September 23, 2008

"Substantial completion" under the construction statute of repose occurs when a residential structure can be used for its intended purpose

DEBORAH JENKINS as Personal Representative of THE ESTATE OF MALCOM WILLIAMS et al v. SOUTHLAND CAPITAL CORPORATION et al (Tenn.Ct.App. September 23, 2008).

This is a consolidated wrongful death and personal injury case. In May 2002, three young boys walking beside the road were struck by a drunken driver in a residential subdivision. Two were killed, the third severely injured. The plaintiffs sued the developers of the subdivision, arguing that the absence of sidewalks in the area where the boys were walking was a cause of the accident. The trial court granted summary judgment in favor of the developers on grounds that the plaintiffs' lawsuit was time-barred under the four-year statute of repose for improvements to real property, T.C.A. section 28-3-202. We agree with the trial court that the improvements to the real property on which the accident occurred were substantially completed more than four years prior to the filing of the lawsuits under the statutory definition at T.C.A. section 28-3-201(2), and therefore affirm.

Opinion may be found at TBA website:

"[T]he absence of sidewalks on the two lots – is too circumscribed an interpretation of the statute. Concomitantly, defining the “real property” at issue to mean the entire subdivision is overly broad. Both interpretations defeat the essential purpose of Section 28-3-202, that is, to limit claims to those arising within four years after substantial completion of the improvements to the real property at issue." Id.

"[S]ubstantial completion would occur under the facts of this case when the lot at issue, including but not limited to the house, can be used for its intended purpose as a residence. ... [T]his may or may not coincide with the approval of a governmental entity ... ; passing such a final inspection is indicative of substantial completion but not necessarily determinative. Under the facts of this case, however, it is undisputed that the homes were transferred to individual homeowners the same year, 1995, and had been occupied as residences thereafter. The Plaintiffs put forth no evidence, save the absence of sidewalks, indicating that the lots had not been used for their intended purpose, as residences, since the transfer to individual homeowners. Here, the defect focused on by the Plaintiffs is the absence of sidewalks on these lots. However important that defect may be in the context of the Plaintiffs’ claims, it is not a defect that would prevent the lots from being used for their intended purpose, as residences." Id.