Case Title: KIRBY v. JEAN'S PLUMBING HEAT & AIR

Citation: 

Docket Number: 105884

State: oklahoma

Court: Oklahoma Supreme Court

Date: 2009-09-22T00:00:00Z

Document:
KIRBY v. JEAN'S PLUMBING HEAT & AIR  KIRBY v. JEAN'S PLUMBING HEAT & AIR 2009 OK 65 222 P.3d 21 Case Number: 105884 Decided: 09/22/2009 THE SUPREME COURT OF THE STATE OF OKLAHOMA DALE KIRBY Plaintiff/Appellant v. JEAN'S PLUMBING HEAT & AIR Defendant/Appellee ON CERTIORARI TO THE COURT OF CIVIL APPEALS, DIV. I ¶0 Plaintiff engaged the defendant plumber to install a sewer pipeline on his property in 1996. In 2007 a backup caused raw sewage to seep into plaintiff's home and damage his property. Appellant brought suit against appellee for negligence and breach of contract in the installation of the sewer pipeline. Upon motion by defendant's counsel, the District Court, Oklahoma County, Barbara G. Swinton, Judge, dismissed the action relying on the statute of repose and statute of limitations. The Court of Civil Appeals, Division I, affirmed that disposition. On certiorari granted upon plaintiff's petition, THE COURT OF CIVIL APPEALS' OPINION IS VACATED; THE TRIAL COURT'S ORDER GRANTING DEFENDANT'S MOTION TO DISMISS IS AFFIRMED. Jim Buxton, Jacob L. Rowe, Buxton Carson, P.L.L.C, Oklahoma City, Oklahoma, for Plaintiff/Appellant. Maurice G. Woods, II, Ryan V. Coventon, McAtee & Woods, P.C., Oklahoma City, Oklahoma, for Defendant/Appellee. OPALA, J. ¶1 Two issues are presented on certiorari. The first of these is whether the replacement of a sewer pipeline constitutes an "improvement to real property" within the meaning of the statute of repose in I THE ANATOMY OF LITIGATION ¶2 In July 1996 Dale Kirby (Kirby or appellant) entered into a contract with Jean's Plumbing Heat & Air (Jean or appellee) for the installation of a sewer line to connect Kirby's home to the city's sewage system. In June 2007 a backup resulted in raw sewage and other hazardous material seeping into Kirby's home, causing damage to his property. Kirby claims the backup's cause was appellee's failure properly to cap the line and remove the sewer pipe then still in place after installing a new line. Also alleged was Jean's failure properly to connect the new sewer line to the city's system. ¶3 Kirby sought damages from negligence and breach of contract. Jean responded by a motion to dismiss for failure to state a claim. This prompted Kirby's amended petition that asserts the same claims against Jean. Jean responded to the amended petition by another motion to dismiss in which Jean argued that Kirby's claim of negligence was barred by the statute of repose in ¶4 In his response Kirby takes the position that § 109 does not apply to the claim because the installation of the sewer line was actually a repair or replacement and not an improvement. He also claims there is a question of fact as to whether the installation of a sewer pipe is an improvement to real property or a normal repair or replacement. Kirby additionally argued that § 95's limitation period should be enlarged by the discovery rule to prevent his claim's defeat. The trial judge granted Jean's motion to dismiss in an order of April 25, 2008. The Court of Civil Appeals (COCA) affirmed the trial court's dismissal on February 13, 2009. COCA held appellant's claims were barred by the statute of repose in II STANDARD OF REVIEW ¶5 When reviewing a trial court's dismissal of an action an appellate court examines the issues de novo. III ARGUMENTS ON CERTIORARI ¶6 Kirby argues in his petition for certiorari and supplemental brief that the installation of the sewer pipeline does not constitute an "improvement to real property" within the meaning of 12 O.S. 2001 § 109. The definition of an "improvement to real property" must be derived from the ad valorem tax code.13 That code defines an "improvement" as an addition to property which amounts to "more than normal repairs, replacement, maintenance or upkeep."14 Appellant argues that because the sewer pipe that Jean installed was replacing an existing pipeline it is to be included within the term "normal repairs, replacement, maintenance or upkeep"15 of the sewer line. ¶7 This court has defined maintenance as "the upkeep or preservation of condition of property, including cost of ordinary repairs necessary and proper from time to time for that purpose."16 Kirby relies on that definition to claim that replacement of his sewer line is merely normal maintenance and "upkeep or preservation...of property"17, not an improvement to real property. Maintenance is not within the purview of § 109's statute of repose. Kirby argues that a claim for maintenance (rather than one for improvement) is not affected by § 109. ¶8 Jean argues the installation of the sewer pipeline is an improvement to real property and appellant's claims are defeated by lapse of time under both the statute of repose (§ 109) and the statute of limitations (§ 95). Moreover, Jean states that the new pipeline is an improvement to real property because (a) it increased the value of appellant's property and (b) is taxed as part of appellant's real property. In a prior decision this court held that a property's change by work performed upon it is not an improvement to real estate if it is not taxed as real property.18 ¶9 Jean further argues that appellant's claim for breach of contract is barred by the statute of limitations found in 12 O.S. 2001 § 95. If the discovery rule were applied to suits for the breach of a construction contract the statute of repose in 12 O.S. 2001 § 109 would be rendered ineffectual and its protection meaningless. Jean points out that this court previously declined to apply the discovery rule to claims for breach of a construction contract where its application would operate to deprive a defendant of the full benefit of the statute of repose in § 109.19 IV A. Statutes of Repose and Statutes of Limitations ¶10 Before allowing Jean to invoke here the provisions of 12 O.S. 2001 §§ 95 and 109, we must first determine how a statute of limitations differs in its impact from one of repose. Early treatise writers and judges considered time bars created by statutes of limitations, escheat and adverse possession as creating periods of repose.20 As the courts began to modify statutory limitations by superimposing the "discovery rule,"21 legislatures responded by enacting absolute (not tollable) time bars through statutes of repose. Modern statutes of limitations and statutes of repose are somewhat similar because they both provide repose for the defendant. They are nonetheless significantly different since a statute of limitation merely extinguishes the plaintiff's remedy while a statute of repose may defeat the accrual of a cause of action before one ever arises.22 In practical terms, a statute of repose marks the outer time boundary for judicial enforcement of a substantive right whereas a statute of limitation interposes itself only procedurally to bar solely the remedy after a substantive right has vested and a claim accrued.23 Moreover, remedial time bars are tollable, whereas substantive-law time limits must be allowed to run and expire uninterrupted by any arrest or suspension.24 ¶11 The time prescribed by a statute of repose runs from a specific act or event regardless of when the harm or damage may occur. A statutory limitation period, on the other hand, runs from the time all the requisite elements of a cause of action occur. It may or may not allow for the plaintiff's discovery of the injurious event to extend the period of limitation.25 Section 109 stands defined as a statute of repose. As we stated before: "[s]ection 109 is not a statute of limitations; it is a statute of repose. Rather than disturbing a vested substantive right, 'a statute of repose marks [the right's] boundary.' It sets an outer boundary in time beyond which no cause of action may arise for conduct that would have otherwise been actionable" (citations omitted).26 B. Installing a Sewer Pipeline is an "Improvement to Real Property" ¶12 The ad valorem tax code's definition is to be used when determining whether the work in suit constitutes an "improvement to real property."27 Kirby claims that the ad valorem tax code's definition of "improvement" does not include the replacement of a sewer line. Kirby also attempts to classify the installation of a new sewer line as the "normal repairs, replacement, maintenance or upkeep"28 associated with sewer lines. Although sewer lines require periodic maintenance, the replacement of an entire sewer line does not fall into the category of "normal" repair.29 Other courts have similarly agreed that replacing an existing infrastructure qualifies as an improvement to real property.30 One court has stated that "whether there was a previously existing service is unimportant, so long as the additions improved the realty."31 ¶13 The excavation, labor and expense necessary to replace a sewer pipeline differ from mere normal repair. Because the change is so extensive, it constitutes an improvement upon real property. Moreover, the installation or replacement of a sewer pipeline adds value to real property. "[A] permanent addition to real property, involving expenditure of labor and money, and making the property more useful and valuable" is an improvement to real property.32 Sewer lines are permanent fixtures upon real property. They increase its value and require expenditure of both money and labor to install. A sewer line replacement constitutes an improvement of real property within both the definitions provided by the tax code and those supplied by other courts' jurisprudence. ¶14 Kirby's argument also disregards the tax code's definition of "real property." Within the meaning of the ad valorem tax code "real property" includes "the land itself" and "all buildings, structures and improvements or other fixtures" that are not defined and taxed as personal property.33 Personal property is defined by the same code as "goods, chattels, and effects."34 "Chattel"is defined as "movable property."35 A sewer line in situ is a permanent installation or fixture upon real property. Because a sewer line cannot be moved, it is considered by the ad valorem tax code an improvement upon real property (and not personal property). ¶15 We conclude that the installation of a sewer pipeline constitutes an improvement to real property within the meaning of the statute of repose. Because the sewer pipeline is an improvement, § 109 defeats appellant's negligence claim for failure to bring it within ten years from appellee's completion of the installation. COCA correctly so held. The trial court's order dismissing appellant's negligence claim as extinguished by § 109 was hence correctly affirmed. C. Breach-of-Contract Claim is Barred by the Statute of Limitations ¶16 The statute of limitations in § 95 provides that an action for breach of contract must be brought within five years if the claim arises upon a written contract and within three years if the claim arises upon a contract not in writing.36 The cause of action for breach of a contract for construction arises at the contract's completion.37 In the case at hand the contract was completed and the cause of action arose in 1996. Kirby did not file his breach-of-contract claim until eleven years later in 2007. His contract claim was dismissed by the trial court because the action was filed after the statutory period had expired. The statute of limitations clearly extinguished the plaintiff's remedy. Kirby urged that the discovery rule should be allowed to enlarge the period of limitations in § 95. By application of the discovery rule a statute of limitations may be tolled until the defect or injury is discovered or should have been discovered. Appellant argues that because the sewer line was covered by soil, even by exercise of reasonable diligence he would not have been able to discover the defect within the statutory limitation period. In short, because the defect in the line was hidden, appellant argues the discovery rule should toll the period of limitation in § 95 until the defect's discovery in 2007. ¶17 This court has declined to apply the discovery rule to suits based on breach of construction contracts.38 The statute of repose in § 109 protects builders from tort liability that otherwise might extend for an uncertain length of time after the completion of a contract. Section 109 would indeed be rendered meaningless if the discovery rule were allowed to extend § 95's limitation period to construction contracts beyond the time fixed by § 109. We must therefore hold that builders' period of statutory protection from liability granted them by the terms of § 109 must be extended with equal force to construction contracts for which the discovery rule under § 95 is sought to be invoked in an effort to avoid the effect of the time bar in § 109. COCA was correct in affirming the trial court's order that dismissed appellant's breach-of-contract claim as barred by § 95's period because no extension of that section's time bar may be allowed by application of the discovery rule. V SUMMARY ¶18 The installation of a new sewer pipeline is an improvement upon real property for the purpose of applying the statute of repose in § 109. Installing a sewer pipeline constitutes work which extends beyond normal repairs and is to be treated as an improvement to real property even when it replaces a previously existing system. ¶19 Breach-of-contract claims arising from construction contracts are not subject to the discovery rule if its application would result in extending the substantive law's time bar of § 109. ¶20 The Court of Civil Appeals' opinion is vacated and the trial court's order granting defendant's motion to dismiss is affirmed. Appellant's negligence claim stands defeated by the statute of repose in 12 O.S. 2001 § 109. His breach-of-contract claim is barred by the statute of limitations in 12 O.S. 2001 § 95. ¶21 EDMONDSON, C.J., TAYLOR, V.C.J., HARGRAVE, OPALA, WATT, WINCHESTER and REIF,JJ., CONCUR ¶22 KAUGER, J., NOT PARTICPATING ¶23 COLBERT, J., DISQUALIFIED FOOT