A recent case from the Court of Appeals of Georgia could lead to significant changes related to construction warranties. In Southern States Chemical v. Tampa Tank & Welding, the appellate court appeared to disregard the effects of certain long-term contractual warranties, instead finding that any action for damages is precluded by the eight year period under the statute of repose.
The case involved claims of breach of contract and breach of express written warranties related to faulty renovation and testing of a sulfuric acid storage tank. Southern States Chemical, the manufacturer who brought the action, had an express one-year warranty in its renovation contract, but brought the claim ten years after renovation was completed. To argue that the damage was still covered by warranty, it claimed that calculations of system life expectancy in post-installation reports acted as an express 40-plus year warranty.
After finding that Southern would not be covered by the 40-plus year warranty because of an issue with consideration, the court went further and considered the statute of repose. Southern argued that the statute of repose did not apply because its claim was based on breach of an express promise, not negligence or construction deficiency. However, the court found no distinction in the statute between negligence and contract claims. It stated, “[w]hether in tort or in contract, the statute broadly precludes any action to recover damages brought outside the eight year period of repose.” Ultimately, the court held that Southern’s contractual claims were barred by the statute of repose because the action was brought ten years after renovations were completed.
The case is raising concerns for building owners and contractors, who rely on the validity of their warranties. Attorneys speaking to Bisnow gave multiple interpretations, many confirming the building owners’ and contractors’ concerns. One attorney claimed that the language of the decision is clear in limiting any actions based on property improvements, even when there is a signed warranty between the parties. Another attorney also understands the case to cut off warranties at eight years, a decision he says will deny owners of commercial real estate “their fundamental right of contract.” On the other hand, one attorney interprets the case slightly differently, claiming that the court may have come to a different decision had they been considering a true 40-plus year warranty, rather than the unofficial 40-plus year warranty at issue in the case.
Whether or not the decision does, in fact, limit all actions to recover damages to eight years, there will be numerous lawsuits brought following this case based on the new uncertainties. Owners of commercial real estate should closely follow the fallout of this case.
About the author
Melanie Tate is a J.D. candidate at Emory University School of Law. Melanie earned her B.A. in literature from Louisiana State University. She is a 2019 – 2020 legal intern at Caiaccio Law Firm.