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  • Writer's pictureAndrew Stewart, Esq. and Kenneth G. Stallard, Esq.

Statutes of Limitations vs. Statutes of Repose. What are they, and how do they affect Contractors and Design Professionals in Maryland?

Statutes of limitations and statutes of repose, when applicable, can provide time-based defenses that will bar a complaint filed against contractors and design professionals, whether the claim is based in contract or in negligence.  Generally speaking, the time limitations for bringing claims established by statutes of limitations operate within the time limit on bringing claims established by statutes of repose.


Statutes of limitations run from the date the cause of action accrues. Contract actions typically accrue as of the date of the breach, although the accrual date may be modified by the contractual agreement of the parties, or from when the breach was discovered or reasonably should have been discovered. In negligence actions, the claim typically accrues on the date of injury or the date upon which the injury was discovered or reasonably should have been discovered. 


Statutes of repose, on the other hand, establish an outside time limitation on claims for wrongful death, personal injury, or injury to real or personal property resulting from the defective and unsafe condition of an improvement to real property. Time limitations under the Maryland statute of repose are measured from the date the entire improvement first becomes available for its intended use, after which no claim can be made, regardless of whether the claim is based in contract or in negligence, and regardless of when the damage is discovered.


If either a statute of limitations or a statute of repose defense applies, a complaint should be dismissed for being filed too late.  While both legal concepts depend on the passage of time, the specific event that triggers the clock under each statute is different.


The Maryland statutes define the amount of time and the type of event that will start the respective clocks under each statute.


Statutes of Limitations – Date of Injury or Breach   

The cause of action accrues and the statute of limitations begins on the date the plaintiff knows (or reasonably should know) that they have been injured or harmed. See Poffenberger v. Risser, 290 Md. 631, 634-38 (1981).  This means that if a plaintiff waits too long and files a lawsuit after the statute of limitations has expired, the lawsuit will be dismissed notwithstanding any liability or wrongdoing of either party. 


In a personal injury case, the statute of limitations begins to run on the date the injury is, or reasonably should be, discovered (for example, if a construction worker fell and injured his ankle due to an intentional or negligent act of a contractor, the clock would start ticking on the date the worker fell).  In other cases involving non-physical injury, such as those involving financial harms, the statute of limitations begins to run when the plaintiff is aware, or reasonably should have been aware, that the harm has occurred.  See Murphy v. Liberty Mut. Ins. Co., 478 Md. 333, 343-44 (2022).  For example, if a general contractor defaults on its payment obligation to a subcontractor, the statute of limitations begins to run from the date on which the subcontractor was aware, or reasonably should have been aware, that the general contractor would not be issuing payment).


In Maryland, the general statute of limitations that applies to a civil lawsuit is three years. (Md. Code, Cts. & Jud. Proc., § 5-101).  There are some exceptions where a longer limitation will apply, such as in breach of contract for sale, where the period is extended from three years to four years. (Md. Code, Commercial Law, § 2-725(a)).  However, under Maryland law, parties to a commercial sales contract are free to negotiate a reduced statute of limitation, provided the statute of limitations period is at least one year. (Id.)  In other contracts, the parties are free to modify the applicable statute of limitations, provided the modification to the limitations period is reasonable, not contrary to any other applicable statute, and there is no fraud, duress, or misrepresentation in the formation of the contract. Garcia v. Fujitec Am., Inc., 621 F. Supp. 3d 577, 580-81 (D. Md. 2022).


The Statute of Repose – Date of Work

The Statute of Repose, like the statute of limitations, serves as a time-bar that prevents a plaintiff from filing a lawsuit due to the passage of time.  Therefore, unlike the statute of limitations, the date of the plaintiff’s injury or harm is not the determining factor.  Instead, the statute of repose focuses on the date that the entire improvement first becomes available for its intended use, and it applies in cases where injury or damage occurs following an “improvement” to land or real property (i.e., cases of new or additional construction and/or development).

 

In Maryland, the statute of repose is at § 5-108 of the Courts & Judicial Proceedings Article.  Section 5-108(a) provides a general statute of repose. It provides that  “no cause of action for damages accrues and a person may not seek contribution or indemnity for damages incurred when wrongful death, personal injury, or injury to real or personal property resulting from the defective and unsafe condition of an improvement to real property occurs more than 20 years after the date the entire improvement first becomes available for its intended use.” Section 5-108 (b) is specifically applicable to “any architect, professional engineer, or contractor.” It provides that “a cause of action for damages does not accrue and a person may not seek contribution or indemnity from any architect, professional engineer, or contractor for damages incurred when wrongful death, personal injury, or injury to real or personal property, resulting from the defective and unsafe condition of an improvement to real property, occurs more than 10 years after the date the entire improvement first became available for its intended use.” (Id.) 


By way of example, suppose a contractor is hired to install a sprinkler system at a hotel. The contractor completes the installation, and the improvement becomes available for its intended use in 2005.  In 2020, the sprinkler system suffers a major leak as a result of a defect in its installation and causes physical damage to the hotel. In 2021, the hotel files suit against the contractor claiming the damage was a result of the contractor’s negligence and breach of contract.  Although the suit was filed within three years from the date of the injury to the hotel’s property, consistent with Maryland’s general statute of limitations, the hotel’s complaint should be dismissed under Maryland’s statute of repose, § 5-108(b), because the damage occurred and the suit was filed more than ten years after the sprinkler improvement became available for its intended use. (See Hartford Ins. Co. of Midwest v. Am. Automatic Sprinkler Sys., Inc., 23 F. Supp. 2d 623, 628 – 629 (D. Md. 1998), aff’d, 201 F.3d 538 (4th Cir. 2000) (barring negligence claims against the contractor who installed a sprinkler system based upon the statute of repose).

 

Conclusion

In any lawsuit, timing of events is critical.  While the statute of limitations and statute of repose are similar in that they may serve to bar legal claims due to length of time, the specific defenses vary based on the triggering event that starts that clock.  These laws also vary from jurisdiction to jurisdiction.  Therefore, if you find yourself facing a lawsuit, the timing of the events may be critical in your defense, and consulting with legal counsel may be beneficial to explore these potential defenses.

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