Rogers v. Mallory

Larry R. ROGERS and Elizabeth H. Snipan v.
Don MALLORY

96-1359                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
                Opinion delivered April 14, 1997


1.   Limitation of actions -- five-year limitation on actions for damages caused
     by deficiencies in construction -- applicable to claim for breach of
     warranty of habitability. -- The supreme court held that with
     respect to claims for breach of warranty of habitability of a
     dwelling, the trial court correctly applied Ark. Code Ann. 
     16-56-112(a) (1987), which provides for a five-year limitation
     on actions in contract to recover damages caused by any
     deficiency in the design, planning, supervision, or
     observation of construction or the construction and repair of
     any improvement to real property or for injury to real or
     personal property caused by the deficiency; although the
     supreme court has made an exception, as does Ark. Code Ann. 
     16-56-112(d), on the basis of fraudulent concealment to
     statutes of limitations, no fraud argument was made here; 
     according to  16-56-112(a), an action in contract must be
     brought no more than five years after substantial completion
     of the home; the statute neither provides an exception for
     residential property nor gives a purchaser a "reasonable
     length of time" in which to bring suit.

2.   Limitation of actions -- Ark. Code Ann.  16-56-112(a) is more accurately
     described as statute of repose rather than of limitations. -- The effect
     of Ark. Code Ann.  16-56-112(a) and statutes similar to it is
     to cut off entirely an injured person's right of action before
     it accrues, even if it does not arise until after the
     statutory period has elapsed; thus,  16-56-112(a) is more
     accurately described as a "statute of repose" rather than a
     "statute of limitations."

3.   Limitation of actions -- General Assembly's purpose in enacting Ark. Code
     Ann.  16-56-112(a). -- The General Assembly's purpose in enacting
     Ark. Code Ann.  16-56-112(a) was to provide a comprehensive
     statute of limitations protecting persons engaged in the
     construction industry from being subject to litigation arising
     from work performed many years prior to the initiation of the
     lawsuit.

4.   Limitation of actions -- Ark. Code Ann.  16-56-112(a) did not conflict
     with implied-warranty-of-habitability cases -- must be followed. -- Where
     Ark. Code Ann.  1656-112(a) was clear and did not conflict
     with the holding of any case dealing with the implied warranty
     of habitability, the supreme court held that it must be
     followed.

     Appeal from Faulkner Circuit Court; Karen R. Baker, Judge;
affirmed.
     David H. Williams, for appellants.
     Mark S. Cambiano, for appellee.

     David Newbern, Justice.
     Arkansas Code Ann.  16-56-112(a) (1987) provides:

          No action in contract, whether oral or written, sealed or
     unsealed, to recover damages caused by any deficiency in the
     design, planning, supervision, or observation of construction
     or the construction and repair of any improvement to real
     property or for injury to real or personal property caused by
     such deficiency, shall be brought against any person
     performing or furnishing the design, planning, supervision, or
     observation of construction or the construction or repair of
     the improvement more than five (5) years after substantial
     completion of the improvement.

The question to be answered in this appeal is whether the five-year
limit imposed by the statute applies to claims for breach of the
implied warranty of habitability of a dwelling.  The Trial Court
held the statute applicable, and we affirm.
     Larry R. Rogers and Elizabeth H. Snipan, husband and wife,
purchased the home in question from Ron and Kay Dobie in May 1992. 
Although the buyers had the home inspected for defects, and had
some defects repaired by the Dobies prior to closing, they were
unaware that the fill on which the house was built had been
composed of wet pond dirt that was slowly drying and causing the
underlying concrete slab to collapse.  
     By the time Mr. Rogers and Ms. Snipan filed their complaint in
August 1994, the home was a disaster area.  The flooring had
crushed drain pipes below.  Doors and cabinets were ajar.  Sewage
was oozing through the exterior brick walls.  Mr. Rogers and Ms.
Snipan were washing dishes and clothes over buckets and had only
one bathing area that drained suitably.  Estimates of repairs
ranged from $132,000, which would not buy a guarantee of completely
solving the problem, to $193,000, which would purchase repairs with
a guarantee that no further settlement would occur.
     The complaint named a number of defendants.  All were
dismissed except the Dobies, Bob Kordsmeier (individually and as
agent for Conway Home Inspection Service, Inc.), and appellee Don
Mallory, a general building contractor who allegedly built the home
through the process of subcontracting with members of building
trades.  
     In his amended answer, Mr. Mallory asserted as an affirmative
defense, among others, that the action was barred by  16-56-
112(a).  He moved to dismiss.  The Trial Court said she was
treating the motion as one for summary judgment, but she held a
hearing at which some testimony was taken and ruled in favor of Mr.
Mallory.  She then certified the case for appeal pursuant to Ark.
R. Civ. P. 54(b), holding the claims against the Dobies and Mr.
Kordsmeier in abeyance until the appeal of her decision with
respect to Mr. Mallory has been decided.
     The only argument presented in the brief of Mr. Rogers and Ms.
Snipan is that  16-56-112(a) does not apply to a cause of action
alleging that a general contractor, in constructing a residence,
breached the implied warranty of habitability.  They argue that
when we recognized the implied warranty in cases such as Wawak v.
Stewart, 247 Ark. 1093, 449 S.W.2d 922 (1970), and Blagg v. Fred
Hunt Co., 272 Ark. 185, 612 S.W.2d 321 (1981), we did not intend
that claims asserting a breach of the warranty be governed by  16-
56-112(a).  Mr. Rogers and Ms. Snipan point out  16-56-112(a) or
a predecessor was in effect at the time we recognized the implied
warranty and that we did not mention the statute or suggest that
the right to sue for a breach of the warranty could be terminated
after five years from the date of the home's substantial
completion.
     Mr. Rogers and Ms. Snipan also cite language from our cases
stating that the implied warranty extends to subsequent purchasers
and exists for a "reasonable length of time."  See Sanders v.
Walker, 298 Ark. 374, 767 S.W.2d 526 (1989); Blagg v. Fred Hunt
Co., supra.  They contend that language affords them the right to
sue for a "reasonable length of time" irrespective of the five-year
limitation prescribed by  16-56-112(a).  They reason that a rule
that essentially terminates a purchaser's right to sue for a breach
of the warranty before the purchaser has even seen or purchased the
home, let alone discovered any defects or suffered any damages, is
fundamentally at odds with the rationale and policy considerations
that led this Court to recognize a cause of action for breach of
the implied warranty of habitability.  Mr. Rogers and Ms. Snipan
seek a ruling that a subsequent purchaser of a home has a
reasonable amount of time in which to bring a claim for breach of
the implied warranty of habitability and that the purchaser is not
required to comply with  16-56-112(a) and bring such a claim
within five years of the substantial completion of the home.
     If we could decide this case simply by considering "the
equities," assuming proof of the allegations made, we would have to
rule in favor of Mr. Rogers and Ms. Snipan.  Construction on their
home was completed in December 1986.  They were not shown the home
by a real estate agency until February 1992, and they did not close
the deal and take possession until May 1992.  They began to notice
the drainage problems in November 1992, and they finally discovered
the causes of the defects in June 1993. 
     Nonetheless, the statute was correctly followed by the Trial
Court.  While we have made an exception (as does  16-56-112(d)
specifically), on the basis of fraudulent concealment, to statutes
limiting the time in which an action must be brought, no such fraud
argument is made here.  According to  16-56-112(a), an action "in
contract" (and there is no argument made here that the breach-of-
warranty claim is not such an action) must be brought no more than
five years after substantial completion of the home.  There is no
exception in the statute, as the appellants suggest there is, for
residential property, and the statute does not give a purchaser a
"reasonable length of time" in which to bring suit.    
     Although we may not have mentioned  16-56-112(a), when
discussing the "reasonable length of time" requirement in prior
implied-warranty cases, it has not been at issue.  We have not held
that a purchaser may bring suit for a breach at any "reasonable"
time.  The obiter dicta cited say that the warranty exists for a
reasonable length of time, not that a purchaser has any
"reasonable" amount of time in which to sue for a breach of the
warranty.
     We have recognized that the effect of  16-56-112(a) and
statutes similar to it "is to cut off entirely an injured person's
right of action before it accrues," even "if it does not arise
until after the statutory period has elapsed."  Okla Homer Smith
Mfg. Co. v. Larson & Wear, Inc., 278 Ark. 467, 470, 646 S.W.2d 696,
698 (1983), quoting Annotation, 93 A.L.R.3d 1242, 1246 (1979). 
Thus,  16-56-112(a) is more accurately described as a "statute of
repose" rather than a "statute of limitations."  See J.W. Looney,
When Third Means Fourth, Contract Includes Tort, and a Five-Year
Statute of Limitation Actually Leaves Only Three Years or Less to
File Suit:  The Strange Saga of the Arkansas "Statute of Repose" in
Construction Cases, 1993 Ark. L. Notes 87, 90 n.15.
     We have observed that the General Assembly's purpose in
enacting the statute "was to enact a comprehensive statute of
limitations protecting persons engaged in the construction industry
from being subject to litigation arising from work performed many
years prior to the initiation of the lawsuit."  Okla Homer Smith
Mfg. Co., 278 Ark. at 470, 646 S.W.2d  at 698.  See also East
Poinsett County School Dist. No. 14 v. Union Standard Ins. Co., 304
Ark. 32, 33-34, 800 S.W.2d 415, 417 (1990).
     The statute is clear.  It does not conflict with the holding
of any case in which we have dealt with the implied warranty of
habitability, and we must follow it.
     Affirmed.