“The Supreme Court of Ohio Clarifies The Construction Statute of Repose”

Co-authored by Judson Millhon

The Supreme Court of Ohio finally resolved a major split in authority among its lower courts regarding the applicability of Ohio’s construction statute of repose, codified in Ohio Revised Code section 2305.131 (“R.C. 2305.131). In releasing its decision in New Riegel Local School Dist. Bd. Of Edn. v. Buehrer Group Architecture & Eng. Inc. on July 17th, the Supreme Court of Ohio clarified that “[R.C. 2305.131] is not limited to tort actions but also applies to contract actions that meet the requirements of the statute.”  Slip Opinion No. 2019-Ohio-2851, ¶ 26.  This decision will significantly benefit design professionals and construction contractors by shielding them from liability to claimants who bring breach of contract claims accruing “later than ten years from the date of substantial completion of [construction work].”  R.C. 2305.131.

The current version of R.C. 2305.131 provides:

• “(A)(1) Notwithstanding an otherwise applicable period of limitations specified in this chapter or in section 2125.02 of the Revised Code and except as otherwise provided in divisions (A)(2), (A)(3), (C), and (D) of this section, no cause of action to recover damages for bodily injury, an injury to real or personal property, or wrongful death 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 to real property or a person who furnished the design, planning, supervision of construction, or construction of the improvement to real property later than ten years from the date of substantial completion of such improvement.”

Since the Generally Assembly enacted this current version of R.C. 2305.131 in 2004, the lower courts in Ohio have inconsistently applied the statute to claimants who have sought to bring breach of contract actions against contractors who have provided construction services.  See, New Riegel Local School Dist. Bd. Of Edn. v. Buehrer Group Architecture & Eng. Inc., 2017-Ohio-8522 (Nov. 13, 2017); State of Ohio by and through Jerry Wray v. Karl R. Rohrer Associates, Inc., 2018-Ohio-65 (Jan. 8, 2018).  In November of 2017, the Third District Court of Appeals held that while R.C. 2305.131 clearly applies to claims based in tort, it “does not apply to claims for breach of contract.”  New Riegel Local School Dist. Bd. Of Edn., 2017-Ohio-8521, ¶ 8.  Two months later, and in direct contrast to the Third District Court of Appeals’ interpretation of R.C. 2305.131, the Fifth District Court of Appeals held that Ohio’s construction statute of repose applies equally to actions based “in tort or contract.”  Karl R. Rohrer Associates, Inc., 2018-Ohio-65, ¶ 28.

This split among the Ohio Appellate Courts is significant because it advanced the confusion regarding construction contractors’ exposure to liability for breach of contract claims and encouraged forum shopping by claimants.  In courts which follow the Third District Court of Appeals’ precedent and maintain that R.C. 2305.131 “does not apply to claims for breach of contract,” New Riegel Local School Dist. Bd. Of Edn., 2017-Ohio-8521, ¶ 8, there is potentially a longer window of opportunity for claimants to bring breach of contract claims pursuant to R.C. 2305.06 depending on what year “the cause of action accrued.”  R.C. 2305.06; see also Rudolph v. Viking International Resources, Co., 2017-Ohio-7369, ¶ 4 (Aug. 11, 2017) (R.C. 2305.06 originally set forth a fifteen-year statute of limitation for breach of contract claims “after the cause therefore accrued” until 2012 amendment changed the statute of limitations to eight years “after the cause of action accrued”).  Thus, in lower Ohio courts which followed this approach, it is possible that a claimant could succeed on a breach of contract claim brought eleven years after the cause of action accrued.  Yet, at the same time, this claimant’s action would be dismissed if the claimant were to bring the same claim in an Ohio court which followed the precedent of the Fifth District Court of Appeals in holding that R.C. 2305.131’s ten-year restriction applies to breach of contract claims.  Karl R. Rohrer Associates, Inc., 2018-Ohio-65, ¶ 28.

In its most recent decision in New Riegel Local School Dist. Bd. Of Edn. v. Buehrer Group Architecture & Eng. Inc., the Supreme Court of Ohio resolved these issues posed by the split in authority among the lower courts in Ohio and clarified that R.C. 2305.131 “applies to [both tort and] breach of contract actions that meet the requirements of the statute.”  Slip Opinion No. 2019-Ohio-2851, ¶ 26.  In New Riegel Local School Dist. Bd. Of Edn., the Buehrer Group contracted to build “a public-school building (the “Project”) for the New Riegel Local School District.”  Id. at ¶ 2.  Though the Project was “substantially completed” in December of 2002, the school district filed a breach of contract action based on “alleged defects in the school building” against the Buehrer Group roughly thirteen years later in April of 2015.  Id. at ¶ 2-4.

The trial court dismissed the school district’s breach of contract claim against the Buehrer Group on the grounds that “R.C. 2305.131 barred [the claim] because substantial completion of the Project occurred more than ten years before [the school district brought action].”  Id. at ¶ 5.  The Third District Court of Appeals reversed, holding that “R.C. 2305.131 does not apply to claims for breach of contract.”  Id. at ¶ 5 citing New Riegel Local School Dist. Bd. Of Edn., 2017-Ohio-8521, ¶ 8.  Finding that the Third District Court of Appeals erroneously based its decision on case law that discussed an earlier, outdated version of R.C. 2305.131, the Supreme Court of Ohio reversed and remanded the case back to the trial court.  Id. at ¶ 22, 33.  In announcing its reversal of the Third District Court of Appeals’ interpretation of Ohio’s construction statute of repose, the Supreme Court of Ohio held that “the current version of R.C. 2305.131 … is not limited to tort actions but also applies to contract actions that meet the requirements of the statute.”  Id. at ¶ 22, 26.

In deciding New Riegel Local School Dist. Bd. Of Edn. v. Buehrer Group Architecture & Eng. Inc., the Supreme Court of Ohio has finally resolved the split in authority among the Ohio Appellate Courts regarding the applicability of R.C. 2305.131.  As a result, the problem of forum shopping has been eliminated.  Under New Riegel Local School Dist. Bd. Of Edn., contractors and design professionals will be relieved of all liability to claimants who attempt to bring breach of contract claims accruing “later than ten years from the date of substantial completion of [construction work].”  R.C. 2305.131.  Contractors who do business in the state of Ohio should celebrate the release of the New Riegel Local School Dist. Bd. Of Edn. decision.  However, the Supreme Court of Ohio failed to address the issue of whether R.C. 2305.131 governs claims which accrue during the ten year period of repose but are filed after the period has expired due to claimants discovering defective and unsafe conditions within the last two years of the ten year period.  See R.C. 2305.131(A)(2)’s two-year discovery rule exception.  Although this is an issue Ohio lawyers must keep an eye on, it is very likely that the New Riegel Local School Dist. Bd. Of Edn. decision will be cited for years to come in future breach of contract disputes when claimants attempt to recover from their contractors long after construction projects are completed.