Newstrack: No change for construction liability law

Background

A study bill was introduced in the Iowa Legislature on Feb. 9 to amend the state's existing 'statute of repose' law. It would have reduced the period from 15 years to 10 years in which a lawsuit can be filed based on negligence in an improvement to commercial property.

It would not have applied to construction projects that began before it took effect.

What's happened since

The Iowa House passed House File 194 by a vote of 60-39 in the legislative session that ended in June. The bill failed to make it out of committee in the Iowa Senate.

A statute of repose cuts off legal rights after the passage of time, regardless of whether an injury to a person has occurred. The clock begins to run on filing a claim on the date the project is completed and occupied.

A statute of limitations begins on the date an injury is discovered.

Scott Friauf, chairman and chief executive officer of Merit Construction and president of Rinderknecht Associates in Cedar Rapids, said Iowa's 15-year period to file a lawsuit under the statute of repose is the longest in the nation. He noted that Missouri, South Dakota and Wisconsin have a 10-year period.

Friauf said contractors have been sued for negligent construction practices when a lack of continuous maintenance by the building owner led to a claim under the statute of repose.

'A lot of building owners take on a project that can't support a maintenance staff, so it (maintenance) gets deferred or neglected,” Friauf said. ”All of a sudden, they realize that they have water filtration into their building and interior damage from moisture.

'At 14 years and 11 months, it becomes a building construction problem, rather than a maintenance problem.”

The Iowa Legislature has considered bills several times in recent years to shorten the period to file construction negligence claims under the statute of repose. A bill introduced in 2014 attempted to shorten the filing period to eight years.

Chad Kleppe, president of the Master Builders of Iowa, said House File 194 was an attempt to strike a reasonable balance between the rights of building owners and the legal exposure of architects, contractors and others involved in construction.

'Studies have shown that 80 percent of building defects are identified in the first four to six years,” Kleppe said. 'When you get closer to that 10-year threshold, you are well over 90 percent.”

Kleppe said contractors are forced to store documents related to the construction of a building for 15 years to be able mount a viable defense in the event of a negligence claim.

'Stale evidence is a huge problem,” he said. 'Companies are acquired, they go out of business and names change.

'Our argument is that a company's ability to adequately defend itself over a 15-year period is problematic. An eight- or 10-year period is more the norm in other states.”

House File 194 also was supported by the Associated Builders and Contractors of Iowa, and the Iowa Association of Realtors.

The bill was opposed by the Iowa Association for Justice (IAJ), Iowa State Bar Association, Iowa Academy of Trial Lawyers, Iowa Association of School Boards and Iowa Federation of Labor.

'The Iowa Association for Justice is strongly opposed to House File 194, as passed by the (Iowa) House,” IAJ said in a statement. 'HF 194 would shorten the statute of repose on real property improvements from 15 to 10 short years, which force more property owners to literally pick up the pieces when they are victimized by shoddy construction that wasn't built to last.”