The Mariners Finally Win One! Contracting Around the Statute of Repose

Statute of ReposeThis off-season the Seattle Mariners re-signed ace pitcher Felix Hernandez to a $175 million, 7-year contract.  But keeping baseball’s best pitcher* in a Mariners uniform was only one of the team’s recent victories. The Mariners (and the entity that owns Safeco Field) scored a legal victory at the Washington State Supreme Court in a case concerning the statute of repose.

The statute of repose is an affirmative defense that terminates any potential claims a litigant may have if those claims are not brought within a specific time period – even if an injury has not yet occurred.  In other words, a statute of repose provides a time period in which the cause of action must accrue. If a cause of action does not accrue within the repose period, those claims are barred.  Del Guzzi Const. Co., Inc. v. Global Northwest, Ltd., Inc., 105 Wn. 2d 878, 719 P.2d 120 (1986).  The statute of repose differs from the statute of limitations which bars a litigant from filing a claim after a specified period of time following accrual of their cause of action.

There are several statutes of repose in Washington, but the one most frequently litigated concerns construction defects.  The construction statute of repose, codified at RCW 4.16.310, provides that “[a]ny cause of action which has not accrued within six years after such substantial completion of construction, or within six years after such termination of services, whichever is later, shall be barred” regardless of when injury is discovered.  The term “substantial completion of construction” means “the state of completion reached when an improvement upon real property may be used or occupied for its intended use.”  RCW 4.16.310.

The case, Washington State Major League Baseball Stadium Public Facilities Dist. v. Huber, Hunt & Nichols-Kiewit Const. Co., 2013 WL 363453, established that parties can, subject to certain limitations, “agree to set the time for accrual of causes of action arising under their construction contracts, and may do so with regard to both the statute of limitations and the statute of repose.”

The case involved the construction contract for Safeco Field entered into between the owners of Safeco and the general contractor. The owners and Mariners (who are reimbursed for maintaining Safeco Field) brought a construction defect claim against the general contractor who argued that the claim was barred by the statue of repose since it was not brought within six years after substantial completion. However, the construction contract expressly stated that “any alleged cause of action shall be deemed to have accrued in any and all events not later than [the] date of substantial completion.”  In other words, the parties contractually established that the accrual date for all construction claims would be deemed to occur not later than the date of substantial completion.

In upholding this contractual language, and ruling in favor of the Mariners and owners of Safeco Field, the Supreme Court found that this provision effectively negated the statute of repose.  Because the statute of repose only bars claims that do not accrue within six years of the date of substantial completion (or within six years after the termination of services), by contractually setting the accrual date for construction claims as not later than the date of substantial completion, no causes of action could be barred by the statute of repose.

While a property owner may be tempted to include such language in their construction contracts so as to avoid a claim being barred by the statute of repose, doing so will subject the owner to heightened risk under the statute of limitations. Specifically, by setting the claim accrual date as the date of substantial completion, the statute of limitations period will also begin at that point in time as well.  An owner may be put in the unfortunate situation of not discovering a breach of the construction contract until after the statute of limitations period has run.

When planning your next construction project, consult with our experienced construction law attorneys to gain insight on what contractual provisions make the most sense for the unique circumstances affecting your project.

*apologies to Justin Verlander.

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