Yesterday, the Oregon Supreme Court issued a decision clarifying the statute of limitation for negligent construction claims. In Goodwin v. Kingsmen Plastering Inc., 359 Or. 694 (June 16, 2016), the Court was asked to identify the period of limitations for a negligent construction claim. Plaintiffs in the case filed a claim for negligence and negligence per se, alleging construction defects that led to water intrusion at a single family residence built in 2001.  Plaintiffs argued that the six-year statute of limitation set forth in ORS 12.080(3), which applies to actions “for interference with or injury to any interest of another real property,” governed their claims.

Defendant, a siding subcontractor, argued that the action was not for injury to an “interest” in real property, but rather for damage to the property itself, and should be governed by a two-year statute of limitations set for in ORS 12.110(1). That statute applies to tort actions in general.

The Oregon Supreme Court determined conclusively that the two-year statute of limitations set forth in ORS 12.110(1) applied. The Court found that ORS 12.080(3) applied only to an injury to an “interest” in real property, such as trespass or waste. It did not apply to actions arising from damage to the property itself. The Court further held that the Plaintiff’s discovery of the damage to the property initiates the two year period of limitation. As a result, the Supreme Court remanded the case back to the Court of Appeals for determination of whether or not the action was brought within two years of when the Plaintiffs knew or should have known about the damage.

This case provides clarity as to the appropriate statute of limitations in Oregon for negligent construction claims. Previously there had been some confusion over what statute should apply. The arguments presented in theGoodwin case were common. Parties often argued whether the six-year or two-year period was appropriate for actions involving construction defects. The Court has now clarified that a party has two years from which to bring a claim for negligent construction. Moreover, the Court clarified that this two-year period of limitations allows for discovery of the claim. As a result, the operative date for any statute of limitations defense will be when the claimant knew or should have known about the damage to the property.

Lether & Associates regularly represents insurers in a number of construction matters and other insurance claims in the State of Oregon.  This includes some of the most significant construction defect claims in that jurisdiction.  A number of our attorneys are licensed to practice in Oregon.  We are always happy to discuss representation of clients in that jurisdiction.