Construction & Public Contract Law Section Blog: Parking Garage Tragedy Yields Appellate Ruling on Concealment Exception to Statute of Repose:

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  • Construction & Public Contract Law Section Blog
    August
    07
    2017

    Parking Garage Tragedy Yields Appellate Ruling on Concealment Exception to Statute of Repose

    Hugh N. Anderson

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    In June 2010, a young man was killed when a 13-ton concrete panel fell onto him in Milwaukee. The case is the basis for a recent Court of Appeals decision regarding statute of repose’s concealment exception. Hugh Anderson discusses the case and the nature of the evidence presented to establish the exception.

    In June 2010, a 13-ton concrete panel fell from a Milwaukee parking garage, killing a young man on his way to Summerfest, and seriously injuring two other victims.

    The O'Donnell Park Parking Structure was built nearly 20 years earlier. Wisconsin’s construction statute of repose, Wis. Stat. section 893.89, bars claims brought more than 10 years after a project’s completion.

    An investigation found that the manner in which the panel was installed was not in accordance with design specifications. In Wosinski v. Advance Cast Stone (ACS), ACS appealed the trial court’s decision of June 2014, finding them liable for all damages resulting from the collapse of the concrete panel, and primarily negligent for the failure of the panel. The trial court granted relief to the estate of the young man who was killed, the two injured victims and a family member who was also a witness, as well as to Milwaukee County, with total damages of more than $39 million.

    In July 2017, the Court of Appeals of Wisconsin affirmed the multimillion dollar jury award in favor of the victims based on an exception in the statute of repose for concealment of a deficiency or defect in the work.1

    Hugh Anderson com hugh.anderson aecdocuments Hugh Anderson, Stanford 1982, is a sole practitioner based in Cross Plains, where his practice focuses on construction contract drafting and analysis. Anderson serves as counsel for the Engineers Joint Contract Documents Committee.

    Case Background

    ACS manufactured and installed the decorative concrete panels on the O’Donnell Park parking garage.

    An engineering firm retained by ACS specified a method of connecting the panels to the structure using stainless steel coil rods and threaded pins. ACS did not use this “pin and sleeve” connection method in the installation of all of the garage’s concrete panels – on the panel that fell, and many other panels, ACS instead used a “drill and pound” method that relied on pounding rebar through drilled holes.

    Use of this alternate connection method was determined at trial to be a major factor in the disastrous detachment and fall of Panel 56AL.

    The Statute’s Exception

    The construction statute of repose contains an exception for cases in which the defendant seeking the protection of the statute is found to have committed “fraud, concealment, or misrepresentation” with respect to a defect. As the court of appeals noted, the “burden of proving that an exception applies lies with the Plaintiffs.”

    At the end of the six-week trial, the special verdict form asked whether ACS had intentionally concealed and misrepresented a defect or deficiency in the panel installation; the jury answered that ACS had done so. The court of appeals concluded that the evidence “reviewed cumulatively and together with the reasonable inferences that flow therefrom” was sufficient to support this jury finding, and therefore concluded that the statute of repose did not bar the claims.

    Other Issues Addressed

    In addition to the statute of repose issue discussed in this blog post, the 67-page decision also addresses several other topics that may be of interest to readers:

    • the application of equitable estoppel to the contract statute of limitations;
    • evidentiary issues;
    • commercial general liability insurance coverage; and
    • an insurer’s duty to defend and duty of good faith and fair dealing.

    Avoiding Unfair Adjudications

    One fundamental principle underlying Wisconsin’s construction statute of repose is that claims brought more than 10 years after the completion of the project can rarely be fairly adjudicated. After 10 years, witnesses’ memories have faded. Documents have been lost, destroyed, or forgotten. Key project personnel have died or cannot be located.

    In light of this disfavor of unfair adjudications, it would seem reasonable to require that any exception to the statutory bar on claims be proved with clear and convincing evidence, and that such exception not rest on inference or conjecture. The court of appeals decision does not indicate whether the trial court required the jury to apply an elevated burden of proof or standard of evidence with respect to the determination of whether ACS intentionally concealed or misrepresented a defect.

    Justifying an Exception

    The facts presented to the jury in support of the notion of ACS’s concealment or misrepresentation, as described in the court of appeals decision, seem more routine than sinister.

    The as-built drawings did not show the change to drill-and-pound installation – yet contractors’ as-built drawings are notoriously sloppy, incomplete, and unreliable. An ACS employee testified that there was a decision to not put the change in connection methodology in writing – but the reason for that might have been a belief that the change was obvious and had already been observed, noted, or accepted by the owner, architect, or construction manager. No change order was executed, yet changes that do not involve contract price or time for completion often go undocumented.

    An ACS employee recalled that the drill-and-pound work was described to him as “backup drilling,” which is usually used in reference to extra reinforcement; from this the court of appeals concluded that the jury might have drawn a “reasonable inference” that ACS misled its own employee about the installation method. That may be one reasonable inference, but other more benign inferences are also possible.

    Are these facts, even taken cumulatively, really enough to justify application of the exception?

    Testimony Decades After the Project

    Most of the proof of concealment and misrepresentation was based on testimony given 21 years after the project was completed. Even the proof that rested on project documentation tied back to witnesses’ testimony. The court of appeals states that “ACS filed final As-Built Drawings with Milwaukee County that did not reflect the changes were that were made to Panel 56AL.” But these supposedly deceptive as-built drawings were actually prepared and submitted to the owner by the construction manager, not by ACS.

    As the court later acknowledges, the inference that ACS had filed inaccurate as-builts with the construction manager was based on a construction manager employee’s testimony, two decades later, that “he would not have submitted the as-built drawings without having received the drawings back from ACS with a representation that the drawings depict the project as it had actually been constructed.” No such ACS drawings or representation could be found in the project records.

    The surviving project records do not appear to explain why ACS did not follow the pin-and- sleeve connection method with respect to all panels. Conjecture might suggest that cost-cutting was a motivation; but perhaps there were schedule or constructability concerns. So long after the fact it is impossible to know – again harking back to the fundamental principle that construction problems are extremely difficult to adjudicate a decade or more after completion of the project.

    Tantalizingly, the court of appeals decision indicates that a Milwaukee County investigator found secondhand evidence of a meeting in 1990 in which the change in installation methods was discussed. Unfortunately, 24 years later, at the time of trial, no documentation or firm evidence of the meeting could be established.

    The court of appeals decision does not address the extent to which the design of the concrete panels was delegated to ACS; whether Milwaukee County, its construction manager, or its architect reviewed and approved the proposed pin-and-sleeve connection method; or whether the contract between Milwaukee County and ACS expressly bound ACS to adhere to the proposed connection method. The decision repeatedly states that the contract required that changes to “the design” must be documented, but it is not clear if that requirement applied specifically to the project design that had been prepared by the owner’s architect, or also to the panel design work done for ACS by ACS’s engineering subcontractor.

    The ‘Long Tail of Liability’

    The construction statute of repose addresses “the long-term liability – the 'long tail of liability' – that accompanies torts of commission or omission in the construction of durable buildings," and is intended to “provide protection from long-term liability for those involved in the improvement to real property."2

    When the issue is a basement leak that occurs 12 years after project completion, or a vapor barrier claim brought 15 years after installation, it is easy to apply the statute of repose to bar the claims. When the issue is a calamitous structural failure, and resulting death and injuries, there is a natural aversion to preventing the innocent victims from seeking recompense.

    But as the Supreme Court of Wisconsin has stated:

    Courts may shudder at the unfairness visited by statutes of repose, but we generally acknowledge the policies underlying these limiting statutes. … The question of what the statute of limitations or the statute of repose for a particular action should be is a fundamental question of public policy.3

    That public policy – the Wisconsin Legislature’s decision to draw the line at 10 years – is jeopardized if the concealment exception is allowed to swallow the rule.

     

    Endnotes


    1 Wosinski v. Advance Cast Stone, Inc., issued July 11, 2017.

    2 Kohn v. Darlington Cmty. Schs., 2005 WI 99, ¶62, 283 Wis. 2d 1, 698 N.W.2d 794.

    3 Aicher v. Wisconsin Patients Compensation Fund, 2000 WI 98, ¶¶45-46, 237 Wis. 2d 99, 613 N.W.2d 849.





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