Pennsylvania’s statute of repose, enacted in 1976, has long provided construction industry participants with finality by barring claims related to construction defects raised more than 12 years after the completion of construction. However, the bright-line application of the Pennsylvania statute of repose is now under review by the Pennsylvania Supreme Court.
Unlike statutes of limitations, which begin running when a cause of action accrues, the statute of repose starts at the point of completion — in Pennsylvania, marked by the issuance of a certificate of occupancy. This distinction means that the statute of repose can bar claims before a defect is even discovered, a principle confirmed by the Pennsylvania Supreme Court in Freezer Storage, Inc. v. Armstrong Cork Co., 476 Pa. 270, 278, 382 A.2d 715, 720 (1978).
Last year, the Pennsylvania Superior Court reaffirmed the longstanding principle that the statute of repose bars claims filed more than 12 years after project completion. See Aloia v. Diament Building Corp., 317 A.3d 582 (Pa. Super. Ct. 2024). But the Pennsylvania Supreme Court intends to review that decision. No matter the outcome, the decision will impact construction professionals’ practices and their exposure to liability for construction defect claims.
Statute of Repose Under Review in Aloia
In Aloia, the Pennsylvania Superior Court affirmed the dismissal of homeowners’ claims against a builder, holding that the state’s statute of repose barred the action because it was filed more than 12 years after construction was completed. The plaintiffs, who were not the original purchasers of the home, alleged construction defects resulting from moisture infiltration and brought a claim under the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL) more than 14 years after the last certificate of occupancy was issued. They argued that alleged building code violations rendered the construction “unlawful,” and because the construction was not “lawfully” performed or furnished, the 12-year statute of repose was inapplicable to the work.
The Superior Court rejected this argument and clarified that the term “lawfully” as found in the statute of repose referred to licensure and authorization to build, as it recently held in Johnson v. Toll Bros., Inc., 302 A.3d 1231, 1238 (Pa. Super. Ct. 2023), reargument denied (Oct. 18, 2023). The court reasoned that the plaintiffs’ interpretation of “lawful” performance, requiring strict compliance with every regulation or code, was more appropriately described as “legally” performed. The Superior Court reiterated that the issuance of the certificate of occupancy was conclusive evidence that construction was lawfully performed, triggering the start of the 12-year repose period. Because the plaintiffs filed suit over 14 years after the last certificate of occupancy was issued, their claims were time-barred.
The Pennsylvania Supreme Court has granted review to consider two key, but distinct, questions. Aloia v. Diament Bldg. Corp., 329 A.3d 586 (Pa. 2024). First, as a threshold matter, whether the statute of repose applies to claims alleging construction “illegally” performed in violation of local ordinances or codes. Second, if the statute of repose applies, whether factual circumstances — such as those surrounding the issuance of the certificate of occupancy — should play a role in determining the start of the repose period.
Construction Professionals Should Closely Monitor the Pennsylvania Supreme Court’s Decision
While members of the Pennsylvania construction industry are closely watching for the Pennsylvania Supreme Court’s decision, the questions presented are not unique to Pennsylvania. Indeed, the pending decision has caught the attention of construction professionals nationwide. The American Institute of Architects, the American Council of Engineering Companies, and other design professional societies authored an amicus brief presenting concerns around a more expansive view of the statute of repose ([T]here must be a moment after which licensed design professionals and their firms are no longer exposed to liability.). The amicus brief highlighted, among other things, that (i) Pennsylvania’s statute of repose was enacted to limit the indefinite liability of construction professionals, (ii) the statute is unambiguous and has been consistently applied by Pennsylvania courts, and (iii) the insertion of a factual inquiry creates an absurd result, as statutes of repose are historically agnostic to case-specific facts such as the injury accrual date.
If the Pennsylvania Supreme Court affirms, industry professionals can continue to view the issuance of a certificate of occupancy as the start of the statute of repose and count on clear and predictable protection from claims arising more than 12 years after completion, even if defects are discovered later or alleged to violate building codes. This certainty is crucial for risk management and insurance purposes. On the other hand, a holding that “lawfully performed” construction requires a factual inquiry into code compliance or the circumstances of the issuance of a certificate of occupancy could have the opposite effect. An unpredictable exposure period, or one that, at a minimum, requires a detailed factual inquiry, could not only lead to builders being subjected to decades-old claims, but the uncertainty may also impact the cost and availability of insurance coverage for completed work.
