The Subrogation Strategist

In Venema v. Moser Builders, Inc., 2022 PA Super. 171, 2022 Pa. Super. LEXIS 414, the Superior Court of Pennsylvania (Superior Court) upheld an award of judgment on the pleadings from the Court of Common Pleas of Chester County (Trial Court). The Superior Court found that Pennsylvania’s 12-year Statute of Repose for improvements to real property (Statute of Repose) began to run upon the issuance of the certificate of occupancy following original construction of the home in 2003—not from the completion of repairs to the home that continued through 2008.

The underlying cause of action involved a home constructed by Moser Builders, Inc. (Moser) in 2003. The certificate of occupancy for the home was issued on August 13, 2003. Matthew Venema and Liza Squires (collectively, Venema) purchased the property from the original owners in 2004.

On August 26, 2019, Venema commenced a suit. Venema alleged that Moser’s repairs failed to remedy the underlying defects, causing significant water infiltration and damage. In addition, Venema alleged 13 counts concerning construction defects, including an allegation that Moser performed “a number of inspections and repairs on the residence from 2004 to 2008.”

Moser filed an answer alleging, among other things, that Venema’s claims were barred by the Statute of Repose. Moser then filed a motion for judgment on the pleadings, seeking dismissal based on the Statute of Repose issue. The Statute of Repose states that “a civil action or proceeding brought against any person lawfully performing or furnishing the design, planning, supervision or observation of construction, or construction of any improvement to real property must be commenced within 12 years after completion of construction[.]” 42 Pa.C.S. § 5536(a).

If the Statute of Repose ran from date of the issuance of the certificate of occupancy, as Moser alleged, it would expire on August 13, 2015, and Venema’s complaint would be untimely. Venema argued that Moser made regular repairs to the residence from 2004 to 2008, which delayed completion of the home for Statute of Repose purposes until the completion of these repairs (meaning the Statute of Repose would run in 2020). The Trial Court granted Moser’s motion, reasoning that the property was completed upon the issuance of the certificate of occupancy in 2003. Venema appealed, asking the Superior Court to determine whether the Trial Court’s ruling was an abuse of discretion.

The Superior Court stated that in a construction defect case, the defendant has the burden of proving that the Statute of Repose precludes liability and must show that: “(1) what is supplied [by defendant] is an improvement to real property; (2) more than twelve years have elapsed between the completion of the improvements to the real estate and the injury; and (3) the activity of the moving party must be within the class which is protected by the statute.”

Only the second element was at issue in the appeal—specifically “whether more than 12 years elapsed between Moser’s completion of [Venema’s] residence and the date of [Venema’s] asserted damages.” The Superior Court stated that it was undisputed that the certificate of occupancy was issued in 2003 and that Venema “did not file suit until over 12 years later[.]”

In affirming the Trial Court’s order, the Superior Court noted that a property “cannot be used or occupied until a certificate of occupancy is issued. The issuance of the certificate hinges on a satisfactory ‘final inspection’ showing that the construction of the residence comports with the governing building codes.” Further, the Superior Court noted “[t]here can be no satisfactory result to a final inspection, nor a certificate of occupancy, until construction of the residence is ‘completed.’” The Superior Court found no cases or statutes to support Venema’s contention that the repairs delayed completion of the residence’s construction or tolled the Statute of Repose period. In fact, the Superior Court found that the Supreme Court of Pennsylvania “has held that a Statute of Repose ‘generally may not be tolled, even in cases of extraordinary circumstances beyond a plaintiff’s control.” See Dubose v. Quinlan, 173 A.3d 634 (Pa. 2017). Accordingly, the Superior Court rejected Venema’s argument that the Statute of Repose ran from the date of completion of the ongoing repairs rather than from the date of the issuance of the certificate of occupancy. Given that the certificate of occupancy was issued in 2003, the Superior Court determined that the Trial Court did not err in ruling that Venema’s claims were barred by the Statute of Repose. Thus, the Superior Court affirmed the order granting judgment on the pleadings.

Subrogation professionals should always be mindful of the nuances of the statute of repose in each state. As demonstrated here, while repairs and/or renovations may continue after a certificate of occupancy is issued, the improvement may be considered “complete” for statute of repose purposes upon issuance of the certificate of occupancy. Professionals must pay close attention to how each individual state interprets any relevant statute of repose to ensure actions are timely filed.