On July 17, 2019, the Ohio Supreme Court held that the construction statute of repose, R.C. 2305.131, applies to breach of contract claims and tort claims so long as the damages at issue meet the criteria of the statute. See New Riegel Local Sch. Dist. Bd. of Educ. v. Buehrer Grp. Architecture & Eng. Inc., 2019-Ohio-2851 (2019). However, as I detailed following the New Riegel decision, the Supreme Court left open the question of whether R.C. 2305.131 applies to claims that “accrue” or vest during the 10-year repose period. The Third District Court of Appeals has answered that question for the time being. See New Riegel Local School Dist. Bd. of Edn. v. Buehrer Group Architecture & Eng., Inc., 2019-Ohio-5040 (3rd Dist. Ct. App. 2019).
The statute states that no claim to recover damages for injury to real property that arises out of a defective and unsafe condition of an improvement to real property shall accrue against a person who performed services for the improvement later than ten years from the date of substantial completion of the improvement. See R.C. 2305.131(A)(1). On remand, the Third District addresses appellant’s argument that the use of the term “accrue” in the statute requires a finding that the statutory bar does not apply to claims that accrue or vest during the 10-year repose period. At heart, the question is whether R.C. 2305.131 is a true statute of repose; one that cuts off a plaintiff’s ability to file suit after a specified period of time has passed. The Third District, relying upon a prior Supreme Court decision in Oaktree Condo. Assn., Inc. v. Hallmark Bldg. Co., 139 Ohio St.3d 264 (2014), answers that question in the affirmative. Oaktree considered whether application of R.C. 2305.131 violates the Constitution’s prohibition on retroactive laws. However, in dicta, the Supreme Court stated that the bar of the statute “applies to civil actions commenced after the effective date of the statute regardless of when the cause of action accrued.” Id. at ¶ 8. Relying upon that dicta, and likely upon Justice Kennedy’s opinion concurring in part and dissenting in part in New Riegel supra, 2019-Ohio-2851, the Third District has found that R.C. 2305.131 is a true statute of repose that bars claims filed later than 10 years after the date of substantial completion of an improvement to real property, regardless of when said claims may have accrued.
The Third District decision is important because attorneys for Owners have latched onto the “accrual” argument in an effort to get around the Supreme Court’s holding in New Riegel. Our firm recently received a similar result before the Seventh District Court of Appeals. In Union Local Sch. Dist. v. Grae-Con Constr., Inc., 2019-Ohio-4877 (7th Dist. Ct. App. 2019), our client had been awarded summary judgment by the trial court based upon application of R.C. 2305.131. On appeal, counsel for the Owner raised the argument, for the first time, that the statutory bar of R.C. 2305.131 does not apply to claims that accrue or vest during the 10-year repose period. While the Seventh District correctly found that Owner counsel had waived his right to raise the argument procedurally, the Court also cited to the dicta in Oaktree as evidence that R.C. 2305.131 is a true statute of repose. The Fifth District Court of Appeals has found the same. See Bd. of Educ. of Tuslaw Local Sch. Dist. v. CT Taylor Co., 2019-Ohio-1731 (5th Dist. Ct. App. 2019).
I anticipate that the Third District’s decision in New Riegel will be appealed. While the appeal is discretionary, the Supreme Court specifically left open the question of the meaning of “accrue” as used in the statute. As such, I expect the Supreme Court will accept jurisdiction and New Riegel will be the vehicle by which the Court finally closes the door on the breadth of application of R.C. 2305.131.
Weston Hurd LLP