Construction Defects

Oregon Court of Appeals Clarifies Application of Statute of Limitations and Statute of Repose in Connection with Construction Defect Suit

Traub Lieberman
January 16, 2015

In Riverview Condo, Ass’n v. Cypress Ventures, Inc., 266 Ore. App. 574 (Or. Ct. App. 2014), the Oregon Court of Appeals clarified application of the statute of repose and statute of limitations in the context of a suit alleging construction defect, negligent and intentional misrepresentation, violation of the Oregon Condominium Act and nuisance and when such claims accrue. Plaintiff in the construction defect suit was a condominium association (the “Association”) alleging that water intrusion and resulting damage to the condominium was the direct result of faulty design, faulty workmanship, improper maintenance, defective material, improper construction and noncompliance with building codes and manufacturer specifications.

The Oregon Court of Appeals found that Oregon statute ORS 12.135 is the applicable statute of repose and, in this regard, relied upon the decision in Sunset Presbyterian Church v. Brockamp & Jaegger, 254 Ore. 286 (2012), which held that “ORS 12.135(1) applies to claims against a person arising from that person’s construction of an improvement to real property ‘whether in contract, tort or otherwise’.”  The Court then considered the definition of “substantial completion,” which is the trigger for the statute of repose. Relying on the decision in Sunset and a subsequent decision in PIH Beaverton, LLC v. Super One, Inc., 254 Ore. App. 486 (2013), the Court concluded that substantial completion refers to the date “on which the construction was fully complete, not the date on which it was sufficiently complete for its intended use or occupancy.” Therefore, the Court rejected the defendants’ position that the trigger date for the statute of repose was the date when the certificates of occupancy were issued. The Court noted that conflicting evidence offered by the parties created an issue of fact as to the date the construction was “accepted” and, therefore, the Court reversed the trial court’s grant of summary judgment.

With regard to the statute of limitations applicable to construction negligence claims, the Court clarified that the claims alleging injury to the “interest of another in real property” are subject to a six year statute of limitations as set forth in ORS 12.080(3). The Court then considered when the claims of negligence accrued and confirmed that ORS 12.080(3) incorporates a “discovery rule” under which the discovery of injury occurs when plaintiff knew or should have known of the existence of (1) harm, (2) causation, and (3) tortious conduct. The Court found that the record before the trial judge lacked specificity and therefore an issue of fact existed as to when the Association knew or should have known of the injury. The Court reached the same conclusion with regard to the Association’s nuisance claim.

Finally, the Court applied the two year statute of limitations, set forth in ORS 12.110(1), to the Association’s claims of negligent and intentional misrepresentation. The Court’s decision was based upon the fact that the Association’s claims alleged injury to the Association’s “pocketbook, not to real property.” With regard to accrual of the claim, the Court found on the facts presented that the only conclusion that could be reasonably reached by the jury was that the Association knew or should have known by 2007 of the falsity of defendants’ representations regarding the condition of the property. The Court applied the same reasoning with regard to the alleged violation of Oregon Condominium Act and non disclosure.

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.traublieberman.com

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