Set Construction Lawsuit Time Limit

Subsection 3 of the proposed statute provides that the affirmative defense shall not be asserted by an architect, engineer, landscape architect, land surveyor or construction contractor in actual possession or control of the premises at the time an injury occurs. Subsection 3 also limits the applicability of the ten-year statute of repose to third party actions, thereby leaving intact the existing 3 or 6 year statute of limitations governing actions by an owner/client.

Existing law

Under current law, a cause of action grounded on a theory of simple negligence brought by a third party (not an owner of building or structure) against a design professional or construction contractor is governed by a three year statute of limitations and the cause of action does not accrue until the injury takes place -- even if the plaintiff is injured 20, 30,50 or 100 years after the design professional has completed work on the building or structure. (See CUBITO V. KRIESBURG, 51 N.Y.2d 900, affirming 69 A.D.2d 738 (1980). Although there is an expedited procedure for those claims brought more than 10 years after the completion of the design professionals' or contractors' work, design professionals and contractors remain answerable to alleged negligence claims commenced indefinitely after project completion; many design professionals and contractors are thus forced to carry insurance cover- age even after they retire from the profession. The insurance problem is exacerbated because insurance coverage is only available on a "claims-made" basis rather than an "occurrence" basis - thereby requiring the professional and contractor to maintain insurance coverage well into retirement.

Justification

When a contractor or design professional's client (i.e., an owner of a building) sues a contractor or design professional, the CPLR's general statute of limitation rules apply and operate to cut off any claim with-in a three-year or six-year period. In an action brought by an owner/client against a design professional or contractor for damages resulting from a personal injury based on negligence, a three-year statute of limitations applies and the cause of action accrues at the time of injury. A malpractice claim against a design professional or contractor by an owner/client carries a three-year statute of limitations and the cause of action accrues upon completion of the project. Similarly, an owner/client claim based on breach of contract is governed by a six-year statute of limitations and the cause of action accrues upon completion of the contractual duties.

Chapter 682 of the Laws of 1996, which instituted an expedited procedure for claims against design professionals brought more than 10 years after completion of work, was a positive, yet modest, first-step to protect design professionals from merit less claims that are brought years, sometimes decades; after completion of a design professional's work.

It is still unfair, however, to hold design professionals and contractors liable for errors in design where injuries are sustained many years after the rendition of services and where the design professional or contractor no longer has supervision or control over the premises. This legislation recognizes the fact that there comes a time when a structure passes from a well-designed building to a well-maintained building. The bill seeks to place liability on the person in the best position to correct the defects -- the present Owner of the building, and to relieve the design professional and the contractor from the threat of perpetual liability that exists under current law.

The outer limit of a ten-year statute of repose was selected because a study of insurance claims against design professionals and contractors prepared for the American Institute of Architects demonstrated that the majority of third party claims are brought within seven years of project completion. More specifically, the study indicates that if a ten-year statute of repose were in place and the claims were measured from completion of the project, 100% of all claims brought during the study period would have been allowed. The additional one-year grace period which sets an outside limit of eleven years for those injured in the tenth year following completion of the project, would provide additional assurance that injured parties will have a right of recourse. These numbers demonstrate that the problem is not the number of actual claims brought after ten years -- the problem is the threat of potential lawsuits which forces design professionals and contractors to carry insurance coverage long after the project has been completed and for years after they supposedly retire from the profession.

Further justification for establishing a statute of repose is that the longer the period between the completion of the structure and the injury, the greater the opportunity for some intervening negligence to occur. The longer the owner is in possession of the improvement, using it, altering it, and maintaining it, the more likely it is that an injury will be the result of the owner's negligence rather than that of the design professionals or contractors. Thirty-two other states have enacted legislation establishing a statute of repose of seven years or more with completion of the project serving as the accrual date for the cause of action.

Legislative history

2011-12 S.4782 Judiciary Committee/A.2475 Higher Ed Committee. 2014 S.3334 Judiciary Committee/A.5301 Higher Ed Committee. 2015-16 S.4931 Judiciary Committee/A.2545 Higher Ed. Committee.

Fiscal implications

None.

Effective date

The first of January after the date it becomes law and shall apply to all actions commenced on or after its effective date.