Colony Hill Condominium I Ass'n v. Colony Co.

320 S.E.2d 273 (1984)

COLONY HILL CONDOMINIUM I ASSOCIATION, Colony Hill Condominium I, Board of Directors of Colony Hill Condominium I Association, Larry Ferrell, Jennie B. Ferrell, Joel Puleo, Ellen Puleo, Christine A. Long, Judith I. Woodburn, Mary A. Brown, Donald P. Vandayburg, Dorothy Vandayburg, U.S. Fire Insurance Company, Crum & Forster Insurance Group, Quincy Mutual Fire Insurance Company, North River Insurance Company
v.
COLONY COMPANY, A Partnership; Fred J. Herndon, William C. Spann, Individually, and T/A Herndon Construction Company; Martin Stamping and Stove Company; Martin Industries, Inc.; Herndon Building Company.

No. 8314SC1071.

Court of Appeals of North Carolina.

September 18, 1984.

Haywood, Denny & Miller by Stewart W. Fisher, Durham, for plaintiffs-appellants.

Moore, Ragsdale, Liggett, Ray & Foley by Peter M. Foley and Nancy D. Fountain, Raleigh, for defendants-appellees Martin Stamping and Stove Company and Martin Industries, Inc.

Spears, Barnes, Baker & Hoof by John C. Wainio and Craig B. Brown, Durham, for defendants-appellees Colony Co., Fred J. Herndon, William C. Spann, Herndon Const. Co. and Herndon Building Co.

ARNOLD, Judge.

The primary issue on appeal is whether the trial court properly granted summary judgment against the plaintiffs on the grounds that their claims are barred by statutes of repose, G.S. 1-50(5) and G.S. 1-50(6). Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Vassey v. Burch, 301 N.C. 68, 72, 269 S.E.2d 137, 140 (1980). Whether a statute of repose has expired is strictly a legal issue, Lamb v. Wedgewood South Corp., 308 N.C. 419, 425, 302 S.E.2d 868, 871-72 (1983), and if the pleadings or proof show without contradiction that it has expired, then summary judgment may be granted.

1. Plaintiffs' Claims Against the Defendant-Builders

Plaintiffs contend that the present version of G.S. 1-50(5), effective 1 October 1981, applies to their negligence claims. This statute provides generally that:

No action to recover damages based upon or arising out of the defective or unsafe condition of an improvement to real property shall be brought more than six years from the later of the specific last act or omission of the defendant giving rise to the cause of action or substantial completion of the improvement. G.S. 1-50(5)(a).

Subsection (e) of the statute prevents any person guilty of wilful or wanton negligence in constructing an improvement to real property from asserting the six-year limit on actions arising out of the improvement. Plaintiffs argue that defendant-builders were guilty of such wilful and wanton behavior and therefore may not plead the statute of repose.

The statute of repose applicable to plaintiffs' claims, however, is not the present version of G.S. 1-50(5), but the version effective from 1963 until 1 October 1981 ("the 1963 statute"). See 1963 N.C.Sess. Laws c. 1030. That statute provided, in pertinent part:

(5) No action to recover damages for any injury to property, real or personal, or for an injury to the person, or for bodily injury or wrongful death, arising out of the defective and unsafe condition of an improvement to real property, nor any action for contribution or indemnity for damages sustained on account of such injury, shall be brought against any person performing or furnishing the design, planning, supervision of construction or construction of such improvement to real property, more than six (6) years after the performance or furnishing of such services and construction.

It had no exception preventing defendants guilty of wilful and wanton negligence from invoking the six-year time limit.

Under the 1963 statute, the plaintiffs' negligence claims were barred in 1979. The record shows that construction of Building 3062 of the Colony Hill Condominiums was completed, at the latest, by December, 1973. Under the 1963 statute, then, plaintiffs had until December, 1979 to bring an action against the defendant-builders. They did not commence an action until 21 December 1981. The 1963 statute therefore barred their action nearly two years prior to passage of the 1981 statute of repose, and almost exactly two years before they brought suit. The 1963 statute, again, had no exception for wilful and wanton negligence.

The plaintiffs argue that the 1981 statute, with its subsection (e), operates retrospectively to revive plaintiffs' negligence claims. Once the 1963 statute of repose barred the plaintiffs' suit, however, a subsequent statute could not revive it. See McCrater v. Stone & Webster Engineering Co., 248 N.C. 707, 104 S.E.2d 858 (1958). A statute of repose, unlike an ordinary statute of limitations, defines substantive rights to bring an action. See Bolick v. American Barmag Corp., 306 N.C. 364, 368, 293 S.E.2d 415, 418 (1982). Filing within the time limit prescribed is a condition precedent to bringing the action. See McCrater, 248 N.C. at 709, 104 S.E.2d 858. Failure to file within that period gives the defendant a vested right not to be sued. McCrater, 248 N.C. at 709-10, 104 S.E.2d 858. Such a vested right cannot be impaired by the retroactive effect of a later statute. Id.

In enacting the statute of repose G.S. 1-50(5), the legislature defined a liability of limited duration. Once the time limit on the plaintiffs' cause of action expired, the defendants were effectively "cleared" of any wrongdoing or obligation. If we were to find that a later version of G.S. 1-50(5) operates retrospectively, then it must revive a liability already extinguished, and not merely restore a lapsed remedy. See Danzer v. Gulf & Ship Island Railroad Co., 268 U.S. 633, 637, 45 S. Ct. 612, 613, 69 L. Ed. 2d 1126 (1925); cf. Campbell v. Holt, 115 U.S. 620, 6 S. Ct. 209, 29 L. Ed. 483 (1885). Such a revival of the defendants' liability to suit, long after they have been statutorily entitled to believe it does not exist, and have discarded evidence and lost touch with witnesses, would be so prejudicial as to deprive them of due process, see Danzer v. Gulf & Ship Island Railroad Co., 268 U.S. 633, 45 S. Ct. 612, 69 L. Ed. 1126 (1925); In re Alodex Corp. Securities Litigation, 392 F. Supp. 672, 680-81 (S.D. Iowa 1975). While we are sympathetic with the plaintiff condominium owners, who find that the statute of repose barred their claims even before injury occurred, we cannot let our sympathies lead us to construe the statute so as to place an unconstitutional burden on the defendant-builders.

Plaintiffs also contend that their cause of action is not barred by the statute of repose because defendants Fred Herndon and the Colony Company retained an ownership interest until 1977, thereby causing them to have a continuing duty to all owners until that date. Plaintiffs claim that they had until 1983, six years from the date defendants relinquished all ownership interest, to bring this action. In support of their contention, plaintiffs have submitted three deeds, one of which shows that defendants conveyed one of the units to its current owner in 1977. However, as the fire in question occurred in a structure entirely separate from that which contained the unit transferred in the 1977 deed, we find this conveyance to be irrelevant. In fact, from the deeds submitted, it appears that the latest date by which defendants could be charged with retaining an ownership interest in a unit located in the damaged building would be 22 January 1974. By this deed the six-year statute of repose would be tolled on 22 January 1980, still nearly two years before this action was filed.

The evidence submitted by plaintiffs shows that defendant-builders had no continuing interest in the condominium units where the fire occurred and, therefore, had no continuing duty to other owners. The case of North Carolina State Ports Authority v. L.A. Fry Roofing Co., 294 N.C. 73, 240 S.E.2d 345 (1978), is not applicable to the case at bar. We hold that the trial court did not err in granting summary judgment on the negligence claims against the defendant-builders, as the action was barred by G.S. 1-50(5).

The plaintiffs' warranty claims against the defendant-builders are also covered by the statute of repose in that they are essentially actions to recover for damages to real property and arose out of "the defective and unsafe condition" of the condominium construction. They are therefore barred under the same analysis as above.

2. Plaintiffs' Claims Against the Defendant-Manufacturers

Plaintiffs allege an array of claims against the defendant-manufacturers of the prefabricated fireplace. These include claims of breach of implied warranty of merchantability, breach of implied warranty of fitness for a particular purpose, breach of express warranty, and negligence in design of the fireplace and in failure to warn. We find that these claims all are subject to G.S. 1-50(6):

No action for the recovery of damages for personal injury, death or damage to property based upon or arising out of any alleged defect or any failure in relation to a product shall be brought more than six years after the date of initial purchase for use or consumption. (Emphasis added).

All the plaintiffs' claims against the defendant-manufacturers are for damage to property and are either "based upon" or "arise out of" an alleged defect or failure in relation to a product, the prefabricated fireplace. The generality of the language in Section 1-50(6) indicates that the legislature intended to cover the multiplicity of claims that can arise out of a defective product. See generally Reid v. Eckerds Drugs, Inc., 40 N.C.App. 476, 253 S.E.2d 344 (1979), for a discussion of the relation between these various claims.

Section 1-50(6) became effective on 1 October 1979. It had retroactive effect upon claims which had not accrued (or had not been barred) by the date it went into effect. See Bolick v. American Barmag Corp., 306 N.C. 364, 293 S.E.2d 415 (1982). The plaintiffs' claims had not accrued by 1 October 1979 because, as they assert, the defects in the prefabricated fireplace were hidden; the cause of action for the defect did not accrue until the defect became obvious, which in this case was the time of injury, 20 December 1979. Under Section 1-50(6), then, since the fireplace was purchased for use during the period 25 January 1973 to 27 September 1973, the plaintiffs' potential claims for damages arising out of a defect in it were barred at the latest in September 1979.

3. Constitutionality of the Repose Statutes

Plaintiffs contend that G.S. 1-50(6) is unconstitutional. In Lamb v. Wedgewood South Corp., 308 N.C. 419, 302 S.E.2d 868 (1983), the North Carolina Supreme Court found G.S. 1-50(5) constitutional. This analysis applies to G.S. 1-50(6) as well, in that both are statutes of repose.

The decision of the trial court entering summary judgment in favor of all defendants is

Affirmed.

WHICHARD and EAGLES, JJ., concur.