In Johnson v. Toll Bros., Inc., two homeowners sued a construction contractor alleging that it had negligently constructed their house in such a manner that allowed significant water intrusion resulting in continuous damage for a period of at least five years up until the time they filed suit. 2023 PA Super 169, 302 A.3d 1231 (2023). The trial court held that the homeowners’ action was barred by the statute of repose found at 42 Pa.C.S. § 5536(a), which required that a claim be made within 12 years of the completion of construction. The court dismissed the case on the contractor’s motion for summary judgment and the homeowners appealed.
On appeal, the homeowners argued that the contractor’s actions were “unlawful” and therefore not covered by the statute of repose. In the alternative, the homeowners claimed they were entitled to a two-year extension of the statute of repose because they sustained “injuries” in the final three years of the filing window. The appellate court disagreed.
The contractor completed the construction of the house on October 18, 2004. The certificate of occupancy was issued on the same day and the house was also conveyed to the original homeowners on that date. This established the end of the twelve-year statute of repose on October 18, 2016. The homeowners bought the house on September 13, 2016, and filed suit against the contractor on August 21, 2018.
On appeal, the homeowners argued that the contractor’s negligent construction was “unlawful” and therefore the statute of repose did not apply. However, the court held that the contractor acted lawfully because at the time it constructed the house it was properly authorized to do business, it was a licensed homebuilder, and the Commonwealth issued a certificate of occupancy; thus, the contractor “lawfully” constructed the house.
Similarly, the homeowners argued that even if the statute of repose applied, they were still entitled to a two-year extension which would have extended their filing time from October 18, 2016, to October 18, 2018, thereby making their August 21, 2018, initiation of their lawsuit timely. To support their claim, the homeowners presented expert evidence that the damage to the house began no later than 2012 and argued that the defects and damage constituted a “continuing injury” that extended the statute of repose. The court disagreed, holding:
“it is clear that the injury contemplated in the exception of part (b) was meant to be one that “shall occur” or arise for the first time no earlier than the tenth year of the filing period. It was not meant to refer to a recurring or continuous injury that began years prior to that three-year range.”
The court determined that the statute of repose barred the homeowners’ claim because the “alleged injury began at least several years before the final three years of the Statute of Repose’s filing period.” Id.
Statutes of repose continue to be great gatekeeping tools to combat stale claims from proceeding. Contractors should know which states have such statutes and assert the defense at the onset of litigation if available.