Riegel Has Landed: Ohio’s Construction Statute of Repose Now Applies to Breach of Contract Claims
For decades, parties and their lawyers have understood that Ohio’s ten-year construction statute of repose, Revised Code § 2305.131, applies to tort claims only. Claims for negligence had to be brought within ten years from the date of substantial completion, while claims against a contractor for breach of the construction contract could be brought at any time within the statute of limitations for written contracts. Prior to a 2012 bill shortening the statute of limitations to eight years, a plaintiff had up to fifteen years from discovery of an alleged defect to sue a contractor for breach of contract. A recent decision by the Supreme Court of Ohio, New Riegel Local School District v. Buehrer Group Architecture & Engineering, Inc., 2019 Ohio LEXIS 1446 (Ohio July 17, 2019), has turned that understanding on its head.
The conventional wisdom arose from the court’s decision in Kosicko v. Charles Shutrump & Sons. Co., 488 N.E.2d 171 (Ohio 1986). The version of the statute of repose in place at the time of the Kosicko decision, enacted in 1971, stated in pertinent part: "No action to recover damages for any injury to property, real or personal, or for bodily injury or wrongful death, arising out of the defective and unsafe condition of an improvement to real property . . . shall be brought against any person performing services for or furnishing the design, planning, supervision of construction, or construction of such improvement to real property, more than ten years after the performance or furnishing of such services and construction." Am.S.B. No. 307, 134 Ohio Laws, Part I, 529, 530.
The Kosicko court found that the language describing the causes of action addressed in that version of R.C. § 2305.131 was “uniformly used to describe tortious conduct.” It emphasized that a cause of action for injury to property, bodily injury, or wrongful death arising out of a “defective and unsafe condition” would not typically describe “warranty or other contractual claims.”
Revised Code § 2305.131 was modified in 2005 to add several Divisions, including exceptions and limitations on the statute of repose. The statute of repose provision, Division (A)(1), uses very similar language to the 1971 statute: "[N]o cause of action to recover damages for bodily injury, an injury to real or personal property, or wrongful death that arises out of a defective and unsafe condition of an improvement to real property . . . shall accrue against a person who performed services for the improvement to real property or a person who furnished the design, planning, supervision of construction, or construction of the improvement to real property later than ten years from the date of substantial completion."
The remaining Divisions, however, include several provisions that, when read in conjunction with Division (A)(1), would be wholly superfluous if applied only to tort claims. For instance, Division (D) provides that the statute of repose “does not prohibit the commencement of [an action] against a person who has expressly warranted or guaranteed an improvement to real property for a longer period than the period described in division (A)(1) of this section and whose warranty or guarantee has not expired as of the time of the alleged bodily injury.” If the ten-year statute of repose in Division (A)(1) were not intended to apply to contract actions, there would be no need to specify that it does not apply to express warranty claims, which are inherently contractual.
Division (G) defines “substantial completion,” the date from which the statute of repose is calculated, in contractual terms as the date the improvement to real property is “first available for use after having the improvement completed in accordance with the contract or agreement covering the improvement.”
Because of these changes, the court in New Riegel held that stare decisis did not require it to apply the Kosicko decision to the current statute of repose, reasoning that: "The current version of R.C. 2305.131, unlike the 1971 version, expressly refers to contract-law concepts, acknowledges that improvements to real property are generally designed and built pursuant to contract, and applies notwithstanding other general statutes of limitations, including those for contract actions. These substantial differences between the 1971 and the current versions of R.C. 2305.131 warrant ‘a fresh review’ of the statute."
Applying the principle that, if at all possible, a statute must be construed to give effect to all of its provisions and render none of them superfluous, the court held that the construction statute of repose must be read to apply to contractual as well as tort claims.
The statute is likely to be back before the court before long, as the court declined to address whether the statement in Division (A)(1), that no cause of action “shall accrue after” ten years, bars the commencement of claims that accrued within the ten-year period of repose. The parties in New Riegel raised that concern before the Supreme Court of Ohio, but they had failed to do so before the trial court and court of appeals, so that issue was punted back to the trial court to address. Justice Sharon Kennedy, concurring in part and dissenting in part, argued persuasively that R.C. § 2305.131 does bar commencement of actions after ten years, regardless of when they accrue. It remains to be seen whether the full court will agree.
*Nathan Woodward is an associate in our Cleveland, Ohio office. He can be reached at 216.912.3803 or email@example.com.
Defense Digest, Vol. 25, No. 4, December 2019 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2019 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact firstname.lastname@example.org.