Alabama’s statutes of limitations and repose are alive and well! Cole, Scott & Kissane, P.A. (“CSK”) recently prevailed on a Motion for Summary Judgment—and in defending the plaintiff’s subsequent appeal to the Supreme Court of Alabama—arguing that the plaintiff’s (an Association) lawsuit against a construction subcontractor was barred as untimely under Alabama’s statute of limitations and statute of repose.
Alabama’s construction-related limitation periods are set forth in Alabama Code Section 6-5-225, entitled “Time for Commencement of Action Against Architects, Engineers, and Builders” and related sections. Code Section 6-5-225 provides a two-year limitations period from the date a cause of action “accrues” and a seven-year repose period following “substantial completion” of the improvement.
Regarding the limitations period, the Code provides that a cause of action “accrues” when the alleged defect was known or should have been known. The Code specifically states that the extent of damages is not relevant—rather, the knowledge of an allegedly defective condition controls. For statute of repose arguments, the Code defines “substantial completion” as when an improvement is sufficiently complete so that an owner can use the property for its intended purpose.
It is critical to understand the interplay and importance between the two statutes. Reading the statutes together, the Code actually provides a plaintiff with a nine-year period to file suit. This means that, in theory, a claim could be timely where a cause of action “accrued” on the last day of the seven-year repose period and suit was filed within the two-year limitations period.
CSK’s recent matter provides a prime example why these dates are so important. In that matter, the plaintiff filed a lawsuit on March 5, 2015m alleging construction defects. Based on the date of the plaintiff’s initial pleading, under the statute of limitations, the cause of action had to have “accrued,” or been known, to the plaintiff no earlier than two years prior, or no earlier than March 5, 2013. Using this date, the statute of repose required that the project be “substantially complete” seven years prior, or March 5, 2006, at the latest. Our investigation revealed that the project received a certificate of occupancy on March 2, 2006. The three-day period between these dates meant that the plaintiff’s claims, on their face, could not survive both limitation periods.
Of course, no limitations Code is complete without an “exception” and Alabama’s exception is set forth in Code Section 6-5-221. That Section provides that the statute of repose does not apply if, during the seven-year period, the builder had (1) “actual knowledge” of the alleged defect and (2) failed to disclose the defect to the person whom the builder contracted to perform its work. For CSK’s client, that would have been the general contractor. Faced with the impossibility of prevailing based on the dates above, the plaintiff argued the applicability of this exception all the way to Alabama’s Supreme Court. There, CSK’s attorneys convincingly argued that there was no record evidence that the Plaintiff could rely on for the exception to apply, and prevailed by obtaining a per curiam affirmed opinion.
CSK attorney Clay Whittaker is licensed in Alabama and is available to discus matters concerning Alabama law including construction defect issues. You may contact him at email@example.com or 850-483-5900.