Good news for homebuilders in Pennsylvania. The Pennsylvania Superior Court earlier this month affirmed a trial court order that awarded judgment on the pleadings in favor of the builder and dismissing the homeowners’ complaint with prejudice. The Superior Court held that the trial court properly determined that Pennsylvania’s 12-year statute of repose barred the homeowners’ claims. In reaching its conclusion, the Superior Court rejected the homeowners’ argument that the builder’s ongoing repairs to the home tolled the statute of repose. Rather, the statute of repose period began to run when the initial owners legally occupied the home because that is when they were first exposed to the alleged defects.

In October 2004, the homeowners purchased a home located in Chester Springs, Pennsylvania (the “Home”) from its original owners. Moser Builders, Inc., d/b/a Moser Homes and Moser Homes, LLC, and Moser Construction Management, LLC, d/b/a Moser Homes (collectively, the “Builder”) constructed the home in 2003. The township issued a certificate of occupancy on Aug. 13, 2003.

Sixteen years later, on Aug. 26, 2019, the homeowners commenced an action against the builder by filing a writ of summons. The homeowners filed a complaint on March 10, 2020, alleging 13 causes of action arising out of the construction of the home. The homeowners also alleged that although the builder performed inspections and repairs to the home from 2004 to 2008, these inspections and repairs did not solve the alleged construction defects. The homeowners further alleged that the defects resulted in water infiltration that caused damage to the home.

The builder filed preliminary objections. The trial court sustained the preliminary objections as to the homeowners’ claims for breach of express warranty, breach of implied warranty, breach of implied warranty of habitability, negligent misrepresentation and breach of contract. The trial court overruled the builder’s preliminary objections to homeowners’ claims for negligence per se, a violation of the Unfair Trade Practices and Consumer Protection Law, piercing the corporate veil, and engaging in willful, knowing, intentional and reckless conduct.

On Aug. 17, 2020, the builder filed its answer with new matter and affirmative defenses to the remaining claims of the homeowners’ complaint. The builder plead that the homeowners’ claims were barred by the statute of repose, which states that “a civil action or proceeding brought against any person lawfully performing or furnishing the design, planning, supervision, or observation of construction, or construction of any improvement to real property must be commenced within 12 years after completion of construction.”

On Oct. 19, 2020, the builder filed a motion for judgment on the pleadings because the homeowners filed their complaint more than 12 years after the completion of construction of the home. The homeowners responded by filing an affidavit stating that the builder had made regular repairs to the residence from 2004 to 2008 and urged the trial court to find that such repairs tolled the statute of repose period. The builder argued that as a matter of law it completed the construction of the home when the township issued the certificate of occupancy.

In granting the builder’s motion for judgment on the pleadings, the trial court held that the construction of the Home was “completed” in 2003. In addition, the trial court held that the homeowners did not raise a genuine issue of fact as to the completion date. The trial court did not consider the homeowners’ affidavit because it was not properly incorporated into the pleadings.

On appeal, the appellate court considered whether the trial court abused its discretion by granting the builder’s motion on the pleadings and dismissing the homeowners’ complaint with prejudice. From the outset, the appellate court noted that the statute of repose defense is properly raised in a motion for judgment on the pleadings because it is a jurisdictional question that may be decided by the court as a matter of law.

To prevail on a motion for judgment on the pleadings, the appellate court noted that the defendant has the burden of proving three things: (1) what is supplied is an improvement to real property; (2) more than 12 years have elapsed between the completion of the improvements to the real estate and the injury; and (3) the activity of the moving party must be within the class that is protected by the statute. The parties did not dispute elements (1) and (3). As such, appellate court only considered element two – whether more than 12 years had elapsed since the builder completed the home and the homeowners’ alleged damages.

Because the appellate court saw no merit to the homeowners’ claims that the builder’s repairs to the home should toll the statute of repose, the appellate court affirmed the trial court’s order granting judgment in favor of the builder and dismissing the homeowners’ complaint.

The appellate court held that there was no dispute that the township issued the certificate of occupancy in 2003. Under the Pennsylvania Uniform Construction Code, a residential building cannot be used or occupied until a certificate of occupancy is issued and such issuance depends on a “final inspection” showing that the construction of the residential property meets the governing building codes. The appellate court held that a final inspection cannot occur until the construction of a residence is complete.

The appellate court further noted that the Pennsylvania Supreme Court has held that unless there are extreme circumstances beyond the control of the plaintiff, courts should not toll the statute of repose period. Pennsylvania appellate courts have also held that completion of construction commences the statute of repose period because that is when a party is first exposed to the defect.

Builders throughout Pennsylvania should be thrilled by this favorable ruling that creates a clear deadline for homeowners to assert claims against builders. As a practical matter, this ruling may encourage builders to perform any necessary repairs without the risk that such action will extend any potential liability of the builder.

Although this ruling is only applicable in Pennsylvania, builders in other states should review the statute of repose period in their state to determine if it can be used as a defense to late claims by homeowners.

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