Horning v. Penrose Plumbing & Heating Inc.

IN THE SUPREME COURT, STATE OF WYOMING
2014 WY 133
OCTOBER TERM, A.D. 2014
October 28, 2014
RICHARD A. HORNING and MARY D.
HORNING,
Appellants
(Plaintiffs),
S-14-0067
v.
PENROSE PLUMBING & HEATING
INC.,
Appellee
(Defendant).
Appeal from the District Court of Campbell County
The Honorable William J. Edelman Judge
Representing Appellants:
Ryan W. McGrath and J. David Horning of Cox, Horning & McGrath, LLC,
Gillette, Wyoming. Argument by Mr. McGrath.
Representing Appellee:
Monty L. Barnett and Grant R. Curry of White and Steele, P.C., Denver,
Colorado. Argument by Mr. Curry.
Before BURKE, C.J., and HILL, KITE, DAVIS, and FOX, JJ.
KITE, J., delivers the opinion of the Court; FOX, J., delivers a dissenting opinion, in
which DAVIS, J., joins.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third.
Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building,
Cheyenne, Wyoming 82002, of typographical or other formal errors so correction may be made
before final publication in the permanent volume.
KITE, Justice.
[¶1] Richard A. and Mary D. Horning (Hornings) sustained damages from carbon
monoxide poisoning after an exhaust pipe in the furnace in their home ruptured. They
filed a complaint against Penrose Plumbing & Heating, Inc. (Penrose) and others to
recover damages for their injuries. The district court granted summary judgment for
Penrose after concluding the Hornings did not file their complaint within the applicable
ten year statute of repose. The Hornings appealed from the order dismissing their claim,
asserting the district court misinterpreted the statute of repose. We reverse.
ISSUE
[¶2] The issue for our determination is when the statute of repose contained in Wyo. Stat.
Ann. § 1-3-111 (LexisNexis 2013) begins to run.
FACTS
[¶3] Mill Iron Partners, LLC, (Mill Iron) was a real estate developer in northeastern
Wyoming. In 2001, Mill Iron began development of property located in Gillette,
Wyoming. The project involved construction of three condominium units. Mill Iron
hired Woodcraft, Inc. (Woodcraft) as the project manager. In that capacity, Woodcraft
was responsible for supervising construction of the condominiums. Woodcraft
subcontracted with Penrose to install heating, ventilation and air conditioning (HVAC)
systems, including gas forced air furnaces and duct work, in each of the units.
[¶4] Penrose completed the installation of the HVAC system in August of 2001.
According to Mill Iron and Woodcraft, the condominium was substantially completed in
early 2002. However, Mill Iron did not pay the water tap fee required for the city to do
the final inspections and issue a certificate of occupancy until August of 2003, eighteen
months later. The Hornings purchased one of the condominium units in 2004.
[¶5] In January of 2012, eight years after they purchased the unit, the Hornings awoke to
extreme cold temperatures. They had headaches and shortness of breath and were
confused and disoriented. They called an HVAC technician who came to the home,
inspected the system and found a rupture in the exhaust pipe. He expressed concern that
the Hornings had been exposed to carbon monoxide. Later, they were diagnosed with
having sustained severe carbon monoxide poisoning.
[¶6] In 2012, the Hornings filed a complaint against Mill Iron, Woodcraft and Penrose
alleging they were negligent in the course of constructing the home. Specifically, they
alleged Penrose had installed the HVAC system with the owner’s manual and installation
instructions wedged inside the exhaust pipe, which obstructed the flow of exhaust gases
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and eventually caused the pipe to rupture, releasing carbon monoxide into the home. Mill
Iron and Woodcraft settled the claims against them and were dismissed from the lawsuit.
[¶7] In its answer, Penrose admitted that it installed the HVAC system in the Hornings’
home but denied any negligence. As an affirmative defense, Penrose asserted the
Hornings’ claims were barred by operation of § 1-3-111, the statute of repose which
requires claims for alleged defective or unsafe conditions relating to improvements to real
property to be brought within ten years of substantial completion of the improvement.
Penrose filed a motion for summary judgment arguing that the claims against it must be
dismissed pursuant to § 1-3-111 because they were not brought within ten years after
Penrose completed its work on the HVAC system. Penrose submitted evidence showing
it had completed the construction and installation of the HVAC system in August of
2001, eleven years before the Hornings filed their complaint.
[¶8] In response, the Hornings argued the ten year statute of repose did not begin to run
until construction of the condominium was sufficiently completed such that they could
utilize the home and, correspondingly, the furnace, for the purposes for which they were
intended. The Hornings asserted no one was able to utilize the condominium and furnace
until the city issued a certificate of occupancy in August of 2003. Because they filed
their complaint in November 2012, nine years after the city issued the certificate, they
asserted it was timely.
[¶9] After a hearing, the district court granted Penrose’s motion for summary judgment.
The district court concluded the ten year statute of repose found in § 1-3-111 begins to
run when an improvement to real property is completed to a point where an owner can
utilize the improvement, not when the entire project is complete. Because Penrose
completed the HVAC system in 2001, the district court concluded the Hornings’
complaint filed eleven years later was untimely. The Hornings timely appealed from the
district court’s order.
STANDARD OF REVIEW
[¶10] The Hornings assert the district court erred in interpreting the applicable statute of
repose as beginning to run when installation of the furnace was completed and granting
summary judgment for Penrose. We review district court interpretations of statutory
provisions and summary judgment orders de novo. City of Cheyenne v. Bd. of County
Comm’rs of Laramie Co., 2012 WY 156, ¶ 4, 290 P.3d 1057, 1058 (Wyo. 2012).
DISCUSSION
[¶11] The statute of repose at issue here provides in pertinent part as follows:
§ 1-3-110. “Substantial completion” defined.
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As used in this act [§§ 1-3-110 through 1-3-113]
“substantial completion” means the degree of completion at
which the owner can utilize the improvement for the purpose
for which it was intended.
§ 1-3-111. Improvements to real property; generally.
(a) Unless the parties to the contract agree otherwise,
no action to recover damages, whether in tort, contract,
indemnity or otherwise, shall be brought more than ten (10)
years after substantial completion of an improvement to real
property, against any person constructing, altering or
repairing the improvement, manufacturing or furnishing
materials incorporated in the improvement, or performing or
furnishing services in the design, planning, surveying,
supervision, observation or management of construction, or
administration of construction contracts for:
(i) Any deficiency in the design, planning, supervision,
construction, surveying, manufacturing or supplying of
materials or observation or management of construction;
(ii) Injury to any property arising out of any deficiency
listed in paragraph (i) of this subsection; or
(iii) Injury to the person or wrongful death arising out
of any deficiency listed in paragraph (i) of this subsection.
(Emphasis added.)
[¶12] The Hornings contend the “improvement to real property” at issue here is the
condominium and the furnace was a component part of that improvement. They further
contend the statute of repose began to run upon substantial completion of the
improvement, i.e. the condominium. Penrose argues, and the district court found, that the
improvement to real property was the HVAC system; it was substantially completed in
2001; therefore, the statute of repose began to run in 2001 and the Hornings’ complaint
filed in 2012 was untimely.
[¶13] To interpret the above provisions, we apply our usual rules of statutory
interpretation.
[Our] paramount consideration is to determine the
legislature’s intent, which must be ascertained initially and
primarily from the words used in the statute. We look first to
the plain and ordinary meaning of the words to determine if
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the statute is ambiguous. A statute is clear and unambiguous
if its wording is such that reasonable persons are able to agree
on its meaning with consistency and predictability.
Conversely, a statute is ambiguous if it is found to be vague
or uncertain and subject to varying interpretations.
Barlow Ranch, Ltd. Partnership v. Greencore Pipeline Co. LLC, 2013 WY 34, ¶ 18, 301
P.3d 75, 83 (Wyo. 2013), citing Michael’s Constr., Inc. v. Am. Nat’l Bank, 2012 WY 76,
¶ 12, 278 P.3d 701, 705 (Wyo. 2012). When the language is clear, we give effect to the
ordinary and obvious meaning of the words employed by the legislature. Barlow Ranch,
¶ 18, 301 P.3d at 83. In ascertaining the meaning of a statutory provision, all statutes
relating to the same subject or having the same general purpose must be considered in
pari materia and construed in harmony. Id. We do not apply our rules of statutory
construction unless a statute is ambiguous. Id., citing Vogel v. Onyx Acceptance Corp.,
2011 WY 163, ¶ 24, 267 P.3d 1057, 1064 (Wyo. 2011).
[¶14] Section 1-3-111 bars an action arising from an improvement to real property if it is
brought more than ten years after substantial completion of the improvement. This Court
has previously applied the following definitions of “improvement” in the context of § 1-
3-111:
(iii) “Improve or improvement” means:
(A) Demolition, erection, alteration or repair of any
property for its permanent benefit;
(B) Any work performed or material furnished for the
permanent change of any real property; and
(C) Materials manufactured pursuant to contract.
WYO. STAT. § 29-1-201(a)(iii) (1997). …
Improvement. A valuable addition made to property
(usually real estate) or an amelioration in its condition,
amounting to more than mere repairs or replacement, costing
labor or capital, and intended to enhance its value, beauty or
utility or to adapt it for new or further purposes. Generally
has reference to buildings, but may also include any
permanent structure or other development, such as a street,
sidewalks, sewers, utilities, etc. An expenditure to extend the
useful life of an asset or to improve its performance over that
of the original asset.
BLACK’S LAW DICTIONARY 757 (6th ed.1990).
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Covington v. W.R. Grace-Conn., Inc., 952 P.2d 1105, 1107 (Wyo. 1998).
[¶15] Construction of a condominium constitutes work performed for the permanent
change of real property and a valuable addition to real property. The Hornings are
correct that the condominium is an improvement to real property within the meaning of §
1-3-111. Furnishing and installing an HVAC system constitutes work performed and
material furnished for the permanent change of real property and amounts to more than a
repair or replacement. Penrose’s assertion that the HVAC is an improvement to property
to which the statute of repose applies is, therefore, also correct. Giving the word
“improvement” its plain and ordinary meaning, both the condominium and the HVAC
system constitute improvements to real property within the meaning of § 1-3-111.1
[¶16] The question is which improvement—the condominium or the HVAC system–
triggered the statutory ten year period. Section 1-3-111 provides that the ten year period
begins to run upon substantial completion of the improvement. Section 1-3-110 defines
“substantial completion” as “the degree of completion at which the owner can utilize the
improvement for the purpose for which it was intended.” Here, neither the condominium
nor the HVAC system could be utilized for the purpose for which they were intended
until the home could be occupied. It is undisputed that the home could not be occupied
until the city completed its final inspections and issued a certificate of occupancy. That
occurred in August 2003. Pursuant to the plain language of §§ 1-3-110 and 1-3-111, that
is the date the statute of repose began to run.
[¶17] Penrose argues the triggering date for the statute of repose should not depend on
when a certificate of occupancy issues particularly where, as here, evidence was
presented showing the condominium was substantially completed in early 2002 but the
developer delayed paying the fee necessary to obtain the certificate of occupancy for
eighteen months. Penrose contends the legislature intended the statute of repose to begin
to run upon substantial completion, not when a developer or other party gets around to
taking the requisite steps to obtain city approval.
[¶18] Penrose’s argument has some appeal. It does seem that a party’s exposure to
liability for defective work should not be dependent on the whims of others involved in
an improvement to real property. However, our task is to interpret the statute as written.
We are not at liberty to rewrite a statute under the guise of statutory interpretation or
impose a meaning beyond its unambiguous language. Jones v. State, 2001 WY 28, ¶ 13,
18 P.3d 1189, 1194 (Wyo. 2001). In § 1-3-110, the legislature has clearly and
1
Our conclusion that the HVAC system is an improvement to real property finds support in cases decided
by other courts. See Pacific Indemnity Co. v. Thompson-Yaeger, Inc., 260 N.W.2d 548 (Minn. 1977);
Fennell v. Nesbitt, Inc., 398 N.W.2d 481 (Mich. 1986); Cyrus v. Henes, 623 N.E.2d 1256 (Ohio App.
1993).
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unambiguously defined substantial completion as the degree of completion at which the
owner can utilize the improvement for the purpose for which it was intended. Here,
neither the condominium nor the HVAC system could be utilized for its intended purpose
until the home could be occupied. Applying the plain language used by the legislature,
the statute of repose began to run when the certificate of occupancy issued in August
2003.
[¶19] Penrose asserts this result is contrary to the policy underlying the enactment of the
statute of repose. Penrose argues that the legislature intended the statute to protect
contractors and subcontractors from claims arising years after their involvement in an
improvement to real property ended. Penrose is correct that the legislature’s intent in
enacting § 1-3-111 was to limit the time in which an action may be brought against those
involved in making improvements to real property. Worden v. Village Homes, 821 P.2d
1291, 1294 (Wyo. 1991), citing 1981 Wyo. Sess. Laws ch. 166 § 2. The legislature
recognized the public interest in allocating
the burden of insuring against injury, property loss and
wrongful death after ten (10) years to the owner or possessor
of the improvement to real property, who routinely carries
insurance against such risks and is in the position to so most
efficiently, upon whom already rests the duty to maintain and
inspect the property and in whom sufficient control over the
property is vested to carry out that duty.
Id. The legislature also recognized “it is not in the public interest to impose liability in
perpetuity upon those providing goods and services necessary to the improvement of real
property.” Id.
[¶20] In balancing the competing interests involved, the legislature determined that the
ten year period for shifting the burden would begin to run when the improvement was
completed to the degree that the owner could utilize the improvement. Here, the
improvements could not be utilized until the home could be occupied. Had the
legislature intended the ten year statute of repose to begin to run on the date an individual
contractor or subcontractor completed its work on a project it could easily have said so.
It did not and we must interpret the statute as written. Stutzman v. Office of Wyoming
State Engineer, 2006 WY 30, ¶ 16, 130 P.3d 470, 475 (Wyo. 2006). Interpreting the
statute to mean that it commences to run when a particular contractor has substantially
completed his portion of a project, as Penrose suggests, rather than when the owner can
utilize the improvement, would mean inserting language into the statute that the
legislature omitted and render meaningless the language the legislature used.
[¶21] In reaching the result it did, the district court relied on Gordon v. W. Steel Co., 950
S.W.2d 743 (Tex. App. 1997). In that case, the owner of a condominium unit filed a
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complaint against two subcontractors who worked on the project. On the subcontractors’
motions, the district court granted summary judgment and dismissed the claims against
them finding that the action was not brought within ten years as required by the Texas
statute. The appellate court affirmed.
[¶22] Significantly, although the statute at issue in Gordon provided that an action must
be brought within ten years of substantial completion of an improvement to real property
the Texas legislature did not define “substantial completion.” The owner argued the
statute began to run when the condominium was finished. The subcontractors argued it
began to run when they completed their work on the condominium. Looking at the
legislative history, the court held the statute commenced to run when the subcontractors
completed their work on the property, not when the entire project was finished. The
court in Gordon was not asked to interpret a statute expressly defining “substantial
completion” to mean “the degree of completion at which the owner can utilize the
improvement for the purpose for which it was intended.” Gordon, therefore, is not
persuasive authority for interpreting the Wyoming provision.
[¶23] The cases Penrose cites are similarly distinguishable. The statute at issue in
Daidone v. Buterick Bulkheading, 924 A.2d 1193, 1198 (N.J. 2007) and Hopkins v. Fox
& Lazo Realtors, 576 A.2d 921 (N.J. 1990) stated:
No action, whether in contract, in tort, or otherwise, to
recover damages for any deficiency in the design, planning,
surveying, supervision or construction of an improvement to
real property, or 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, surveying, supervision of
construction or construction of such improvement to real
property, more than 10 years after the performance or
furnishing of such services and construction.
N.J.S.A. 2A:14-1.1(a). (Emphasis added.) The New Jersey court interpreted this
provision as follows:
A cause of action for construction or design defects ceases to
exist ten years and one day after the designer or contractor
has performed or furnished his or her design or construction
services. Thus, if a designer's or contractor's services continue
up to and including the date the certificate of occupancy is
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issued for the improvements made, then the start date for
Statute of Repose purposes is the date of the certificate of
occupancy. If, however, the design or construction services
are completed before a certificate of occupancy is issued and
the designer or contractor has no further functions to perform
in respect of that construction project, then the start date for
Statute of Repose purposes is the date on which the designer
or contractor has completed his or her portion of the work.
[¶24] The California statute interpreted by the court in Industrial Risk Insurers v. Rust
Engr. Co., 232 Cal. App. 3d 1038, 283 Cal Rptr. 873 (Cal. App. 1991) provided in
relevant part:
(a) No action may be brought to recover damages from
any person . . . who develops real property or furnishes the
design, specifications, . . . or construction of an improvement
to real property more than 10 years after the substantial
completion of the development or improvement . . . .
....
(g) The 10-year period specified in subdivision (a) shall
commence upon substantial completion of the improvement,
but not later than the date of one of the following, whichever
first occurs:
(1) The date of final inspection by the applicable
public agency.
(2) The date of recordation of a valid notice of
completion.
(3) The date of use or occupation of the improvement.
(4) One year after termination or cessation of work on
the improvement.
The date of substantial completion shall relate
specifically to the performance or furnishing design,
specifications . . . or construction services by each profession
or trade rendering services to the improvement.
Cal. Code Civ. Proc. § 337.15 (2014).
[¶25] Finally, the statute interpreted in Fueston v. Burns & McDonnell Engr. Co., Inc.,
877 S.W.2d 631 (Mo. Ct. App. 1994) provided in pertinent part:
1. Any action to recover damages for economic loss, personal
injury, property damage or wrongful death arising out of a
defective or unsafe condition of any improvement to real
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property . . . shall be commenced with ten years of the dates
on which such improvement is completed.
....
6. Notwithstanding subsection 1 of the section, if an
occupancy permit is issued, the ten-year period shall
commence on the date the occupancy permit is issued.
§ 516.097 R.S. Mo. (2014).
[¶26] None of the statutes interpreted in the above cases define the term “substantial
completion” as the Wyoming statute defines it. Our task is to interpret the language our
legislature utilized. Giving the words their plain and ordinary meaning, we conclude § 1-
3-111 begins to run on the date the owner can utilize the improvement for which it was
intended which, under the facts of this case, occurred in August of 2003. If our
interpretation of the plain language is not what the legislature intended, it is free to amend
the statute.
[¶27] Reversed.
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FOX, Justice, dissenting, in which, DAVIS, Justice, joins.
[¶28] I respectfully dissent. As the majority recognizes, the HVAC is an “improvement”
to real property under Wyo. Stat. Ann. § 1-3-111 (LexisNexis 2013). I believe a careful
reading of the statute and the policy behind it require us to find that the triggering event
to begin the period of repose is substantial completion of the HVAC improvement, not
the date of substantial completion of a different improvement, the condominium.
Further, there seems to be no basis for the conclusion that substantial completion of the
condominium did not occur until the city issued a certificate of occupancy, at some date
unrelated to the actual completion of the condominium.
[¶29] A statute of repose differs from a statute of limitations because it has no relation to
a date of injury, but rather it begins “upon the occurrence of an event, regardless of when
the injury occurs[.]” Worden v. Village Homes, 821 P.2d 1291, 1295 (Wyo. 1991). The
purpose of a statute of repose, and Wyo. Stat. Ann. § 1-3-111 in particular, is to further
“the legitimate state objective of protecting the economic and social stability of the state.”
Worden, 821 P.2d at 1294. The legislature set forth its policy determination of the public
interest when it enacted § 1-3-111, explaining the allocation of risk to insure against
injury to the homeowner, and the interest of protecting “those providing goods and
services necessary to the improvement of real property” from liability in perpetuity. 1981
Wyo. Sess. Laws ch. 166 § 2(a)(iii) and (iv). The legislature recognized that one reason
for providing such protection to service providers is that once they have completed their
particular improvement, they “lack control over other forces, uses and intervening
causes[.]” Id. at (a)(i). An interpretation that extends the trigger for the statute of repose
violates its policy by favoring the injured party rather than the service provider.
[¶30] On August 24, 2001, Penrose had installed the HVAC system to “the degree of
completion at which the owner can utilize the improvement for the purpose it was
intended.” Wyo. Stat. Ann. § 1-3-110 (LexisNexis 2013). It had no control over other
forces, and no control over when the condominium would be substantially completed or
when a certificate of occupancy would be issued. If, as the majority concedes, the HVAC
system is an “improvement” under the statute, it is the date of the substantial completion
of that improvement that should trigger the statute of repose period, not some other date
over which Penrose had no control.
[¶31] Even if we look at the date of substantial completion of the condominium, the
facts support a finding that the statute of repose had run by the time the Complaint was
filed. The condominium was completed in early 2002. Thus, the Complaint, filed
November 13, 2012, was filed more than ten years after the period had begun to run. The
condominium had reached “the degree of completion at which the owner can utilize the
improvement for the purpose for which it was intended.” Wyo. Stat. Ann. § 1-3-110.
The legislature made no reference in that statute or in § 1-3-111 to a certificate of
occupancy. The legislature “specifically focuse[d] on the extent to which a structure has
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been built as the measuring stick for whether the owner may use or occupy the structure
for its intended purpose, not on the owner’s legal right to use or occupy that structure for
its intended purpose.” Rosso v. Hallmark Homes of Minneapolis, Inc., 843 N.W.2d 798,
803 (Minn. Ct. App. 2014); see also, Ocean Winds Corp. of Johns Island v. Lane, 556
S.E.2d 377, 421 (S.C. 2001) (“The purpose of the statute of repose is served where the
period prescribed therein begins to run on the date installation and incorporation into a
larger improvement is complete, rather than the date on which certificates of occupancy
are issued.”).
[¶32] To find that the “improvement” is not “substantially completed” until issuance of a
certificate of occupancy is to put words in the statute that are not there, contrary to our
rules of statutory interpretation. In re Adoption of Voss, 550 P.2d 481, 484-85 (Wyo.
1976) (“[A] court cannot, under the guise of its powers of construction, rewrite a statute,
supply omissions, or make other changes[.]”). Further, there is nothing in the definition
of “improvement” that we adopted in Covington v. W.R. Grace-Conn., Inc., 952 P.2d
1105, 1107 (Wyo. 1998) that suggests the physical work contemplated would also
include an administrative function such as the issuance of a certificate of occupancy.
[¶33] For these reasons, I would affirm the district court’s grant of summary judgment.
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