The United States District Court Takes Another Look at South Carolina's Statute of Repose

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To the regular readers of the TIPS Blog, thank you and congratulations, today's post will reference an earlier post you've already read. To the new TIPs readers, welcome! (You can read the January article here.)

Several months ago, we addressed the United States District Court’s helpful analysis of selected portions of South Carolina’s statute of repose. That case is back before the court, and there is additional clarification as to the statute. Hampton Hall, LLC v. Chapman Coyle Chapman & Associates Architects AIA, Inc., et al, 2018 WL 2305658 (May 21, 2018).   

This time, a few background facts. Chapman Coyle Chapman & Associates Architects, AIA, Inc. (“Chapman”) designed and oversaw the construction of Hampton Hall Development amenity facilities, including a golf clubhouse, a community clubhouse and other amenities. Co-Defendant Choate Construction Company (“Choate”) was the general contractor. Southern Roof and Wood Care Corporation (“Southern”), was one of Choate’s subcontractors. The golf clubhouse was substantially completed on May 17, 2004 and therefore subject to the previous thirteen-year statute of repose. The community clubhouse was substantially completed in 2007 and subject to the current, eight-year statute of repose. Plaintiff filed this action on May 12, 2017, alleging various claims for defective construction, breach of contract, breach of warranty and negligence. The action was filed just five days prior to the lapse of the repose period. On February 14, 2018, Choate filed a third-party complaint against several of its subcontractors, including Southern. The case is currently before the court on Southern’s motion for summary judgment as to all claims relative to the construction of the golf clubhouse and the community clubhouse.

The current statute of repose provides that no actions for damages based upon or arising from defective or unsafe condition of an improvement to real property may be brought more than eight years after substantial completion of the improvement. Actions for fraud, gross negligence or recklessness are specifically excluded from the protection of the statute.

In response to Southern’s motion for summary judgment, Choate concedes the statute of repose bars its claims against Southern relative to the community clubhouse, substantially completed in May 2004.  As to its claims against Southern relative to the golf clubhouse, it first argues the statute should be tolled.

The court found that argument meritless; the statute of repose cannot be tolled. Unlike statutes of limitations, statutes of repose are not subject to equitable tolling.

Choate next argues the statute does not bar its claims because its third-party complaint, in response to Plaintiff’s amended complaint, relates back to the original complaint in this action. The court likewise rejected this argument. While Fed. R. Civ. P. 15(c)(1) allows amended pleadings to “relate back” to the date of the original pleading, Choate’s third-party complaint is not an amended pleading. Further, Choate offered no authority to support an argument that a third-party complaint may relate back to the date of an adverse party’s pleading.

Plaintiff served Choate on May 17, 2017, the day upon which the statute of repose expired. Thus, Choate’s third-party action was barred before it even accrued. The seemingly inherent unfairness of this result is not a revelation. The South Carolina Supreme Court previously recognized a lawsuit filed on the eve of the lapse of the statute of repose, but not resolved until the statute has expired, barred a contribution action prior to the accrual of the right. While this results in an undue burden on a single tortfeasor, it is a result that can only be remedied by the legislature; the court lacks the power to modify the statutes.[1]

Granting Southern’s motion for summary judgment as to most of Choate’s claims, the court briefly turned its attention to gross negligence – a claim excluded from the statute of repose. Southern argued Choate could not make a prima facie case for gross negligence, as evidence of a building code violation does not equate to gross negligence per se and because a certificate of occupancy would not have issued if Southern had been grossly negligent. The court rejected Southern’s argument. While evidence of a building code violation is not gross negligence per se, it may be evidence of gross negligence. The court also found no merit in Southern’s argument that the issuance of a certificate of occupancy relieves subcontractors of liability for gross negligence that result in latent defects. Finding evidence of violation of a building code sufficient to create a genuine issue of material fact, Southern’s motion for summary judgment as to gross negligence was denied.

In January, we viewed the court’s analysis and application of the statute of repose as evidence of its dedication to practical and reasonable interpretation of the statute. In this most recent look, the conclusion is no different. Certainly, the results can be harsh, leaving some parties with no chance of pursuing recovery even before their rights accrue.

Nevertheless, the court continues to apply the statute as it is written.

Cheryl D. Shoun is a trial attorney and certified mediator whose experience includes construction law, insurance defense, personal injury defense, employment litigation and medical malpractice. As a frequent writer, she serves as editor for Nexsen Pruet's TIPS: Torts, Insurance and Products Blog.