Shell v. Schollander Companies, Inc.

The statute of repose in ORS 12.135(1) applies to contracts to construct, alter, or repair an improvement to real property where a “contractee” accepts the property as “substantially complete,” while the statute of repose in ORS 12.115(1) applies generally to claims for negligence that do not derive from a contract to construct, alter, or repair an improvement to land.

Defendant, a general contractor that builds spec houses, entered into a purchase and sale agreement for a house in May of 2000. Construction was mostly complete, and after some upgrades were complete and a walk-through inspection conducted by the parties, the sale closed in July of 2000. More than ten years after the purchase and sale agreement was executed but less than ten years after the sale closed, Plaintiff brought a construction defect action against Defendant. Defendant argued as an affirmative defense that the statute of repose in ORS 12.115(1) barred Plaintiff’s claims; Plaintiff argued ORS 12.135(1)(b) applied, giving her ten years from the date of “substantial completion * * * of construction” to bring her action, and that a reasonable juror could find construction was not substantially complete until the sale closed in July 2000. The trial court held that because ORS 12.135(1) applies to claims arising from contracts to construct, alter, or repair homes—inapplicable here—ORS 12.115(1) applied and Plaintiff’s claim was time-barred. The Court of Appeals affirmed, holding because the date of “substantial completion” is defined as the date the “contractee” accepts the construction as complete, ORS 12.135(1) applies only to claims that “derive from the contractor-contractee relationship,” again inapplicable to the parties’ transaction. On appeal, Plaintiff argued ORS 12.135(1) is the more specific statute that governs a subset of claims to which ORS 12.115(1) would otherwise apply, and therefore ORS 12.135(1) controls over ORS 12.115(1). After analyzing the text and legislative history of the statutes, the Court held that because there was no contract to construct, alter, or repair an improvement to real property and thus no “contractee” whose acceptance will trigger the period of repose, ORS 12.135(1)(b) does not apply and ORS 12.115(1) governs Plaintiff’s claim, which the Court of Appeals and trial court properly held was time-barred. Decision of the Court of Appeals and judgment of the circuit court affirmed.