Construction & Public Contract Law Section Blog: The Construction Statute of Repose: More Hammer or Nail Today?:

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  • Construction & Public Contract Law Section Blog
    September
    08
    2016

    The Construction Statute of Repose: More Hammer or Nail Today?

    Matthew R. McClean

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    Can the statute of repose still be used to bar cases from moving forward to trial as the law intended, or has the law lost its force? Matthew McClean discusses recent appellate cases applying Wisconsin’s construction statute of repose.

    We have a case where the construction statute of repose – Wisconsin Statute section 893.89 – is squarely at issue. We moved for summary judgment based on a prima facie application of the statute, but our motion was denied, then we lost the underlying trial and have now filed an appeal. Specifically, the case implicates the statute’s “fraud, concealment or misrepresentation” exception. As you might imagine, we keep tabs on any new cases addressing the statute. I have a quick status report.

    Background on the Law

    Before I give it, here is just a little background on the law itself. Wisconsin’s construction statute of repose eliminates long tail liability for construction negligence. The law prohibits any claim for injury or death arising out of a defect or deficiency in the design, planning, supervision, or construction of an improvement to real property more than 10 years after the project is substantially complete.1 It applies to construction workers, architects, engineers – anyone directly involved in the improvement. The law was created to address two well defined policy goals. First, it balances the public’s interest in allowing a claim to proceed with the equally compelling interest to protect contractors against claims made years after their work is complete.2 After a project is complete, documents are discarded or lost, details blend with other jobs, and key witnesses move, pass away, or simply forget about the job. This lost evidence obscures the truth, which makes mounting a defense difficult.3 Second, the statute protects contractors who have no control over the structure after they leave the jobsite. Lack of maintenance, weather, and an owner’s use of the building all may compromise the integrity of a contractor’s work.4

    Matthew McClean com mmcclean dkattorneys Matthew McClean, Marquette 2002, is shareholder at Davis & Kuelthau in Milwaukee where he serves as the chair of the litigation team. Matt has considerable experience in all aspects of construction law and is a current board member and past chair of the State Bar of Wisconsin Construction & Public Contract Law Section.

    Under these circumstances, the legislature found it unfair to hold a contractor responsible for damage caused by the passage of time or an owner’s neglect. While courts might question whether having a repose period for claims is good policy or struggle with its results, the Wisconsin Supreme Court has affirmed its constitutionality, thus requiringthat courts defer to the legislature’s decision to impose a strict time limitation on construction liability.5

    Applying the Statute of Repose

    Applying the statute of repose seems like it should be easy enough. Simply answer the basic questions.

    1. Does the work at issue involve an improvement to real property?
    2. Does the claim involved arise out of defects or deficiencies in design or construction work?
    3. Was the work substantially completed more than 10 years ago?
    4. Do any of the four statutory exceptions found in section 893.89(4)6 apply?

    But, like many things in our business, cases involving the statute of repose are often not easy. These issues are fiercely litigated from both sides, and frequently they are decided in our appellate courts. And, as we monitored the recent statute of repose cases for our case, I noted a trend in 2015 – the court of appeals appeared to be rejecting the defense. In four decisions in 2015, the court of appeals reversed trial court decisions applying the statute of repose to bar claims, reinstated those claims, and remanded the cases.7 Three of these four cases involved asbestos claims, but all the cases contained a similar problem: a lingering question of fact about whether the defect at issue related to an improvement to real property. For example, if one contracts mesothelioma during the removal of asbestos from a building, is that due to the original defective use of asbestos, or as the result of negligence in performing the maintenance? This, the court felt, was an issue for trial.8

    Could the statute of repose still be used to bar cases from moving forward to trial as the law intended? Or had the law lost its force somewhere?

    My case had no such issue. But I was nonetheless concerned. If the court of appeals was consistently second-guessing the trial court’s determination that the statute barred claims and was sending cases back for trial, would it have any inclination to second-guess a trial court who did not apply the statute and did hold a trial? More directly, could the statute of repose still be used to bar cases from moving forward to trial (perhaps with the best evidence long gone) as the law intended? Or had the law lost its force somewhere?

    A Turnaround

    Since Christmas 2015, however, my concerns have subsided as the situation has improved. On Dec. 29, 2015, District III released its opinion in Johnson v. Hello The House, LLC.9 There, the court of appeals affirmed the trial court’s application of the statute of repose to bar a claim arising from a slip and fall on ice, where the sidewalk’s ice accumulation resulted from the original roof defects in the defendant’s building. The court noted that being aware of the drainage problem did not create a maintenance obligation to modify the original roof structure.

    In March, District I affirmed the trial court’s grant of summary judgment in Miron v. MNI, Inc.10 based on the statute of repose. The case involved a demolition company laborer who was injured by a defectively installed fixture wall in the building being demolished. The plaintiff alleged that the original contractor who built the building concealed and misrepresented its defective work, thereby seeking to apply the “fraud, concealment or misrepresentation” exception.11 This was noteworthy because our appellate courts had never interpreted this exception before, and fortunately, the court of appeals provided a good discussion on its meaning and proof requirements. The court of appeals upheld the trial court’s determination that there was no evidence, even at the summary judgment stage, to support misrepresentation or concealment. And, simply pointing to the implied covenant to perform construction work “in a good and workmanlike manner” was not enough, as the court of appeals recognized that such a finding “would eviscerate the intent of the statute of repose.”

    Most recently, District III released an opinion in Heintz v. Hanson12 again affirming summary judgment dismissing claims pursuant to the statute of repose. The plaintiff was injured in a deck collapse. The plaintiff’s expert opined that the deck was not built with sufficient fasteners to support the load. The problem got worse over time as the weather deteriorated the wood components, eventually leading to failure. The plaintiff insisted this was a failure to properly maintain the deck, triggering the maintenance exception.13 The court of appeals said no, finding that the deck was unsafe from the start, making it still defective construction (not a surprising result, given District III’s rationale in Johnson in December).

    Alive and Well

    Obviously, this looks only at two years of cases, and all but the Spinkmann Sons asbestos case are unpublished opinions. The Wisconsin Supreme Court has not weighed in on section 893.89 since 2010.14 So I cannot give you any guarantees, never mind any new, mandatory authority that definitively tips the scales here. But, the takeaway is that the statute of repose is alive and well, and our trial courts need not be gun-shy about applying it. The court of appeals recognizes that this law may lead to harsh results, and the court certainly wants to ensure that the law is analyzed correctly. But ultimately, the statute of repose can and should bar claims and avoid unnecessary trials for negligent work on old projects, as intended. The construction industry should continue to have peace of mind that the rule is still no liability for defects after 10 years.

    Endnotes

    1 Wis. Stat. §§ 893.89(1)-(2).

    2 See Kohn v. Darlington Cmty. Schs., 2005 WI 99, ¶ 77, 238 Wis. 2d 1.

    3See Aicher v. Wisconsin Patients Comp. Fund, 2000 WI 98, ¶ 27, 237 Wis. 2d 99.

    4 1975 Wis. Act 335; Kohn, 2005 WI 99, ¶ 76.

    5 Kohn, 2005 WI 99, ¶ 43.

    6 Section 893.89(4) provides: “This section does not apply to any of the following: (a) A person who commits fraud, concealment or misrepresentation related to a deficiency or defect in the improvement to real property. (b) A person who expressly warrants or guarantees the improvement to real property, for the period of the warranty or guarantee. (c) An owner or occupier of real property for damages resulting from negligence in the maintenance, operation or inspection of an improvement to real property. (d) Damages that were sustained before April 29, 1994.

    7 Peter v. Sprinkmann Sons Corp. 2015 WI App 17, 360 Wis. 2d 411; Sorenson v. Building Service Industrial Sales, Inc., 2015 WI App 43, 362 Wis. 2d 539; Pauli v. Safeco Ins. Co. of America, 2015 WI App 75, 365 Wis. 2d 195; Brezonick v. A.W. Chesteron Co., 2016 WI App 16, 366 Wis. 2d 808.

    8 Brezonick, 2016 WI App at ¶¶14-15.

    9 2016 WI App 16, 366 Wis. 2d 809.

    10 2016 WI App 34, 369 Wis. 2d 73.

    11 Section 893.89(4)(a).

    12 2016 WL 3247559 (June 14, 2016).

    13 Section 893.89(4)(c).

    14 Hocking v. City of Dodgeville, 2010 WI 59, 326 Wis. 2d 155.





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