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Breach of Contract Claims Find No Quarter in the Language of Ohio’s Statute of Repose: R.C. § 2305.131 Applies Both Tort and Contract Claims

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By Timothy B. Spille

August 12, 2019

The Supreme Court of Ohio recently held that R.C. § 2305.131, the statute of repose, applies to any cause of action, whether sounding in tort or contract, so long as the cause of action meets the requirements of the statute. What this means is that property owners claiming faulty or defective construction by architects, engineers, and contractors must file lawsuits within ten years of a project’s completion.

In Riegel Local School Dist. Bd. of Edn. v. Buehrer Group Architecture & Eng., Inc., Slip Opinion No. 2019-Ohio-2851, the New Riegel Local School District (the “School District”) filed suit alleging that condensation, moisture intrusion, and other deficiencies stemmed from the improper design and construction of a public-school building (the “Project”). The School District’s claims against the design professional, general contractor, and roofing subcontractor ranged from breach of contract, i.e., failure to provide services or work in conformance to the terms of their contracts, to tort claims, i.e., failure to conform with the requisite standard of care to perform in a workmanlike manner. As a result, the School District claimed it incurred damages, including damages for physical damage to property.

In response, the defendants moved to dismiss on grounds that R.C. 2305.131 barred the School District’s claims because substantial completion of the Project occurred more than ten years before it filed the lawsuit. The defendants also argued that the breach of contract claims were time-barred. The trial court granted the defendants’ motions and the matter was appealed to the Third District Court of Appeals.

On appeal, the Third District noted the School District’s breach of contract claims appeared to be barred by the statute of repose. Yet, the Third District determined that it was required to follow earlier Ohio Supreme Court case that held the statute of repose only applied to tort actions and therefore, held that R.C. 2305.131 does not apply to claims for breach of contract.

The Ohio Supreme Court analyzed the language of R.C. § 2503.131(A)(1), which provides:

Notwithstanding an otherwise applicable period of limitations specified in this chapter or in section 2125.02 of the Revised Code and except as otherwise provided in divisions (A)(2), (A)(3), (C), and (D) of this section, no cause of action to recover damages for bodily injury, an injury to real or personal property, or wrongful death that arises out of a defective and unsafe condition of an improvement to real property and no cause of action for contribution or indemnity for damages sustained as a result of bodily injury, an injury to real or personal property, or wrongful death that arises out of a defective and unsafe condition of an improvement to real property shall accrue against a person who performed services for the improvement to real property or a person who furnished the design, planning, supervision of construction, or construction of the improvement to real property later than ten years from the date of substantial completion of such improvement.

Underpinning its analysis, the Court also noted the Legislative intent behind enacting the statute of repose, writing:

The General Assembly recognized that the availability of evidence pertaining to an improvement to real property more than ten years after completion is problematic and that it is an unacceptable burden to require the maintenance of records and documentation pertaining to an improvement to real property for more than  ten years after completion. [* * *] It intended the current version of R.C. 2305.131 “to preclude the pitfalls of stale litigation.”

Reading R.C. § 2503.131 as a whole, the Court concluded that the statute of repose does not just apply to tort actions, but also applies to contract actions that meet the requirements of the statute. Consistent with this statutory interpretation, the Court emphasized that R.C. Chapter 2305 includes statutes of limitations for both contract claims (i.e.R.C. 2305.06 and 2305.07) and tort claims (i.e.R.C. 2305.09 and 2305.10).

Moreover, the Court also acknowledged “[* * *] the General Assembly explicitly tied the commencement of the repose period to contractual performance.” This acknowledgment nicely dovetails with the definition of “substantial completion” in R.C. § 2305.131(G), which provides:

[* * *] the date the improvement to real property is first used by the owner or tenant of the real property or when the real property is first available for use after having the improvement completed in accordance with the contract or agreement covering the improvement, including any agreed changes to the contract or agreement, whichever occurs first. (Emphasis Added.)

The real property construction statute of repose, “[* * *] which became effective on April 7, 2005, applies to civil actions commenced after the effective date of the statute regardless of when the cause of action accrued.” Oaktree Condo. Ass’n. v. Hallmark Bldg. Co., 139 Ohio St. 3d 264, 266, 2014-Ohio-1937. The Ohio Supreme Court follows the delayed-damages rule when considering when a cause of action accrues in construction cases. See id., at 267. “The delayed-damages rule considers when all elements of a cause of action have come into existence.” Id. “To establish actionable negligence, one must show in addition to the existence of a duty, a breach of that duty and injury resulting proximately therefrom.” Id., citing Mussivand v. David, 45 Ohio St.3d 314, 318, 544 N.E.2d 265 (1989).

If you have any questions regarding this case, or anything involving construction claims, please contact a member of the Architects and Engineers/Construction Liability Group.

This has been prepared for informational purposes only. It does not contain legal advice or legal opinion and should not be relied upon for individual situations. Nothing herein creates an attorney-client relationship between the Reader and Reminger. The information in this document is subject to change and the Reader should not rely on the statements in this document without first consulting legal counsel.

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