Jun 6 2013

Ten Years is Ten Years: "Repair Work" Held Not to Extend the Duration for Contractor's Liability for Personal Injury Claims

 Ken and his son Charlie

Ken and his son Charlie

 

Kenneth A. Cripe ©2013

 “Repair Work” done years after the original construction sometimes can complicate the calculation of deadline for suit.

Contractors should know that whether performance of work is considered an “improvement” or “repair work” could make a difference in liability for injury claims.

Illinois has a four year statute of limitation to sue after the person bringing an action “knew or should reasonably have known of such act or omission.” To provide an outside limit on that “discovery,” Illinois has a statute of repose:

“No action based upon tort, contract or otherwise may be brought against any person for an act or omission of such person in the design, planning, supervision, observation or management of construction, or construction of an improvement to real property after 10 years have elapsed from the time of such act or omission.” 735 ILCS 5/13-214(b).

Under the facts, the “repair” was not an “improvement to real property”

Contractors often perform repair and maintenance work after the comple- tion of a project. Is performance of “repair work” after project completion considered “an improvement to real property” that extends a contractor’s 10 year repose period for the original construction work?  That question was recently addressed by the Fifth District Appellate Court in Schott v. Halloran Construction Company, Inc.,982 N.E.2d 965 (5th Dist. 2013). In Schott, the Appellate Court held that reconstruction work to a retaining wall that partially collapsed after heavy rain did not extend the 10 year statute of repose for the defects in the original construction, because it was repair of an existing structure, not “an improvement to real property.”

Lawrence and Rochella  Schott filed  suit on  June 16,  2010 against  a contractor and contractor’s principal for personal injury damages that Lawrence suffered after falling off a retaining wall while patrolling the area during his duties as a police officer. The Schotts alleged that the contractor negligently failed to build a guardrail at the top of the wall to prevent people from falling off, when the contractor built and then later reconstructed the retaining wall.

Original construction of the wall was completed in 1990, more than 10 years prior to Lawrence’s fall from the wall on April 6, 2001. Contractor acknowledged that a portion of the wall was rebuilt in 1994 after collapsing due to heavy rain.

At trial the contractor’s principal testified he purchased the property in March 1990, and contractor for the construction was both the developer and general contractor of an office park on the property. Contractor’s subcontractor constructed three retaining walls on the property in 1990.

Contractor’s principal also was the president of the board of directors for a not-for-profit corporation to whom contractor’s principal sold the property. On November 15, 1994, subsequent to sale of the property, a part of the south retaining wall fell over during a heavy rain.

Contractor then sued Subcontractor to recoup the new owner’s damages for rebuilding and repairing the wall. Contractor’s principal denied that contractor rebuilt the wall after it collapsed, but never identified who performed the work.

Lawrence stepped or fell off a portion of the wall that did not collapse and was not repaired.

Contractor raised the statute of repose as an affirmative defense to all of Schotts’ claims for injuries and filed motions for summary judgment, arguing that Schotts’ injury occurred more than 10 years after the construction of the wall was completed and, therefore, not timely. The trial court denied all of contractor’s motions.

After trial, a jury returned a verdict in favor of Schotts and against the contractor, but also found that Lawrence was 50% contributorily negligent. After a second jury trial on the proper amount of damages, the trial court entered a judgment on the jury’s verdict.  The Contractor appealed.

The appellate court reversed the trial court judgment, holding that the Schotts’ claims were barred by the statute of repose because: (1) the work done to rebuild the retaining wall after it collapsed in 1994 did not constitute the “construction of an improvement to real property”; and (2) the portion of the wall that Lawrence stepped or fell from was not rebuilt in 1994.

The court reasoned that the 1994 retaining wall work was not an “improvement to real property” because the work simply returned the wall to its original condition. The value and use of the property was not enhanced.

In other words, unless there was performance of construction work on a completed project that exceeded the original project scope, increasing the value or use of the property, the 10-year statute of repose for construction damage liability does not restart.

DISTINCTION: The case dealt with the Illinois statute of repose. That involves the right to sue, not the different duty to correct. Contracts often say that a contractor’s duty to correct will restart the clock on that particular duty. Normally, though, that duty applies for much shorter period than the statute of repose (depending on how often that clock is restarted).