Insurance Coverage

Bill Would Add Statute of Limitations in State Construction Disputes

Michelle Tuccitto Sullo | The Connecticut Law Tribune
May 27, 2015

Companies involved in the construction of public buildings and infrastructure likely won't have to be in perpetual fear of litigation anymore, as the legislature has approved a 10-year statute of limitations for the state and municipalities to sue if problems arise.

The bill has cleared the House and Senate, and as of May 27 was awaiting Gov. Dannel Malloy's signature. A spokesman for Malloy said the governor and his staff are reviewing the final language of the legislation.

Under the measure, for any project completed on or after Oct. 1, 2017, the state or any municipality will have 10 years from the "substantial completion" date to bring an action or claim. For projects completed before Oct. 1, 2017, the deadline is Oct. 1, 2027, to do so, according to the bill. The bill provides exemptions from the statute of limitations, including cases where there is a written warranty, guarantee or other agreement that provide for a longer period. It also doesn't restrict based on willful misconduct, environmental remediation law or for asbestos abatement.

Under the common-law doctrine of nullum tempus occurrit regi, or "no time runs against the king," a statute of limitations does not apply to a state unless a law specifically provides that it does.

The legislation arose in response to a 2012 state Supreme Court decision in Connecticut v. Lombardo Brothers Mason Contractors, in which the court ruled that the state could proceed with lawsuits against contractors involved in the construction of the University of Connecticut Law School library.

The state and university claimed defective design and construction work led to extensive water damage at the library, which was completed in 1996. The state paid for repairs, then sought to recoup those expenses. When the state sued in 2008, the defendants claimed the state had waited too long.

Following the ruling, the parties entered into mediation, and the dispute was settled for about $12 million in 2014.

Attorney Raymond Garcia, of Garcia & Milas in New Haven, who represented Lombardo Brothers Mason Contractors, said the 10-year statute of limitations aligns Connecticut with neighboring states. "I think this is a good compromise which deals with a problem that has a significant impact on contractors," Garcia said.

According to Garcia, the state knew the law library building was leaking two years after it opened. "Any problems with a building or project would manifest themselves well within the 10-year statute of limitations," Garcia said.

John Butts, executive director of the Associated General Contractors of Connecticut, had told lawmakers during the March public hearing it would be impractical and, in some cases, "fundamentally impossible" to defend against a claim that is filed 15, 20, 30 or even 50 years after completion of a construction project. As time passed, it would be harder to recover documentation and records and to locate key stakeholders, he said.

"With unlimited exposure, contractors doing business with the state are taking on risk that they cannot identify, manage or buy insurance for," Butts said. "Our members are also concerned that state agencies could, years after the completion of a project, assert claims that may arise from poor maintenance, the expected life span of the building's components, or other factors thereby making them responsible for issues not caused by the original construction."

In an interview, Butts said he is happy with the bill approved by the legislature. He called a 10-year statute of limitations a "reasonable amount of time" for the state or municipalities to file suit. "We have been working on this ever since the Supreme Court case," Butts said. "The construction and design industry worked with the administration to come up with a reasonable solution and compromise."

The Connecticut Bar Association, which supported the bill, indicated in its public hearing testimony that the Supreme Court decision would make any private business wary about entering any contract with the state. It cautioned that if the state did nothing to resolve the problems raised by the decision, the state would be unable to find enough contractors and designers "willing to bear the disproportionate and unique risks of a public construction project."

Attorney Gary Sheldon of Hartford, who focuses on construction law and is on the executive committee of the Connecticut Bar Association's Construction Law Section, said the legislation is the result of the construction industry and insurance companies approaching lawmakers. According to Sheldon, after the Supreme Court decision, some expressed to him that they would prefer not to do business with the state, and with the economy picking up, those in the construction industry have had more opportunities to pursue private work projects.

"There won't be an infinite risk hanging over businesses," Sheldon said. "This change makes it more fair for people doing business with the state."

Attorney Donald Doeg of Hartford, who has represented several architects and engineers, said there was a lot of angst in the construction industry following the court's decision, which prompted it to come together and try to address it with the legislature. "From the architects to the insurance providers, they were all equally alarmed and wanted to do something," Doeg said. "The state did work with us and try to come up with a compromise that worked for everyone."

Having a statute of limitations makes Connecticut more business-friendly, according to Doeg. Those involved in a project will be able to move on afterward, he said. Doeg said a 10-year period is plenty of time for the state or a municipality to know if a problem will arise. "In my experience, most problems tend to arise within a couple of years," said Doeg, who also has a background in engineering.

Within that time frame, a structure will have had to go through multiple seasons, with exposure to extremes in temperature, so any problems, from an air conditioning issue to what happens when the roof is covered in snow, will manifest, he said.

Betsy Gara, executive director of the West Hartford-based Connecticut Council of Small Towns, said the doctrine of nullum tempus recognizes the interests of citizens and taxpayers "should not be harmed because lawsuits are not filed within a certain time frame."

Gara told lawmakers municipalities usually exercise a great deal of caution in determining whether to proceed with a lawsuit.

"Municipalities generally have an obligation to their communities and property taxpayers to vigorously pursue claims where shoddy construction or design flaws have resulted in damages, regardless of the amount of time that has passed," Gara said, in public hearing testimony.

Asked this week about the language the legislature ultimately approved, Gara said she has spoken with leaders of municipalities, and none could think of an instance where it took them longer than a decade to file litigation over a problem with a structure.

The content of this article is intended to provide general information and as a guide to the subject matter only. Please contact an Advise & Consult, Inc. expert for advice on your specific circumstances.

SOURCE: www.ctlawtribune.com

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