United States: Two Year Statute Of Limitations Applies To Negligent Construction Defect Claims For Damage To Property

A recent decision by the Supreme Court of Oregon - Goodwin v. Kingsmen Plastering, Inc.  ( 359 Or 694, 375 P.3d 463 (June 16, 2016) - held that a claim arising out of alleged negligent construction must be brought within two years of when a plaintiff knew or should have known of the defect. The court's opinion clarified the uncertainty surrounding the appropriate statute of limitations and held that the two-year statute of limitation applies to negligent construction defect claims.

Plaintiffs were homeowners who commenced an action against a subcontractor involved in the original construction of the home. The subcontractor was responsible for installing synthetic stucco siding on the home's exterior. The Plaintiffs alleged that numerous construction defects in the siding led to water intrusion, which caused damage to the home.

The defendant moved for summary judgment arguing that the plaintiffs initiated their action more than two years from when they discovered the siding defects and, therefore, the claims were time-barred. They relied on an Oregon statute that has been construed to require tort claims to be initiated within two years of the date of discovery of the injury or damage. Plaintiffs argued, however, that the six-year statutory period is applicable (ORS 12.080), because it applies to actions for interference with or injury to an "interest" in real property.

The trial court agreed with plaintiffs regarding the six-year limit, but granted summary judgment in favor of the defendant on the ground that plaintiffs brought their action more than six years after the construction was completed. The Court of Appeal agreed with the trial court that the six year statute applied, but also held that a "discovery rule" applied to the six-year statute. Since there was a question of fact as to whether the action was commenced more than six years after the plaintiffs knew or should have known of the defects, the case was remanded to the trial court for that determination.

On appeal of the Court of Appeal's decision and in an opinion which included a wide-ranging legal analysis, the Supreme Court of Oregon held that plaintiffs claim was not subject to the six-year statute, because the action was for damage to property itself and, therefore, subject to the two-year statute of limitations. However, because there was still a factual question as to when the plaintiffs knew or should have known of the defect, the Supreme Court remanded the case to the trial court for a determination of that fact.

The decision is important because it tells us that, under Oregon law, a typical construction defect claim for damage to property is subject to a two-year statute of limitations, unless another limitation period "especially enumerated" in the Oregon Statutes, applies.

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