By Kevin Clonts and Claude Bosworth
On June 16, 2016, the Oregon Supreme Court issued an opinion holding that a two-year statute of limitations applies to negligent construction defect claims, subject to a discovery rule. In Oregon, negligent construction defect claims must therefore be brought within two years of when plaintiff knew or should have known of the defect, and per the statute of repose, no later than ten years after construction was completed.
In Goodwin v. Kingsmen Plastering, Inc., plaintiff homeowners filed a construction defect suit against a stucco contractor nearly ten years after construction was completed and, according to defendant, over two years after the alleged defects were discovered. Plaintiffs argued that the six-year statutory period applicable to actions “for interference with or injury to any interest of another in real property” controlled. Defendant argued that the two-year statute generally applicable to tort claims controlled, because that statute applies to “any injury to the person or rights of another, not arising on contract, and not especially enumerated in this chapter.” In support of its argument, defendant relied on a 2011 Oregon Supreme Court decision, which stated in dictum that the two-year statute applied.
The Oregon Supreme Court conducted an extensive analysis of the competing statutes of limitations, their constructions and histories, and concluded that the catch-all two-year tort statute controlled. In deciding that the two-year statutory period governed, the Oregon Supreme Court overturned a 2014 Court of Appeals case that held that the six-year statutory period applied to construction defect claims. Further, in deciding that the two-year statutory period was subject to a discovery rule, the court extended and clarified its prior decision applying a discovery rule to actions subject to the generally applicable two-year statute.
With this decision, it will be important for attorneys in pending and future negligent construction defect cases to carefully test when plaintiffs first knew or should have known of alleged defects. For claims based on contract, the six-year statute of limitations for breach of contract claims continues to control, and that statutory period starts to run when the contract is breached, that is, when the defective construction was performed.
A copy of the decision can be found online at: http://www.publications.ojd.state.or.us/docs/S062925.pdf