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March 12, 2024 Feature

Construction Bills

Rowan T. Mason and Brian R. Zimmerman

Recent Reductions to State Statutes of Repose in Florida and Texas: A National Trend or Outliers?

Every lawyer is intimately familiar with the concept of statutes of limitations and many litigators frequently encounter them in day-to-day practice. Fewer, however, concern themselves with its cousin—the statute of repose. But for those in construction and construction insurance law, statutes of repose can function as an important end date after which all potential liability for a project is absolved.

At the most basic level, a statute of repose acts as the bookend of any potential liability. While a statute of limitations puts time limits on claims for patent or known defects, the discovery rule and tolling principles can theoretically extend the statute of limitations for unknown, latent defects, in perpetuity. For this reason, many (but not all) jurisdictions also impose statutes of repose, particularly in the arenas of construction and products liability; these statutes ensure that contractors do not face lawsuits for work performed decades in the past. Such statutes range from five years in Arkansas and Tennessee, to 10 years in the District of Columbia, Hawaii, Kansas, New Mexico, Rhode Island, and others. A few states also have statutes of repose that go beyond 10 years or can be extended beyond 10 years under certain circumstances.

The issue, of course, can be polarizing. Contractors and insurance companies naturally prefer shorter statutes of repose that begin to run as early as possible. These entities insist that longer periods of liability increase risk (and therefore cost) and result in more litigation, sometimes after potentially responsible subcontractors and suppliers have gone out of business. Advocates for owners and plaintiff-side defects lawyers counter that purchasers of construction (particularly condominiums in large projects) must be protected from latent defects that may not manifest for years.

In what could be the beginning of a trend, several states have recently taken steps to reduce their statute of repose periods. The most recent example is Florida. On April 13, 2023, Florida’s Governor DeSantis signed into effect a new law altering Florida’s statute of repose in several ways. Most dramatically, it reduced the statute of repose from 10 years down to seven years. But the new law also starts the clock with the earliest possible trigger date rather than the latest. The prior codification stated that the statute of repose began to run from the latest of (a) the date of actual possession by the owner, (b) the date of the certificate of occupancy, (c) the date of abandonment of construction if not completed, or (d) the date of completion or termination of the contract. The modifications now begin the statute of repose at the earliest, not latest, of the potential triggers and removes items (a) and (d) above, thereby reducing the necessity of fact discovery to determine, for example, if a claim is rescued by the date of the owner’s actual possession of the property. The amendment further provides that while the new law is effective, the shortened statute of repose will not be enforceable until July 1, 2024.

Texas also recently shortened its statute of repose. While the Texas change only affects residential construction, and even then only in certain circumstances, the residential space is likely where the change will have the biggest impact. Effective June 9, 2023, the typical 10-year statute of repose in Texas becomes just six years for residential construction where the contractor has complied with certain written warranty requirements contained in the statute. The requirements are that the contractor has provided written warranties of “(1) one year for workmanship and materials; (2) two years for plumbing, electrical, heating, and air-conditioning delivery systems; and (3) six years for major structural components.” Presumably most Texas home and condominium builders will be updating their warranties to ensure they qualify for the reduced statute of repose.

If this constitutes a trend, at least one other state has bucked it. New York has long enjoyed the distinction of being just one of two states to have no statute of repose at all (the other being Vermont). Naturally, this has rankled contractors and industry trade groups who have long lobbied the New York legislature to change it. In fact, a bill has been introduced in the New York House or Senate every session since at least 2009 to add a 10-year statute of repose to the books. Despite these biennial attempts, each bill has stalled in committee and not even gone up for a vote. Thus, New York remains without any statute of repose.

Projects for the federal government also have no statute of repose. While there have been those that have called for one to be imposed, to the authors’ knowledge, no bills have been proposed in Congress to date. As a result, those performing federal contracting work can be sued decades after completion for latent defects, unless otherwise agreed in the contract.

For now, it remains to be seen which way the wind blows on capping the duration of exposure of builders. Contractors and insurers will continue to bemoan the cost and risk associated with long time horizons for potential liability on their projects, while consumer advocates will tout the importance of keeping open avenues for relief on latent building defects.

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    Rowan T. Mason

    Ralls Gruber & Niece LLP

    Rowan T. Mason is a partner at Ralls Gruber & Niece LLP in San Francisco, California.

    Brian R. Zimmerman

    Hurtado Zimmerman SC

    Brian R. Zimmerman is a shareholder at Hurtado Zimmerman SC in Wauwatosa, Wisconsin.