Construction Law - Statute of Limitations
Court Interprets “Substantial Completion” to Extend Repose Period
Stanley A. Martin | Duane Morris LLP
November 5, 2014
The HVAC sub finished a new condo unit system in August 2001. The condo was substantially complete in early 2002. But since the developer did not pay necessary fees, the city did not issue a certificate of occupancy until August 2003. Which date should be used to start the Wyoming ten-year statute of repose period? The Wyoming Supreme Court majority, over a dissenting opinion, adopted the last date and allowed a lawsuit filed in late 2012 to move forward. Watch for the Wyoming contractors or designers associations to file legislation to address this decision.
The Wyoming statute of repose cuts off a cause of action ten years after substantial completion. Substantial completion is defined as “the degree of completion at which the owner can utilize the improvement for the purpose for which it was intended.” That definition is typical, but the case came down to the court’s application of this phrase to the facts at hand. The majority decided that to “utilize the improvement” all permits for lawful occupancy had to be in hand. Thus, despite the fact that the condo sat empty and unused (but complete) until the C/O was obtained some 18 months later, it was not yet “substantially complete” per the majority.
The dissent argued that the HVAC improvement could have been used as intended in August 2001, and the entire condo used as intended in early 2002, and the definition of “substantial completion” did not require the concept of a further administrative function. The dissent persuasively argued (obviously not persuasively enough for their fellow justices comprising the majority) that the majority position was adding a further concept to the definition of “substantial completion.” The case is Horning v. Penrose Plumbing & Heating, Inc., 2014 WY 133, 2014 Wyo. LEXIS 156 (Oct. 28, 2014). This decision effectively made the contractors hostage to the developer’s delays in achieving “substantial completion,” which many would consider was achieved much earlier.
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SOURCE: www.lexology.com