Chapter 11 Statutes of Limitation and Repose

• Library: Arkansas Construction Law Manual (2016 Ed.)

Statutes of Limitation and Repose

David L. Jones^* © 2016

11.1 Scope of Chapter......................................... 11-1

11.2 Contract Actions......................................... 11-2

A. Oral Contract............................................. 11-2

B. Written Contracts....................................... 11-3

11.3 Tort Actions............................................... 11-3

A. Negligence................................................. 11-3

B. Breach of Warranty.................................... 11-4

C. Products Liability....................................... 11-4

11.4 Professional Liability.................................. 11-5

11.5 Latent Defects............................................ 11-7

11.6 Statute of Repose........................................ 11-7

11.7 Conclusion................................................ 11-11

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11.1 Scope of Chapter

This chapter discusses the time limitations for initiation of legal proceedings related to commercial and residential construction projects. The chapter first addresses the statutes of limitation for contract and various tort actions affecting construction. The chapter then highlights special provisions that impact limitations on actions involving design and other construction professionals before discussing latent defects and their impact on limitation periods. Finally, the chapter discusses the statute of repose. Limitations imposed on lien actions are not discussed.¹

11.2 Contract Actions

In contract actions, the statute of limitations depends on whether the contract is oral or written. An oral contract has a three-year statute of limitations; a written contract has a five-year limitations period. Whether an oral or written contract is at issue, the statute of repose in Arkansas for breach of contract “against any person performing or furnishing the design, planning, supervision, or observation of construction or the construction or repair of” any improvement is limited to five years after substantial completion.²

A. Oral Contract

The statute of limitations for oral contracts is three years from the date the cause of action accrues.³ The cause of action accrues when one party has, by words or conduct, indicated to the other that the agreement is being repudiated or breached.⁴ While not labeled as such, the basis for determining when a cause of action has accrued on an oral contract is essentially a “discovery rule.” As discussed more comprehensively in Section 11.6, Arkansas has adopted a statute of repose that may shorten the three-year statute of limitation for an oral contract but will not extend it.⁵ In the absence of a contract, Arkansas also recognizes the doctrine of quantum meruit in instances where its implementation would prevent unjust enrichment. The limitation period applicable to claims for quantum meruit is the same as the limitation period for breach of oral contract—three years.⁶

B. Written Contracts

The statute of limitations for actions to enforce written contracts is five years after the cause of action accrues.⁷ Partial payment or written acknowledgment of default tolls the statute of limitations.⁸ In contract actions, “the statute of limitations begins to run upon occurrence of the last element essential to the cause of action.”⁹ The test for determining when a breach of contract action accrues is the point when the plaintiff could have first maintained the action to a successful conclusion.¹⁰ The “discovery rule” does not apply to the accrual of a claim for breach of a written contract.

11.3 Tort Actions

A. Negligence

The general statute of limitations for injury to persons or property resulting from negligence is three years.¹¹ Arkansas does not distinguish between negligence, gross negligence, or professional negligence in the context of construction or design. For professional negligence or malpractice, the limitation begins to run when the negligent services are provided.¹²

As is the case with contracts, the statute of limitations of tort actions can be impacted by the statute of repose, which provides that no action “to recover damages for personal injury or wrongful death caused by any deficiency in the design, planning, supervision, or observation of construction or the construction and repairing of any improvement” shall be brought more than four years after substantial completion.¹³ A three-year statute of limitations, which begins to run when payment to a plaintiff is made by a party who has either settled with a plaintiff or has been adjudged liable to a plaintiff, applies to all actions for contribution in Arkansas.¹⁴

B. Breach of Warranty

A breach of warranty must be brought no more than five years after substantial completion.¹⁵

C. Products Liability

“[A]ll product liability actions shall be commenced within three (3) years after the date on which the death, injury, or damage complained of occurs.”¹⁶ Section 16-56-112, however, if applicable, will serve as a bar even if a claim is otherwise timely under § 16-116-103.¹⁷ In Brown v. Overhead Door Corp., the parents and minor victim sought recovery in a federal diversity action on products liability theories for injuries caused when an automatic garage door opener closed on the victim.¹⁸ The manufacturer sought summary judgment based on the expiration of the claims under the statute of repose. The issue before the court was whether the manufacturer of a mass-produced good is protected by the statute of repose.¹⁹ The court hinted at three factors that would invoke the application of the statute of repose: (1) specific construction services; (2) installation of the product; or (3) specifically designed product for the real property. The court ultimately concluded, albeit unclearly, that the statute of repose “was designed to protect those actors supplying individual expertise under circumstances not susceptible to the quality control standards of the factory.”²⁰ Thus, the statute of repose did not bar the action for personal injuries.

11.4 Professional Liability

Arkansas does not distinguish between negligence, gross negligence, or professional negligence in the context of construction or design. The general statute of limitations for injury to persons or property resulting from negligence is three years.²¹ “A cause of action accrues the moment the right to commence an action comes into existence, and the statute of limitations commences to run from that time.”²² For professional negligence or malpractice, the statute of limitations begins to run when the negligent services are provided.²³ In Zufari v. Architecture Plus, the plaintiff sued his architects because the medical clinic designed by the defendants did not pass Health Department approval.²⁴ The Health Department rejected the clinic after substantial completion of the construction project. In affirming summary judgment for the defendants, the Arkansas Supreme Court held that the statute of limitations began to run when the defective design was rejected, not upon substantial completion of the project.²⁵

The insertion of language into a written contract concerning a standard of care will not in and of itself extend the statute of limitations for written contracts applicable to an action for professional negligence. In Sturgis v. Skokos, a legal malpractice case involving claims for professional negligence and breach of contract, the Arkansas Supreme Court ruled that the appropriate statute of limitations was the three-year statute for professional negligence (rather than the five-year statute for written contracts) by determining that the primary basis for the lawsuit was negligence.²⁶

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