Ohio Supreme Court Rules Statute of Repose Applies to Contract Actions
The Ohio Supreme Court recently issued its decision in the New Riegel Local School District Board of Education, et al. v. The Buehrer Group Architecture & Engineering, Inc., et al., which interpreted the application of Ohio’s 10 year statute of repose, R.C. § 2305.131. In the case, the school district alleged that its architect, general contractor, roofing subcontractor, and surety breached their contracts by improperly designing and constructing a building that incurred moisture intrusion among other deficiencies. The defendants argued that Ohio’s statute of repose barred the school district’s claims because the breach of contract claims were brought to Court more than 10 years after the building was substantially completed.
Under Ohio law, the statute of repose generally states that no cause of action shall accrue against any person who performs services on a construction project more than 10 years after substantial completion of the project. The statute of repose has undergone changes in the past and this is not the first time the Ohio Supreme Court has had to provide guidance. In 1986, the Court held that the statute of repose only applied to tort claims and not to breach of contract claims. But because the legislature amended the statute in 2004, the Court decided to revisit the issue. Based on contextual clues contained within the statute, the Court held that the legislature intended for the current version of the statute of repose to apply to both contract claims and tort claims.
As such, no tort or contract claim may accrue within 10 years after a construction project is substantially completed; but there are two things to keep in mind. The first issue is that the school district could pursue additional arguments in the lower court. For example, the school district argues that the statute of repose only bars claims that accrue within 10 years after substantial completion of the project. For breach of contract cases, the claim likely accrues when the defective construction has been performed. Thereafter, the party may bring a breach of contract claim so long as it is within the applicable statute of limitations, which in this case, was 15 years when the school filed its claim (the statute of limitations for contract actions in Ohio is now 8 years). The second issue is that there are exceptions to the statute of repose, including:
- The plaintiff discovers the defect within 2 years of the statute of repose expiring;
- The plaintiff suffers from a disability that affects their ability to file the claim;
- The defendant controls and possesses the property at the time of the alleged injury;
- The defendant engages in fraud with respect to the claims at issue; and
- The defendant expressly agrees to a longer time period.
Overall, this case is a win for the construction industry. Trying to defend a case from over a decade ago is exceedingly difficult since memories fade, records get lost, and buildings incur normal wear and tear. Interested parties should keep an eye on the school district’s argument regarding the “accrual” of claims and the applicability of Ohio’s old 15 year statute of limitations for contract actions. Going forward, the Court has made it clear that the statute of repose does apply to contract claims. If you have any questions or concerns regarding the statute of repose, please feel free to contact Nick Nykulak at Ross, Brittain & Schonberg Co., L.P.A.