How does the recent CTS decision affect your association?
Similar to a statute of limitation, a statute of repose prescribes a time limit during which a suit must be filed or all right to recovery are lost. However, a statute of repose begins to run based on the occurrence of some event (i.e. when the defendant took the action that caused the harm), whereas a statute of limitation generally begins to run either when the harm occurred or when it is discovered by the person harmed. Statutes of limitation and statutes of repose are governed by state law. Before Waldburger there was some question on whether statutes of repose were a kind of limitation or something completely different. We now have an answer.
On Monday, the U.S. Supreme Court held that property owners from Asheville, North Carolina were barred by the State’s statute of repose from filing suit against CTS Corp. In so holding, the Court found that state statutes of repose, unlike state statutes of limitation were not tolled (frozen in time) by the federal Superfund law (the Comprehensive Environmental Response, Compensation, and Liability Act). Statutes of repose are not only relevant in environmental cases, but also apply to construction law suits.
North Carolina law provides that:
“No action to recover damages based upon or arising out of the defective or unsafe condition of an improvement to real property shall be brought more than six years from the later of the specific last act or omission of the defendant giving rise to the cause of action or substantial completion of the improvement.” N.C.G.S. § 1-50(5)(a).
So what does this mean from a practical standpoint? Let’s say that you buy a condo in Asheville this summer that was built by a developer in 2008. The individual units were sold slowly because of the economic downturn, but by 2014 enough of the units transferred from the developer and the developer turns over control to the Association. As winter rolls around and the first snow falls in the mountains of Western North Carolina, the Association quickly realizes that the roof to the condo was not constructed properly and that it could fall in any minute. The Association gets an estimate from a reputable contractor who says that it will cost hundreds of thousands of dollars to fix it. The Association is furious with the developer (who never admitted to the defects in construction) so they promptly call an attorney after the holidays in early 2015. Much to their dismay, they have no direct cause of action; the statute of repose has run.
This issue has come up in recent North Carolina cases. (here) and (here). Statutes of repose are strict deadlines that can eliminate your right to recovery. If you have specific questions about how you could be affected, you should contact our office or another attorney. Don’t delay!