Attachment #1
White Paper
PROPOSED CHANGES TO TIIE IOWA STATUTE OF REPOSE
John A. Templer, Jr.
\ilhitfield & Eddy, PLC
EÊckeroqçd
The lowa Legislature is considering
a
bill (Housc File z}gqthat would reduce the Statute of
Repose contained in Iowa Code Sec. 61,4.1.11 from 15 years to 8 years. There is an amendment
that is being considered that would apply the reduction to only commercial construction, while
rnaintaining the current Statute of Repose for single or two-family dwellings. In this
mernorandurn I
will
address several issues that impact this iegislation.
The current Iowa Statute of Repose states as follows:
"Improvements to real property. In addition to limitations contained
elsewhere in this section, an action arising out of the unsafe or defective condition of an
improvement to real property based on tort and implied wæranty and for contribution and
indemnity, and founded on injury to property, real or personal, or injury to the person or
wrongful death, shall not be brought more than fifteen years after the date on which
occurred the act or omission of the defendant alleged in the action to have been the cause
of the injury or death. However, this subsection does not bar an action against a person
solely in the person's capacity as an owner, ocotpant, or operator of an improvement to
real property."
Purpose of the Statute of Repoq.eStatutes of repose differ from statutes
of limitations, although they have similar
impacts on prospective litigants. Hanson v. Williams Cpung, 389 N.W.Zd 319,321 (Iowa
198ó). A statute of limitations bars afrer a certain period of time the right to prosecute
accrued cause of action. B,ob,McKiness Excavatins
&
an
Gradins v. Morton Bldes.. Inç=, 507
N.W.2d 405,408 (Iowa 1993). [n contrast, a statute of repose terminates any right of action
after a specified time has elapsed regardless ofwhether ø cause of action has accrued, and thus,
1
a statute of repose
will
prevent legal rights from ever arising or accruing after the specified time
period, Id.
Statutes of repose, like statutes of limitations, are based on principles of fundamental
faimess. Weighed in the balance are the abilities of harmed parties to seek redress for their
iqjuries versus the abilities of the accused wrongdoers to defend themselves. Viewed in this
context, state legislafures have recognized that old or "stale" claims, while still rnay have some
merit, are very difftcult to defend against. Over a certain period of time, key witnesses may
move al¡/ay or die, and critical documents may be lost or even destroyed, unintentionally or
as
part of a regular document destruction policy. Under those circumstancas, a defendant may find
it impossible to mount
a successful defense.
ln establishing statutes of repose and statutes of limitations, state legislatures recognize
the inherent arbitrary nature of these time'limits. This arbitrariness is reflected in the wide
variety of statutes of repose time limits in the United States. The time frames vary from four
years (Tennessee) to lowa's fifteen years.l In setting these time limits, legislatures presumably
attempt to consider the types of claims involved and the inherent problems in defending against
stale claims and set the time frames accordingly. The differenccs in the time frames from state to
state reflect the obvious disagreements as to what is fair or reasonable.
In setting the various time limits for statutes of limitations, legislatures may consider the
type of claim; for example, in lowa, the time limit for bringing a claim based upon a personal
injury is two years, while a claim grounded upon an injury to property must be brought within
I A list ofthe various states' statutes ofrepose is attached hereto. Note that the language ofthe various statutes
differ from state to state. Iowa's I5 year Statute ofRepose âppears to be an outlier.
2
five years.2 When establishing the time periods for a statute of repose, legislatures should also
weigh the types of claims that will be impacted by such a decision.
Construction Defect and P-qsíglr P efect Claims
Claims relating to so-called defective construction are particularly difficult to defend
when the alleged "defective" work (which could include defective design) has taken place many
years before the claim is made. Due to the
volatility of the construction industry, particularly in
times of economic downturns, it becomes more and more likely that after a significant passage
tíme key witnesses
will
of
have moved on, and some construction companies involved in the claim
may no longer exist, thus depriving all parties of the opportunity to get all other relevant project
participants brought into the case.
There are other aspects of construction defect claims that should be considered when
determining what is a "reasonable" period for a statute of repose. Construction defect claims,
including defective design claims, are traditionally "document intensive." In many cases
involving stale claims, key project personnel are more likely than not unavailable. Thus
a
defendant's ability to defend itself may be almost entirely based upon written records. Project
records are frequently used as source documents by litigants in construction defect cases. In
some cases, a successful defense may be entirely based on a key document. But most
construction and design firms avoid fiUinS up valuable space with ancient files and records and
2
Iowa Code Sec. 614.1.2 and 614.1.4 respectively. These limits may be extended by the so-called ""Discovery
Rule." This Rule states that the limitations periods do not begin to run until the plaintiff knew or should have
knorvn" of the injury or properfy damage. Presumably, the legislature assumed that a person who has suffered a
personal injury would generally know immediately that an injury has occurred, while damage to property may not
be noticed for a longer period of time. The Díscovety Rule, hovtever, does not apply to or exÍend the time limít in the
Iowa Statute of Repose. McKiníss, id.
J
document retention policies may even require that project files be deshoyed after a nominal
period of time. Yet these ancient files, if preserved, may provide a defense which could
exonerate a company from
liability for a claim asserted many years after compietion of the
project. Ifthose files are gone, so is the defense.
Other time-related issues may further complicate the defense of a stale construction
defect claim. For example, building codes frequently change over time, thus complicating the
identification of relevant standards to be applied at time of trial, In addition, and without a doubt,
the investigation and defense of old claims
will cefiainly
add to the expenses of "discovery"
which already burden modçrn litigation.
Finally, construction defects or defective design claims typically involve issues with the
construction that are manifested relatively soon after construction. For example, a leaky roof or
leaky window should be evident soon after a rain event. An HVAC system that is poorly
designed maybe suspect
if it
cannot keep up with normal seasonal weather conditions. It does
not take fifteen years for these kinds of problems to be discovered.
With the proposed amendment, HF 2094 will apply only to commercial conskuction.
Thus it is more likely that design professionals, contractors and subcontractors working in that
environment
rare, and
if
will have sufficient experience
they occur at all, they
will
such that construction and design defects
be revealed
will be
well before eight years following construction.
For these reasons, it makes sense to limit a construction company's or design company's
exposure to elaims
to a reasonable period of time
based on the type
of work they do and the
difñculty in defending old claims as discussed above, Arguably, fifteen years is by defìnition,
4
not a reasonable period of time. But
if
15 years is reasonable, as some would argue, why not 20
or 30 years? There is no justification in fact or experience which establishes the rationale for a
l5-year Statute of Repose. While an eight-year Statute of Repose is still arbtftary,
it is more
reflective ofthe fact that construction defects are rarely undiscovered for fifteen years or even
ten years. The logic of an eight-year Statute of Repose is more rationally related to similar
of limitations for personal injury or property damage which reflect the likelihood that
statutes
damage or injury
will be díscovered relatively
soon.
Breach of Contract Claims 'Wi4Not Be Impacted bv Statute of Repqs.e
Some opponents of the proposed legislation argue that the contract or warranty rights
of
building owners may be diminished by a reduction of the period of the Statute of Repose. Such
fears are groundless. The Iowa Statute of Repose regarding funprovements to real property only
applies to claims based on tort; i.e., negligence, and implied warranty.3 Therefore, claims based
on breaches of written contracts are not subject to the Statute of Repose.
a breach
A claim by
an owner
for
of warranty relating to a construction defect would still be governed by the applicable
contractual warranty
period. [n lowa, slairns based on a breach of a written warranty
are
governed by the ten year warranty limitations period established in Iowa Code Sec. 614.5.a. The
Statr¡e of Repose has no applicability
in such cases.
In sutn, the proposed change to the period of the Statute of Repose will have no impact
on the current ability of owners to bring claims against contractors for breach of contract. The
contracting parties
3
will still be free to establish by contract
Iowa Code Sec. 6 14. l. I I
5
any wananty periods that can be
agreed upon. An owner seeking to sue for breach of such warranties need not be concerned about
the Statute of Repose limiting its right to make such claims.
As stated above, in Iowa, the statute of limitations for breach of a written contract,
including written construction contracts, is ten years
- that is, ten years from the breach of a
contract or warranty provision, which may occur at the time of the construction, such as
if
a
contractor installs unspecified products, or afrer construction, in the case of a contractor failing to
cure a warranty issue that arises after completion of the construction.a These principles
will not
be affected by the proposed change in the Statute of Repose.
ThiTd",PFrfv Claimants
Of course, a breach of contract claim, with
a few narrow exceptions, can only be brought
by a party in contractual privity with the alleged breaching party. TVhat about claims against
contractors or design professionals brought by those without contractual privity
-
so-called third
party claimants? Under the current law, such claims are governed by the applicable statutes of
limitations relating
to
personal injury
or
property damage claims, two and five years
respectivelS and the fifteen-year Statute of Repose. Under the proposed change, the existing
statutes
of limitations would not
change,
but the period of the Statute of Repose would be
shortened to eight years. The eight year period would begin to run upon the date of the negligent
act or omission alleged to have caused the injury or property damage. This is consistent with
current law, except for the eight year versus fifteen year time frame for the Statute of Repose.
a
lowa Code Sec.614.1.5.a. Note also that some form conhacts, such as the 1997 Edition of the American Institr¡te of
Architects General Conditions Form 4201, specify when a cause of action for breach of contract is deemed to have
occurred forpurposes of applying the statutes of limitations.
6
The proposed change to the Statute of Repose, while baning claims against the contractor
or design professional after eight years, will not prevent an injured Third Party Claimant from
asserting claims against a property owner
for conduct which causes an injury. Note the last
sentence of the Statute of Repose, which states:
"However, this subsection does not bar an action against a person solely in the person's
capacity as an owner, occupant, or operator of an improvement to real property."
Nothing in the proposed change will modify that provision. lndeed, there are numerous existing
legal theories giving injured parties remedies against o'wners, occupants or operators of real
properfy.
CoqçFr.çi.gg
There is no logical reason to maintain the current lS-year Statute of Repose. Iowa's
current statute puts our state in the distinct position of being an outlier on this issue. One can
only speculate upon the negative impact this unreasonable law may have on companies seeking
to establish a business in lowa. As a specialist in Iowa construction law, I am called upon with
increasing frequency to render opínions as to lowa law as it would apply to outside companies
seeking to do business in
lowa. The current l5-year
I would love to be able to
Statute of Repose is part of that discussion.
advise prospective companies seeking to do business ín our state that
our construction laws are more in line with that of other states.
7
Attachment #3
State by State Comparison
STATUTE OF REPOSE
State
A-labama
Yea¡s
7 Years
AIaska
l0 Years
A¡ízona
I Years
- A GENEI{AL NATIONWIDE ANALYSIS
Sratute / code Section
Ala. Code $ 6-5-221
Comme¡ttst
120i1)
Alaslca Stat. $ 9.10.055
t201 1)
A.R.S $ 12-5s2 (2011)
Ifthe iqjury occurred during ihe
eighth year after the substanlial
completion, or, in the case of a latent
defect, was not discovered until the
eighth year after substantial
completion, an action to recove¡
damages for i4iury to the real property
may be brought within one year after
the date on which the iajury to real
property or an improvement to real
p¡operfy occu¡red or a latent defect
was discovered, but in no event may
an action be brought more than nine
years after the substantial comnìetion
of tle improvement.
A¡kansas
5
Years;4
Years; or 3
Yea¡s.
Fiver years after substantial
completion ofthe improvement for
A¡k. Code $ 16-56-112
(2011)
tort or côntract actions involving
damage to properly and four years
after substantial completion of the
improvement for tort or contraot
actions involving personal Ínjrlry or
death.
If a person fumishes designs or plans
which âre ûot used within three (3)
years frorn the date they are furnished,
no actio¡r shall lie against that person
fol deficiency in the designs or plans.
California
4 Years; 5
Yea¡s or
i0 Yea¡s
For injury to propefy arising out
of
Iatent defects, au actioa must be
brouEht wiihin 10 years ofsubstantial
Cal.C.C.P. $$ 337.1
and 337.15 (201 l)
t
This "Commenrs" scctio¡r contains general information regarding addition durational limits fo¡ nume¡ous statütes.
Additional time limitations 6¡d coûdit¡ons rnay apply.
completion.
I'or injury to property, personal injury,
or wrongful death arising out of Patçnt
defects, an action must be brought
within four years ofsubstantial
completion. ffiqiurt occurs during
ihe fourtl¡ year, the actíon may be
brought u'ithin one year after date of
injury, but in no eveut may such an
action be brought more than five years
after substa¡¡tial complef ion
Colorado
c.R.s.A. $ 13-80-104
l20i l)
6 Years
7 Years or
I Years
In the case ofan it¡iury to properly or
the person or such an i4jury causing
rrnongfirl death, which injury ocouned
duriug the seveûtl year Bf,er such
subst¿i¡tial completion, an action in
tort to recover damages for such an
C.G.S.A $ 52-58aa
(201 1)
iqjury or wrongful death may lre
brought rvithin o¡¡e year afrer the date
on which such injury occurred,
inespective ofthe date ofdeath, but in
üo cveÂt may such an action be
brought more than eigltt years after the
sübstantial completion of construction
of such an improvement.
Delarvare
10
6 Years
Del. C, $ 8127
(201 1)
Florida
10 Years
Georgia
I
F.s.A. $ 9s.ll(3)(c)
(?011)
Yea¡s or
l0 Years
In personal injury cases, ifthe injury
occurs dtring the seventh or eìghth
year afler substantial completion, tbe
claim can be brought rvitlún two yeats
afrer the injury; in uo event may a
claim be brought more than l0 years
afrer substantial completion.
o.c.G.A
(20r
l)
$ 9-3-sr
Halv.Rev.Stat. 5657-B
Harvaíi
10 Years
idaho
6 Yea¡s
.As
Illinois
10 Years
A.ny person who discovers such act or
omission prior to expuation of 10
(201
writtel, the statnte appears to be a
rc
l)
$ 5-241 (2011)
statule of limitatio¡s.
or 14
T3s ILCS s t73-214
(201
r)
T
Indiana
Years
from the time of such âct or
omission sl¡ali in no event have less
than 4 years to bring an action.
10 Years;
12 Years:
or 14
Ten years applies after the date
Years
1'ears
of
substantial completion of the project
or tlvelve years after the completion
and sutrmission of plans and
speciñcation to lhe or;rmer, if the
action is for a deficiency in the desigrt
Ind. Code $ 32-30-I5(d) (201 l); $ 32-30-16 (2011).
of the improvemenL
Ifihe acfion is for injury or wrongftll
death occurring during the
nintli or
tenth years after substantial
completion of an improvement to real
property, tle action may be brought
within fwo years after the date on
which the injury occurred.
If the injury or wongfirl deatb is
based upon deficiency in design, it
may not be brought more than fwelve
years afrer substantial completion of
the conskuclion of the improvement,
or fourteen years after the completion
and submission ofplaas and
specifications to the owner, whichever
comes
lowa
Ka.r:sas
Kentucþ
first.
614.1(11) t20t
15 Years
10 Years
10 Years
or 5 Years
t)
KSA 60-5i 3 (201 1)
KRS 413.120 provides: An action for
personal injuries suffered by any
person against the builder of a home
or ofher improvements. This cause of
action shall be deemed to aocrue at the
tirne of oúginal occupancy of the
improvements which the builder
caused to be erected.
rßs
r988.130(2)
(2011); KRS 413.120
(r4)
(201 1)
KRS 1988.130(2) Applies in relation
to a violation of the Unifonn State
Building Code and contains a ten year
pror"ision.
Louisia¡a
5 Yea¡s or
A.rt. 3500 proyides: An action agai¡¡st
LSAR.S.9;2772
10 Years
a contractor or an architect on acceunt
(20i 1); LSA-C.C. Art.
of defects of construction, renovation,
or repair ofbuildings and other rvo¡ks
is subject to a ten year period.
3500 (20r 1).
LSA R.S. 9:27'12 contains a five year
provision based upon sevéral
contingencies.
Maine
10 Years
Marland
10 Years
or20
Years
Massachusetts
6 Years
Michigan
l0
Mirmesota
Míssissippi
10 Years
6 Years
r\4issouri
l0
Monta¡a
10 Years
Nebraska
4 years or
10 Years
ME. Rev. Stat. tit. 14,
$752-.4 and $ 752-D
Iflhe
defendant is an architect,
professional engineer, or contractor,
the action may not be brought ifthe
injury occus more than ten yea¡s afte¡
the entire improvement became
available. In all other cases, action
may not be brought more thon twenty
years after e$tirç hnprovement
became available.
Only applies to "actions ofTort for
damages..."
Years
(201r)
MD Code Ann, Cts &
J¡rd. Proc. $ 5-108(b)
(2011)
M.G.L.A.260 $ 2B
l20t l'l
M.C.L,A. 600.5839
r20l l)
M.S.A. 541.0s1 (2011)
Miss. Code $15-i-41
(20n)
M.R.S. $ sr6.097
t2011)
Yea¡s
M.C.A. ç27-2-2Ð8
(20i i)
Any action to recovel damages based
Neb.Rev.St. 525-22i
ofwarranty on
improv€monls to real property or
(2011)
oo any alleged breacb
based on any alleged dehciency in tbe
design, planning, supervision, or
observation of construction, or
construction of an improvement to real
property shall be cornmenced within
four years after any alleged act or
omission constitutÌng such breach of
Þ-ânanty or deflcíency. If such cause
ofaction is not discovered and couid
not be reasonably discovered within
such four-year period, or within one
the
of such
;{
then the cause of
action may be commenced $¡ithin two
years fronr the date of such discovery
or from the date ofdiscovery offacts
which would reasonably lead to such
discovery, whichever is earlie¡. I¡r no
evenl may åûy action bo commenced
to recover clarnages for an alleged
breach of wauanty o¡r improvements
to real properfy or deficiency in the
foì¡t:year
design, planning, supervision, or
Nevada
I
6 Years;
Years or
l0 Yea¡s.
observaiion of construction, or
construction of at improvement to ¡eal
property more tiran ten yÇars beyoncl
tho time of the act giving rise to the
action.
11.203: Anaction
property
damage, personal iajury, or wrongftl
death shall be commenced against tÏe
owner, occupier, or person performiug
or firnishing the desiga, plarming, e1c.
ofthe construction within ten years
followiag substantial completion. If
the injury occu¡s in the tenth year after
subsiaotial completion, the actioa may
be co¡nmenced within two yeârs, but
in any event no more than twelve
years after substantial completion.
I 1.204: An action based on latent
deficiency must be commenced rvithin
eight years of substantial completion;
ifirjury occurs duriag eighth year, the
action may be eor¡menced within trvo
years, but in aûy eveat no rnore than
ten years after substalrtial completion.
I 1.205: Än action based on petent
deficiency must be commenced within
six years ofsubstantial oompletion; if
injury occurs during sixth year, the
acfion may be commenced within two
years, but in any event no more thar
eight years affer substantial
completion.
Nev.Rev.St. 11.203;
Nev.Rev.Stat. 11.204;
Nev.Rev.Star 11.205
(2011)
I
NewHampshire
l{.H. Rev. Stat. Ann.
Years
508:4-b (20111
New Jersey
10 Years
N.J.S.A. 2A:14-1.I
Nerv Mexico
l0 Years
NewYork
l0 Yea¡s
N.M. Stat. Ann. $37-l27 p0t1)
NY CPLR2I4-d
North Carolina
6 Years
(20r 1)
(2011')
l0
North Dakota
Yeæs
ot 12
Years
Injwies to persons or property which
occru during the tenth year after
substantial completion may be brought
witbin two years after the date on
which such i4iury occurred, but i¡ no
ev€nt may such au action be brought
rnore than fwelve years añer the
North Carolina General
Statufcs $ l-50 (2011)
N.D.C.C. $ 28-01-44
(20i 1)
substantial completion ofsuch an
inprovement.
i0 Yea¡s
Ohio
or 12
Years
Oldahoma
Oregon
Pennsylvania
l0
or 14
Years
l0
South Carolina
I
South Dai<ota
Six or ten years depending upon the
size and type ofthe slructure
Ifinjury or rvrongfuI death occurs
more than ten and within twelve years
after completion of the improvement a
civil action may be commenced within
the time otherwise limited by the
chapter, but not later thm 14 years
after the completion ofconskuction of
such improvement.
Years
or 1l
For projects completed before July
2005 the time is 13 years
The statufe ofrepose does not apply to
persons found to be guilty of&aud or
Years
willfi¡l
Years or
i3 Years
10 Years
R.c. $ 2105.131(AXl)
(201 1)
12 Okl.St.A.r¡n. $ 109
Yea¡s
6 Years or
10 Years
12 Years
Rhode Island
Ifa claimant discove¡s a defective and
unsafe condition of an improvoment to
real property during the 1 0-year
period, but less tþa¡r ? years prior to
{he expiration of the period, may
pursue a claim within 2 yea¡s ùom the
åte ofdiscovery ofthe defcctive and
unsafe conditíon.
and waåton
(201r)
o.R"s. $ 12.13s(1)
r2011)
42 Pa.C.S. $ ss36(a)
(2011)
R.I. Gen. Laws $ 9-129; 9-l-13 (201 1)
S.C. CodeAnn. $15-3640 (201 1)
SDCL $$ 15-24-3; I52A-5 (20r l)
¡risconduct. An
t
additional one year is also provided in
which to bring an action in.the event
that an injury to property o¡ to persons
Teruessee
Texas
4 Years
occurs in the tenth year following
substantial completion of const¡uction.
Ifrhe injury to property or pÇrson
occur¡ed during the foufh year afler
sul¡stantial completion, ân action to
rccover damages for such injury or
rvrongflrl death shall be brought within
one year aflerwhich such i4jury
occurred, withoul respect to the date
ofdeath ofsuch iniured person.
i0
Years
If the claimant presents a u¡ritten
or
12
claim for damages, conlribution, or
indemnity to the architect, engineer,
interior designer, or landscape
architect rvithin the lO-year limitations
period, the period is sxtended for two
years from the day the claim is
Years
T.C.A. $ 28-3-202;
T.C.A. $ 284-243
(201 1)
Tex. Civ. Prac. &Rem.
Code An¡. $$ 16.00816.009 (201 1)
nresented.
Utah
9 Yea¡s or
11 Years
Ifthe carse ofaction is discovered or
u.c.A.
discoverable in the eigþÎh or ninth
year ofthe nine-year period, the
injured person shall have two
additional years from that date to
commence an action.
Vçrmont does not appear to have a
statutc ofrepose; however, tle general
statute of limitåtions is six years after
(2011)
Vermont
¡la
Vi¡sìnia
lgashington
5 Years
6 Years
Wesf Virginia
l0
Wisconsin
10 Years
Wyoming
10 Years
If
or
injury causing unongful dealh occu¡s
$ 78P-2-22s
Vf. Slat. $
sll
(20i1)
the çause ofaction accrues.
ô 8.0r-250 f2011)
R.C.W.4.16.3t0
(20i 1)
W. Va. Code $ 55-2-6a
(2011)
Wis. Stat. $ 893.89
Years
(201 1)
11
Years
au i4iury to property or person or an
Wyo. Stat. $ l-3-111
(201
r)
during the ninth yeat after substantial
completion of the improvement to real
property, an actio¡ to recover damages
for the injury or wrongful death may
be brought rvithin one year after the
date on u'hioh the iniury occurs.
?