Navigating the Fog of Oregon’s Construction Claim Statute of Limitations
The law in Oregon regarding which statute of limitations is applicable to negligent construction claims, and when the applicable statute should begin to run, has been far from clear for many years. Whether such claims are subject to a two-year or six-year statute of limitations, and whether a discovery rule will apply to determine when the proper limitation period begins to run, have been the subject of countless motions in Oregon trial courts with mixed results.
A recent Oregon Court of Appeals decision may serve to clarify the unclear legal landscape on this issue. In Riverview Condominium Ass’n v. Cypress Ventures, Inc., No. A150586 (Or. App. 2014), the appellate court held that construction defect claims are subject to the six-year statute of limitations set forth in ORS 12.080(3), which applies to actions for “interference with or injury to any interest of another in real property.” The court applied this six-year limitations period to the Association’s negligent construction claims rather than the general two-year limitations period for negligence claims.
The Riverview court further clarified that this six-year limitations period is subject to a discovery rule: the period would not begin to run until the Association knew or should have known about its injuries and the tortious acts giving rise to its injuries. The condominiums at issue in the case were completed in May 2000, and a notice of completion was filed in December 2000. The Association filed its lawsuit in July 2010.
The individual unit owners began to notice water intrusion issues at windows as early as 2001, several years prior to filing the lawsuit. Further, in 2003 and seven years before it filed its lawsuit, the Association was informed by a repair contractor that the water intrusion issues were caused by improper installation of building paper. Nevertheless, the court of appeals reversed the lower court’s summary judgment ruling in favor of defendants, finding that there was a question of fact as to when the Association “discovered” its injuries and the tortious conduct which caused its injuries.
Builders should keep in mind that Oregon law allows parties to agree to limitations periods other than those established by statute. The statutory limitations period governs a contract action “unless the contracting parties have specified a different limitation period.” Reedsport Sch. Dist. No. 105 v. Gulf Ins. Co., 210 Or App 679, 687 (Or. App. 2007). Therefore, at least regarding breach of contract claims, contractors can manage risk by specifying in their contracts the applicable limitations period for bringing a construction claim.
As for negligent construction claims, the Riverview case provides some clarity on an issue that has remained unsettled in Oregon for several years, ruling that the six-year statute of limitations, with a discovery rule, applies.
Stay tuned to this blog as we will continue to monitor developments in this area of Oregon law.
Blog by: Elizabeth Wright