Following the construction industry and related legal topics in the United States.


Friday, February 9, 2007

Red Dirt Muddies the Waters

Ken Michael's January 25 blog entry focused on a recent unpublished North Carolina Court of Appeals decision that leaves parties and practitioners in a quandary when faced with the potential application of a statute of limitations.

Red Dirt Properties, LLC v. Prime Building Company Inc. of North Carolina (North Carolina Lawyers Weekly No. 07-16-0119), diminishes the impact of a limitations statute even when an owner has written notification of the existence of a construction problem. Statutes of limitation often result in a hardship to one of the parties, and the results can be unfair. So this court's rationale for letting the owner off the hook is puzzling.

The decision also begs these and other questions: What is an owner's duty when it learns of a possible construction deficiency? Can an owner rely solely on the assurances of the contractor (who is responsible for the problem), rather than undertaking an independent review of the situation? And, what if personal injuries were involved? Then, would the owner have been able to stand behind an estoppel argument in asserting its claim against the contractor?

Lawyers should consider the individual facts and equities of each case before advising owner clients that they are safe simply to rely on assurances of a contractor; and or advising contractor clients that they are protected by a statute of limitations. An outcome driven court may end up dishing out some mud pie. (Today's entry was published by Laura Luger of Womble Carlyle's construction and real estate development group.)

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