Ohio Supreme Court Clarifies That the Statute of Repose Protects Professionals and Contractors from Stale Claims

The Supreme Court of Ohio held today in the New Riegel Local School District case that breach of contract claims for property damage due to defective work may be barred by Ohio's ten year construction statute of repose. This holding confirms that the statute of repose applies to both tort and breach of contract claims brought against design firms and builders.

A statute of repose generally serves to bar any lawsuit from being brought after a specified time once the project is substantially complete. Ohio's construction statute of repose bars a lawsuit from accruing after ten years from the date of substantial completion of the improvement. Substantial completion is the date the improvement is first used by the owner or when the real property is first available after the improvement is completed in accordance with the contract.

The statute provides that no cause of action to recover for bodily or property damages shall accrue against a person who performed services for an improvement to real property, including the design professional and contractors, more than ten years after the date of substantial completion. The General Assembly recognized that requiring builders and designers to maintain records of improvement projects for more than ten years after substantial completions was problematic and an unacceptable burden.

The design and construction of a school building for the New Riegel Local School District was substantially completed in December 2002. The School District alleged that moisture intrusion and other defect issues existed in areas of the building due to improper design and construction. In January 2015, the District notified the design and the construction firms contracted to perform the work of the claims for the alleged defects. The District filed a lawsuit several months later alleging breach of contract against the design firm, the general contractor, and the roofing subcontractor. A claim was also made by the District against the roofing subcontractor for breach of express warranty. The School District alleged it incurred damages as a result of the physical damage to its property.

The Seneca Court of Common Pleas relied upon the statute of repose to dismiss the School District's breach of contract claims because substantial completion of the project occurred more than ten years before the School District filed its lawsuit. The Court of Appeals reversed the trial court's decision and held that the statute of repose did not apply to claims for breach of contract. The Ohio Supreme Court accepted the appeal by the design professional firm and the contractors and held that the statute of repose does, in fact, apply to both tort and breach of contract actions that accrue more than ten years after substantial completion.

If you have additional questions, please contact Pat Devine or another member of our Construction Group.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.