The D.C. Court of Appeals last week ruled that the time limit on the right to file suit in cases of professional negligence or breach of contract or warranty does not begin to run until the complainant becomes aware of the injury.
The ruling by a three-judge appellate panel reversed a lower court decision in a case of alleged construction malpractice. And while the panel specifically did not do so, its finding apparently opens the way for extending the so-called "discovery rule" to a broad range of cases in the District, where it had not applied before.
Lawyers in Washington say that extension of the discovery rule to breaches of contracts and warranties could have a significant impact on many professions, particularly the construction industry, where defects and problems may not become apparent for years.
The discovery rule holds that a person's right to sue for damages should extend from the time the person became aware of the injury, rather than from the time the injury was committed. It had been limited largely to medical or legal malpractice in D.C. courts before.
The panel held that the principles involved in applying the rule to medical and legal cases were equally applicable to a case that Superior Court Judge John F. Doyle had recently dismissed on the grounds that the statute of limitations had run out.
The case that triggered this change was first filed by Peter D. Ehrenhaft in the spring of 1982, after he encountered problems with a sun-room addition to his house, built by architect Charles H. Atherton and builder Malcolm Price in 1977.
According to statements filed by Ehrenhaft with the court, a pipe in the outside wall of the sun room burst during the winter of 1978. Price repaired the damage and told Ehrenhaft he would not have problems with it again.
The next winter, the pipe burst a second time. Price again repaired it, this time with design changes made by Atherton, including more insulation in the wall and the insertion of valves to turn off the water during cold spells.
Two years later, the pipes burst again. Ehrenhaft brought in an independent contractor who found that to solve the problem the pipes had to be rerouted. The contractor also found problems with insulated windows in the room and a heater enclosed under a bench.
When Price and Atherton refused to pay for the repairs, Ehrenhaft filed suit, arguing that they were guilty of breach of expressed and implied warranties, negligence and professional malpractice. Price and Atherton moved to have the case dismissed on the grounds that the statute of limitations, allowing a plaintiff three years in which to exercise his right to sue, had run out.
Judge Doyle agreed with Price and Atherton, saying that it was "well-settled" in Washington that the three-year limitation of actions based on a simple contract begins to run from the date of the breach.
"The fact that a party is unaware of the breach will not toll the statute, nor will the fact that the damages are unascertainable," he said.
The appeals court, moving in a direction taken recently by Maryland and 36 other states, agreed with Ehrenhaft that the discovery rule should apply in such a case. The suit was remanded to superior court to be heard within the framework of the newly expanded rule.
"A client in [Ehrenhaft's] position, who has arranged for the design and construction of a new room to his house, must undoubtedly rely upon the professional skills of those hired to perform the work," said the court. "Moreover, it is unreasonable to expect the client to engage yet another professional to oversee the work as it is performed."
The court went on to say that in cases where the injury or defect was latent in nature, the injury may not manifest itself until after the statute of limitations has run under traditional principles.
"Surely it is inconsistent with our notions of justice to interpret the 'accrual' of a cause of action to occur prior to a point in time at which a person would reasonably have knowledge of wrongdoing," it said. "In cases like [this], where the professional returns upon request to remedy damages resulting from defective work, to preclude application of the rule would likely serve to encourage litigation in the first instance, rather than as a last resort."
The court then specifically said that in actions "based upon tort and contract claims arising out of allegedly deficient design and construction of an addition to a house" that the time limit of the statute of limitations does not begin to run until "the plaintiff knows, or in the exercise of reasonable diligence should know," of the injury.
The court did not, however, extend the discovery rule to all actions, as was recently done by the Maryland Court of Appeals.
"We decide only [this] case, leaving to the future the application of the rule by analogy to the facts," said the court.
Atherton's attorney said he was concerned about the broadened application of the discovery rule.
"The adoption of the rule will go far to gut the statute of limitations for professional people," said Courts Oulahan. "It is serious for the construction industry and just as serious for architects, accountants and any type of professional."