We recently declined to accept a personal injury case associated with an injury suffered in a partial deck collapsed because the house in question was built in 1999. The bank (owner post foreclosure) had taken the property back in foreclosure. When we investigated the injury we determined that the injuries the putative plaintiff suffered were barred by the statute of limitations and/or the statute of repose associated with real property. The house was built in 1999. The foreclosure occurred and injury occurred in 2010.
Georgia, like many states, bars all actions or injury to persons or properties associated with real property after the passage of eight (8) years. OCGA § 9-3-51. That statute reads in pertinent part as follows:
OCGA § 9-3-51. Limitations On Recovery For Deficiency In Planning, Supervising, Or Constructing Improvement To Realty Or For Resulting Injuries To Property Or Person
(a) No action to recover damages:
(1) For any deficiency in the survey or plat, planning, design, specifications, supervision or observation of construction, or construction of an improvement to real property;
(2) For injury to property, real or personal, arising out of any such deficiency; or
(3) For injury to the person or for wrongful death arising out of any such deficiency shall be brought against any person performing or furnishing the survey or plat, design, planning, supervision or observation of construction, or construction of such an improvement more than eight years after substantial completion of such an improvement.
(b) Notwithstanding subsection (a) of this Code section, in the case of such an injury to property or the person or such an injury causing wrongful death, which injury occurred during the seventh or eighth year after such substantial completion, an action in tort to recover damages for such an injury or wrongful death may be brought within two years after the date on which such injury occurred, irrespective of the date of death, but in no event may such an action be brought more than ten years after the substantial completion of construction of such an improvement.
There is, to some extent, an extension of two (2) years if a significant personal injury or wrongful death occur at the very end of the eight year statute of limitations. It would appear that pursuant to OCGA § 9-3-51(b) an action may be maintained for two (2) years beyond the eight (8) years. That is, a wrongful death action can be (theoretically) maintained for ten (10) years after the completion of the property.
The Court of Appeals recently reaffirmed this (statute of limitations and statute of repose) doctrine in Wilhelm v. Houston County, et. al, Ga. Ct .App., 3d Division, Ct. App. No. A11A0255 (June 21, 2011), when it found that Sussex Construction Company and Houston County, Georgia were not responsible for significant damages caused by a defective septic tank field and septic tank installation.
It appears that Houston County instructed the developer to build the field properly, the developer did not do so. Nevertheless, the statute of limitations and statute of repose completely barred any action against the developer and the County (notwithstanding how meritorious that action was) by the landowner. The Court of Appeals wrote in Wilhelm, supra:
Wilhelm contends that the trial court erred in concluding that her claims against Sussex and the health department are barred by OCGA § 9-3-51.
Under OCGA § 9-3-51 (a) (1) and (2),
[n]o action to recover damages... [f]or any deficiency in the survey or plat, planning, design, specifications, supervision or observation of construction, or construction of an improvement to real property... [or for] injury to property, real or personal, arising out of any such deficiency... shall be brought against any person performing or furnishing the survey or plat, design, planning, supervision or observation of construction, or construction of such an improvement more than eight years after substantial completion of such an improvement.
(a) In this case, Wilhelm’s house (and the septic system) were completed before she moved in in November 1995, but she did not file suit for damages allegedly resulting from construction defects in the septic system and/or the development of the property until December 2004, more than nine years later. Thus, her claims against Sussex and the health department are barred by OCGA § 9-3-51.
(b) Wilhelm argues, however, that OCGA § 9-3-51 does not apply to her claims, because the septic system is not an “improvement to real property” as that term is used in the statute. She argues that, because the system was “faulty” and did not perform properly, it did not “add value” to the property, suggesting that only improvements which perform properly and do not cause damage “add value” to the property and, therefore, only those improvements would be subject to the limitation period in OCGA § 9-3-51. This argument lacks merit, however, because the statute specifically applies to “deficiencies” in the design or construction of an improvement to real property that causes personal injury or property damage, such as the septic system in this case. It follows that, while an improvement that works properly and does not cause any damage arguably “adds value” to the property, it could not be deemed as having a “deficiency” and, because it caused no damage, no cause of action would arise from its use. Therefore, the statute would not apply in such a case. See Armstrong v. Royal Lakes Assoc., 232 Ga.App. 643, 645 (1) (502 S.E.2d 758) (1998) (ruling that OCGA § 9-3-51 (a) did not apply to the case because it “did not involve a deficiency in the construction of an improvement to real property”) (citation omitted). [3]
(c) Further, although Wilhelm asserted a cause of action for fraud in her complaint, a fraudulent act or statement by a defendant does not toll the statutory repose period of OCGA § 9-3-51, because “the statute of repose abrogates the action, and fraud under OCGA § 9-3-96[ [4] ] does not toll the statute of repose.” Esener v. Kinsey, 240 Ga.App. 21, 23 (522 S.E.2d 522) (1999). However, a defendant may be equitably estopped from raising the defense of the statute of repose if the plaintiff reasonably relied on a fraudulent act or statement by the defendant that occurred after the plaintiff’s injury accrued and, as a result of that fraud, the plaintiff did not file suit until after the repose period expired. Id. at 22-24.
In this case, though, Wilhelm failed to allege or to present evidence of any fraudulent act or statement to her by any of the defendants regarding the property’s history of drainage problems, or the possible causes thereof, that occurred after she purchased the property or of any fraud that prevented her from filing her cause of action before 2004. Consequently, the defendants were not equitably estopped from raising a defense based upon the expiration of the statutory repose period of OCGA § 9-3-51. Id.
2. Wilhelm also argues that her nuisance [5] claim is not barred by OCGA § 9-3-51, because the sewage backup from her negligently installed septic system constituted a “continuing nuisance” that is not subject to the eight-year statute of repose limitation period. [6]
(a) This argument fails, however, because Wilhelm could not maintain a nuisance action under the facts asserted in her complaint. In Morgan Constr. Co. v. Kitchings, 110 Ga.App. 599 (139 S.E.2d 417) (1964), this Court held that a plaintiff cannot maintain a nuisance claim that is based upon damage to a house resulting from a defect constructed into the house that was concealed from the plaintiff by the builder and/or the seller. Instead, the applicable causes of action are fraud (against the seller) and/or negligent construction (against the builder). Cendant Mobility Financial Corp. v. Asuamah, 285 Ga. 818, 820-822 (684 S.E.2d 617) (2009) [7]; Morgan Constr. Co. v. Kitchings, 110 Ga.App. at 599.
(b) Moreover, in her complaint, Wilhelm alleged that, “with knowledge of the hydric soil and/or wetland condition of the property and the placement of fill dirt on the property, ” Sussex “negligently and willfully pushed for and received the approval of the lot for a septic tank” and negligently installed the septic tank on the property, and the county and the health department “negligently and willfully approve[d] the lot for a septic tank.” The complaint alleged that these actions, both individually and in concert, resulted in the maintenance of a continuing nuisance on her property that amounted to a taking of her private property right. However, although the “continuing nuisance” (the sewage backup and related problems) began appearing shortly after Wilhelm purchased the property, she failed to allege any acts by the defendants after the installation of the septic system that could conceivably constitute their “maintenance” of either the septic system or the problems it created.
Thus, the defendants’ acts that, according to Wilhelm, resulted in the problems she experienced were not just related to the “construction of an improvement to real property, ” they were essential to such construction and occurred prior to the substantial completion of the improvement. Accordingly, any cause of action for damage to real property that resulted from the deficiencies in such construction is subject to the eight-year statute of repose in OCGA § 9-3-51. Wilhelm’s argument to the contrary is without merit.
3. Although the trial court did not rule on whether Wilhelm’s nuisance claim against the county is barred by OCGA § 9-3-51, [8] its grant of summary judgment to the county on the claim should be affirmed for the reasons given in Divisions 1 and 2 under the “right for any reason” rule. [9] See McPherson v. McPherson, 307 Ga.App. 548, 550 (1) (705 S.E.2d 314) (2011).
4. Having determined that Wilhelm’s claims are barred, her remaining alleged errors are moot.
Judgment affirmed. Wilhelm at A11A0255.
This legal ruling is not inconsistent with the 2009 Court of Appeal’s ruling in Rosenberg v. Falling Water, Inc., 302 Ga. App. 78, 690 S.E.2d 183 (2009), where the Court of Appeals denied recovery to Mr. Rosenberg despite the showing of substantial and significant serious injuries. While the facts of ownership are a bit convoluted, Richard Rosenberg suffered serious injuries on August 31, 2005, when a deck collapsed on a home he had purchased in 2005. The house was built in Kennesaw, Georgia and the City of Kennesaw issued a Certificate of Occupancy on June 14, 1994. The date of the completion of the home was more than eight (8) years prior to Mr. Rosenberg's injury. In Rosenberg, the Court of Appeals affirmed that the eight (8) year statute of limitations barred all actions against the builder, developer and former owner of the house, notwithstanding the severity of Rosenberg’s injuries or the glaring negligent construction.
Conclusion
In this continuing wave of bank foreclosures and significant real estate owned (REO) ownership by banks, banks (as all owners) now find themselves, generally, immune from suit. The REO bank’s new found immunity is based on the fact that most of the properties the banks take back were built more than eight (8) prior to the foreclosure.
Hugh Wood, Esq.
Wood & Meredith, LLP
3756 LaVista Road
Suite 250
Atlanta (Tucker), GA 30084
Phone: 404-633-4100
Fax: 404-633-0068
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