13, 2009. On July 11, 2019, after the AB 125 six-year repose period had expired, but before the 10-year repose period (AB 421) went into effect, CNLV brought an action against the contractor for construction defects.

The Contractor moved to dismiss the action, arguing that CNLV’s claims were time-barred under the six-year repose period. The district court heard the motion on September 30, 2019, the day before A.B. 421’s amendment to the repose period took effect. On October 14, 2019, the court issued an order dismissing CNLV’s complaint based on the six-year statute of repose.

CNLV moved to alter the judgment under NRCP 59(e), arguing that the ten-year statute of repose was now in effect and governed its claims. The Contractor countered that the claims were statutorily barred when the complaint was filed and thus void ab initio and could not be revived. The Contractor also asserted that granting CNLV’s motion would violate its due process rights.

The district court granted CNLV’s motion to alter the judgment, determining that NRS 11.202 applied retroactively and constitutionally, and reinstated CNLV’s claims. The Contractor filed a writ of mandamus or, alternatively, prohibition with the Nevada Supreme Court challenging the district court’s order.

The Nevada Supreme Court framed the issue as follows:

[W]hether NRS 11.202’s 2019 amendment extending the repose period allows a claim to proceed even if the repose period in effect when the claim was filed barred that claim.

The Nevada Supreme Court held that such a claim may proceed:

[A]s amended [in 2019], the plain language of NRS 11.202 allows a claim to be brought so long as it was filed within ten years after the date of substantial completion of the construction work, regardless of whether the claim would have been barred under the previous six-year statute of repose at the time the complaint was filed.

In other words, an otherwise time-barred claim may be brought back to life based on the retroactive nature of the new 10-year statute of repose. The Court observed that the Nevada Legislature lengthened the statute of repose because the shorter repose period prejudiced Nevada residents, and the Legislature clearly intended the amendment to apply retroactively.

Dekker provides some much-needed clarity to the recently evolving nature of Nevada’s statute of repose for construction and design defect claims.

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