Construction contract statute of limitations case

by ocladmin on August 7, 2011

For negligence torts, the statute of limitations has a discovery rule. The time period does not start to run until the injured party knew, or should have known upon reasonable inquiry, of the claim. But contract claims are different from negligence claims.

The statute of limitations for a contract claim, including a construction contract claim, under Oregon law is 6 years from the breach. The discovery rule that applies to negligence claims does not apply. This was decided by the Oregon Court of Appeals in a construction contract case.

Waxman v. Waxman & Associates, Oregon Court of Appeals, said:

In the mid-1990s, defendant developed and built four row houses.(1) After completing construction, defendant sold the row houses to [the original purchasers]. [One of the original purchasers] sold their row house to plaintiffs in 2001.

There were significant construction defects in the common elements of the row houses, necessitating extensive repairs. The row houses are subject to covenants, conditions, and restrictions, which give each row house owner a 25 percent ownership interest in and responsibility for the common elements. As a result, the four property owners at the time of the repairs … were each responsible for 25 percent of the repair bill.

 

The trial court held that the plaintiff would not be given an extension by the discovery rule.

The [trial] court concluded that plaintiffs’ … contract claims were barred by the statute of limitations.

We turn, then, to the question of whether, as plaintiffs contend, their contract claims may nevertheless be timely because ORS 12.080(1) incorporates a discovery rule. For the reasons explained below, we conclude that ORS 12.080(1) is not subject to a discovery rule.(7)

“Whether [a] statute contains a discovery rule is a matter of legislative intent.” Gladhart v. Oregon Vineyard Supply Co., 332 Or 226, 230, 26 P3d 817 (2001). Consequently, we first examine the text and context of ORS 12.080(1) to determine whether the legislature intended to make a discovery rule applicable.

ORS 12.080(1) provides, in pertinent part, that “[a]n action upon a contract * * * shall be commenced within six years.” A “‘discovery rule cannot be assumed, but must be found in the statute of limitations itself.'” Gladhart, 332 Or at 230 (quoting Huff v. Great Western Seed Co., 322 Or 457, 462, 909 P2d 858 (1996)). Further, when the legislature intends to subject a statute of limitations to a discovery rule, it knows how to make its intent to do so clear. See, e.g., ORS 12.135(2) (providing that specified actions “shall be commenced within two years from the date the injury or damage is first discovered or in the exercise of reasonable care should have been discovered”). Nothing in the text of ORS 12.080(1) suggests that the legislature intended to make a discovery rule applicable to actions for breach of contract.

In sum, the applicable statute of limitations for plaintiffs’ contract claims is, without a discovery rule, six years from the date of breach. Plaintiffs did not bring this action within that time. Accordingly, the trial court properly dismissed those claims.

For the text of the Court of Appeals opinion, visit http://www.publications.ojd.state.or.us/A132602.htm . The conventional wisdom is that you should file a civil action promptly if there was a breach of contract including any breach of a construction contract.

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