Defect in Construction Does Not Stop Statute of Repose From Starting to Run

In Tennessee, the construction statute of repose begins to run when a project reaches substantial completion, which is when it can be used for its intended purpose. A flaw in the project will not prevent it from being substantially complete for statute of repose purposes, as recently demonstrated in the case of Raby v. Covenant Health, No. E2014-01399-COA-R3-CV (Tenn. Ct. App. June 9, 2015).*

In Raby, plaintiff worked at Methodist Hospital. The emergency room at the hospital was “substantially completed and opened in February of 2006.” Apparently a portion of lead-lined wall was left out when the radiology facilities were built, and plaintiff’s suit alleged that she was accordingly exposed to excessive radiation. In December 2013 a lead-lined wall was constructed, but during the entire time between 2006 and 2013 the facility was in use as intended. Plaintiff filed her suit in January 2014.

The trial court granted summary judgment to defendants based on the construction statute of repose found in Tenn. Code Ann. § 28-3-202 which requires that actions based on the construction of an improvement to real properly be brought within four years “after substantial completion of such an improvement.” The trial court found that the hospital radiology department was substantially completed in March 2006 when it became “available for its intended use as an emergency room.” Accordingly, the trial court held that plaintiff’s claim was untimely under the statute of repose, and the Court of Appeals affirmed.

On appeal, plaintiff argued that “the absence of the shielding in the wall means that the construction project was not substantially completed until that defect was corrected” in 2013. The Court rejected this argument, reasoning that “[s]ubstantial completion does not mean perfect completion according to the exact specifications. Otherwise, the qualifying word ‘substantial’ before ‘completion’ would have no meaning. …The fact that the improvement was allegedly defective does not prevent that improvement from being substantially complete.” According to the Court, following the rationale of plaintiff’s argument would “vitiate the very purpose of the construction statute of repose” as “every defective construction project would be considered not substantially complete[.]” Instead, the Court affirmed the trial court’s analysis of looking to when the project could be used for its intended purpose and upheld summary judgment for defendants.

While this analysis produces a harsh result, it is probably correct under Tennessee law. The statute of repose works as an absolute outer limit on liability for defective construction, assuming there is no fraud and no other exception comes into play. The question, though, is whether there could be a defect great enough that it would keep a project from reaching substantial completion. Certainly some defects should be considered so essential to a construction project that the project cannot reach substantial completion while the defect still exists, but there is no case-law that reaches that result yet.

Statutes of repose are a grant of immunity that are difficult to explain to a client who has been harmed.  I had to tell a potential client that her claim was barred by our health care liability three-year statute of repose just last night and she could not understand how she lost her rights before she knew she had any.

Who you vote for makes a difference.

*Several other plaintiffs filed identical lawsuits wherein the Court reached identical results.