construction disputes: statutes of limitation and...

Construction Disputes: Statutes of Limitation and Repose in Indemnity and Contribution ClaimsAdvanced Issues, State Law Differences, Discovery Rule, Substantial Completion, Triggering Events, Patent and Latent Defects, Tolling, Estoppel

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THURSDAY, OCTOBER 10, 2019

Presenting a live 90-minute webinar with interactive Q&A

Marie Cheung-Truslow, Principal, Law Offices of Marie Cheung-Truslow, Boston

Joshua Quinter, Associate Managing Principal, Offit Kurman, Plymouth Meeting, Pa.

Gary Strong, Partner, Seiger Gfeller Laurie, Princeton, N.J.

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STATUTE OF

LIMITATIONS AND

STATUTE OF REPOSE

Presented by:

Gary Strong, Esq.

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SEIGER GFELLER LAURIE LLP

Statutes of Limitation in Construction Project –

NOT as Easy as You Think…

Length of Construction Projects

Documents are scarce

Person suing your client may not have had any

connection to the client

Lawsuit occurs…what’s next?

6

SOL

States

Alaska, Arizona, Co – 2 years

California – 3 years

Illinois – 5 years

New Jersey – 6 years

7

Accrual of SOL

Generally speaking, case law states the limitation

period does not begin to run until the plaintiff discovers

or should have discover the cause of action.

Plaintiff hires inspector for home.

Plaintiff is not at property for time but hears about problems.

8

Discovery Rule

Discovery rule provides that accrual date of a cause of

action is delayed until plaintiff becomes aware of

his/her injury.

What if defect is discovered during limitation period?

How much time does one have – NJ, NY, CA?

9

Statute of Repose

Unlike limitations it is a hard stop when a

contractor ceases to perform work.

Single scope of work contractor VS. Contractor

who is on the project throughout its duration.

10

Exception to SOL and Statute of Repose

Fraud and/willful concealment

Right to Repair

States that limit

Statutory limitation by contract

New York, New Jersey, Nevada

11

Statute of Repose: Alabama

Construction: 7 Years from substantial completion to

improvement to real property against any person

performing or furnishing the design, planning, supervision

or observation of the construction. Ala. Stat. § 6-5-

221(2011).

Exception: Where architect, engineer, or builder had

knowledge that a defect or deficiency existed and failed to

disclose the defect. Ala. Code § 6-5-221(a).

Products: None.

12

Statute of Repose: Arkansas

Construction: 4 Years from substantial completion to

improvement to real property for tort or contract actions

for personal injury or wrongful death.

13

Statute of Repose: California

Construction: 4 Years from substantial completion of

construction or construction of improvement to real

property arising out of a patent defect, 10 years from

substantial completion for a latent defect. This doesn’t

apply to actions based on willful misconduct or fraudulent

concealment. Ca. Civ. Proc. Code § 337.1,337.15.

14

Statute of Repose: Illinois

Construction: 10 Years from improvement to real

property, but after person had knowledge, four years. 735

I.L.C.S. § 5/13-214.

15

Statute of Repose: Louisiana

Construction: 5 Years after the date owner takes possession of

(accepts) the improvement to real property. La R.S. 9:2772. If loss during

5th year (i.e. registry of acceptance; ownership or possession), action can

be brought within one (1) year after injury, but in no event more than six

(6) years after loss. L.S.A.-C.C. § 9:2772.

An action against a contractor or an architect for construction defects

must be brought within a ten (10) year liberative ten (10) year

prescription period (statute of limitations). L.S.A.-C.C. Art. § 3500. This

conflicts with a five (5) year prescriptive period for actions against

architects and contracts for ruin of a wood or brick, it is ten (10) years.

L.S.A.-C.C. § 9:2762.

16

Statute of Repose: New Jersey

N.J. Stat. § 2A:14-1.1(a) states, in pertinent part:

No action, whether in contract, in tort, or otherwise, to recover damages

for any deficiency in the design, planning, surveying, supervision or

construction of an improvement to real property, or for any injury to

property, real or personal, … arising out of the defective and unsafe

condition of an improvement to real property, nor any action for

contribution or indemnity for damages sustained on account of such

injury, shall be brought against any person performing or furnishing the

design, planning, surveying, supervision of construction or construction

of such improvement to real property, more than 10 years after the

performance or furnishing of such services and construction….

17

Statute of Repose: North Carolina

Construction: 6 Years after “last act of defendant” or

“substantial completion” by the improvement. N.C.G.S.A.

§ 1-50.

18

Thank You For Your Time!Questions?

Seiger Gfeller Laurie LLPGary Strong, Esquire

[email protected]

(609)375-2035

19

mailto:[email protected]

TOLLING OF THE LIMITATIONS PERIOD

PRESENTED BY:

Marie Cheung-Truslow, Esq.

Principal/Owner

101 Arch Street, Suite 800

Boston, MA 02110

(617) 4777-4748

[email protected]

20


DEFINITION OF TOLLING

The most frequently intended meaning of the phrase

"tolling the statute of limitations" is to suspend its

operation, that is, that the limitations period does not

begin to run for one reason or another, or that it is

temporarily suspended.

21

Circumstances Tolling the

Limitations Period

OVERVIEW

Statutory Tolling

Fraud and Concealment of Cause of Action

Equitable estoppel

Tolling Agreements

22

STATUTORY TOLLING

A minor or person incapacitated by mental illness

When a cause of action accrues

May apply even if parents are available to file suit

Examples

Adding Defendants or new causes of action in a pending case

Relation back statute to the original complaint

Examples

23

STATUTORY TOLLING

Savings Statute

If original claim timely filed, but dismissed, savings

statute provides additional time to refile

Must be dismissed for a “matter of form”

Dismissal for improper venue

Dismissal for lack of jurisdiction

Examples

24

Fraud and Concealment of

Cause of Action

If Defendant fraudulently conceals cause of action

The period prior to discovery of cause of action is

excluded

Positive acts done with the intention to deceive

Examples

25

Tolling of Statute of Repose

Statute of Repose cannot be tolled.

26

Equitable Tolling

Conduct by Defendant that lulls plaintiff into

delaying filing suit until the limitations period

has passed

Need not be based on fraud

Examples

27

TOLLING /STANDSTILL AGREEMENTS

Parties can enter into tolling or standstill

agreements to stop the running of the statute of

limitations

For a specific period of time

Cannot be indefinite

Specify any period that has already expired will

not be revived or revived

Agreements entered into after expiration of SOL

28

TOLLING /STANDSTILL AGREEMENTS

The Parties agree that the period from the Effective Date of

this Tolling Agreement, through and including the Termination

Date of this Tolling Agreement, as defined in Paragraph 2

below, shall not be asserted or relied upon in any way to

compute the running of time under any statute of limitations

or repose, any suit limitation provision, whether statutory,

contractual, equitable or otherwise, concerning any causes of

action, lawsuits or other legal proceedings Plaintiff may have

now or hereinafter bring against Defendant.

29

Thank You!

PRESENTED BY:

Marie Cheung-Truslow, Esq.

Principal/Owner

101 Arch Street, Suite 800

Boston, MA 02110

(617) 4777-4748

[email protected]

30


CONSTRUCTION CLAIMS:

STATUTES OF LIMITATIONS AND

REPOSE

Joshua C. Quinter, Esquire

[email protected]

484-531-1701

The Indemnity Landscape

- Indemnity is an agreement to pay for the

“stupidity” of another person.

- Common law indemnity v. contractual indemnity

v. statutory indemnity

- What is covered by the promise of indemnity?

©2017 Offit Kurman, P.A. All rights reserved 32

When Indemnity is Not Indemnity

• Anti-indemnity statutes – generally restrict what a party can or

cannot claim in an indemnity action as a matter of public policy

– Can restrict: 1. Parties

2. Action types

3. Time periods

• Waiver of indemnity obligation – Bester line of cases

• Practical: when the other party refuses to defend and hold

harmless


Statute of Limitations


- Each state has a statute of limitations for different claims (tort,

contract, etc.); best practice is to make sure the indemnity claim is in

before that statute of limitations expires.

- Practical reality is that most contract claims are brought long before

the statute of limitations expires, so the issue usually does not arise.

- Tort claims can be problematic because statutes of limitation are

shorter and plaintiffs more often file at the deadline.

- Keep the discovery rule in mind, as it can be a useful tool in

extending the limitations period

Statute of Limitations Continued

- Read the Statute of Limitations, they are statutes so the

analysis starts there

- Case law and court rules should also be considered for a

variety of reasons (entire controversy doctrine, timing,

etc.)

- Some states start the limitations period from the date the

underlying claims arise (similar to the period the Plaintiff

has to file suit)

- Other states will measure from the date Plaintiff’s claims are

filed


Best Practices to Toll the

Statute of Limitations


• Tolling Agreements – Be sure the document is clear;

consider definitive versus indefinite time frames and

preserve claims and defenses

• Writ of Summons – A way to initiate suit without filing a

complaint; some courts will not allow cases to linger on the

docket

• Private arbitration under agreement that the statute of

limitations does not apply – not commonly done, but

possible if parties will agree

A Word on Statutes of Repose

• Practically speaking, the statute repose is the construction

equivalent of the rule against perpetuities – its application is

exceptionally rare

• If you have a statute of repose problem, your problem is

much larger than the statute itself – proof is your issue

• Consider that if you bump into a statute of repose question

the case will be exceptionally hard to litigate from a practical

perspective because so much has changed in the period of

time that it took the statute to run.


Contribution Versus Indemnity


• A little different than indemnity because asking someone else

to pay a part of the claim as opposed to all of it.

• Contribution, when asserted, is usually asserted under a

statutory or common law theory that allows for recovery – not

contract based

• Legal theory behind contribution is different than indemnity,

but the practical applications discussed in the indemnity slides

is largely the same – the primary difference is that there is not

really contract analysis

Additional Practical Considerations


• Like in many other situations, communication is key – discussions and

side agreements with valuable clients can be part of the solution.

• Pay attention to contract language up front and discuss these things

when people are not “hot under the collar” – assign risks to the parties

best able to control them so that there are fewer problems and less

disputes

• Keep in mind that choice of law and forum selection clauses can

impact the outcome – think about this when looking at contracts, when

considering where to file, and thinking through defenses.

Additional Practical Considerations


• Keep in mind that the arbitration rules sometimes give

arbitrators more discretion, including on procedure

(good, bad, or indifferent, the fact is that it exists)

• Is the indemnity claim real or just an attempt to get into

another pot – impacts how hard someone will fight on it

or not (also dependent on the size of the claim)

THANK YOU!

Contact the Presenter

OFFIT KURMAN, P.A.

401 PLYMOUTH ROAD, SUITE 100

PLYMOUTH MEETING, PA 19426

https://www.offitkurman.com/onkonstruction/

Joshua C. Quinter, Esquire

[email protected]

484-531-1701