The Texas statute of repose (Tex. Civ. Prac. & Rem. Code 16.008(a)) requires that a plaintiff file suit  "not later than 10 years after the substantial completion of the improvement or the beginning of operation of equipment in an action arising out of a defective or unsafe condition of the real property, the improvement, or the equipment."  Texas courts have historically used the 10 year period as a "drop-dead deadline " for any construction defect claim, under any cause of action, and under any factual circumstance.

After 16.008 was enacted, Texas passed various tort reform legislation,   included was Tex. Civ. Prac. & Rem. Code 33.004 which allows a defendant to designate someone as a "responsible third party" - even without suing such person - so as to limit the defendant's potential liability to the plaintiff by the percentage of responsibility which the jury puts on the responsible third party (i.e. the jury can allocate a percentage of liability to the "empty chair," and the plaintiff's recovery will be reduced by the amount of that percentage liability).  If a defendant designates someone as a "responsible third party," however,Sec. 33.004 also says that the plaintiff "is not barred by limitations from seeking to join that person, even though such joinder would otherwise be barred by limitations, if the [plaintiff] seeks to join that person not later than 60 days after that person is designated as a responsible third party" (emphasis added) 

Appreciating the distinction between a "statue of limitations" and a "statute of repose," most Texas construction lawyers would not have concluded that a claim otherwise barred by the statute of repose could somehow be revived by the application of Sec. 33.004.  That is, however, until the recent decision of Pochucha v. Galbraith Engineering Consultants, Inc.

Case Background

The facts of the Pochucha case are fairly straightforward.  Building was completed in September 1995.  Owner noticed leaks, had the building inspected, and learned that the original french drain was improperly constructed.  Owner sued the original Contractor in April 2005 (before the expiration of the repose period).  On November 2005 (after expiration of the repose period), Contractor filed a motion to designate an Engineering Firm as a "responsible third party."  Note:  Contractor did not sue Engineering Firm, but instead made the responsible third party designation to try and shift some percentage of liability from itself.  The motion was granted by the court in December 2005. 

In January 2006 (well after expiration of the repose period), the Owner added the Engineering Firm as a party defendant.  The Engineering Firm then successfully moved for summary judgment based on the application of the statute of repose (i.e. suit was not filed against the Engineering Firm until after the repose period expired).  The Owner appealed the ruling and the San Antonio Court of Appeals reversed the trial court's summary judgment, holding that the language in Sec. 33.004 ("a claimant is not barred by limitations . . . if the claimant seeks to join that person not later than 60 days after that person is designated as a responsible third party") was intended to pre-empt both the statute of limitations and the statute of repose. 

Impact of Decision

This is the first meaningful breach in what has up until now been a solid wall of defense against defective construction claims on buildings more than 10 years old.  If the Supreme Court affirms the decision, contractors and design professionals could be exposed to liability for 15, 20 or more years, based solely on whether someone elects to designate them as a "responsible third party" in pending litigation.  This decision was poorly reasoned and would be very damaging to the construction industry if it is upheld. As a result,  a number of trade associations will be filing amicus briefs to have it overturned.  If you would like to participate in filing an amicus brief, please contact us. In the meantime, however, you should be mindful of this exception to the protections afforded by the state of repose.