Update: After the merit decision was released in New Riegel Local School Dist. Bd. of Edn. v. Buehrer Group Architecture & Eng., Inc.,2019-Ohio-2851., New Riegel sought reconsideration on the ground that when the case was remanded, as ordered by the Supreme Court of Ohio, it be sent to the trial court instead of to the appellate court. On September 17, 2019, the motion was denied by a vote of 6-1.
“Although this court stated in Kocisko…that similar language in the 1971 version of R.C. 2305.131 was ‘uniformly used to describe tortious conduct,’ that statement was shortsighted.”
Justice French, Majority Opinion
“It is therefore manifest that the General Assembly understood R.C. 2305.131 to be a true statute of repose, i.e., one that bars accrued claims as well as those that have not yet vested.”
Justice Kennedy, Partial Dissenting Opinion
“In the years following Kocisko, the General Assembly could easily have added contract actions to R.C. 2305.131(A)(1)’s list of actions to which the statute applies, but it has chosen not to.”
Justice Stewart, Dissenting Opinion
On July 17, 2019, the Supreme Court of Ohio handed down a merit decision in New Riegel Local School Dist. Bd. of Edn. v. Buehrer Group Architecture & Eng., Inc., 2019-Ohio-2851. In an opinion written by Justice French, joined by Chief Justice O’Connor and Justices Fischer and Donnelly, the court held that Ohio’s construction statute of repose, R.C. 2305.131, applies to both contract and tort actions as long as such actions otherwise meet the requirements of the statute. Justice Kennedy concurred in part and dissented in part, joined by Justice DeWine. Justice Stewart dissented. The case was argued March 5, 2019.
Case Background
As part of the Ohio Classroom Facilities Assistance Program, a new public school building was constructed for the New Riegel Local School District (“New Riegel”). The school building was substantially finished and approved for occupancy in December 2002.
Key parties involved (collectively, for simplicity, “Appellants”)
Buehrer Group Architecture and Engineering, Inc. (“the Buehrer Group”) Project designer
Studer-Obringer, Inc. General contractor
Charles Construction Services, Inc. Roofing contractor
Ohio Farmers Insurance Company. Surety for the general contractor and the roofing contractor.
The Lawsuit
In April of 2015, New Riegel sued Appellants for breach of contract, breach of express warranty, and failure to perform in a workmanlike manner. According to New Riegel, the building suffered from condensation, moisture intrusion and other defects as a result of improper design and construction.
Appellants individually moved for judgment on the pleadings based on Ohio’s statute of repose in R.C. 2305.131, arguing the school building was substantially completed more than ten years before the claim was filed. The trial court granted the motions and also dismissed the surety.
The Appeal
In two (here and here) separate, but nearly identical, opinions the Third District Court of Appeals unanimously reversed the trial court’s dismissal of claims against all parties. The appeals court stated that while on its face, R.C. 2305.131 appeared to bar New Riegel’s breach of contract claims, it felt bound to follow the Supreme Court of Ohio’s 1986 decision in Kocisko v. Charles Shutrump & Sons Co., which held that the statute does not apply to breach of contract actions.
Propositions of Law Accepted for Review
While phrased slightly differently by each appellant, the gravamen of all of them is that the statute of repose codified at R.C. 2305.131 applies to both tort and contract actions, and that stare decisis should not be applied where, as here, the General Assembly has repealed and replaced the statute construed in Kocisko.
Read the oral argument preview of the case here and the analysis here.
Key Statute and Precedent in this Case
Current Version of R.C. 2305.131(A)(1) (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 against a person who performed services for the improvement to real property or a person who furnished the design, planning, supervision of construction, or construction of the improvement to real property later than ten years from the date of substantial completion of such improvement.”)
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))
Other Statutes and Precedent
Other pertinent sections of R.C. 2305.131
(G) (“As used in this section, ‘substantial completion’ means the date the improvement to real property is first used by the owner or tenant of the real property or when the real property is first available for use after having the improvement completed in accordance with the contract or agreement covering the improvement, including any agreed changes to the contract or agreement, whichever occurs first.”)
(D)(“(A)(1) of this section does not prohibit the commencement of a civil action for damages against a person who has expressly warranted or guaranteed an improvement to real property for a period longer than the period described in division (A)(1) of this section and whose warranty or guarantee has not expired as of the time of the alleged bodily injury, injury to real or personal property, or wrongful death in accordance with the terms of that warranty or guarantee.”)
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.”)
Brennaman v. R.M.I. Co., 70 Ohio St. 3d 460 (1994) (Held that the 1971 version of R.C. 2305.131 is unconstitutional.)
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.)
Stetter v. R.J. Corman Derailment Servs., L.L.C., 2010-Ohio-1029 (Court conducted a “a fresh review” of a statute that had a resemblance to previous legislation, but differed from the prior statute “in significant and important ways.”)
Landis v. William Fannin Builders, Inc., 2011-Ohio-1489 (10th Dist.) (Recognizing that a plaintiff, in appropriate circumstances, may seek damages for injury to property in an action for breach of contract and applying the rule governing damages for temporary injury to real property in breach-of-contract claim.)
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.”)
Merit Decision
Analysis of Majority Opinion
Per Justice French, the issue before the court is the meaning of the current version of R.C. 2305.131 and whether the court is bound here by stare decisis.
What is a Statute of Repose?
A statute of repose is a hard stop. It bars any lawsuit brought after a certain period of time, now ten years in Ohio for the construction statute of repose. Justice Kennedy’s separate opinion has an excellent definition, taken from the 2014 U.S. Supreme Court decision in CTS Corp. v. Waldburger:
“A statute of repose is akin to a discharge in bankruptcy; because it is a ‘cutoff’ or absolute bar to liability that ‘puts an outer limit on the right to bring a civil action,’ application of a statute of repose does not depend on whether the cause of action has accrued… It extinguishes liability regardless.”
The Evolution of R.C. 2305.131
The first version of Ohio’s construction statute of repose was enacted in 1963. The version addressed in Kocisko was the 1971 version. And in Kocisko, the court held the 1971 statute applied only to actions “for injury to real or personal property, bodily injury or wrongful death,”—tort language. So, the court held the statute applied only to tort actions.
In 1994, in Brennaman v. R.M.I. Co., the court held the 1971 version of R.C. 2305.131 unconstitutional for violating the Ohio Constitution’s right to a remedy provision. So in 1996, as part of H.B. 350, the General Assembly repealed the 1971 version and enacted a new version. Unlike the 1971 version, which precluded the commencement of an action, the 1996 statute precluded the accrual of a cause of action, But this 1996 version went down as a small part of a huge conflagration when the court struck down H.B. 350 in its entirety as a violation of the single subject rule.
As George Santayana once said, “those who cannot remember the past are condemned to repeat it.” In 2004 the legislature passed the current version of R.C. 2305.131, which is a lot like the previous version.
Stare Decisis
So is the court bound, as the Third District felt it was, by the precedent decided in Kocisko? No, because the present statute is different from the one in that case. The legislature repealed that one and enacted a new one. Just because this one is similar to the one stricken as unconstitutional doesn’t mean this one is, too. The majority here does what it did in Stetter– gives a fresh review of the new statute despite its resemblance to the old one.
“The current version of R.C. 2305.131 is sufficiently different from the 1971 version of the statute ‘to avoid the blanket application of stare decisis,’” wrote French.
What is so different? The 1971 version had only one paragraph. This version has nine, includes exceptions to its application that allow for extensions of the repose period, and has more contract-y concepts in it. Justice French describes these differences as “substantial.” (Justice Stewart very much disagrees, in dissent.) So the Third District was wrong in applying stare decisis to hold that the current version of RC. 2305.131 applies only to tort claims.
R.C. 2305.131 Applies to Both Tort and Contract Claims
Unshackled from Kocisko, the court looks anew at this version of R.C. 2305.131, and decides that the holding in Kocisko that the similar language in that statute applied only to tort claims was “shortsighted.” The introduction in the statute says the repose period applies “notwithstanding any otherwise applicable period of limitations specified in this chapter.” Chapter 2305 includes statutes of limitations for both tort and contract claims. Had the legislature wanted to limit this to tort claims it could have said so. And the beginning of the repose period is tied to contractual performance, using language like “substantial completion” of the project, in accordance with the contract. “Substantial completion” is a contract term.
Furthermore, and this is the piece Justice French says is most persuasive of the fact that the legislature did not intend to exclude contract actions from the statute of repose, the statute excludes express warranty claims. Since express warranty claims are contract matters, if the statute intended to exclude all contract claims, there would be no need to exclude these. So the statute applies to all causes of action seeking to recover damages for injuries from improvements to real property, from the design and construction people as set forth in the statute. Since the key legislative intent is to protect against having to defend stale claims, it only makes sense that the statute applies to both torts and contracts.
So, is New Riegel’s Claim Barred? Let’s Punt
New Riegel argued that even if the current version of the statute applies to contract actions, it does not bar its claims because they accrued within ten years of the substantial completion of the school building, and R.C. 2305.131(A) does not limit the commencement of an accrued claim. So, are New Riegel’s claims barred? After all that ink about why contract claims are included within the statute of repose, you’d think the answer would be yes, but it isn’t. The majority’s answer is that this is beyond the propositions of law the court accepted, so the court of appeals can figure this out. The Third District did not address this issue originally, and the case is sent back to it to address now. Justice Kennedy, however, does address this in her separate opinion.
Justice Kennedy’s Position
Justice Kennedy agrees that R.C. 2305.131 applies to both tort and contract claims, and agrees that the Third District should be reversed. But she writes separately to address New Riegel’s argument that the statute only applies to tort claims because it does not bar an accrued claim, and since a breach-of-contract claim will always accrue before the ten-year period of repose expires, it makes no sense to say the statute covers contract claims. Unlike the majority, Kennedy believes this argument is properly subsumed in the propositions of law accepted for review, should be addressed, and is necessary to address to decide the case.
Kennedy rejects New Riegel’s argument that the statutory phrase “no cause of action…shall accrue” exempts causes of action (like this one) that did accrue during the ten-year repose period. As is boilerplate by now, words in a statute cannot be read in isolation. Other parts of the statute contain a discovery rule exception and a disability exception to the statute of repose; those would be made meaningless if the statute didn’t apply to accrued claims.
Furthermore, in the uncodified law, the General Assembly repeatedly described R.C. 2305.131 as a statute of repose, meaning that it bars accrued claims as well as those that have not yet vested.
Bottom Line, for Kennedy
“The plain language of R.C. 2305.131(A), read in its entirety, extinguishes liability for injuries arising out of a defective and unsafe condition of an improvement brought against a person who designed, planned, supervised, or constructed that improvement after ten years from its substantial completion, subject to the time extensions established in subdivisions (A)(2) and (A)(3) of that statute.” Since New Riegel brought its breach of contract action more than ten years after the school building was substantially completed, its action is time-barred. No need to send the case back. The court of appeals should be reversed and the judgment of the trial court reinstated.
Justice DeWine joined this opinion.
Justice Stewart’s Dissent
R.C. 2305.131(A)((1) hasn’t really changed in any significant way since the court interpreted it to apply only to tort actions in Kocisko. The language the majority refers to as “similar” is virtually identical. “The same words are used but merely reordered, with no effect on the meaning of the statute,” wrote Stewart. If the legislature disagreed with the court’s holding in Kocisko, it could have easily amended the statute to add contract actions, but it didn’t. It has amended other provisions twice since then, but has never superseded Kocisko.
“The General Assembly is presumed to have been aware of our decision in Kocisko, and its failure to add contract actions to the actions listed in R.C. 2305.131(A)(1) shows that it has been content to let the statute stand as we previously interpreted it,” wrote Stewart. She disagrees with the majority that there are any contract law concepts in the statute. Just because the words “substantial completion of the contract” appear in the statute doesn’t mean the statute applies to contract claims. And there is absolutely no Supreme Court of Ohio authority holding that a party can recover damages for injury to property in a contract action. The only claims alleged by New Riegel in this case were contractual, and thus outside the scope of the statute of repose.
Justice Stewart ends her dissent with examples of other state supreme courts interpreting similar statutes of repose in the same way the Ohio high court did in Kocisko, and notes that the General Assembly has had ample opportunity to add contract actions to the construction statute of repose, but has not done so. She gives some examples of state legislatures that have-like Illinois (“actions based on tort contract, or otherwise…”), Indiana (applying to “actions whether based upon contract, tort, nuisance or other remedy”) and New Jersey (applying to any action “whether in contract, on tort, or otherwise”).
Bottom Line for Stewart
Both propositions of law should be rejected and the court of appeals judgments affirmed.
Concluding Observations
After an unusually quiet argument (in a case with a whole lot of briefing), my student contributors and I all predicted a win for Appellants. This battle has been going on for years (see, Sedar v. Knowlton Constr. Co. and Brennaman v. R.M.I. Co.). I suspect the legislature really means for this to be a true statute of repose and apply to contract actions as well as torts. But really, the statute just doesn’t say that. Justice Stewart has the only sane take on that. I found the majority opinion tortured in its attempt to justify its finding that contract claims are covered.
In order to find contract claims covered, I think Justice Kennedy’s opinion makes more sense. But really, how hard would it be for the General Assembly to add the words “and contract actions” to the statute, after all these amendments?