The Tortured Relationship Between Statutes of Limitations and Statutes of Repose!

Construction clients are often confused by the distinction between Statutes of Limitations or SOL's and Statutes of Repose or SOR’s. Both share similarities and differences. SOL's are not limited to construction projects and impose time limitations upon when lawsuits may be filed running from when the cause of action accrues. SOR ‘s are generally limited to design and construction projects and impose time limitations upon when claims for design and construction defects may be filed typically running from substantial completion of the project. Consequently, there is an overlap of the limitations imposed by SOL’s and SOR's when it comes to claims for design and construction defects upon construction projects.

Both have existed since Roman times and were enforced before the birth of Christ. The rationale behind SOL's was and is to protect parties against stale disputes, where the passage of time has caused evidence to be lost, memories to fade, or witnesses to disappear. England, recognizing the wisdom behind Roman law, began to adopt SOL's in the 16th century. Since the laws of our country are based upon English law, every state has since adopted SOL's, once again based upon the same rational proffered by the Romans. All 50 states have since enacted SOL's that impose time limitations upon when lawsuits may be filed after claims accrue, whether based upon contracts, or torts.

Most SOL's identify the accrual of underlying claims as either when the act or omission giving rise to the claim had occurred or when the damage from the act or omission was incurred. Over time, commentators and creative litigators argued this definition of accrual was unfair and it was inequitable for SOL's to prohibit a litigant from filing a lawsuit to recover claims and damages over which they never knew existed. Gradually, most every state adopted common law exceptions to SOL's known as the “Discovery Rule,” holding that causes of action did not accrue, and time limitations under SOL's did not begin to run until the litigant discovered the claim or damage. Application of this judge created “Discovery Rule” threatened to undermine the rationale behind SOL's regarding lost evidence, faded memories, or missing witnesses. In practice, the “Discovery Rule” could defer the accrual of actions indefinitely, imposing huge risks upon construction projects where age, lack of maintenance, and use could give rise to claims and damages decades after design and construction was completed.

Recognizing the SOR’s “Discovery Rule” could be used to avoid application of the SOL’s, 48 states (excluding New York and Vermont) enacted SOR's imposing an absolute outside limitation upon when lawsuits for design and construction defects may be filed. SOR ‘s circumvented an unlimited application of the “Discovery Rule” by abandoning the concept of accrual with respect to claims involving design and construction defects, providing the limitations period began to run upon substantial completion of the project. Every SOR establishes a limitations period several years longer than the underlying SOL, thereby allowing application of the “Discovery Rule” up to an absolute date after substantial completion of the project. SOL’s impose conditional limitations periods varying between 2-and-10 years dependent upon whether the claim related to personal injury or property damage. In contrast, SOR's impose absolute limitations periods between 5-and-12 years without regard to whether the claim is based upon personal injury or property damages.

Recently, courts have begun a counterattack against the SOR adopted in many states. Several courts have held SOR's  to be unconstitutional and prohibited its enforcement. Other states have restricted application of SOR's to either contract claims or tort claims. Still others have prohibited application of SOR's to personal injury claims. Suffice it to say, the tortured relationship between SOL's and SOR's remains in a constant state of attack and change.