Statute Of Limitations Not Tolled by Discovery Rule under AIA Article 9.3

Gustine Uniontown Assocs., LTD v. Anthony Crane Rental, Inc.
2006 PA Super 12 (Pa. Super. Ct. 2006)

In conjunction with its construction of a shopping mall over a non-functioning coal mine, project owner Gustine entered into a standard American Institute of Architect form of agreement, AIA B141, with the project architect ASG. Article 9.3 of the contract stated:

“Causes of action between the parties to this Agreement pertaining to acts or failures to act shall be deemed to have accrued and the applicable statutes of limitations shall commence to run not later than either the date of Substantial Completion for acts or failures to act occurring prior to Substantial Completion, or the date of issuance of the final Certificate for Payment for acts or failures to act occurring after Substantial Completion.”

Before construction began, Gustine was informed that the subterranean characteristics of the land could result in earth movement that could cause structural damage to building on the land. On September 8, 1993, ASG issued certificates that all mall structures were substantially completed. Cracks appeared in mall retail stores in 1995, and by early 1998, every building sidewalk, and parking area in the mall had sustained damage from subterranean earth movement.

On July 30, 1999, Gustine instituted an action by filing a writ of summons. Six month later, it filed a complaint against thirteen defendants, including ASG, who had been involved in either pre-construction subsurface investigation, mall construction, or both, alleging causes of action sounding in contract and tort. ASG filed preliminary objections, arguing that the breach of contract claims were barred by a four-year statute of limitations and the tort claims by a two-year statute of limitations. Gustine countered that actions for latent defects involving contracts governing real estate construction were governed by a six-year statute of limitations and further that the applicable statute of limitations had been tolled by the discovery rule and the repair doctrine.

The trial court rejected application of the six-year statute of limitations to the contract counts, but overruled all of the defendants’ motions to dismiss, except for that of ASG. The court dismissed ASG as a party defendant based on Article 9.3 the contract. The court held this provision fixed the accrual date for both Gustine’s tort and contract claims against ASG at September 8, 1993, and since the action had been filed after September 8, 1997, that the statute of limitations had expired. The court thus implicitly found that neither tolling doctrine applied. On appeal, the Superior Court affirmed application of the two-year statute of limitations to all fraud and negligence counts but held that a six-year statute of limitations applied to contract actions alleging latent real estate construction defects. The Pennsylvania Supreme Court reversed, holding that a four-year statute applied to all actions sounding in breach of contract, even those involving latent defects in the construction of real property, and remanded for a determination of Gustine’s remaining claims.

On remand, Gustine argued that the discovery rule applied despite the language of Article 9.3, that it was unreasonable to prevent its application, and that Article 9.3 did not apply to tort-based claims. The Court found that the plain language of the Article, stating that “applicable statutes of limitations shall commence to run,” was specifically intended to preclude application of the discovery rule. Further, because the Article merely dictated when the statute would begin to run, but did not shorten it, precluding application of the discovery rule was not unreasonable. The Court stated that Gustine could not have reasonably expected that it could apply the discovery rule “because those expectations are erased by the clear terms of the contract it executed.” Reiterating that the contract was a standard form agreement and the stated policy of the Supreme Court is to enforce clear contract language, the Court further found that the Article’s broad reference to “causes of action” encompassed tort claims as well as contract claims and affirmed ASG’s dismissal from the action.

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