Court Opinion

ID: 2711400
Source: CourtListenerOpinion
Date Created: 2014-08-05 20:07:22.34964+00
Date Added: 2024-06-11T13:10:06.110354
License: Public Domain

286	                  April 24, 2014	                 No. 25

          IN THE SUPREME COURT OF THE
                STATE OF OREGON

         SUNSET PRESBYTERIAN CHURCH,
            an Oregon non-profit corporation,
                 Respondent on Review,
                              v.
             BROCKAMP & JAEGER, INC.,
            an Oregon non-profit corporation,
                   Petitioner on Review,
                             and
              ANDERSON ROOFING, CO.,
                 an Oregon corporation;
           Shupe Roofing, Inc., fka Epuhs, Inc.,
 and/or Dial One Shupe Roofing, an Oregon corporation;
Positive Construction, Inc., an inactive Oregon corporation;
       Woodburn Masonry, an Oregon corporation;
  Sharp & Associates, Inc., an Oregon corporation; and
Portland Sheet Metal Works, Inc., an Oregon corporation,
                Defendants-Respondents,
                             and
           DIVERS WINDOW & DOOR, INC.,
          an inactive Oregon corporation, et al;
   and The Harver Company, an Oregon corporation,
                        Defendants.

         SUNSET PRESBYTERIAN CHURCH,
            an Oregon non-profit corporation,
                  Respondent on Review,
                              v.
             BROCKAMP & JAEGER, INC.,
                 an Oregon corporation;
           Shupe Roofing, Inc., fka Epuhs, Inc.,
 and/or Dial One Shupe Roofing, an Oregon corporation;
Positive Construction, Inc., an inactive Oregon corporation;
       Woodburn Masonry, an Oregon corporation;
  Sharp & Associates, Inc., an Oregon corporation; and
Portland Sheet Metal Works, Inc., an Oregon corporation,
                Defendants-Respondents,
Cite as 355 Or 286 (2014)	287

                           and
              ANDERSON ROOFING, CO.,
                 an Oregon corporation,
                  Petitioner on Review,
                           and
           DIVERS WINDOW & DOOR, INC.,
          an inactive Oregon corporation, et al;
     and The Harver Company, an Oregon corporation,
                       Defendants.
              (CC C091601CV; CA A146006;
             SC S061171 (Control), S061185)

   En Banc
   On review from the Court of Appeals.*
   Argued and submitted on January 13, 2014.
   Anne Cohen, Smith Freed & Eberhard P.C., Portland,
argued the cause and filed the briefs for petitioner on review
Brockamp & Jaeger, Inc. With her on the brief was Bruce R.
Gilbert.
   Michael T. Stone, Brisbee & Stockton, LLC, Hillsboro,
argued the cause for petitioner on review Anderson Roofing
Co., Inc.
   Daniel T. Goldstein, Ball Janik, LLP, Portland, argued
the cause and filed the briefs for respondent on review.
   Michael J. Vial, Vial Fotheringham, LLP, Portland, filed
the brief for amicus curiae Oregon Trial Lawyers Association.
   WALTERS, J.
   The decision of the Court of Appeals is affirmed. The
judgment of the circuit court is reversed, and the case is
remanded to the circuit court for further proceedings.

______________
	 * Appeal from Washington County Circuit Court, Donald R. Letourneau,
Judge. 254 Or App 24, 295 P3d 62 (2012).
288	       Sunset Presbyterian Church v. Brockamp & Jaeger

     Defendants appealed a decision of the Court of Appeals reversing the trial
court’s award of summary judgment. The Court of Appeals had held that the
trial court erred in awarding summary judgment because disputed questions of
material fact remained as to the date on which construction was substantially
complete. Held: The decision of the Court of Appeals is affirmed. Under the terms
of the parties’ contract, plaintiff’s claims accrued on the date that the architect
issued a Certificate of Substantial Completion, not on the date that plaintiff first
used the construction for its intended purpose. Plaintiff’s claims were not time-
barred under ORS 12.135, because evidence of the date on which construction was
fully complete was contested. The decision of the Court of Appeals is affirmed.
    The judgment of the circuit court is reversed, and the case is remanded to the
circuit court for further proceedings.
Cite as 355 Or 286 (2014)	289

	          WALTERS, J.
	        In this construction defect case, we interpret the
meaning of the contractual term “date of substantial com-
pletion” and the statutory term “substantial completion” to
decide whether defendants were entitled to summary judg-
ment on the basis that plaintiff’s tort claims were barred
either by the statute of limitations or by the statute of ulti-
mate repose. We conclude that defendants were not entitled
to summary judgment, affirm the decision of the Court of
Appeals, reverse the judgment of the trial court, and remand
to the trial court for further proceedings.
	        We take the following uncontested facts from the
record on summary judgment. Plaintiff Sunset Presbyterian
Church contracted with defendant Brockamp & Jaeger to
act as its general contractor and build a new church facility.
Plaintiff and defendant executed a standard form contract
provided by the American Institute of Architects (AIA). Defen-
dant then subcontracted with Anderson Roofing Company
(defendant subcontractor) and other subcontractors to per-
form various specialized construction tasks.1 Plaintiff did
not enter into a contractual relationship with any of the
subcontractors.
	         Construction began in 1998. On February 14, 1999,
plaintiff held its first services in the church, and on March 14,
1999, held a dedication ceremony. In May 1999, defendant
general contractor issued plaintiff a warranty that extended
for one year from February 7, 1999, a date that defendant
identified as the “substantial completion date.” The county
issued a certificate of final occupancy on May 28, 1999, but
additional work continued during the summer of 1999, and
it was not until November 19, 1999, that the architect issued
approval for final payment to defendant.
	         In early 2009, plaintiff allegedly discovered exten-
sive water damage in the church, and on March 16, 2009,
it filed an action asserting tort claims against defendants.
Defendant general contractor filed an affirmative defense
alleging that, by the terms of the parties’ contract, plaintiff’s

	1
       The other subcontractors were joined as defendants, but they did not seek
review in this court; we do not discuss them further.
290	       Sunset Presbyterian Church v. Brockamp & Jaeger

claims accrued on the “date of substantial completion” and
were time-barred. Defendant subcontractor, which was not a
party to that contract, filed an affirmative defense alleging
that plaintiff’s claims were barred by the statute of ultimate
repose provided in ORS 12.135.2 Both defendants moved for
summary judgment.
	        The trial court granted defendants’ motions and
dismissed the case. The Court of Appeals reversed. Sunset
Presbyterian Church v. Brockamp & Jaeger, 254 Or App 24,
295 P3d 62 (2012). Defendants then petitioned for review.
This court granted defendants’ petitions and, for purpose
of oral argument, consolidated this case with a companion
case, PIH Beaverton, LLC v. Super One, Inc., 254 Or App
486, 294 P3d 536 (2013). We begin with the issue presented
by defendant general contractor and consider whether it was
entitled to judgment as a matter of law.
	        Generally, for purposes of the statute of limitations,
tort claims accrue when the plaintiff knows or should know
that an injury has occurred. See Rice v. Rabb, 354 Or 721,
725, 320 P3d 554 (2014) (holding that discovery rule applies
to tort actions referenced in ORS 12.080 and ORS 12.110).
Defendant contends that, in this case, the parties altered,
by contract, the date on which plaintiff’s claims accrued. For
purposes of this opinion only, we will assume that the con-
tractual provision on which defendant relies—Paragraph
	2
         ORS 12.135 was amended by the legislature in 2009, effective January 1,
2010; those amendments do not affect this case, and we refer to the 2007 version
of the statute. See Or Laws 2009, ch 715, §§ 1, 3. When plaintiff filed its action,
ORS 12.135 (2007) provided, in part:
     	    “(1)  An action against a person, whether in contract, tort or otherwise,
     arising from such person having performed the construction, alteration or
     repair of any improvement to real property *  * shall be commenced within
                                                      * 
     the applicable period of limitation otherwise established by law; but in any
     event such action shall be commenced within 10 years from substantial
     completion or abandonment of such construction, alteration or repair of the
     improvement to real property.
     	    “* * * * *
     	    “(3)  For purposes of this section, ‘substantial completion’ means the date
     when the contractee accepts in writing the construction, alteration or repair
     of the improvement to real property or any designated portion thereof as hav-
     ing reached that state of completion when it may be used or occupied for its
     intended purpose or, if there is no such written acceptance, the date of accep-
     tance of the completed construction, alteration or repair of such improvement
     by the contractee.”
Cite as 355 Or 286 (2014)	291

13.7.1.1—could have that effect and turn to an analysis of
that provision.3
	        Paragraph 13.7.1.1 provides that claims arising
from “acts or failures to act occurring prior to the rele-
vant date of Substantial Completion” of the construction
“accrue[  and “any applicable statute of limitations shall
         ]”
commence to run * * * not later than such date of Substantial
Completion.”  (Emphasis added.) Paragraph 9.8.1 defines
             4

“Substantial Completion” as “the stage in the progress of the
Work when the Work or designated portion thereof is suffi-
ciently complete in accordance with the Contract Documents
so the Owner can occupy or utilize the Work for its intended
use.” Paragraph 8.1.3 provides that the “date of Substantial
Completion is the date certified by the Architect in accor-
dance with Paragraph 9.8.”
	        Paragraph 9.8.2 includes steps that the contractor,
architect, and owner of the property must take before the
architect issues a Certificate of Substantial Completion.
First, “[w]hen the Contractor considers that the Work *  *
                                                         * 
is substantially complete, the Contractor shall prepare and
submit to the Architect a comprehensive list of items to be
completed or corrected.” Then, the architect must perform
an “inspection” and thereby determine that the “Work or
designated portion thereof is substantially complete.” At
that point, the architect
    “will prepare a Certificate of Substantial Completion which
    shall establish the date of Substantial Completion, shall
    establish responsibilities of the Owner and Contractor
    for security, maintenance, heat, utilities, damage to the
    Work and insurance, and shall fix the time within which

	3
       Plaintiff and amicus curiae Oregon Trial Lawyers Association argue that
the accrual clause in Paragraph 13.7.1.1 of the parties’ contract cannot have the
effect that defendant proposes. Plaintiff argues that the accrual of tort claims in
this case remains independent of the parties’ contract because the contract did
not clearly and unequivocally waive or limit recovery in tort. Amicus argues that,
under Oregon law, a contract may not function to waive tort claims. We do not
reach either argument.
	4
       Paragraph 13.7.1.1 provides:
    	 “As to acts or failures to act occurring prior to the relevant date of
    Substantial Completion, any applicable statute of limitations shall commence
    to run and any alleged cause of action shall be deemed to have accrued in any
    and all events not later than such date of Substantial Completion.”
292	       Sunset Presbyterian Church v. Brockamp & Jaeger

    the Contractor shall finish all items on the list accompa-
    nying the Certificate. *  * The Certificate of Substantial
                             * 
    Completion shall be submitted to the Owner and Contractor
    for their written acceptance of responsibilities assigned to
    them in such Certificate.”
	        Defendant did not include an architect’s Certificate
of Substantial Completion in the documents that it submit-
ted in support of its motion for summary judgment, nor does
it argue that the evidence that it did submit established that
such a certificate ever had been issued.5 Rather, defendant
argues that Paragraph 13.7.1.1 should be interpreted to
mean that the applicable statute of limitations begins to run
when construction is “substantially complete” from a func-
tional standpoint: the point at which construction meets
the contractual definition of substantial completion (i.e., is
sufficiently complete so the owner can occupy or use it as
intended). According to defendant, the date that a Certificate
of Substantial Completion is issued is one way to prove that
functionality, but it is not the only way. Defendant contends
that other evidence, such as the date that the construction
is occupied or used for its intended purpose, also may estab-
lish the date of substantial completion. In this case, defen-
dant argues, plaintiff occupied and used the church for its
intended purposes at some point in 1999. Therefore, defen-
dant submits, the statute of limitations began to run in 1999
and, regardless whether a two-year or a six-year statute
of limitations applies, plaintiff’s claims are time-barred.6
Plaintiff did not file its complaint until March 2009, more
than 10 years from the date that the church was “substan-
tially complete.”
	       Thus, the parties’ arguments focus on different con-
tractual provisions. Defendant argues that plaintiff’s claims
accrued when construction was “Substantially Complete,”

	5
      The parties agree that no Certificate of Substantial Completion can be
located; we do not know whether that is because no certificate was ever issued.
	6
       ORS 12.080 imposes a six-year statute of limitations for actions for injury
to any interests of another in real property. ORS 12.110 imposes a two-year stat-
ute of limitations for actions for injury to the rights of another not arising on
contract and not especially enumerated in chapter 12. We do not decide which
of those statutes of limitations is applicable in this case. Defendant general con-
tractor does not argue that the statute of ultimate repose provided in ORS 12.135
bars plaintiff’s action.
Cite as 355 Or 286 (2014)	293

as that term is defined in Paragraph 9.8.1—“the stage in the
progress of the Work when the Work * * * is sufficiently com-
plete *  * so the Owner can occupy or utilize the Work for
        * 
its intended use.” Plaintiff contends that, under Paragraph
13.7.1.1, its claims accrued on the date of Substantial
Completion and that the “date of substantial completion”
is as defined in Paragraph 8.1.3—when an architect deter-
mines that the construction is “substantially complete” and
issues a certificate to that effect.
	        Paragraph 9.8.1 defines “Substantial Completion”
as a “stage” in the progress of the work, and Paragraph 8.1.3
defines the “date” of Substantial Completion. The contract
does not further define the words “stage” or “date,” but the
difference in the terms is obvious from their dictionary defi-
nitions. The dictionary defines “stage” as “a period or step
in a process, activity, or development.” Webster’s Third New
Int’l Dictionary 2219 (unabridged ed 2002). The dictionary
defines “date” as “the point of time at which a transaction or
event takes place or is appointed to take place: a given point
of time.” Id. at 576. Thus, a stage may extend over a period
of time, while a date is a specific point in time.
	         Accordingly, under the terms of the parties’ contract,
if a contractor were to consider construction fit for occupancy
or use on, for example, March 1, any date after March 1 would
be a date within the “stage” of Substantial Completion. By the
terms of the parties’ contract, however, claims do not accrue
during the “stage” of Substantial Completion but only on a
specific “date of Substantial Completion.” Paragraph 13.7.1.1
(emphasis added). Paragraph 8.1.3 defines the “date of
Substantial Completion” as one date—the “date certified by
the Architect in accordance with Paragraph 9.8.” Therefore,
in our example, the “date of Substantial Completion” could
only be the specific date after March 1 designated by the
architect in the Certificate of Substantial Completion.
	        We therefore agree with plaintiff that evidence that
plaintiff occupied and used the property for its intended
purpose beginning sometime in February 1999, and at the
latest by March 14, 1999, does not establish the date on
which plaintiff’s claims accrued under Paragraph 13.7.1.1.
Under that provision, plaintiff’s claims accrued only on the
294	       Sunset Presbyterian Church v. Brockamp & Jaeger

date that the architect issued a Certificate of Substantial
Completion.
	        Defendant’s complaints about that result are mis-
directed. Defendant submits that architects are hired by
owners and that there may be many reasons why architects
may not issue Certificates of Substantial Completion or may
do so inaccurately.7 Therefore, defendant contends, tying
accrual to an architect’s act will create poor public policy for
Oregon. But it is the parties’ contract, not otherwise applica-
ble Oregon law, that establishes that accrual date.8 Parties
who enter into contracts choose the policies that they wish
to have apply to their transactions, and, as the court said in
Morgan v. State Farm Life Ins. Co., 240 Or 113, 117, 400 P2d
223 (1965), “we are not at liberty to create a new contract
for the parties.” See ORS 42.230 (in construing a document,
court is “to ascertain and declare what is, in terms or in
substance, contained therein, not to insert what has been
omitted, or to omit what has been inserted”); Williams v. RJ
Reynolds Tobacco Co., 351 Or 368, 379, 271 P3d 103 (2011)
(citing statute).
	       Our decision does not mean, of course, that the con-
struction in this case was never substantially complete—
indeed, defendant’s work may well have been fully complete
at some point in 1999, when final payment was authorized.

	7
       Defendant raises the possibility that an architect in bad faith could refuse
to supply a Certificate of Substantial Completion, although defendant does not
suggest that that occurred in this case. We note that the parties’ contract pro-
vides for mediation in the event of disputes. See Paragraph 4.4.1 (“any dispute
that may arise under this Agreement will be submitted to a mediator agreed
to by both parties as soon as such dispute arises”). We further note that, if a
contractor were able to establish that it had taken all possible steps to obtain a
Certificate of Substantial Completion but that the architect, acting as the owner’s
agent, refused to cooperate in the process, the contractual requirement poten-
tially could be deemed satisfied. See Gilbert v. California Oregon Power Co., 223
Or 1, 15-16, 353 P2d 870 (1960) (where one party prevents another from perform-
ing under the terms of a contract, the party preventing performance may not
avail itself of the failure). That is not the circumstance here, however.
	8
       We note that the current version of the AIA standard form contract now
leaves the date that the statute of limitations begins to run to state law. See The
American Institute of Architects, §13.7 AIA Document Commentary A201-2007
General Conditions of the Contract for Construction, Time Limits on Claims,
52 (2007) (“The Owner and Contractor shall commence all claims and causes of
action * * * within the time period specified by applicable law, but in any case not
more than 10 years after the date of Substantial Completion of the Work.”).
Cite as 355 Or 286 (2014)	295

But without evidence that an architect issued a Certificate
of Substantial Completion, defendant cannot rely on
Paragraph 13.7.1.1 as establishing the date that plaintiff’s
claims accrued. Our decision also does not mean that plain-
tiff had unlimited time within which to bring its action
against defendant. Plaintiff was required to bring its action
within the statute of limitations or, at the very latest, within
the period of ultimate repose provided by ORS 12.135.9
	        We also note, as we did at the outset, that defen-
dant does not argue before this court that the evidence that
it adduced in support of its motion for summary judgment
was sufficient to establish that the architect in fact issued a
Certificate of Substantial Completion, even though it could
not be located. In appropriate circumstances, a party’s
inability to produce a document may not foreclose it from
proving its existence. See, e.g., Pac. States Fire Ins. Co. v.
C. Rowan Motor Co., 122 Or 665, 670, 260 P. 441 (1927) (parol
evidence admissible to prove the existence of a document but
not its contents or legal efficacy); President & Trustees of
Tualatin Acad. & Pac. Univ. v. Keene, 59 Or 496, 503, 117
P. 424 (1911) (affidavit ascribing to the making and delivery
of a mortgage and its loss before being recorded admissi-
ble to prove the existence of the mortgage). However, on the
record before us, the trial court erred in granting defendant
general contractor summary judgment based on Paragraph
13.7.1.1 of the parties’ contract.
	        We now turn to defendant subcontractor’s argument
that plaintiff’s claims are barred by the statute of ultimate
repose provided in ORS 12.135. We address a similar argu-
ment in PIH Beaverton, LLC v. Super One, Inc., 355 Or 267,
___ P3d ___ (2014), also decided today. In that case, we con-
clude that, in the absence of a written acceptance, the limita-
tions period of ORS 12.135 begins to run on the date on which
the contractee accepts the construction as fully complete, as
opposed to accepting the construction as “sufficiently com-
plete for its intended use or occupancy.” Id. at 284.

	9
      Plaintiff takes the position that Paragraph 13.7.1.1 does not determine the
date that its tort claims accrued. Therefore, plaintiff cannot rely on that para-
graph as extending the date of accrual until the date that the architect issues a
Certificate of Substantial Completion.
296	    Sunset Presbyterian Church v. Brockamp & Jaeger

	        In this case, defendant subcontractor contends
that the 10-year limitations period of ORS 12.135 began
to run on or before March 14, 1999, when the church held
its dedication service. The date of that service is relevant
evidence that defendant accepted the construction as fully
complete on that date, but that is not the only evidence in
the record. Plaintiff offered evidence that construction con-
tinued after March 14, that neither the architect nor the
owner considered the construction to be complete on that
date, and that the county did not issue a certificate of final
occupancy until May 28, 1999. Because evidence of the date
on which construction was fully complete is contested, the
trial court erred in granting summary judgment to defen-
dant subcontractor.
	      In summary, the trial court erred in granting both
defendants’ motions for summary judgment.
	       The decision of the Court of Appeals is affirmed.
The judgment of the circuit court is reversed, and the case
is remanded to the circuit court for further proceedings.