The new New Riegel school was substantially completed in 2002. In 2015, the school district brought claims against the project architect/engineer and two contractors, alleging that the building was beset by condensation, moisture intrusion, and other deficiencies as a result of improper design and construction. Later that year the school district sued the A/E and contractors in state court, based on breach of contract and breach of warranty.
Because the Ohio statute of limitations for breach of contract was 15 years from the breach, the school district’s suit was timely unless Ohio’s design/construction statute of repose provided a shield for the defendants. The statute of repose precludes lawsuits that are brought more than 10 years after substantial completion. Based on the statute of repose, the trial court dismissed the claims against the A/E and contractors. However, the intermediate court of appeals reversed the dismissal, citing a 1986 Ohio Supreme Court decision that had stated that the statute of repose does not apply to breach of contract claims. The defendants intermediate decision to the Ohio Supreme Court.
Decision: The Ohio Supreme Court concluded that the 1986 decision was no longer applicable, and that the statute of repose applies to both tort (negligence) and breach of contract claims.
The 1986 decision was based on an early version of the statute of repose. As in many states, the Ohio statute of repose was the subject of various challenges from claimants, based on remedy denial, equal protection, and other constitutional grounds. As a result, the Ohio legislature repeatedly changed the wording of the statute. The state Supreme Court concluded that the wording had changed enough that the 1986 case was no longer binding, and that the court was free to reinterpret the statute of repose. In 1986, the wording of the statute was terse and tort-oriented, seeking in a single paragraph to bar injury and damages claims arising from defective and unsafe improvements to property. By 2015, the statute had lengthened to nine paragraphs, addressing various specific situations and creating specific exceptions. The statute expressly stated that it applied as a limit on all “otherwise applicable” statutes of limitations in a specific chapter of the statutes—the contract statute of limitations was one such statute.
In addition, the Ohio Supreme Court found that it was significant that the latest version of the statute of repose referred directly to “substantial completion,” and the statute defined that term in part as completion “in accordance with the contract or agreement covering the improvement.” By using the contract terminology, the legislature had signaled its understanding that the statute of repose was operating in a contract-dominated context. Also significant, in the opinion of the Supreme Court, was a provision of the statute of repose that created an exception for claims on express warranties that are longer than 10 years. This strongly suggested that warranties, which are creatures of contract, are generally covered by the statute of repose.
Comment: Because Ohio had an exceptionally long statute of limitations for breach of contract claims (15 years), and because breach of contract claims are so intrinsic to construction disputes, the statute of repose was of relatively little value if it did not limit contract claims. The New Riegel decision clarifies that the statute does apply to contract claims; and at the same time the Ohio legislature has shortened the contract statute of limitations to 8 years, giving additional protection to A/Es and contractors.
The New Riegel case provides some useful explanation about statutes of repose. The court notes that such a statute is especially important in design and construction because buildings, infrastructure, and other improvements last a long time, in contrast to more common consumer products—and thus the potential for claims would extend an inordinate length of time if not cut off by a statute of repose. The court also mentions the inadequacy of available evidence after 10 years, and the “unacceptable burden” of maintaining records and documentation for more than 10 years.