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Statute of Repose Refresher – A Powerful Shield Contractors Should Use!

03.30.2022

Statute of Repose Refresher

By Anam R. Fazli, Associate

In 1975, the Texas Legislature added a statute of repose applicable to individuals who perform or furnish construction or repair of improvements to real property. This provision, codified in Section 16.009 of the Texas Civil Practices and Remedies Code, provides:

[a] claimant must bring suit for damages… against a person who constructs or repairs an improvement to real property not later than 10 years after the substantial completion of the improvement in an action arising out of a defective or unsafe condition of the real property or a deficiency in the construction or repair of the improvement.[1]

The statute of repose is significant because it completely bars claims related to (1) injury, damage, or loss to real or personal property; (2) personal injury; (3) wrongful death; (4) contribution; (5) or indemnification.[2]

The public policy behind the statute of repose is if there is a defect in the construction or design of a building then it should be obvious within ten years of the time of completion. It further eliminates the threat of never-ending liability for individuals who perform or furnish construction or repair. On the flip side, it deprives individuals of their right to assert a claim for latent defects. The Texas Legislature does not address latency periods, but since it is not exempted, it must be included.

Is the statute of repose different for government entities? Yes, with some exceptions.

The Texas Legislature passed House Bill 3069 in 2021. House Bill 3069 applies to public projects and shortens the period for a government entity to bring suits down to 8 years from the date of substantial completion.[3] It also only extends this period by 1 year if a claim is presented during the 8-year period.

However, it is important to note that the bill carves out three exceptions to the 8-year deadline for government entities: (1) TXDOT contracts; (2) projects receiving money from state or highway mass transit funds, and (3) certain civil works projects. The 10-year deadline, codified in Section 16.009 of the Texas Civil Practice and Remedies Code, will apply to these exceptions.

Is the statute of repose different for residential cases? No.

No. In 2021 House Bill 3595 was introduced, which would have cut the statute of repose from 10 years to 5 years. However, that bill died in committee. Accordingly, the 10-year deadline under Section 16.009 applies to residential cases.

What is the difference between the statute of repose and the statute of limitations?

The statute of repose and statute of limitations imposes a deadline for when claims must be filed, but they are different. The statute of repose applies retroactively to prohibit the bringing of a suit after a stated time, regardless of when the breach of injury occurs or becomes discoverable. The statute of limitations begins to run when the claim accrues. Additionally, the statute of repose cannot be extended by equitable doctrines, but the statute of limitations may be extended by equitable doctrines such as tolling limitations.[4]

Who does the statute of repose not protect?

The statute of repose only protects individuals that construct or repair improvements. In Sonnier v. Chisholm-Ryder Company, Inc., the Texas Supreme Court held that an off-site manufacturer of a product used in the construction of improvement may not claim the protection under Texas Civil Practice and Remedies Code Section 16.009.[5]

The court further held that a manufacturer must be the one who constructs the improvements to be protected by the statute of repose.[6] Construct means annexing the realty, thereby transforming the personality into an improvement.[7]

What is an improvement?

Improvements is key to determining if a person is entitled to protection. The Texas Supreme Court created a three-factor test to qualify an improvement and to determine whether personalty has been annexed to realty:

(1) the mode and sufficiency of annexation, either real or constructive; (2) the adaptation of the personalty to the use or the purpose of the realty, and (3) the intention of the owner who causes the personalty to be annexed to the realty…[8]

Many items that might not appear to be improvements might qualify as improvements. For example, the Supreme Court suggested that a motel could bolt a painting to a wall, intending that it not be removed and thus transforming the painting into an improvement.[9]

Is asbestos an improvement? Yes.

In Brown & Root Inc., from 1969 until 1971 the general contractor constructed certain renovations and additions at a plant using asbestos-laden materials.[10] Specifically, it applied fireproofing to the ceiling of the plant, installed pipe insulation and gaskets adapted to fit the layout of the plant, built an expansion of the cafeteria, and installed new tire machines in the factory. In 1999, the general contractor’s employee was diagnosed with mesothelioma and filed a personal injury action against the general contractor.

The general contractor argued that the statute of repose applies and protects it from liability. It further showed that it met the three-factor test to qualify improvements and affirmed that personalty has been annexed to realty. The court relied on a Fifth Circuit opinion that noted asbestos-containing materials are “improvements” under a similar Mississippi statute of repose because “the term improvement must be given its customary meaning… generally… a permanent addition that increases the value of the property addition that increases the value of the property and makes it more useful.”[11]

This court applied the same standard and held that the asbestos fireproofing materials constitute as improvements.[12] Accordingly, the statute of repose provided the general contractor with protection for exposure to asbestos that occurred on or after annexation.[13]

Brown v. Root is a labor and employment case, but the holding can be applied to construction cases. A property owner cannot bring a claim for mesothelioma against a contractor that used asbestos-laden materials for construction beyond the statute of repose deadline.

Does Section 33.004 of the Texas Civil Practice and Remedies Code revive claims that were otherwise barred by repose? No.

In Galbraith Engineering Consultants, the homeowners brought a construction defect case against the builder.[14] The builder designated Galbraith as a responsible third party for purposes of proportionate responsibility and the homeowners amended their pleadings to join Galbraith as a defendant. Galbraith argued that the claim was barred by the 10-year statute of repose and that Texas Civil Practice and Remedies Code 33.004 could not revive the claim.

The Texas Supreme Court agreed and upheld that the statute of repose provides “absolute protection to certain parties from the burden of indefinite potential liability. Accordingly, a claim cannot be revived through Texas Civil Practice and Remedies Code 33.004 when the statute of repose has run.

Are there exceptions to the statute of repose? Yes.

The statute of repose carves out exceptions for the following claims:

(1) on a written warranty, guaranty, or other contracts that expressly provides for a longer period; (2)against a person in actual possession or control of the real property at the time that the damage, injury, or death occurs; and (3) based on willful misconduct or fraudulent concealment with the performance of the construction or repair.[15]

The first exception ensures that an agreement is upheld by the individuals involved. The second exception preserves a property owner’s duty to warn or make dangerous conditions on a property safe. The third exception protects parties from fraud that can result in financial loss or physical harm.

 Conclusion

The statute of repose is a powerful shield that contractors can use to completely protect themselves from a wide variety of claims that are brought beyond the statute’s deadline. On the other hand, claimants must ensure that they are well within the 8- or 10-year deadline when filing their claims or fall under the exceptions. Otherwise, they relinquish all rights to their claims.
[1] Tex. Civ. Prac. & Rem. Code Ann. 16.009
[2] Id.
[3] H.B. 3069, 87th Legis. (Tex. 2021-2022).
[4] S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996); Tex. Civ. Prac. & Rem. Code Ann 16.001(b); 16.063
[5] Sonnier v. Chisholm-Ryder Company, Inc., 909 S.W.2d 475 (Tex. 1995).
[6] Id.
[7] Id. at 479.
[8] Id.
[9] Id.
[10] Brown v. Root Inc. v. Shelton, 446 S.W.3d 386, 400 (Tex.App.—Tyler 2003 no pet.).
[11] Trust Co. Bank v. U.S. Gypsum Co., 950 F.2d 1144, 1152 (5th Cir. 1992).
[12] Id.
[13] Id.
[14] Galbraith v. Pochucha, 290 S.W.3d 863 (Tex. 2009).
[15] Tex. Civ. Prac. & Rem. Code Ann. 16.009


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Anam R. Fazli

Associate

Contact: 713.255.3553

Anam provides legal counsel with respect to construction law and commercial litigation issues. She routinely represents residential and commercial construction clients throughout the litigation and arbitration processes. Anam’s experience covers a variety of disputes involving construction defects, breach of contract claims, payment disputes, liens, negligence, insurance coverage, and personal injury issues.

Anam has successfully represented general contractors, subcontractors, manufacturers, insurance companies, owners and individuals in litigation matters.

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