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How Many More Years?

Timothy R. Hughes, Esq.
Hughes & Associates, P.L.L.C.

Lawyers often confront the question of how long a party has available to file a lawsuit. You may ask how many more years you have to file suit, or you may ask how many more years you face a potential lawsuit related to a project. (It is only if you are truly lucky that your lawyer may additionally associate the question with blues music and Howling Wolf’s classic tune.)

Limitations periods provide a critical defense and possible impediment to lawsuits. In theory, statutes of limitations are designed to bar untimely and stale claims. The basic premise is that over time, it becomes more difficult to justly adjudicate a dispute. Documents are lost. Witnesses leave or even die. Even when witnesses may be located, recollections fade and become uncertain.

As a subcontractor, it is critical to analyze applicable statutes of limitations and statutes of repose as they have a bearing on the amount of time you may assert claims. It is also important to know how long you face potential litigation on a project. In addition, given the vertical market exposure on educational facilities, we briefly discuss special limitations issues that may apply to governmental projects in some jurisdictions.

Comparing Statutes of Limitations and Statutes of Repose

On construction projects, you will often hear of both “statutes of limitations” and “statutes of repose”. In simple terms, both types of statutes address how long a party has to file a lawsuit. There are distinctions. A limitations period starts to run from when the cause of action “accrues”. In contrast, a statute of repose generally starts to run from the occurrence of an independent event. For construction repose statutes, the repose period is often tied to a construction related event, such as completion of the defendant’s work or completion of the project.

When Does The Clock Start?

When the clock starts to run came be equally important to evaluating whether a claim is time-barred. “Accrual” is when the statute of limitations starts to run. Accrual can be tied to a number of different standards. In some states, the statute of limitations starts to run upon the occurrence of any damage, no matter how slight. The clock can be ticking under those circumstances when the plaintiff literally has no idea they have a claim.

Other states apply a “discovery” trigger. Under that scenario, the statute of limitations generally starts to run from when a plaintiff discovers, or knew or reasonably should have known, that they had a cause of action. The discovery rule applies to both tort claims for personal injury and property damage as well as contract claims.

With every legal rule, there come exceptions. Even states with short accrual triggers tend to use the discovery trigger for fraud claims. Some types of claims establish a special limitations period or accrual rule in that state for specific claims.

“Education” Projects Discussed Generally

Many educational projects are public projects. Cases involving the government as a defendant have specific potential nuances. You may run into issues relating to sovereign immunity against tort claims. In addition, some states provide a defendant sued by the state cannot claim that the suit is barred by statue of limitations. Different states may split on the question of whether this same rule applies to statutes of repose as well. Thus, you may face virtually indefinite liability on governmental projects in certain statues.

The Statute Depends on the Claims

Most states define the time period for a claim as dependent on the type of claim asserted. For example, the time period for a personal injury case may be different than a property damage case. Similarly, the time period applicable to contract claims may be different than these tort based claims.

Most liability cases involving subcontractors, and the overwhelming majority of claims asserted by subcontractors, involve issues of breach of contract. It is clearly possible, however, for an electrical contractor to face personal injury or property damage claims. Thus, you need to be familiar with all the potential time periods to know when you can breathe a sigh of relief that your liability exposure on a project is over.

Conclusion

As with so many issues we discuss, statutes of limitations and repose are driven by specific state law. You should be familiar with the time periods that apply to your project to gauge and understand how long you can sue or be sued on your projects. Knowing this information helps you manage both your risk and your business.