Court of Appeals Issues Decision on Ten-Year Statute of Repose

The court of appeals issued an important decision about the ten-year statute of repose in ORS 12.135.  In PIH Beaverton, LLC v. Super One (http://www.publications.ojd.state.or.us/docs/A142268.pdf), the court limited ORS 12.135 as to claims against property owners, but also expanded ORS 12.135 to include third-party indemnity claims.

Plaintiff, a hotel owner, brought negligent-construction claims against the general contractor (Super One), and various subcontractors.  Super One, in turn, brought third-party indemnity claims against two subcontractors.  The trial court granted defendants’ motions for summary judgment on the ground that plaintiff's claim was time barred because it was brought after the ten-year repose period in ORS 12.135.  The trial court also granted the third-party defendants’ motions against Super One's indemnity claims on the same ground.  Plaintiff and Super One appealed.

Concerning Plaintiff’s claims, the appellate court first held that the appropriate statute of repose was ORS 12.135, not ORS 12.115, a more general statute of repose.  Under ORS 12.135, the issue was whether the project was “substantially complete” more than ten years before Plaintiff filed suit (May 23. 2007).  Defendants offered evidence that more than ten years before that (on February 13, 1997), the prior owner of the hotel filed a “Notice of Completion” pursuant to a statue involving construction liens and Washington County issued a certificate for temporary occupancy.

Plaintiff countered with evidence that unspecified, construction work was ongoing within ten years before filing suit, and that the final occupancy permit from Washington County was issued within that ten-year period.

The court reversed the summary judgment on the Plaintiff’s claims, finding that a question of fact existed as to whether the work was “substantially complete” as defined by ORS 12.135(3).  The court then discussed the two part definition of “substantially complete” in ORS 12.135(3).

The first part of ORS 12.135(3) states that substantial completion occurs when the owner provides written acceptance that the work has “reached that state of completion when it may be used or occupied for its intended purpose.”  The court held that the “Notice of Completion” filed by the prior owner and certificate of temporary occupancy did not necessarily mean that the owner had accepted the work.   Thus, the property was not “substantially complete” under this part of the definition.

The second part of ORS 12.135(3) defines “substantial completion” as the date the contractee accepts the construction as "completed." The court interpreted this part of ORS 12.135(3) to mean—somewhat counterintuitively—that “substantial completion” would only occur when construction is fully complete.  Because work was ongoing after May 23, 1997 and Washington County did not issue its final occupancy permit until after May 23, 1997, a question of fact existed as to whether the property was fully complete. 

Super One also appealed the trial court’s decision granting summary judgment to the third-party defendants under the same statute of repose.  Super One argued that ORS 12.135 did not apply to indemnity claims, citing Huff v. Shiomi, 73 Or App 605, 699 P2d 1178 (1985).  The court distinguished Huff, stating that Huff involved a product liability state of repose not applicable to this construction defect case.  It held that ORS 12.135 was enacted to provide finality to all types of construction claims, including indemnity claims, and affirmed summary judgment.



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