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December 1st, 2017
construction
ELEVENTH CIRCUIT COURT OF APPEALS AFFIRMS NECESSITY TO INCLUDE SPECIFIC TIMEFRAME IN CONTRACT IN ORDER TO PROPERLY EXTEND INDEMNITY AND DEFENSE OBLIGATIONS BEYOND SEVEN YEAR STATUTE OF REPOSE FOR ANY CLAIM AGAINST AN ARCHITECT, ENGINEER, OR BUILDER

In Sears, Roebuck & Co. v. Hardin Constr. Grp., Inc., 697 F. App'x 637 (11th Cir. 2017), the United States Court of Appeals for the Eleventh Circuit affirmed the United States District Court for the Southern District of Alabama’s conclusion that a specific written timeframe is necessary in order to extend Alabama’s statute of repose.

In 1996, Sears and Hardin, Inc. entered into a contract whereby Hardin agreed to make certain renovations to the elevator located inside one of Sears' retail stores (the “Contract”). Hardin substantially completed all work called for under the Contract on June 30, 1997. On June 14, 2014, there was a fatal accident involving the escalator which had been installed by Hardin pursuant to that contract.

After suit was filed against Sears for wrongful death, Sears in turned filed suit against Hardin seeking a ruling that Hardin was required to provide it with defense and indemnification pursuant to the Contract. Sears’ demand for indemnification occurred nearly nineteen years after construction had been substantially completed.

Hardin filed a Motion to Dismiss arguing that the applicable Alabama statute of repose barred the claim. Alabama’s statute of repose bars all claims against an architect, engineer, or builder, including claims for contribution and indemnity, seven years after a building is substantially completed unless an exception applies. One such exception to the statute of repose is a written contractual agreement extending the limitations period beyond seven years.

The Court held that while parties are free to extend the limitations period, in order to do so the “period of time” must be “specified in writing.” The Court determined that although the Contract contained a provision which stated that the rights under the indemnity provision should not be limited by any statutory bar, this alone was not sufficient to overcome the requirement that the intended “period of time” must be “stated in writing.”  The Court held that the language used in the contract did not extend the applicable period of repose and Sears' claims against Hardin were time barred.

In light of this decision, parties are reminded that if they desire to extend the timeframe an engineer, architect, or builder is required to provide defense and indemnification obligations beyond the statute of repose in Alabama, they must include specific language in the contract setting out the timeframe the obligation is intended to endure for. Failure to include a specific timeframe in the contract will cut off any such obligation after seven years, regardless of any other language in the contract which a party may otherwise believe provides grounds for such an extension.

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