Product Liability v. Improvements to Real Property
What is a Statue of Repose?
A Statute of Repose is a time-barring statute which prohibits bringing suit against a defendant a fixed number of years after a specific event occurs. Unlike a Statute of Limitations, which begins to run from the date you knew or should’ve known about the issue, statutes of repose start running upon the happening of a specified event, whether or not you are aware of any defect at that time. Because the statute of repose begins to run whether or not you are aware of any issue, it can bar a claim before the statute of limitation begins to run!
The General Assembly recently repealed N.C. Gen. Stat. § 1-50(a)(6), North Carolina’s Products Liability Statute of Repose. Prior to October 1, 2009, N.C. Gen. Stat. § 1-50(a)(6) provided that a lawsuit to recover damages for personal injury, death, or damage to property based upon an alleged defect, or failure, in relation to a product must be brought within six years after the date of initial purchase of the product. Article 5 of Chapter 1 of the General Statutes was recently amended by removing this language from § 1-50 and adding it to a new section, § 1-46.1, which features a twelve year statute of repose. Under N.C. Gen. Stat. § 1-46.1 a plaintiff now has twelve years after purchasing a product to file a product liability claim.
It should be noted that the repeal of § 1-50(a)(6) has no effect on the time period in which to bring suit for damages based upon improvements to real property as governed by § 1-50(a)(5)(a), North Carolina’s Real Property Improvements Statute of Repose. N.C. Gen. Stat. § 1-50(a)(5)(a), provides that a lawsuit to recover damages for the defective or unsafe condition of an improvement to real property must be brought within six years from either the last act or omission of the defendant giving rise to the cause of action, or substantial completion of the improvement, whichever is later. In other words, contractors still have six years from either the substantial completion of the project, or their last act or omission on the project, to watch for suits stemming from improvements to the real property.
An issue that often arises is whether the products liability statute of repose or the real property improvement statute of repose is applicable within a particular action. This question has become increasingly relevant now that claims arising from product defects in North Carolina have a twelve year statute of repose. North Carolina courts have routinely held that our state’s products liability statute of repose applies to “remote manufacturers” whose products find their way to a job site indirectly through the stream of commerce. See Forsyth Memorial Hospital, Inc. v. Armstrong World Industries, Inc., 336 N.C. 438, 444 S.E.2d 423 (1994) (“Forsyth I”). A remote manufacturer is a supplier or entity characterized by the fact that they place their product into the stream of business without any intent to sell or deliver directly to the ultimate consumer of the product. The definition applies to many building material suppliers. For example, a supplier who delivers its product to a wholesale distributor to be subsequently delivered to a retailer would be a remote manufacturer.
Under North Carolina’s statute of repose for real property improvements, actions arising from defective improvements to real property include claims against persons who furnish materials to an improvement of real property. N.C. Gen. Stat. § 1-50(a)(5)(b)(9). These “materialmen” furnish materials to the jobsite either directly to the owner of the premises, or to a contractor or subcontractor on the job. Forsyth, 336 N.C. at 443, 444 S.E.2d at 426. Courts have looked to North Carolina’s materialman’s lien statute, N.C. Gen. Stat. § 44A-8, to gain additional guidance as to who may be a materialman. Forsyth Memorial Hospital, Inc. v. Armstrong World Industries, Inc., 122 N.C. App. 413, 418, 470 S.E.2d 826, 829-30 (1996) (“Forsyth II”). Section 44A-8, defines a materialman as any person who performs or furnishes labor, professional design or surveying services, or furnishes materials pursuant to a contract, either express or implied, with the owner of the property for the purpose of making an improvement to real property. The distinguishing feature of a “materialman” is that he furnishes materials or services directly to the ultimate consumer, whereas a “remote manufacturer” merely places its product into the stream of commerce and has no intent to sell or deliver to the particular end user. National Property Investors, VIII v. Shell Oil Company, 950 F.Supp. 710, 713 (E.D.N.C. 1996) (citing Forsyth Memorial Hospital, Inc. v. Armstrong World Industries, Inc., 122 N.C. App. 413, 470 S.E.2d 826, 830-31 (1996) (“Forsyth II”)).
For each claim, it is imperative to be aware of the applicable statute of limitation and statute of repose. If you have any questions about this or any other legal topic in the construction industry, please contact Attorney Justin Hampton, at Anderson Jones, PLLC, at (919) 277-2541 or email.