Construction Contracts
Time Limit on Filing Certain Construction Lawsuits Extended
Scott R. Metcalf | Franczek Radelet PC
November 20, 2014
A recent Illinois Appellate Court decision extends the time period in which a certain type of legal claim can be made against a general contractor on a construction project. The decision, 15th Place Condominium Association v. South Campus Development Team, LLC, holds that the time limit for filing a lawsuit claiming breach of an express indemnity clause in a construction contract is ten years rather than four years.
Generally, a lawsuit involving an act or omission in the design, planning, supervision, observation, or management of a construction project must be filed within four years from the time the person bringing the action knew or should reasonably have known of such act or omission. If the act or omission is discovered within ten years after it occurs, the person discovering the act or omission has four years to bring a lawsuit. However, if the act or omission is discovered more than ten years after it occurred, filing a lawsuit is prohibited.
At issue in the 15th Place Condominium Association decision, however, was an express indemnity clause between a developer and general contractor. After the developer turned the property over to the condominium association in 2005, numerous design and workmanship defects were discovered. The condominium association sued the developer in 2008. In 2011, the developer filed third-party lawsuits against the architect and the general contractor. At the trial court, both the architect and the general contractor successfully argued that the developer’s lawsuits were barred by the four year time limit on bringing actions on construction contracts.
The Appellate Court upheld the trial court’s dismissal of the claims against the architect and all but one claim against the general contractor. Under that claim, the Court ruled that the developer’s claim against the general contractor for breaching the express indemnification clause of the contract could proceed. Applying a prior Illinois Supreme Court decision’s precedent, the Court found that the general contractor’s promise to indemnify the developer against claims, damages or losses arising out of or resulting from the work was not a construction-related activity. Because the promise to indemnify was not a construction-related activity, the ten year time limit for filing lawsuits based on all other written contracts applied.
While the decision may allow a school district to bring a claim for breach of an indemnification clause in a construction contract after four years from discovering defects in a construction project, the case should also serve as a reminder that in most instances lawsuits on construction projects must be brought within four years. Given how often construction projects result in problems and potential legal claims, it remains advisable to address these issues promptly to protect a school district’s rights.
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SOURCE: www.lexology.com