In September 2013, I blogged about the decision of the North Carolina Court of Appeals (“COA”) in Christie v. Hartley Construction, Inc., which held that owners of an improvement to real property could not recover money damages under a supplier’s express 20-year warranty because the lawsuit was filed outside of North Carolina’s applicable six-year “statute of repose.” That statute, codified at N.C. Gen. Stat. § 1-50(a)(5), bars damages actions arising from improvements to real property asserted more than six years after substantial completion. The COA’s Christie decision effectively meant that the statute of repose trumped an express warranty of a longer duration.
As I mentioned in my prior blog post, however, one of three COA judges on the Christie panel dissented from the majority’s opinion, giving plaintiffs the right to appeal to the state’s Supreme Court. They did. And that Court reached the opposite conclusion of the COA majority, ruling that the protection provided by the six-year statute of repose could be waived without violating North Carolina public policy.
Let’s break down the North Carolina Supreme Court’s decision in Christie:
As set forth in the attached order, The Supreme Court of the United States will NOT review the decision of the Minnesota Supreme Court upholding legislation by the Minnesota state legislature that revives long-extinguished design defect liability arising from the 2007 collapse of a portion of the I-35W bridge in Minneapolis.Prior to the collapse, Minnesota’s “statute of repose” (a statute that limits the time during which an action can arise) for design defects was 15 years. Despite the fact that the design work for the bridge in question was performed in the mid-1960’s, and despite the fact that the designer of record — Sverdup & Parcel and Associates, Inc. — had been bought out by Jacobs Engineering in 1999, the Supreme Court’s denial of certiorari means that Minnesota is now free to pursue $37 million in indemnity claims against Jacobs Engineering that had expired under the 15-year statute no later than the early 1980’s.
This is a scary outcome for participants in the construction industry, with potential insurance, contract drafting and document retention repercussions. I’ll be back in the days ahead with additional analysis. In the interim, you can read AGC’s brief in favor of review here, which sets forth quite eloquently the reasons why the Supreme Court should have reviewed and reversed the Minnesota Supreme Court’s decision.
UPDATE (5/29/12 1:38 p.m.): Coverage from Engineering News & Record can be found here.