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:
Ten years ago, you had the roof on your office building replaced. Your roofer had assured you that the new membrane would be waterproof, wouldn’t crack and would be well-suited for your building over the long-haul. He even backed up these representations with a document stating that both the membrane and his workmanship were “fully warranted for 20 years.”
The work was substantially complete on September 15, 2003, and until recently, the new membrane hadn’t given you any problems. After storms passed through your neck-of-the-woods last week, however, your “new” roof leaked. Big Time.
Turns out you’re going to need to replace your roof immediately, ten years earlier than expected. Adding insult to injury, interior spaces were damaged, including common areas and rented space, and the operations of some of your tenants were disrupted. You suspect they might seek rent abatement, maybe more. Good thing you kept that 20-year warranty in a safe place, right?
Kind of. Under a recent North Carolina appellate decision, you might be able to compel the roofer to replace the roof, but you’re not likely to succeed in recovering any monetary damages from him.
Virginia construction attorney Chris Hill
Last week, I reported that the U.S. Supreme Court had refused to hear the Jacobs Engineering Group, Inc. v. State of Minnesota case, which arises from a decision of the Minnesota Supreme Court allowing that state’s legislature to retroactively revive long-expired latent defect liability.
This week, I provide a summary of the Minnesota Supreme Court’s decision and prognosticate about its consequences over at Chris Hill’s excellent blog, “Construction Law Musings.” You can read my guest post on Chris’s site by clicking here.
Many thanks to Chris, a fellow Duke ’94 alum, for giving me the opportunity to guest blog at his place. I’ll be back here with original content early next week. Lots going on with mechanic’s lien law & policy to share…
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.