Colormatch Exteriors, Inc. v. Hickey

• Decision Date: 10 June 2002
• Docket Number: No. S01G1063., No. S01G1036
• Citation: 275 Ga. 249,569 S.E.2d 495
• Parties: COLORMATCH EXTERIORS, INC. v. HICKEY et al. Bowden et al. v. Hickey et al.
• Court: Georgia Supreme Court

569 S.E.2d 495

275 Ga. 249

COLORMATCH EXTERIORS, INC. v. HICKEY et al.

Bowden et al. v. Hickey et al.

Nos. S01G1036, S01G1063.

Supreme Court of Georgia.

June 10, 2002.

Drew, Eckl & Farnham, Hall F. McKinley III, Andrew D. Horowitz, Atlanta, for Colormatch Exteriors.

Weisenbaker & Brooks, Eugene C. Brooks IV, Russell M. Stookey, Savannah, for Hickey et al.

McCorkle, Pedigo & Johnson, David H. Johnson, Savannah, Amy E. Edgy, New York City, for Bowden et al.

Holland & Knight, Frank O. Brown, Jr., Atlanta, amicus curiae.

CARLEY, Justice.

In early April of 1995, David V. Bowden, Kevin Mathews, Mathews Home Builders, Inc., and Mathews Custom Homes, Inc. (Builders) finished construction of a house for which they did not yet have a buyer. On April 26, 1995, the Chatham County Building Inspections Department completed its inspection process and, in July, 1995, issued a certificate of occupancy. Builders then conveyed the property to David and Kimberly Hickey (Plaintiffs). After Plaintiffs discovered moisture damage under the house's synthetic stucco cladding, they brought suit on April 26, 1999 against Builders and the manufacturer of the synthetic stucco, Colormatch Exteriors, Inc. (Appellants). Plaintiffs asserted products liability claims as to Colormatch and, with respect to Builders, alleged negligent construction breach of warranty, and negligent misrepresentation. The trial court granted summary judgment in favor of Appellants on the ground that the applicable statutes of limitation had expired. The Court of Appeals reversed, concluding that the trial court should have applied the six-year limitation period for contract actions to the claim for breach of implied warranty, and that the four-year statute of limitations for damage to realty did not preclude the remaining tort, fraud, and products liability claims. Hickey v. Bowden, 248 Ga.App. 647, 548 S.E.2d 347 (2001). The rationale for the latter conclusion was that the earliest date on which the house could be deemed substantially completed, so as to start the four-year period, was the date on which the certificate of occupancy was issued, at which time the house could be occupied legally. Hickey v. Bowden, supra at 650(2), 548 S.E.2d 347. In order to consider this holding, we granted certiorari in Case Number S01G1036 as to Colormatch and in Case Number S01G1063 as to Builders. We conclude that in those circumstances where, as here, a contractor makes improvements to his own real property for the express purpose of sale and the property actually is sold, the applicable period of limitations for claims of damage to realty does not begin to run until the initial sale of the improved property, regardless of the date of "substantial completion." However, the limitations period begins to run against the manufacturer of materials necessary for the improvement on the date of substantial completion, which we hold is not dependent on the issuance of a certificate of occupancy. Accordingly, we reverse the judgment of the Court of Appeals in Case Number S01G1036, but affirm in Case Number S01G1063 under the "right for any reason" principle. See Dental One Assoc. v. JKR Realty Assoc., 269 Ga. 616, 617, 501 S.E.2d 497 (1998). 1. The statute of limitations which is applicable to Plaintiffs' tort claims, including their products liability claims, is found in OCGA § 9-3-30(a). Corporation of Mercer Univ. v. Nat. Gypsum Co., 258 Ga. 365, 366(1), 368 S.E.2d 732 (1988); Mitchell v. Contractors Specialty Supply, 247 Ga.App. 628, 629, 544 S.E.2d 533 (2001); Mitchell v. Jones, 247 Ga.App. 113, 115(2), 541 S.E.2d 103 (2000); Hanna v. McWilliams, 213 Ga.App. 648, 649(2)(a), 446 S.E.2d 741 (1994). Compare OCGA § 9-3-30(b) (providing a special rule for synthetic stucco causes of action which do not expire before March 28, 2000); Daniel v. American Optical Corp., 251 Ga. 166, 167(1), 304 S.E.2d 383 (1983). OCGA § 9-3-30(a) provides that "[a]ll actions for trespass upon or damage to realty shall be brought within four years after the right of action accrues." See Daniel v. American Optical Corp., supra at 168(1), 304 S.E.2d 383 (the similar language of OCGA § 9-3-33 demonstrates that the scope of its application "is determined by the nature of the injury sustained rather than the legal theory underlying the claim for relief").

By its terms, the four-year time period established in OCGA § 9-3-30(a) only began running when Plaintiffs' rights of action in tort accrued. For statute of limitations purposes, the general rule for determining the time a cause of action accrues is well-settled in Georgia. "The true test to determine when a cause of action accrues is to ascertain the time when the plaintiff could first have maintained [his or] her action to a successful result. [Cit.]" Travis Pruitt & Assoc. v. Bowling, 238 Ga.App. 225, 226(1), 518 S.E.2d 453 (1999). Thus, Plaintiffs could have no cause of action for damage to the property under the theories of negligence and strict liability before they incurred some damage. OCGA §§ 51-1-8, 51-1-11(b)(1); Travis Pruitt & Assoc. v. Bowling, supra at 226(1), 518 S.E.2d 453. Damage to property arising out of construction is generally considered to occur at the time of the defendant-contractor's "substantial completion" of the project, because damages usually become immediately ascertainable to the plaintiff-owner at that time. Corporation of Mercer Univ. v. Nat. Gypsum Co., supra at 366(1), 368 S.E.2d 732; Travis Pruitt & Assoc. v. Bowling, supra at 226(1), 518 S.E.2d 453; Hanna v. McWilliams, supra at 649(2)(a), 446 S.E.2d 741. The issue presented for resolution is whether this general rule of "substantial completion" is applicable under the circumstances presented in this case.

Case Number S01G1063

2. Whatever the date of substantial completion, it occurred before title to the property was conveyed to the Plaintiffs. In the suit against Builders, the issue is whether Plaintiffs' rights of action nevertheless accrued upon substantial completion of the house even though Builders were still the owners of the property at that time. Travis Pruitt appropriately distinguishes cases involving "alleged negligent design and construction of the plaintiff's own property. [Cits.]" Travis Pruitt & Assoc. v. Bowling, supra at 226(1), 518 S.E.2d 453. If the owner contracts with a builder and intends to retain the improved property after completion of the project, he can maintain an action against the contractor immediately upon substantial completion of the allegedly negligent construction and, thus, there is no question that the statute of limitations begins to run at that time. In such a case, the plaintiff is the owner of the property at the time of substantial completion. Where, however, the contractor is a developer who still owns the property at the time of substantial completion, he obviously cannot maintain an action for negligent construction or misrepresentation against himself. If the new house was constructed by an owner-builder for the purpose of sale and the property actually is sold, then the only persons who are injured by any negligence of the builder and who can successfully maintain an action therefor are the purchaser and his successors. With respect to Builders, this case is analogous to Travis Pruitt, where the plaintiff owned only the neighboring property and could not have successfully maintained an action until the adjoining defective property first caused damage to her own property. Thus, the statute only began to run on the tort claims against Builders on the date that Plaintiffs bought the property. They filed suit within that four-year period. However, if, without bringing suit, Plaintiffs had sold their house more than four years after purchasing it, that conveyance would not have revived the cause of action and their grantee could not maintain an action. U-Haul Co. v. Abreu & Robeson, Inc., 247 Ga. 565, 567, 277 S.E.2d 497 (1981). See also Armstrong v. Royal Lakes Assoc., 232 Ga.App. 643, 644(1), 502 S.E.2d 758 (1998). Where, as here, however, the purchaser of new construction or his successor brings suit against the builder-seller within four years of the date of sale, the statute of limitations does not bar the action. Rosenheimer v. Tidal Constr. Co., 250 Ga.App. 145, 146(1), 550 S.E.2d 698 (2001) is overruled to the extent that it followed the Court of Appeals' decision in the instant case as to Builders.

Various circumstances may delay the sale of property by a developer and cause a corresponding delay in the accrual of tort claims for damage to realty. However, the General Assembly has provided for such an eventuality by enacting statutes of ultimate repose. The purpose of these statutes "`is to impose an outside limit on the bringing of lawsuits which are otherwise brought within the applicable statutory period after the action has accrued. [Cit.]'" Armstrong v. Royal Lakes Assoc., supra at 645(1), 502 S.E.2d 758. Statutes of repose apply "regardless of when the injury occurs or, indeed, whether a cause of action has accrued at all prior to the expiration of the period. [Cit.]" Hanna v. McWilliams, supra at 651(3), 446 S.E.2d 741. OCGA § 9-3-51 establishes a reasonable outside time limit beyond which builders are insulated from liability. See Gwinnett Place Assoc. v. Pharr Engineering, 215 Ga.App. 53, 55(1)(a), 449 S.E.2d 889 (1994). This statute of repose can commence to run against the purchaser of new construction "even before [he] acquires legal title to the real property which is the subject of the deficient improvement...." (Emphasis in original.) Hanna v. McWilliams, supra at 651(3), 446 S.E.2d 741. However, the outside time limit of that statute was not reached here. Accordingly, the Court of Appeals' reversal of the grant of Builders' motion for summary judgment is affirmed.

Case Number S01G1036

3. Our analysis is entirely different with regard to Colormatch. Prior...