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has a four year statute of repose for construction defect claims, with some exceptions. A statute of repose bars a claim after a date certain and is different from a statute of limitations. A statute of limitations generally bars a claim a certain amount of time after the cause of action accrues. A statute of repose, however, generally bars a claim after a certain time period passes from an event other then the time the cause of action accrues. (See Wyatt v. A-Best Products Co., 924 S.W.2d 98, 102 (Tenn. Ct. App 1995) for a good discussion on the differences between the two). The Tennessee Court of Appeals has stated that “because a statute of repose sets the triggering event as something other than accrual, it can have the effect of barring a plaintiff's claim before it accrues, most typically before the plaintiff becomes aware of his or her injury.” Wyatt at 102.
The statute of repose for construction defect claims is found in T.C.A. § 28-3-201 – T.C.A. § 28-3-205. This statute has some nuances that need to be considered in all cases involving construction defects. T.C.A. § 28-3-202 is the operative statute and provides as follows:
All actions to recover damages for any deficiency in the design, planning, supervision, observation of construction, or construction of an improvement to real property, for injury to property, real or personal, arising out of any such deficiency, or for injury to the person or for wrongful death arising out of any such deficiency, shall be brought against any person performing or furnishing the design, planning, supervision, observation of construction, construction of, or land surveying in connection with, such an improvement within four (4) years after substantial completion of such an improvement.
(emphasis added). As a result, there is a four year statute of repose which prevents a lawsuit for construction defect claims (as defined in the statute) unless the cause of action is commenced within four years after substantial completion of the improvement.
As a result, the definition of “substantial completion” is very important to determine when the four year time period begins to run. T.C.A. § 28-3-201 provides a definition for substantial completion as follows:
(2) “Substantial completion” means that degree of completion of a project, improvement, or a specified area or portion thereof (in accordance with the contract documents, as modified by any change orders agreed to by the parties) upon attainment of which the owner can use the same for the purpose for which it was intended; the date of substantial completion may be established by written agreement between the contractor and the owner.
Additionally, T.C.A. § 28-3-203 provides a minor exception to the four year statute of repose if the “injury” occurs during the fourth year after substantial completion. If the injury occurs during the fourth year, then the lawsuit must be brought within one year of the date the injury occurred. This essentially extends the statute of repose up to five years when the injury occurs in this time frame.
One other part of this statute provides some limited exceptions to the general four year statute of repose. T.C.A. § 28-3-205 provides as follows:
(a) The limitation provided by this part shall not be asserted as a defense by any person in actual possession or the control, as owner, tenant, or otherwise, of such an improvement at the time any deficiency in such an improvement constitutes the proximate cause of the injury or death for which it is proposed to bring an action.
(b) The limitation hereby provided shall not be available as a defense to any person who shall have been guilty of fraud in performing or furnishing the design, planning, supervision, observation of construction, construction of, or land surveying, in connection with such an improvement, or to any person who shall wrongfully conceal any such cause of action.
The first exception in subsection (a) provides this statute of repose can not be used as a defense by any person who is actually in possession or control of the property at the time the injury occurs. Additionally, subsection (b) provides a fraud exception that prevents a party from taking advantage of the four year statute of repose when that party is guilty of fraud or has wrongfully concealed the cause of action.
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