Running Out The Clock

SFE Attorney: Paul Sheely

Plaintiff Attorney: Christopher Grady

City, Co., State: Washington County Circuit Court, Oregon

Claims Alleged: Construction Defect

Injuries Alleged: Construction Defect

Admitted Liability: No

Amount Claimed: $200,000

The Overview

In a question of first impression for Oregon, Smith Freed Eberhard partner Paul Sheely was able to persuade the circuit court judge that the applicable statute of repose meant the claim against his client must be dismissed as untimely.

The Background

In June 2000, a developer completed a “spec house” – a home built by the developer and then sold as a completed home to a buyer.  More than 10 years after construction of the home was completed, the buyer served a notice of defective construction on the developer. However, this notice was sent days shy of 10 years from the date the buyer closed on the sale of the home. The question the parties faced was which statute of repose applied.  

Plaintiffs Theme

Unlike Paul, plaintiff’s strategy was to convince the judge that the applicable statute of repose was that which applied to contracts for construction services. Plaintiff’s main argument is that this statute of repose is not limited to applicability only in claims arising from a construction contract. Plaintiff used the legislative intent to attempt to demonstrate that this statute was intended for situations like this. Plaintiff further alleged that the main case relied on by defendants did not actually help prove defendants’ case. 

Our Strategy

Paul Sheely, hired by the developer, argued that the buyer did not contract for construction of the home, but rather purchased a completed home under the terms of a purchase and sale agreement.  As such, the statute of repose began to run from the “act complained of” – in this case, the construction of the home. Paul knew this statute of repose would mean the claim brought by the plaintiff was untimely. In fact, the part of the home which the buyer alleged to be damaged had been completed well before the final completion of the construction of the house. Whether the purchase of a spec house should be treated as a contract for construction services, as plaintiff argued, had not before been decided in Oregon. 

The Outcome

Paul was able to convince the judge that the applicable statute of repose was the one that started the 10-year clock running from “act complained of” rather than the date the sale closed. The judge agreed with Paul, and because more than 10 years had passed from the date the siding was installed and the homeowner initiated a claim, the notice of defective construction was untimely.  Once again, experience and hard work prevailed, and Paul brought home a win for his client on a close call in this area of litigation.

This decision was appealed all the way to the Oregon Supreme Court, where the judge affirmed that the spec home should not be treated as a contract for construction services. Paul’s work and arguments laid the foundation for this decision, and ultimately influenced this area of law in a way which was beneficial for his client and any future spec home developers.