Georgia Supreme Court Upholds Statute of Repose for Construction Defects

In 1994 defendant Falling Water, Inc. (“Falling Water”) began construction of a house in Kennesaw. The certificate of occupancy was issued in 1994 at which time transfer of title of the property was made from Falling Water to the Nowicki family. The Nowickis later sold the property to the Bayala family and in 2002, eight years after the certificate of occupancy was issued, the Bayalas sold the house to plaintiff Rosenberg. Rosenberg did not know who had built the house and did not inquire about it, had no contact with Falling Water, didn’t know anything about Falling Water’s reputation, and did not talk to any other homeowners in the subdivision about their homes.

The house had a deck attached to the back. In August of 2005 Rosenberg hired his neighbors, who were not carpenters, builders or renovators, to remove the wood siding from the house so that it could be replaced with vinyl siding. On August 31, 2005, on the second day of the renovation project, the neighbors removed the siding from the back of the house but left the original siding at the site where the deck was attached to the house. When Rosenberg arrived home from work, he started to walk out onto the deck to check the progress of the project. As soon as he stepped on the deck, it collapsed and he fell, sustaining serious injuries. There was no evidence that Rosenberg or the previous owners experienced any problems whatsoever with the deck prior to the date of its collapse.

Rosenberg filed suit in May of 2006 alleging that Falling Water had negligently constructed the deck by improperly failing to affix it to the house and had committed fraud by hiding the defective construction from future owners by using certain bolts that made it appear that the deck was properly attached. Falling Water contended that Rosenberg’s claim was barred by the applicable statute of repose and the trial court and Court of Appeals agreed.

O.C.G.A. § 9-3-51 provides that no action to recover damages for injury to a person arising out of any deficiency in the construction of an improvement to real property shall be brought against any person performing construction of such an improvement more than eight years after substantial completion. Rosenberg’s injury occurred more than a decade after his home had been substantially completed by Falling Water.

The majority of the Supreme Court ruled that Rosenberg’s right to file suit against Falling Water never accrued and, once eight years passed with no injury, even the possibility of such an accrued right was eliminated. Rosenberg argued that several prior opinions from the Georgia Court of Appeals indicated that a question of fact remained as to whether Falling Water concealed a defect in the deck construction thereby causing Falling Water to be “equitably estopped” from asserting the statute of repose defense. The Court did not agree and found that the cases sited by Rosenberg were distinguishable because the respective plaintiffs in those cases sustained and discovered injuries within the statute of repose and each plaintiff delayed filing suit until after the statute of repose expiration due to fraudulent acts by the respective defendants which were designed to prevent or discourage the plaintiffs from filing suit. Rosenberg was not injured within the statute of repose. Falling Water took no action to prevent Rosenberg from discovering a cause for his injuries or to dissuade Rosenberg from filing suits with respect to his injuries, even if such a cause of action existed.

This opinion contains strong language reinforcing the proposition that a statute of repose represents an express determination by the Legislature of a time beyond which it is no longer fair to hold a defendant potentially liable for his actions. Therefore, the injury giving rise to a claim must happen within the applicable time period of the statute of repose for any argument of equitable estoppel to apply.

The dissent’s rationale supporting estoppel of the statute based on an allegation of fraud would potentially, in my opinion, render the statute meaningless. The injured plaintiff can almost always argue that a construction defect is latent, hidden, and therefore fraudulent thereby creating a fact question for a jury. Fortunately, the majority of the Supreme Court did not adopt this interpretation. This ruling should be helpful in setting a bright line time period for the filing of suits against construction companies for defects.

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About the Author

Michael Rust graduated from Emory University in 1980 and Emory University School of Law in 1983 where he was Notes and Comments editor of the Emory Law Journal (Law Review). Since that time, he has maintained an active trial practice in the state of Georgia both in State and Federal Courts. Mr. Rust teaches litigation as part of Emory University School of Law’s annual Trial Practice Program. He has received AV rating from Martindale Hubble, the highest rating afforded to lawyers by their peers.