Shell v. Schollander Cos.

• Decision Date: 24 September 2014
• Docket Number: C106480CV,A150509.
• Citation: 265 Or.App. 624,336 P.3d 569
• Parties: Melissa SHELL, an individual, Plaintiff–Appellant, v. THE SCHOLLANDER COMPANIES, INC., dba Schollander Development Company, Defendant–Respondent. The Schollander Companies, Inc., dba Schollander Development Company, an Oregon corporation, Third Party Plaintiff, v. Kustom Built Construction, LLC, an Oregon limited liability company; HL Stucco Systems, Inc., an Oregon corporation; Newside, Inc., an Oregon corporation; Westurn Cedar, Inc., an Oregon corporation; and J & R Gutter Services, Inc., an Oregon corporation, Third Party Defendants.
• Court: Oregon Court of Appeals

265 Or.App. 624

336 P.3d 569

Melissa SHELL, an individual, Plaintiff–Appellant

v.THE SCHOLLANDER COMPANIES, INC., dba Schollander Development Company, Defendant–Respondent.

The Schollander Companies, Inc., dba Schollander Development Company, an Oregon corporation, Third Party Plaintiff

v.Kustom Built Construction, LLC, an Oregon limited liability company; HL Stucco Systems, Inc., an Oregon corporation; Newside, Inc., an Oregon corporation; Westurn Cedar, Inc., an Oregon corporation; and J & R Gutter Services, Inc., an Oregon corporation, Third Party Defendants.

C106480CV

A150509.

Court of Appeals of Oregon.

Argued and Submitted on Sept. 18, 2013.

Decided Sept. 24, 2014.

Christopher C. Grady, Portland, argued the cause for appellant. With him on the briefs were Kevin A. Eike and Aldrich Eike, P.C.

Paul E. Sheely, Portland, argued the cause for respondent. With him on the brief was Stephen E. Archer.

Before DUNCAN, Presiding Judge, and WOLLHEIM, Judge, and SCHUMAN, Senior Judge.

Opinion

SCHUMAN, S.J.

This is a construction defect case brought by a homeowner alleging that water intrusion damage resulted from the negligence of defendant, the general contractor who built the house and from whom plaintiff bought it. The trial court granted defendant's motion for summary judgment on the ground that plaintiff did not initiate this action within the 10–year statute of repose required by ORS 12.115, which begins to run from the time of “the act or omissions complained of.” On appeal, plaintiff argues that the court erred in applying that statute; the correct statute, she maintains, is ORS 12.135, which begins to run at the time of “substantial completion,” which, she maintains, occurred later than “the act or omission complained of.” In the alternative, she argues that, even if ORS 12.115 is the applicable statute of repose, the court erred in granting summary judgment to defendant, because there are disputed issues of material fact regarding when, exactly, the “acts or omissions complained of occurred. We affirm.

We will affirm the trial court's ruling granting defendant's motion for summary judgment if there is no genuine issue of material fact and defendant was entitled to judgment as a matter of law. ORCP 47 C. There is no genuine issue of material fact if, based on the record before the court viewed in a manner most favorable to the nonmoving party, here plaintiff, no objectively reasonable juror could return a verdict for the adverse party on the matter that is the subject of the motion for summary judgment. Id.; See Jones v. General Motors Corporation, 325 Or. 404, 408, 939 P.2d 608 (1997). If there is no issue of material fact in dispute, we review the trial court's ruling for errors of law. Oregon Southwest, LLC v. Kvaternik, 214 Or.App. 404, 413, 164 P.3d 1226 (2007), rev. den., 344 Or. 390, 181 P.3d 769 (2008).

Here, the relevant facts are undisputed (although, as we explain below, the parties disagree about the characterization of those facts and their legal significance). In 1999, defendant began constructing a house on property it owned in Washington County. At that time, defendant intended to sell the house but had not identified a prospective purchaser of the house and property. However, in May 2000, before defendant finished the house, plaintiff decided to buy it. Before the end of that month, the parties signed a document captioned “Real Estate Sale Agreement,” including several “addenda” requiring defendant to replace some already-installed floor coverings (tile and carpet) with ones chosen by plaintiff, to install certain closet doors, to plumb a utility room to accommodate a gas dryer, to conduct a “walk-thru” inspection, and to “remedy deficiencies prior to closing.” On June 22, 2000, defendant recorded a Notice of Completion, and the county issued a Certificate of Occupancy seven days later. By that time, the outside shell of the house—that is, the portion of the house that plaintiff alleges was negligently constructed—was substantially completed. Defendant conducted the “walk-through” on July 5, 2000, and two days later, on July 7, agreed to make some minor repairs to the house's stucco. The purchase closed on July 12, 2000. Plaintiff served a Notice of Defect on defendant, pursuant to ORS 701.565, on June 25, 2010.

The dispute centers on which statute of repose applies to these facts. Plaintiff argues in favor of ORS 12.135 :

“(1) An action against a person by a plaintiff who is not a public body, whether in contract, tort or otherwise, arising from the person having performed the construction, alteration or repair of any improvement to real property or the supervision or inspection thereof * * * must be commenced before * * *:

“ * * * * *

“(b) Ten years after substantial completion or abandonment of the construction, alteration or repair of a residential structure * * *.

“ * * * * *

“(4) For purposes of this section:

“ * * * * *

“(b) ‘Substantial completion’ means the date when the contractee accepts in writing the construction, alteration or repair of the improvement to real property or any designated portion thereof as having reached that state of completion when it may be used or occupied for its intended purpose or, if there is no such written acceptance, the date of acceptance of the completed construction, alteration or repair of such improvement by the contractee.”

(Emphasis added.) According to plaintiff, “substantial completion” occurred, at the earliest, on June 26, 2000, when she accepted a written warranty from defendant covering construction defects.¹ The action was “commenced,” she argues, on June 25, 2010, when she sent a Notice of Defect to defendant; the action, she concludes, was therefore within the limitation period by at least one day.

Defendant, however, argues that the trial court correctly identified ORS 12.115(1) as the applicable statute of repose. That statute provides, “In no event shall any action for negligent injury to person or property of another be commenced more than 10 years from the date of the act or omission complained of. ” (Emphasis added.) According to defendant, the “act or omission complained of was (allegedly) the negligent construction of the outside shell or envelope of the house, and that action necessarily occurred before the notice of completion, that is, before June 22, 2000. The action was commenced, at the earliest, more than 10 years later, when plaintiff sent defendant a Notice of Defect on June 25, 2010.²

As noted above, the trial court agreed with defendant and granted its motion for summary judgment.³

On appeal, the parties initially focus on Lozano v. Schlesinger, 191 Or.App. 400, 84 P.3d 816 (2004). In that case, the defendant built a home for himself and lived in it for five years. At that point, he put it on the market and sold it to the plaintiff, who subsequently found what he believed to be construction defects. Id. at 402, 84 P.3d 816. The plaintiff then initiated an action against the defendant, who argued that the action was time barred by ORS 12.135. The trial court agreed with the defendant and granted his motion for summary judgment. Id. at 402–03, 84 P.3d 816. We reversed, holding that ORS 12.135 did not apply; we reasoned that, under subparagraph (4)(b), that statute applied only if there is a “contractee,” who accepts in writing a completed construction contract, and the plaintiff did not qualify as such a person. Id. at 405, 84 P.3d 816.

“The phrasing of the statute * * * suggests that, consistently with the common usage of the term ‘contractee,’ the statute was intended to apply when the recipient of services under a construction contract accepts in writing the completion of those services.

“ * * * * *

“[I]t is undisputed that there was no written acceptance of the services of a contractor by a ‘contractee’ within the meaning of the statute. [The defendant] built his own house and then moved into it. ORS 12.135 does not apply, and the trial court erred in reaching a contrary conclusion.”

Id. Therefore, “[p]lainly, the targets of the statute are claims that arise out of negligent performance of construction contracts.”

Defendant acknowledges that it had a contract with plaintiff; however, it focuses on the court's statements that “the statute was intended to apply when the recipient of services under a construction contract,” and “the targets of the statute arise out of negligent performance of construction contracts.” (Emphasis added.) According to defendant, the contract in this case was not a contract involving construction services; it was a purchase and sale agreement. Citing Sunset Presbyterian Church v. Brockamp & Jaeger, Inc., 254 Or.App. 24, 32–33, 295 P.3d 62 (2012), rev'd on other grounds, 355 Or. 286, 325 P.3d 730 (2014), defendant argues that the legislative history of ORS 12.135 supports its reading of Lozano; the court in Sunset Presbyterian Church noted that “[t]he proponents of ORS 12.135 told the legislature that the repose period under the statute would run from the date on which a general contractor transfers control of a completed improvement to the person who had contracted for its construction. ” 254 Or.App. at 32, 295 P.3d 62 (emphasis added).

Plaintiff, for her part, also advances arguments derived from Lozano. First, she argues that Lozano establishes that ORS 12.135 applies to construction defect claims brought by a “contractee,” and that she is one. She bases that argument on the fact that she and defendant did, in fact, have a contract, albeit not a construction contract. She asserts that, although Lozano uses the term “construction contract,” the type of contract was not an issue in that case; rather, the issue was only whether a contractor who builds and then occupies a house can be in a “contractor-contractee” relationship with himself. Second, she notes that, by virtue of a 2009 amendment to ORS 12.135, the statute “[a]pplies to an action against a manufacturer, distributor, seller or lessor of a manufactured...