Montana Supreme Court Rules That Statute of Repose Is an Absolute Bar to Claims and Cannot be Tolled for Any Reason, Including Concealment

Hill County High School District No. A v. Dick Anderson Construction, Inc., 2017 Mont. LEXIS 38 (Mt. Feb 7, 2017)

This action arose out of the design and construction of a new roof for a high school in Hill County, Montana. The roof was built by Dick Anderson Construction, Inc. (“Contractor”) and designed by Springer Group Architects, P.C. (“Architect”). While the parties disputed whether the roof was ever completed to the School District’s satisfaction, the school was in full use by April 1998 and final payment was issued around that same time.

Problems emerged with the roof almost immediately. The Contractor and Architect worked with the School District to address the problems through October 2003 when the Architect informed the School District that repairs were finished and that no further work was necessary. But the roof partially collapsed in 2010 and the School District filed suit the following year.

The Montana statute of repose applicable to construction projects (the “Statute”) provides, in pertinent part, that “an action to recover damages … resulting from or arising out of the design … [or] construction … of any improvement to real property … may not be commenced more than 10 years after completion of the improvement.” Section 27-2-208(1), MCA. The Statute expressly defines “completion” as “that degree of completion at which the owner can utilize the improvement for the purpose for which it was intended or when a completion certificate is executed, whichever is earlier.” Section 27-2-208(4)(a), MCA.

The Contractor and Architect filed motions to dismiss, arguing that the action was barred by the Statute. The trial court granted the motions, concluding that the Statute barred the School District’s claims because the roof was “completed” within the meaning of the Statute when the School District began using the roof for its intended purpose in 1998. The trial court concluded also that the School District’s allegation that the Contractor and Architect concealed problems with the roof did not toll the Statute from running. The School District appealed, and the Montana Supreme Court affirmed.

The Supreme Court rejected the School District’s argument that questions of fact existed regarding when, or even if, the roof was completed because of the ongoing issues that needed repairs through 2003. Based on the plain meaning of the Statute, the Court held that “completion” only requires that the improvement can be used for its intended purpose, not finished to the owner’s final satisfaction. The Court noted that the School District’s interpretation of the Statute would require any unsatisfactorily completed construction project to extend the Statute ad infinitum based upon any subsequent punch list or repair work done. The Court concluded that such an interpretation runs counter to both the plain language and purpose of the Statute which grants a substantive right to be free from liability after a legislatively-determined period of time.

The Court also rejected the School District’s argument that the Statute was subject to tolling. The Court cited prior precedent directly on point holding unequivocally that the Statute “is an absolute time limit beyond which liability no longer exists” and reiterated that it “will not be extended even if a party is late in discovering facts.”  The Court reasoned that to toll the Statute for any reason would upset the economic balance struck by the legislature. Thus, the Court concluded that the Statute operated to bar the School District’s claims for construction-related damages more than 10 years after construction was completed, even if it did not discover, or the Contractor and Architect concealed, relevant facts.

Consequently, the Court affirmed the trial court’s ruling in favor of the Contractor and Architect.

To view the full text of the court’s decision, courtesy of Lexis®, click here.

Jeffery R. Mullen

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