VIII. Statute of Limitations

Common Law (6 years from completion).

In a contract action based upon a warranty to construct a house in a workmanlike manner, claims must be brought within 6 years of when the builder completes performance. Mitchell v. Richmond, 754 So.2d 627 (Ala.1999); Kelly v. Alexander, 554 So.2d 343, 345 (Ala. 1989); Stephens v. Creel, 429 So.2d 278 (Ala. 1983); Sims v. Lewis, 374 So.2d 298 (Ala. 1979) (“in no event, however, would the time limitations in which to file suit for implied warranty extend behind the period allow for filing suit on express warranty of six years.”).

Statutory (2 years from discovery of problems).

In February of 1994 the Alabama Legislature adopted a new statute related to civil actions against builders, architects or engineers. Ala. Code § 6-5-221 (1975). That statute stated that claims must be brought within two years from when the cause of action accrued. Ala. Code § 6-5-221 (1975). Under the statute, a cause of action is deemed to accrue, or arise, where the damage is latent “at the time the damage or injury is or in the exercise of reasonable diligence should have been first discovered, whichever is earlier.” Id. at § 6-5-220(e). Therefore, the cause of action commences at “the time of discovery — thereby applying for the first time to both these tort and contractual actions, the so-called ‘discovery rule.'” Id. at § 6-5-225. Additionally, the statute was revised in 2011 to bar any action filed more than 7 years after the cause of action accrues.

Regarding builders, the statute only applies to those who, at the time of construction, were licensed as a general contractor in the State of Alabama. Id. at § 6-5-220 (a). Additionally, the statute only applies to construction done pursuant to architectural or engineering plans. Id. at § 6-5-221 (a).

Estoppel

Statute of limitation issues in construction projects sometimes involve the question of whether the plaintiff is estopped from asserting the statute of limitations because the contractor somehow induced the plaintiff not to file suit. Only certain actions trigger estoppel. Generally, “the mere entry into or continuation of negotiations” does not toll the statute of limitations. Page v. Hale, 472 So.2d 634, 636 (Ala. 1985). “[T]he type of conduct which is sufficient to give rise to an estoppel against pleading the statute of limitations must amount to an affirmative inducement to the claimant to delay bringing action.” Seybold v. Magnolia Land Co., 376 So.2d 1083, 1085 (Ala. 1979) (emphasis added). Specifically, one can be estopped from asserting the statute of limitations as a defense when he “intentionally or fraudulently misrepresents or conceals information, or specifically states that there is no need to file a lawsuit because he intends to remedy the problem. . . ” See City of Birmingham v. Cochrane Roofing & Metal Co., Inc., 547 So.2d 1159, 1168 (Ala. 1989) (emphasis added).

The court in Cochrane Roofing, 547 So.2d at 1167 considered an estoppel claim in the construction industry and stated:

[I]f these equitable principles were taken to their limits they could yield ridiculous results that would, in effect, negate the statute of limitations. For instance, in the construction industry it is conceivable that an owner and an architect could continue some form of working relationship for ten or more years after a building was certified to be complete. If estoppel prevented the assertion of the statute of limitations as a defense, then the owner could file suit many years after the contract was completed, claiming that he was unsatisfied with the initial design or construction, but that he had been “induced” not to file suit during the years that the architect was either consulting with him or making repairs. Clearly, estoppel was not meant to defeat the statute of limitations defense in every case where a defendant attempts to remedy problems that might otherwise lead to a lawsuit.

There are also public policy concerns we must consider in determining whether to apply estoppel in the manner the [plaintiff] suggests. It makes good business sense to maintain a client’s goodwill by assisting him in any way possible, even after the formal contractual relationship has ended. If the statute of limitations defense was defeated as to claims regarding the initial design or construction every time an architect or contractor assisted a client after its performance pursuant to the contract was completed, then the architect or contractor would have no incentive to assist the owner with any subsequent business problems; to do so would only extend its liability.

Id. at 1168 (rejecting plaintiff’s argument that limitations period did not begin to run as long as the defendant “continued to assist the [plaintiff] in repairing the roof”).