This is a construction defect case brought by a homeowner alleging that water intrusion damage resulted from the negligence of defendant, the general contractor who built the house and from whom plaintiff bought it. The trial court granted defendant’s motion for summary judgment on the ground that plaintiff did not initiate this action within the 10-year statute of repose required by ORS 12.115, which begins to run from the time of “the act or omission complained of.” On appeal, plaintiff argues that the court erred in applying that statute; the correct statute, she maintains, is ORS 12.135, which begins to run at the time of “substantial completion,” which, she maintains, occurred later than “the act or omission complained of.” In the alternative, she argues that, even if ORS 12.115 is the applicable statute of repose, the court erred in granting summary judgment to defendant, because there are disputed issues of material fact regarding when, exactly, the “act or omission complained of” occurred. We affirm.
Here, the relevant facts are undisputed (although, as we explain below, the parties disagree about the characterization of those facts and their legal significance). In 1999, defendant began constructing a house on property it owned in Washington County. At that time, defendant intended to sell the house but had not identified a prospective purchaser of the house and property. However, in May 2000, before defendant finished the house, plaintiff decided to buy it. Before the end of that month, the parties signed a document captioned “Real Estate Sale Agreement,” including several “addenda” requiring defendant to replace some already-installed floor coverings (tile and carpet) with ones chosen by plaintiff, to install certain closet doors, to plumb a utility room to accommodate a gas dryer, to conduct a “walk-thru” inspection, and to “remedy deficiencies prior to closing.” On June 22, 2000, defendant recorded a Notice of Completion, and the county issued a Certificate of Occupancy seven days later. By that time, the outside shell of the house — that is, the portion of the house that plaintiff alleges was negligently constructed — was substantially completed. Defendant conducted the “walk-through” on July 5, 2000, and two days later, on July 7, agreed to make some minor repairs to the house’s stucco. The purchase closed on July 12, 2000. Plaintiff served a Notice of Defect on defendant, pursuant to ORS 701.565, on June 25, 2010.
The dispute centers on which statute of repose applies to these facts. Plaintiff argues in favor of ORS 12.135:
“(1) An action against a person by a plaintiff who is not a public body, whether in contract, tort or otherwise, arising from the person having performed the construction, alteration or repair of any improvement to real property or the supervision or inspection thereof * * * must be commenced before * * *:
“(b) Ten years after substantial completion or abandonment of the construction, alteration or repair of a residential structure * * *.
“(4) For purposes of this section:
“(b) ‘Substantial completion’ means the date when the contractee accepts in writing the construction, alteration or repair of the improvement to real property or any designated portion thereof as havingreached that state of completion when it may be used or occupied for its intended purpose or, if there is no such written acceptance, the date of acceptance of the completed construction, alteration or repair of such improvement by the contractee.”
(Emphasis added.) According to plaintiff, “substantial completion” occurred, at the earliest, on June 26, 2000, when she accepted a written warranty from defendant covering construction defects.
Defendant, however, argues that the trial court correctly identified ORS 12.115(1) as the applicable statute of repose. That statute provides, “In no event shall any action for negligent injury to person or property of another be commenced more than 10 years from the date of the act or omission complained of.” (Emphasis added.) According to defendant, the “act or omission complained of’ was (allegedly) the negligent construction of the outside shell or envelope of the house, and that action necessarily occurred before the notice of completion, that is, before June 22, 2000. The action was commenced, at the earliest, more than 10 years later, when plaintiff sent defendant a Notice of Defect on June 25, 2010.
On appeal, the parties initially focus on Lozano v. Schlesinger,
“The phrasing of the statute * * * suggests that, consistently with the common usage of the term ‘contractee,’ the statute was intended to apply when the recipientof services under a construction contract accepts in writing the completion of those services.
“ [I] t is undisputed that there was no written acceptance of the services of a contractor by a ‘contractee’ within the meaning of the statute. [The defendant] built his own house and then moved into it. ORS 12.135 does not apply, and the trial court erred in reaching a contrary conclusion.”
Id. Therefore, “[p]lainly, the targets of the statute are claims that arise out of negligent performance of construction contracts.”
Defendant acknowledges that it had a contract with plaintiff; however, it focuses on the court’s statements that “the statute was intended to apply when the recipient of services under a construction contract,” and “the targets of the statute are claims that arise out of negligent performance of construction contracts.” (Emphasis added.) According to defendant, the contract in this case was not a contract involving construction services; it was a purchase and sale agreement. Citing Sunset Presbyterian Church v. Brockamp & Jaeger, Inc.,
Plaintiff, for her part, also advances arguments derived from Lozano. First, she argues that Lozano establishes that ORS 12.135 applies to construction defect claims brought by a “contractee,” and that she is one. She bases that argument on the fact that she and defendant did, in fact, have a contract, albeit not a construction contract. She asserts that, although Lozano uses the term “construction contract,” the type of contract was not an issue in that case; rather, the issue was only whether a contractor who builds and then occupies a house can be in a “contractor-contractee” relationship with himself. Second, she notes that, by virtue of a 2009 amendment to ORS 12.135, the statute “[a]pplies to an action against a manufacturer, distributor, seller or lessor of a manufactured dwelling * * * or of a prefabricated structure ***.” Or Laws 2009, ch 485, § 3. Thus, she concludes, the application of the statute could not logically be limited to construction contracts.
After plaintiff submitted her opening brief, we decided PIH Beaverton, LLC v. Super One, Inc.,
“the statute contemplates that the ultimate repose period applies to any action ‘arising from’ certain construction-related activities, regardless of the legal theory that forms the basis for the action. The question posed by this appeal, then, is what it means for an action to ‘arise from’ the construction-related activities described in ORS 12.135(1).”
Id. at 501-02 (emphasis omitted). In concluding that “an action ‘arises from’ a contract if the contract is ‘the specific place of origin or the source of the legal action,”’ id. at 502 (quoting Black v. Arizala,
Plaintiff overreads PIH Beaverton, LLC. She is correct that ORS 12.135 applies to actions in “contract, tort or otherwise.” That much is self-evident from the text. It does not follow that the statute applies to all actions in contract, tort or otherwise. By specifying that the statute of repose for such actions begins at “substantial completion,” and then defining that term to mean “when the contractee accepts in writing” the construction, alteration, or repair of premises, the legislature specified that the statute applied to only a subset of actions in contract, tort or otherwise— those that derive from a contractor-contractee relationship. Necessarily, those actions are based on a contract. This conclusion follows from the text of ORS 12.135; plugging in the definition of “substantial completion” from ORS 12.135(4)(b) (in italics below) into the operative provision, ORS 12.135(1), results in a text that provides, “An action against a person by a plaintiff*** must be commenced before *** (b) [t]en years after the date when the contractee accepts in writing the construction * * *.” That text clearly reinforces our opinion in Lozano.
So too does the legislative history of ORS 12.135, as we observed in Lozano:
“Moreover, as the Oregon Supreme Court explained after reviewing the legislative history of the statute, the enactment of ORS 12.135 ‘began with the objective of fixing a starting date for applying the statutory time limits to actions against construction contractors.’ SecuritiesIntermountain v. Sunset Fuel,289 Or 243 , 250,611 P2d 1158 (1980) (emphasis added). Plainly, the targets of the statute are claims that arise out of negligent performance of construction contracts.”
Our conclusion that, except (perhaps) in the case of manufactured or prefabricated structures, ORS 12.135 applies only to actions arising out of construction contracts, does not end our inquiry. That is so, because the agreement between the parties in this case contains not only a purchase and sale contract, but, in addenda, agreements supported by consideration that defendant will perform certain construction-related tasks — that is, terms of a construction contract. In particular, defendant promised to remedy construction-related deficiencies prior to closing, to install some “mirrored bypass style” closet doors, to plumb a utility room for gas, and to change vinyl floor coverings to ceramic tiles. These elements of a construction contract, however, do not help plaintiff. Her complaint alleged negligence with respect to “sheathing, framing, trim, weather-resistive barrier (‘WRB’), siding, and interior finishes.” Under the undisputed facts, all of the alleged incidents of negligence occurred before plaintiff entered into the addenda to the purchase and sale agreement
Plaintiff, however, argues that, even under ORS 12.115, her claim was timely. ORS 12.115 bars actions that are commenced more than 10 years from the date of the act or omission complained of. According to plaintiff, the court erred in granting defendant’s motion for summary judgment under ORS 12.115 because there are disputed issues of fact as to when the act or omission complained of occurred. Plaintiff points out that defendant had an obligation to ensure that the home met the county building codes, and that the obligation continued through the date of closing on July 12, 2000 — a date that was less than 10 years from the time when plaintiff commenced the action. Also, plaintiff argues, defendant conducted a walk-through less than 10 years from the initiation of the action, and it did so negligently.
Plaintiffs argument cannot withstand well-settled case law. In Josephs v. Burns & Bear,
“If the statute was intended to be one of ultimate repose, regardless of circumstances, it would follow that the legislature did not intend the statute to be circumvented by allegations that subsequent to the fundamental wrong, a continuing duty existed to rectify the results of such wrong. By this statement we do not intend to prejudge a situation in which an active, continuous relationship between plaintiff and defendant exists from the time of the negligent acts to a time within the period during which an action is permitted.”
Id. at 501-02. Here, the only “fundamental wrong” that plaintiff alleged in her complaint, that is, negligent construction of the house’s shell, occurred outside of the 10 year period, and there was no “continuous relationship between plaintiff and defendant * * * from the time of the negligent acts to a time within the period.” As noted above, plaintiff did not allege negligent inspection or a negligently performed walk-through. Thus, at the time of the injurious acts — allegedly negligent construction of the house’s shell — there was no relationship between plaintiff and defendant.
The court correctly concluded that ORS 12.135 does not apply to this case and that, on the undisputed facts, ORS 12.115 bars plaintiffs action.
Affirmed.
Notes
In addition to arguing that substantial completion occurred upon acceptance of a written warranty, plaintiff’s more vigorous argument is that substantial completion occurred on June 29, 2000, when a “Notice of Completion” was filed and recorded in Washington County, or perhaps on July 12, 2000, when the sale of the house closed. We need not decide the precise date of “substantial completion,” however, because all of the dates alleged by plaintiff are less than 10 years from the date she cites as the commencement of her action.
The parties agree that filing a Notice of Defect tolls any applicable statute of repose, even when — as here — the contractor does not respond. The parties rely on ORS 701.585(1). We express no opinion on the correctness of the parties’ shared position on this unraised issue. The statute provides:
“If an owner sends a contractor, subcontractor or supplier a notice of defect within the time allowed for the owner to commence a court action against that contractor, subcontractor or supplier for a claim described in ORS 701.565, the time for the owner to commence the action shall be extended, notwithstanding any statute of limitation or statute of ultimate repose, until the later of:
“(a) One hundred and twenty days after the owner receives a written response from the contractor, subcontractor or supplier that received the notice of defect if the written response does not contain a written offer to perform remediation or pay monetary compensation for one or more of the defects or incidental damage described in the notice of defect;
“(b) One hundred and twenty days after the owner rejects a written offer by any contractor, subcontractor or supplier to perform remediation or pay monetary compensation for one or more of the defects or incidental damage described in the notice of defect; or
“(c) Thirty days after the date specified in an accepted written offer by which the offering contractor, subcontractor or supplier is to complete the remediation or complete payment of monetary compensation for one or more of the defects and any incidental damage described in the notice of defect.”
Plaintiff originally named several subcontractors as codefendants. They are no longer parties to this appeal.