Ohio’s 10-year Statute of Repose Enforced as Written: Homeowner’s 15-year-old Claim Dismissed as Untimely
Kegler Brown Construction Alert September 18, 2008
Virtually every other state has a Statute of Repose to bar construction-related claims that are not brought within a certain number of years (for example, 10 to 15) after a project's substantial completion. After the Ohio Supreme Court declared Ohio's first attempts at such a statute unconstitutional, the Ohio legislature tried again in 2005: it enacted a ten-year Statute of Repose to bar construction-related claims asserted more than ten years after the date of the project's "substantial completion." Ohio Revised Code § 2305.131. The question was, “is the new statute constitutional?”
In McClure v. Alexander, 2008 Ohio 1313 (Ohio Ct. App.), the Court of Appeals for the Second Appellate District of Ohio, Greene County, held that the new Statute of Repose is constitutional and affirmed its use to dismiss a homeowner's claim as time-barred.
The dispute centered around an addition to a residential home that was completed in June 1989. In 2004 —fifteen years after the project was completed— the addition had to be destroyed because of rotten walls from water damage. The homeowner sued the deceased contractor's estate for $70,000.00, alleging that the siding had been applied incorrectly and caused the water damage.
The contractor moved to dismiss the claim, arguing that Ohio's ten-year Statute of Repose barred the fifteen-year-old claims. The home owner argued that the new Statute of Repose violated the same provisions of the Ohio Constitution that the Ohio Supreme Court had previously relied on to invalidate the previous statute.
The Appeals Court responded with a detailed review of the legislative and legal history of statutes of repose in Ohio. It noted that it was "attentive" to the legislative objective behind the Statute of Repose. This objective included a desire to "balance" the rights of claimants against the rights of contractors, architects, and other construction professionals involved in construction improvements to "real property, the useful life of which may be decades long, and to thereby preclude the inherent risks of stale litigation." In other words, the legislature wanted to balance the right to recourse for one's damages against such things as the long effective life of most construction improvements, the intervening factors that may cause or contribute to damages (such as how the owner was maintaining the improvement), the passage of time, and the need to, at some point, put a definitive end on one's potential liability.
The Appeals Court's decision in this construction defects case comes on the heels of an Ohio Supreme Court decision earlier this year holding a 10-year Statute of Repose constitutional as applied in a products liability case arising out of a personal injury to a worker at a General Motors plant in Toledo, Ohio. These decisions indicate that Ohio's "new" Statute of Repose appears to have avoided the fate of its predecessor statute.
This, in turn, should give relief to the Ohio construction industry in that construction employers will finally be able to dispose of records dealing with "old projects", which were completed more than twelve years ago. (The Statute of Repose has a 'savings' clause that allows claimants an additional two years to file suit from the date they discover the alleged defect if they discover that defect within the last two years of the ten-year period.) In addition, further relief is likely in that it should reduce the risk of plaintiffs’ lawyers asserting legal claims long after construction is over. That said, we still recommend to our clients that they continue to maintain their records for as long as practical. This is because, as the contractor in McClure discovered, there is still a possibility that you may have to defend a claim filed almost a dozen years after substantial completion.