Update: On July 17, 2019, the Supreme Court of Ohio handed down a merit decision in this case.  Read the analysis here.

On March 5, 2019, the Supreme Court of Ohio heard oral argument in the case of New Riegel Local School District Board of Education et al. v. The Buehrer Group Architecture & Engineering, Inc., et al., 2018-0213. At issue in this case is whether the statute of repose codified at R.C. 2305.131 applies to causes of action sounding both in tort and contract. Also at issue is whether stare decisis requires a court to apply precedent based on a statute later found to be unconstitutional and subsequently repealed and rewritten.

Case Background

In 2000, New Riegel Local School District (“New Riegel”) contracted to build a new K-12 school building, and entered into agreements with multiple contractors. The Buehrer Group Architecture & Engineering, Inc. (“Buehrer”) designed the building, Studer-Obringer, Inc. (“SOI”) served as the general contractor, and Charles Construction Services (“CCS”) was the roofing contractor. The contractors finished the project in 2002, and New Riegel took occupancy that December.

New Riegel eventually had issues with the facility, allegedly from condensation and moisture intrusion which the school attributed to construction and design errors. In April 2015, New Riegel filed separate complaints against Buehrer (as well as the Estate of Huber H. Buehrer, which is not a party to the appeal), SOI, and CCS, alleging breach of contract for failure to design and construct the project in a workmanlike manner. SOI subsequently filed a motion for judgment on the pleadings, claiming that New Riegel’s claims were time-barred by Ohio’s construction statute of repose, R.C. 2305.131.

Thereafter, New Riegel filed a second amended complaint to include Ohio Farmers Insurance Company (“OFIC”) as a defendant as the surety for SOI, but did not change any of its underlying claims against any of the parties. Buehrer, CCS, and OFIC then filed motions for judgment on the pleadings on the same statute of repose grounds as SOI’s motion—asserting claims against designers and builders in construction projects are barred after ten years from the project’s substantial completion. The trial court granted all motions in each case, and dismissed all claims against all parties as time-barred by R.C. 2305.131. New Riegel appealed.

The Appeal(s) 

In two (here and here) separate, but nearly identical, opinions by Judge Willamowski, joined by Judges Zimmerman and Shaw, the Third District Court of Appeals unanimously reversed the trial court’s dismissal of claims against all the parties. The Third District agreed with Buehrer, SOI, CCS, and OFIC that a clear reading of R.C. 2305.131 supports the proposition that the statute applies to all causes of action to recover damages arising from construction projects. However, the court felt bound by the Supreme Court of Ohio’s 1986 decision in Kocisko v. Charles Shutrump & Sons Co., which held that the statute does not apply to actions for breach of contract. Thus, since New Riegel pled breach of contract claims against Buehrer, SOI, CCS, and OFIC, those claims could not be subject to the statute’s ten-year limitations period.

The Third District upheld the trial court’s dismissal of claims against the Buehrer Estate on separate grounds: that the claims against the estate were subject to Ohio’s six-month statute of limitations for claims against a decedent, and were thus properly dismissed.

Appellants Buehrer, SOI, CCS, and OFIC brought separate appeals, which were then consolidated into one case.

Read the oral argument preview here.

Key Precedent

R.C. 2305.131  (Ten Year Statute of Repose) (“[N]o cause of action to recover damages for bodily injury, an injury to real or personal property, or wrongful death that arises out of a defective and unsafe condition of an improvement to real property . . . shall accrue . . . later than ten years from the date of substantial completion of such improvement.”)

2003 Am.Sub. S.B. No. 80 Sec. 3(B)(1) (“In enacting section 2305.131 of the Revised Code in this act, it is the intent of the General Assembly . . .  [t]o declare that the ten-year statute of repose prescribed by section 2305.131 of the Revised Code,  is a specific provision intended to promote a greater interest than the interest underlying the general four-year statute of  limitations prescribed by section 2305.09 of the Revised Code, the general two-year statute of limitations prescribed by section 2305.10 of the Revised Code, and other general statutes of limitation prescribed by the Revised Code.”)

R.C. 2305.06 (Statute of Limitations in Contract Actions. For parties who entered into written contracts before 2012, the statute of limitations is 15 years, after that, 8 years.)

Kocisko v. Charles Shutrump & Sons Co., 21 Ohio St.3d 98 (1986) (R.C. 2305.131 only limits actions arising out of tort, and does not limit actions for breach of contract, which continue to be governed by the fifteen-year statute of limitations found in R.C. 2305.06. (syllabus)).

Midwest Specialties, Inc. v. Firestone Tire & Rubber Co., 42 Ohio App.3d 6 (9^th Dist. 1988)( “[a] cause of action for breach of contract does not accrue until the complaining party suffers actual damages as a result of the alleged breach.”)

Brennaman v. R.M.I. Co., 70 Ohio St. 3d 460 (1994) (Held that the 1971 version of R.C. 2305.131 is unconstitutional.)

 Thomas v. Freeman, 79 Ohio St.3d 221 (1997) (A statute that specifies one exception to a general rule is assumed to exclude all other exceptions.)

Ormet Primary Aluminum Corp. v. Employers Ins. of Wausau, 88 Ohio St.3d 292 (2000) (The statute of repose bars all claims after ten years to avoid prejudice to defendants that arises due to the passage of time.)

 Corporex Dev. & Constr. Mgt., Inc. v. Shook, 2005-Ohio-5409 (Under the economic-loss rule, a plaintiff that suffers purely economic damages cannot recover in tort.)

 Groch v. Gen. Motors Corp., 2008-Ohio-546 (For stare decisis to apply, the legislation must be phrased in substantially the same way as legislation previously invalidated.)

McClure v. Alexander, 2008-Ohio-1313 (2nd Dist.) (The General Assembly made its purpose clear by enacting the current version of R.C. 2305.131, which included recognition of contractors’ lack of control over property after construction is complete.)

Antoon v. Cleveland Clinic Found., 2016-Ohio-7432 (“A true statute of repose . . . applies to vested and nonvested claims.”)

State v. Karl R. Rohrer Assocs., 2018-Ohio-65 (5th Dist.) (“It matters not whether the action is brought in tort or contract, if the resultant damages are injury to property of the type set forth in R.C. 2305.131, the statute applies.”)

Appellants’ Propositions of Law Accepted for Review

Each of the appellants submitted two propositions of law that use slightly different wording but are substantially similar.  The Buehrer Group’s Propositions are listed as illustrative of the entire group’s.

Proposition of Law No. 1 

Ohio’s statute of repose, R.C. 2305.131, applies in actions sounding both in contract and tort.

Proposition of Law No. 2 

A court is not required to apply stare decisis when the prior version of the statute being applied has been held unconstitutional by the Supreme Court of Ohio.

At Oral Argument

Arguing Counsel

Brian T. Winchester, McNeal Schick Archibald & Biro Co., L.P.A, Cleveland, for Appellant Buehrer Group Architecture & Engineering, Inc., and Buehrer Group Architecture & Engineering.

Matthew T. Davis, Ritter, Robinson, McCready & James, Ltd., Toledo for Appellant Studer Obringer, Inc.

Michael D. Meuti, Benesch, Friedlander, Copeland & Aronoff LLP,  Cleveland, for Appellant Ohio Farmers Insurance Company

Christopher L. McCloskey, Bricker & Eckler LLP, Columbus, for Appellee New Riegel Local School District Board of Education

Appellants’ Argument

The appellants divided their argument into three sections with Mr. Winchester addressing the propositions of law, Mr. Davis addressing statutory construction, and Mr. Meuti doing rebuttal.  For blog purposes the three arguments are consolidated.

The General Assembly intended R.C. 2305.131 to serve as a 10 year hard stop to all construction defect claims. By its very terms, this statute of repose for claims arising from improvements to real property applies to breach of contract claims, and not just to tort claims. Each section of the statute contains contract references and provisions.  For example, subsection (D) specifically relates to contract terms and provisions. Section (A)(1) references indemnity, another contract provision. Section (F) states that it shall be applied in any civil action “notwithstanding any prior rule of law of this state,” which specifically means the Kocisko decision. Subsection (G) uses “substantial completion”- another construction term of act.

In its opinion, the Third District recognized that the plain language of the statute does apply to breach of contract claims, but reversed the trial court based on a 30-year-old case that interpreted a prior and different version of the statute.

If the Court were to find the statute ambiguous, then legislative intent must be determined. In this case that is easy, because the legislature has given a statement of intent in its legislative notes, which was to eliminate the possibility of contractors being held responsible for the conduct of others and to operate outside other general statutes of limitations. Admittedly, there is nothing in that statement of intent regarding the use of the word “accrual” in the statute. The legislature probably used that word to get around the Court’s right to remedy jurisprudence.

The legislature also noted specifically that it wanted to find a reasonable amount of time for requiring construction contractors and service providers to maintain documentation related to potential claims, and that reasonable amount of time is ten years. If this statute does not apply to breach of contract claims, then the legislature’s statement of what is reasonable would be negated. Additionally, when this statute was passed, the General Assembly could simply have stated it was limiting it to tort actions, but it didn’t. The clear understanding of its intent is not to limit the statute to tort claims only and to include breach of contract claims.

New Riegel’s Argument

This case involves a 12 million dollar building that was delivered to the owners with considerable defects in both design and construction that resulted in a 5 million dollar plus repair bill. The New Riegel Local School District brought this action against the architects, the contractors, and their sureties to recover for those contractual damages.  The trial court dismissed that action based on the statute of repose. The Third District reversed, and that decision should be upheld.

At issue here is a statute of repose. It expressly says that it applies to causes of action for bodily injury, injury to real or personal property, and wrongful death. Noticeably absent from those three categories are anything related to contractual damages. The statute speaks only in terms of typical tort damages. This Court analyzed a similar, prior statute in the Kocisko case, in which the Court held that the statutory language chosen is uniformly used to describe tortious conduct.  Those same three categories of damages were at issue in Kocisko, which also did not include economic losses. Nothing in the legislative history of the current statute specifically indicates that Kocisko was overruled.

Tort law does not create a duty to protect individuals from their economic expectations, which arise solely by agreement of the parties. While the statute does reference contracts in various situations, those situations are contextual. Those references have no import on the types of claims that the statute speaks to. Every construction project that takes place must have a contract, especially if there is an architect involved. So, any references to contract language in the statute is just contextual. If the statute really intended to cover contracts, it would have included the types of damages usually recoverable from breach of contract cases, such as economic losses.

Nor does “accrual” language apply to contract breaches. If it does, as used in this statute, a cause of action for breach of contract accrues on substantial completion of the project. For this particular project, then, New Riegel’s cause of action had already accrued well within the statute of repose.

What Was On Their Minds

For a case loaded with pages and pages of briefs and loaded with amici, the oral argument was only 23 plus minutes long, with very few questions.  Justice DeWine really pressed the appellants about the use of the word “accrue” in the statute, while Justice French suggested a number of words and references in the statute suggest it applies to any civil action including contract actions. She also chided Mr. McCloskey a bit for an argument about accrual which went beyond the propositions of law accepted by the Court. And Justice Fischer asked about a court of appeals opinion that held that “a cause of action for breach of contract does not accrue until the complaining party suffers actual damages as a result of the alleged breach.” That’s about it.

How It Looks From The Bleachers

To Professor Emerita Bettman

Dividing argument is usually not a good idea, but in this case it worked well. I’m going to call this for the Appellants, not necessarily from the arguments, but because this has been a long-simmering issue, and I think the legislature intended for this version of the statute to be different from the one in Kocisko, and intended it to apply both to contract and tort actions, with a ten year hard stop for construction and design professionals. The Court could either overrule, or more likely distinguish, Kocisko. While none of the Appellants gave a fully satisfactory answer to Justice DeWine’s questions about the use of the word “accrue” in the statute, there just may not be one, other than an inartful attempt to avoid some of the past disputes on this issue. And there have been many.  If this subject fascinates you, you might want to read the duel that occurred in Sedar v. Knowlton Constr. Co.  49 Ohio St.3d 193 (1990) and Brennaman v. R.M.I. Co., 70 Ohio St. 3d 460 (1994).

To Student Contributor Ivy Charneski

Despite having four separate parties as appellants on the Contractors’ side, their argument came together seamlessly as a group. I was afraid the argument might be very repetitive like all the briefs, but I was pleasantly surprised at how simple and coherent their argument was as a group. Each lawyer for the contractors attacked a separate piece of the puzzle and the rebuttal lawyer at the end wrapped it all together with a clear, concise summary. The contractors’ argument, even though argued by three separate lawyers, was one of the clearest arguments I’ve watched so far.

New Riegel’s argument was also concise and for the most part clear, but just not very convincing to me. I especially found the explanation for the contract references in the statute (that they were simply “contextual”) unpersuasive. Also, I thought the lawyer seemed to dance around Justice French’s questions.

This was one of the quietest benches I’ve seen with only two or three questions the whole argument. With few questions, it makes it hard to tell which way the Court is leaning. Nonetheless, this looks like a win for the contractors to me as I think they just had the better argument. My only wonder thought is what the Court thinks of the pesky Kocisko case.

To Student Contributor Carson Miller

It is difficult to determine which side will win with any confidence with another quiet bench in this case, but I think the Court will find for the contractors and insurance company. The contractors’ argument—that the statute of repose, as amended, applies to all civil actions by its plain language—is straightforward and received little opposition from the bench. In contrast, New Riegel received some push-back from Justices Fischer and French, particularly concerning New Riegel’s argument that the statute’s accrual language signaled intent to allow contract claims more than ten years after completion of the project. Again, this case could go either way, but I would bet on the contractors’ more streamlined argument as the winner.