By Sean M. McChristian of Porter Hedges LLP
Published May 26, 2021
As the end of the 87th Texas legislative regular session approaches, we appear to be on the verge of having new, shortened statutes of repose for design and construction claims by certain Texas governmental entities. This is important because statutes of repose “provide a definitive date beyond which an action cannot be filed.” Galbraith Eng'g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 866 (Tex. 2009).
Statute of Limitations vs. Statute of Repose
A statute of repose, like a statute of limitations, is a statute that cuts off certain legal rights if they are not acted upon by a specified deadline. However, “[u]nlike traditional limitations provisions, which begin running upon accrual of a cause of action, a statute of repose runs from a specified date without regard to accrual of any cause of action.” Id. “Repose then differs from limitations in that repose not only cuts off rights of action after they accrue, but can cut off rights of action before they accrue.” Id. “And while statutes of limitations operate procedurally to bar the enforcement of a right, a statute of repose takes away the right altogether, creating a substantive right to be free of liability after a specified time.” Id. “Thus, the purpose of a statute of repose is to provide absolute protection to certain parties from the burden of indefinite potential liability.” Id.
Current Statutes – 10-Year Limitation Period and Possible 2-Year Extension
Texas Civil Practice and Remedies Code § 16.008 currently requires a person to sue a registered or licensed architect, engineer, interior designer, or landscape architect not later than 10 years after the substantial completion of the improvement that gives rise to the suit. Texas Civil Practice and Remedies Code § 16.009 imposes a similar requirement on claims against a person who constructs or repairs an improvement to real property. Under both statutes, if a person presents a written claim for damages, contribution, or indemnity to the contractor or design professional within the 10-year limitations period, the period is extended for 2 years from the date the claim is presented.
Proposed Change – 8-Year Limitation Period and Possible 1-Year Extension
House Bill 3069 would amend Sections 16.008 and 16.009 to require a governmental entity to sue a registered or licensed architect, engineer, interior designer, or landscape architect or a person who constructs or repairs an improvement to real property not later than 8 years after the substantial completion of the improvement that gives rise to the suit. The bill would also shorten the possible extension associated with the presentment of a claim during the 8-year period from 2 years to 1 year. That said, not all government construction projects would be subject to the new statutes because they do not apply to a claim arising out of: (1) a contract entered into by the Texas Department of Transportation; (2) a project that receives money from the state highway fund or a federal fund designated for highway and mass transit spending; or (3) a civil works project, as that term is defined under Texas Government Code § 2269.351.[1]
Current Status – Pending Action by the Governor
House Bill 3069 passed the House on May 4, 2021 and passed the Senate on May 23, 2021. As of this post, it has been reported enrolled, signed in the House and Senate, and been sent to the Governor for action. If the Governor signs the bill, then it will take effect immediately. If the Governor allows it to become law without signing it, then the bill will take effect on the date the Governor files it with the office of the Texas Secretary of State. The new, shortened periods will then apply to governmental design and construction contracts that are entered into after the new statutes take effect.
For the current status of House Bill 3069, please see here.
[1] Under Texas Government Code § 2269.351(1), “Civil works project” means: (A) roads, streets, bridges, utilities, water supply projects, water plants, wastewater plants, water distribution and wastewater conveyance facilities, desalination projects, wharves, docks, airport runways and taxiways, storm drainage and flood control projects, or transit projects; (B) types of projects or facilities related to those described by Paragraph (A) and associated with civil engineering construction; and (C) buildings or structures that are incidental to projects or facilities that are described by Paragraphs (A) and (B) and that are primarily civil engineering construction projects.
Sean McChristian is a partner at Porter Hedges LLP in Houston. He is certified by the Texas Board of Legal Specialization in Construction Law and represents contractors, subcontractors, developers, owners, suppliers, sureties, and design professionals in all types of construction-related disputes. He can be reached at smcchristian@porterhedges.com.