Ohio Supreme Court Set to Decide Whether Ohio’s Statute of Repose Applies to Contract Claims Ohio Supreme Court Set to Decide Whether Ohio’s Statute of Repose Applies to Contract Claims

Ohio Supreme Court Set to Decide Whether Ohio’s Statute of Repose Applies to Contract Claims

On March 5, 2019, the Ohio Supreme Court will hear oral argument in a case of consequence to determine how long a party may file a construction contract claim under Ohio law.

Specifically, by reviewing an appeal of the decision in New Riegel Local School Dist. Bd. of Edn. v. Buehrer Group Architecture & Eng. Inc., 2017-Ohio-8521 (Nov. 13, 2017), the Ohio Supreme Court will decide whether the 10-year limit on construction claims under Ohio’s statute of repose applies to breach of contract claims as it does to tort claims.

Background. In February 2000, the New Riegel Local School District Board of Education (“New Riegel”) hired Studer-Obringer, Inc. (“SOI”) to build a K-12 school building. In March 2004, SOI completed the project, and New Riegel took control of the building. Eleven years later, after having issues with condensation and moisture intrusion, New Riegel sued SOI for breach of contract and failure to perform in a workmanlike manner. New Riegel also sued SOI’s insurer and roofing subcontractor, as well as the architecture and engineering groups who worked on the job.

The defendants responded that Ohio’s statute of repose barred New Riegel’s claims. Ohio Revised Code Section 2305.131 provides:

“…no cause of action to recover damages for bodily injury, an injury to real or personal property, or wrongful death that arises out of a defective and unsafe condition of an improvement to real property…shall accrue against…a person who furnished the design, planning, supervision of construction, or construction of the improvement to real property later than ten years from the date of substantial completion of such improvement.” (Emphasis added.)

SOI argued it completed the project in 2004, eleven years before New Riegel’s 2015 lawsuit and was, therefore, barred under the statute of repose. The trial court granted judgment on the pleadings to SOI.

On appeal, New Riegel argued the Ohio Supreme Court has interpreted the statute of repose as only applicable to tort claims, not breach of contract claims like the ones New Riegel filed, citing Kocisko v. Charles Shutrump & Sons Co., 21 Ohio St.3d 98, 488 N.E.2d 171, 172 (1986).  Although disagreeing with the Supreme Court’s conclusion, the Court of Appeals followed the Kocisko holding and reversed the trial court’s decision. The Supreme Court is now poised to consider the question.

A finding that the statute of repose applies to contract claims would benefit numerous stakeholders in construction. For contractors, that conclusion would provide additional protection against contract claims that originated from long-completed projects. Similarly, design professionals would have less need to carry claims-made professional liability policies after 10 years of project completion.

New Riegel is potentially significant particularly in context of claims brought by the state.  Currently, Ohio law provides that the state is not subject to general requirements of statutes of limitations unless the statute in question has specifically included the government by its terms. State, Dept. of Transp. v. Sullivan, 38 Ohio St.3d 137, 139, 527 N.E.2d 798, 799 (1988). Consequently, the state can bring breach of contract claims beyond the 8-year statute of limitations for written contract claims. R.C. 2305.06. The statute of repose, however, is not a statute of limitation “but rather a declaration of when a cause of action no longer exists.” State v. Karl R. Rohrer Assocs., Inc., Franklin App., 2018-Ohio-65 (Jan. 8, 2018). New Riegel provides the Supreme Court an opportunity to address that question as well.

Please contact Steve Forry, Christian Robertson or another member of the Construction Group if you have any questions.

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.
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