Baker v. M
| Decision Date | 06 April 2016 |
| Docket Number | NO. 34,664,34,664 |
| Parties | GREGORY L. BAKER and LAURIE D. BAKER, Plaintiffs-Appellants, v. WOOD METAL CONCRETE, LLC, Defendant-Appellee. |
| Court | Court of Appeals of New Mexico |
This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date.
APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
John B. Pound, LLC
John B. Pound
Santa Fe, NM
for Appellants
Montgomery & Andrews, P.A.
Kevin M. Sexton
Miguel P. Archuleta
Carolyn A. Wolf
Santa Fe, NM
for Appellee
{1} Summary judgment was granted to Defendant Wood Metal Concrete, LLC, on the ground that the statute of repose limiting liability for construction projects to ten years after their substantial completion bars the present suit. Gregory and Laurie Baker (Plaintiffs) appeal, contending that their claims are not time-barred under the due process rule announced in Terry v. New Mexico State Highway Commission, 1982-NMSC-047, 98 N.M. 119, 645 P.2d 1375. We affirm.
{2} The following facts are not in dispute. In July 2010, Plaintiffs purchased a home in the Sierra Del Norte Subdivision in Santa Fe, New Mexico. The home was designed by Defendant a decade earlier and first occupied by the sellers on November 21, 2001.
{3} Plaintiffs had the structure of the home inspected prior to closing. The inspector's report noted "heaving in the garage area" with "related cracking in some adjacent walls." Plaintiffs discussed the issue with the builder of the home, who explained that melting snow in the gravel driveway had been causing the soil under the building to expand, resulting in damage to the slab. The builder represented to Plaintiffs that he had returned to the site to remedy the drainage issue in 2008, installing new french drains and gutters and paving the driveway and surrounding area.
{4} Not convinced that the problem had been fully resolved by those efforts, Plaintiffs hired a structural engineering firm to inspect the garage in July 2010. Theresulting report observed that "[t]he garage slab has heaved and separated specifically at the joint which is nearest to the main portion of the house" and that there were "minor shrinkage cracks in the garage floor slab[,]" but that there was no evidence of structural distress in the house itself. The engineer's report also stated:
It is common knowledge that several residences in the Sierra Del Norte area have incurred significant damage due to subsurface instability. We have had great success in preventing structural distress with careful and good management of the grading and drainage around the houses. It is my professional opinion that this house is in good structural condition, the grading and drainage and waterproofing have been correctly installed and that future potential for damage is next to none.
Presumably encouraged by these representations, Plaintiffs purchased the home.
{5} According to Plaintiffs, cracks began to appear in the interior and exterior of the house in mid-2011. They hired a different structural engineer and a soil consultant who ultimately concluded that the home "had been built over clay/shale materials, which possessed the ability to swell and heave vertically when wetted." The soil consultant also noted that the slab had probably been heaving since it was first constructed. Plaintiffs sued the builder, the sellers, the first engineer, and Defendant on April 10, 2014.
{6} With respect to Defendant, Plaintiffs alleged that a topographic survey showed on its face that the site was one of greatly varied elevations, with approximate eleven-foot variations within the footprint of the home. Despite this, Defendant's specifications provided that all footings were to bear on undisturbed soil, causing thehome to be constructed with inadequate foundations on inadequately prepared subsoil. According to the complaint, this design ultimately caused the slab to heave. The district court applied the relevant statute of repose and granted summary judgment to Defendant, resulting in this appeal. The district court's ruling is only appropriate if there are no genuine issues of material fact and Defendant is entitled to judgment as a matter of law. See Jacobo v. City of Albuquerque, 2005-NMCA-105, ¶ 4, 138 N.M. 184, 118 P.3d 189. "We review these legal questions de novo." Id. (internal quotation marks and citation omitted).
{7} By statute, liability arising from defective or unsafe conditions created during the improvement of real property is limited to ten years from substantial completion of the improvement. NMSA 1978, § 37-1-27 (1967). Section 37-1-27 is a statute of repose, meaning that it is intended "to put an end to prospective liability for wrongful acts that, after the passage of a period of time, have yet to give rise to a justiciable claim." Garcia ex rel. Garcia v. La Farge, 1995-NMSC-019, ¶ 14, 119 N.M. 532, 893 P.2d 428. Unlike a statute of limitations, Section 37-1-27 begins to run from the date of substantial completion of a project "without regard to when the underlying cause of action accrues and without regard to the discovery of injury or damages." Garcia, 1995-NMSC-019, ¶ 14. Thus, our Supreme Court has recognized that the purpose of the statute, as evidenced by its history and text, is to shift liability from protectedparties to property owners and other tortfeasors ten years after completion of a project. See Saiz v. Belen Sch. Dist., 1992-NMSC-018, ¶ 41, 113 N.M. 387, 827 P.2d 102.
{8} However, when application of Section 37-1-27 would create an "unreasonably short" period of time to pursue a remedy against a protected party, due process requires the courts to intervene. Terry, 1982-NMSC-047, ¶¶ 14-17. In short, the statute cannot be constitutionally applied to bar any cause of action accruing within but close to the end of the ten-year period. Id. ¶ 13. This is a narrow doctrine that we have previously applied only in " 'unusual cases involving exceptional circumstances' resulting in an unusually short period of time within which to file suit[.]" Cahn v. Berryman, 2015-NMCA-078, ¶ 22, 355 P.3d 58, cert. granted, 2015-NMCERT-007, 355 P.3d 58. When the Terry rule is implicated, Section 37-1-27 does not apply, and the period for liability is only limited by the generally applicable accrual-based statute of limitations that would ordinarily apply to the claim alleged. See Terry, 1982-NMSC-047, ¶ 17; see also Garcia, 1995-NMSC-019, ¶ 37 (). In Terry, for instance, the Court held that Section 37-1-27 was unconstitutional as applied to a cause of action for bodily injuries arising from unsafe conditions on a state highway that accrued approximately three months before the end of the ten-year statutory period. Terry, 1982-NMSC-047, ¶¶ 2, 10, 16. Under those circumstances, the Court declined to enforce the statute andinstead applied the three-year statutes of limitations for personal injury and wrongful death claims. Id. ¶ 17.
{9} It is uncontested that Section 37-1-27's ten-year period began when the certificate of occupancy was issued on November 21, 2001. That period would have expired in November 2011, long before Plaintiffs filed their complaint. But Plaintiffs argue that Terry's due process exception controls this case and that their claims are thus limited only by the generally applicable accrual-based statutes of limitations for negligence and breach of contract. See Terry, 1982-NMSC-047, ¶ 17. Resolving Plaintiffs' contention necessarily involves two determinations: first, we must identify the date the cause of action accrued, and second, we apply the Terry analysis to determine whether the time remaining between the accrual date and the expiration of the statutory period was unreasonably short.
{10} The parties seem to agree that the cause of action in this case accrued when Plaintiffs discovered the injury to the property. See NMSA 1978, § 37-1-7 (1880) (). "The key consideration under the discovery rule is the factual, not the legal, basis for the cause of action." Christus St. Vincent Reg'l Med. Ctr. v. Duarte-Afara, 2011-NMCA-112, ¶ 29, 267 P.3d 70 (internal quotation marks and citation omitted). Thus, discovery occurs—and the cause of action accrues—"whenthe plaintiff knows or should know the relevant facts, whether or not the plaintiff also knows that these facts are enough to establish a legal cause of action." Id. (internal quotation marks and citation omitted). When conflicting inferences can be drawn, the application of the discovery rule is a jury question. Williams v. Stewart, 2005-NMCA-061, ¶ 16, 137 N.M. 420, 112 P.3d 281.
{11} The basis for the complaint is that Defendant improperly specified that the footings of the home were to bear on undisturbed soil, causing and contributing to heaving. It is undisputed that Plaintiffs had actual knowledge of the damage to the slab as well as its potential cause—unstable soils—by the end of July 2010. As early as June 22, 2010, Plaintiffs indicated in documents related to the purchase of the property that they were aware of "cracking and heaving in the garage area[.]" Shortly thereafter they disclosed to the structural engineer that the home inspection uncovered heaving in the garage slab and cracking in some adjacent walls. The engineer's subsequent report to Plaintiffs, dated July 8, 2010, confirmed that "[t]he garage slab ha[d] heaved and separated specifically at the...
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