In the latest issue of The Wright Toolbox:
- When is a law not “The Law?” An Examination of Maryland’s Statute of Repose – read now
- Don’t Ignore Your Contract Notice Provisions – read now
When is a law not “The Law?” An Examination of Maryland’s Statute of Repose
Statutes and regulations are often difficult to interpret and understand, even for practicing lawyers and judges. That fact was evident in a recent wrongful death case. The case focused on what seemed like a straightforward interpretation of Maryland’s statute of repose, which is set forth at Section 5-108 of the Courts and Judicial Proceedings Article of the Maryland Code. As is often the case, however, things were not as they seemed.
What is a Statute of Repose?
A statute of repose generally establishes an absolute deadline for filing a lawsuit. After the statute runs, a lawsuit is absolutely barred. In that way, it is similar to a statute of limitations, which also acts to bar lawsuits after the passage of a certain time period. However, generally speaking, a statute of limitation begins to run when a party knew or should have known that the wrong occurred – the so-called “discovery rule.” Thus, the longer the wrong goes undiscovered, the longer one has to file suit. A statute of repose sets an absolute deadline for filing suit – regardless of whether the wrong is ever discovered. For example, under Maryland’s statute of repose, one may not sue a property owner for injuries arising from the property’s defective construction more than 23 years after the construction of that property. One cannot sue an architect, engineer, or contractor for defective construction more than 13 years after the property first becomes available for its intended use – even if the defect is discovered after that time period.
As may be evident, statutes of repose, and the discovery rule, are particularly relevant in the construction industry, because defective work is oftentimes not discovered for an extended period of time. The statute of repose, in particular, provides certainty to contractors, engineers, architects, and others by providing absolute immunity from suit after the statute’s passage of time. However, Maryland, like many states, exempts some claims from the statute of repose, and a Maryland court recently discussed such exemptions.
Gilroy v. SVF Riva Annapolis
Gilroy arises from the untimely death of a repairman hired to service an HVAC unit located on the roof of a Chuck E. Cheese restaurant in Annapolis. When the repairman stepped off the ladder, the space into which he stepped contained no roof. He tragically fell more than 20 feet onto a concrete pad and later passed away. The repairman’s survivors filed a wrongful death action for negligence and premises liability against the shopping center where the restaurant was located as well as the shopping center’s management company and the tenant operator of the restaurant.
The defendants argued that the statute of repose barred the suit, because the restaurant had been constructed more than 23 years earlier. The trial court agreed, and dismissed the action, and plaintiffs appealed.
The appeal hinged on four exceptions contained in the Maryland’s statute of repose. Three of those exceptions expressly related to asbestos claims. A fourth exception exempted those in actual possession and control of property when the injury occurred. The Gilroy plaintiffs argued that this actual possession exception applied, thus exempting it from the statute of repose. Defendants responded that this “actual possession” exception only applied to asbestos-related claims, because it was found under the heading “personal injury or death caused by asbestos.”
Although the trial court found merit in defendants’ argument, the Court of Special Appeals reversed that decision. It noted that the asbestos-related heading is not in the original text of the law and was only added later by commercial publishers, such as Westlaw. The appeals court noted, therefore, that the phrase purporting to limit the “actual possession” exception to asbestos cases only was not, in fact, the law, and, as such, was not legally binding. The appeals court examined the statute of repose’s legislative history, finding further support for its determination that the “actual possession” exception was not limited to asbestos-related cases. It therefore remanded the case to the trial court for consideration of arguments raised before the trial court but not on appeal.
Lawyers counsel their clients to read and understand their contracts. It is obviously just as important to know the law that governs that contract, a task which can become much trickier with laws such as Maryland’s statute of repose. As published, the statute clearly contains a heading that suggests that the “actual possession” exception is limited to asbestos-related claims. However, as the Court of Special Appeals noted, such headings and captions in published statutes are merely for informative purposes and not intended to limit or define the law in any way. In other words, what appears as a heading in a published version of a law is not always “The Law.”
Don’t Ignore Your Contract Notice Provisions
Notice is a critical aspect of any contract. In a typical construction contract there are many provisions that may have notice requirements that must be complied with, including: (1) delays; (2) acceleration, disruption, interference, inefficiency; (3) changed conditions; (4) change orders; (5) extra work; (6) damages; (7) claims; (8) hazardous materials; (9) supplementing work; (10) default/termination and (11) incomplete/defective/deficient design documents. Timely notice allows the parties to investigate the situation or circumstances, preserve necessary documents or information and mitigate damages by providing timely remedies or solutions to the problem if possible. Timely and proper notice lets the responsible party know that the person providing notice intends to preserve and protect its rights. Moreover, the notice itself can become a contemporaneous record of the nature and extent of the adverse conditions, and, when properly documented, can preserve important information and facts before memories begin to fade, key people move on, documents become lost and the facts recede into the “haze of construction.” Timely and proper notice is typically required by law or the contract documents and failure to comply with such notice requirements may result in a forfeiture, waiver or limitation of your rights. Because the failure to comply with notice requirements can have drastic economic consequences it is essential for the parties to a construction project to know and understand the requirements that are applicable to the project.
First, you need to determine what notice provisions exist. You need to check all of the contract documents, including those incorporated by reference, to determine if any applicable notice provisions are in those documents. It is imperative that a thorough review of the contract documents be conducted to determine which documents apply to a particular circumstance and to determine if there are any documents which are incorporated by reference that might control the timing and form of notice required.
Second, when giving notice you must strictly follow the requirements set forth in the contract as to timing, form, substance, method of delivery, person and place of delivery, etc. Such provisions should be strictly followed to avoid claims that the action taken was improper. Thus, if the notice provision requires the notice to be in writing and to be delivered by certified mail, make sure such requirements are followed. Many times, there are conditions that must occur before notice can be given such as the passage of a period of time, consent or approval of a third party or notice must be given in multiple stages. Such conditions must be followed for the notice to be valid and effective.
Third, notice provisions exist outside of the contract. There are notice requirements for mechanic’s liens, payment and performance bond claims and insurance claims. Ascertaining and following those requirements are critical to preserving claims.
Fourth, follow the maxim “more is better.” When providing notice, it is always better to provide as much information as possible to avoid a circumstance where the party receiving the notice claims that your notice was insufficient. Provide as much information as you can in the initial notice and then follow up when additional information becomes available.
There are many cases where a party is denied recovery on tens or even hundreds of thousands of dollars in claims or damages simply because the party did not provide proper notice. Know what is required and provide what is required to preserve your rights and claims.
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