340 P.3d 169
Or. Ct. App.2014Background
- Plaintiffs (Michael and Sheila Goodwin) bought a home in December 2004 that had been constructed in 2001 with EIFS (synthetic stucco) installed by subcontractor Kingsmen Plastering, Inc. (KPI).
- Plaintiffs allege they discovered water intrusion and hidden construction defects in the EIFS in May 2010 and sued KPI and others for negligence and negligence per se on March 10, 2011.
- KPI moved for summary judgment arguing plaintiffs’ negligence claims were time-barred under the two-year tort statute (ORS 12.110(1)); alternatively, KPI argued the six-year real-property statute (ORS 12.080(3)) applies but contains no discovery rule, so the limitations period began at occurrence (no later than 2004).
- The trial court held ORS 12.080(3) applied and did not contain a discovery rule, dismissed the claims as time-barred, and entered limited judgment for defendants.
- On appeal the court relied on its prior decisions (Riverview and Tavtigian-Coburn) and the Supreme Court’s Rice decision to hold that (1) construction-defect claims alleging injury to an interest in real property are governed by ORS 12.080(3), and (2) ORS 12.080(3) is subject to a discovery rule — so accrual is triggered upon actual or reasonably discoverable injury; summary judgment was therefore improper as factual disputes remained about discovery timing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which statute of limitations governs construction-defect claims alleging injury to real property? | ORS 12.080(3) (six-year real-property statute) governs. | ORS 12.110(1) (two-year tort statute) governs per dicta in Abraham. | ORS 12.080(3) governs (construction-defect claims alleging injury to an interest in real property). |
| Does ORS 12.080(3) incorporate a discovery rule (when does the limitations period begin)? | Yes — accrual is triggered upon actual discovery or when a reasonably diligent person should have discovered the injury. | No — the six-year period runs from the date of injury/occurrence (no discovery rule). | ORS 12.080(3) includes a discovery rule; accrual is upon discovery or when discovery should have occurred. |
| Was summary judgment appropriate based on limitations? | No — factual disputes remain about when plaintiffs discovered or should have discovered the injury. | Yes — plaintiffs knew or should have known more than two/six years before filing. | Summary judgment was erroneous as genuine issues of material fact exist concerning discovery dates; case remanded. |
| Effect on claims against other defendants for post-2005 work | Plaintiffs noted some claims (against KCI) accrue later for inspection/repair work. | Defendants argued all claims barred. | Claims against KCI for work after March 10, 2005 were not time-barred; plaintiffs did not appeal T&M dismissal. |
Key Cases Cited
- Rice v. Rabb, 354 Or 721 (2014) (Supreme Court held claims for injury to personal property under ORS 12.080(4) accrue upon discovery, endorsing a discovery rule)
- Riverview Condo. Assn. v. Cypress Ventures, 266 Or App 574 (2014) (Or App held construction-defect claims alleging injury to real property are governed by ORS 12.080(3))
- Tavtigian-Coburn v. All Star Custom Homes, LLC, 266 Or App 220 (2014) (Or App applied Rice to hold ORS 12.080(3) contains a discovery rule)
- Abraham v. T. Henry Construction, Inc., 350 Or 29 (2011) (Supreme Court opinion containing dictum suggesting tort claims arising from construction might be governed by ORS 12.110 but treated as nonbinding here)
- Greene v. Legacy Emanuel Hospital, 335 Or 115 (2002) (explains accrual under discovery rule: actual discovery or when a reasonably diligent person should have discovered the injury)