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

Monday, November 12, 2007

SOL Countdown

Statute of Limitations ("SOL") cases can be complicated, and my mission in this space is to keep this simple. The case is Baum v. John R. Poore Builder, Inc., 643 S.E.2d 607 (N.C. App. 2007). Climb aboard and I’ll share the story. North Carolina Homeowners sued a Builder, Tile Subcontractor and Engineer for construction problems with their deck. In North Carolina, the SOL for filing suit is three years for contract and negligence actions. That part is easy. The hard part is establishing the date the SOL accrues or starts. Under North Carolina law, for "physical damage to claimant's property, the cause of action ... shall not accrue until ... physical damage to his property becomes apparent or ought reasonably to have become apparent to the claimant, whichever event first occurs."

At T-Minus seven years before suit, a report identified flaws in the deck; however, construction was ongoing and related issues in the report were settled in an agreement six years before suit.
At T-Minus four years before suit, the Homeowners noticed deck tile cracks and complained to the Builder, who instructed the Homeowners to call the Tile Subcontractor, who assured the Homeowner that there were no structural problems that caused the cracked tiles.

The Builder, Tile Subcontractor and Engineer tried to get the case dismissed on summary judgment. At issue was whether there are genuine issues of material fact as to when the Homeowners knew or reasonably should have known about the damage to their deck, and whether that date was more than three years from the date they filed suit. If the SOL accrued due to either of the just-mentioned T-Minus seven year or T-Minus four year events, the Builder, Tile Subcontractor and Engineer would be dismissed from the case. But there is more.

At T-Minus two years before suit, a painter told the Homeowners they should have the tile inspected possible moisture problems behind the tile. Homeowners contacted the Tile Subcontractor who promised but failed to come out. At T-minus one year before suit, a construction inspector advised the Homeowners "that the tile problems were the product of serious structural defects [in the design and construction of the deck]."

The North Carolina Court of Appeals ruled in favor of the Homeowners allowing the case to be decided by a jury, since the Tile Contractor assured the Homeowner that there were no structural problems that caused the cracked tiles at T-Minus four years before suit, which the Court deemed as evidence sufficient to support an inference that the Homeowners did not really know about the structural problems until T-Minus one year before suit.

Lesson one: SOL cases are very fact intensive. Lesson two: When filing a motion for summary judgment based on SOL, if the Statutes of Repose may also serve as grounds for dismissal, don’t forget to raise it in the motion for summary judgment. In this case, the defendants did plead the Statute of Repose as a defense in their answers to the complaint, but failed to mention it in their motions for summary judgment - and the Court failed to consider it even though the deck was completed a little over T-Minus six years from suit. What is the applicable Statute of Repose in North Carolina? Six years. Ouch. (This entry posted by Ken Michael, a member of Womble Carlyle’s real estate development and construction law practice group).

Source: Baum v. John R. Poore Builder, Inc.


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