On July 1, 2011, the Supreme Court of Louisiana decided a case, Charles Ebinger, et ux. v. Venus Construction Corporation, et al., that focused on the interpretation of La. R.S. 9:2772. This Louisiana statute has established a specific time limit of five years to bring an action against residential building contractors. Here, the Supreme Court reversed the decision of the Third Circuit Court of Appeals, making it very clear where the law stands regarding this issue.
Let’s get our feet wet with the facts of the case to better understand the real issues and implications of this case.
The Ebinger family hired Venus Construction to build their home. Venus then hired Post-Tension Slabs, Inc. to supply the foundation. In 1997, the Ebingers moved into their home and obtained a certificate of occupancy. Six years later, the Ebingers decided to sue Venus for certain construction defects, like cracks in the wall, brick, and floors.
Before the case between the Ebingers and Venus was decided with finality by the court, Venus filed a “third-party demand” in 2006 seeking indemnification from Post-Tension. In other words, because Venus believed Post-Tension was partially responsible for these defects it was being sued for, Venus attempted to bring Post-Tension into the suit to share the potential liability if the court did end up ruling against it.
The real question that this case presents is two-fold: when does the time frame to sue under La. 9:2772 begin and does one always have the right to bring a cause of action against a residential building contractor within that time frame?
This court determined that the time frame for Venus’ third-party indemnification action against Post-Tension began when the Ebingers obtained a certificate of occupancy in 1997.
Which brings me to the second fold of this two-fold issue: one does not always have the right to a cause of action under this statute. Your right must be “vested.” Whether a right to take action is vested is contingent on the outcome of the original claim itself. At the time Venus’ attempted the third-party action against Post-Tension, the outcome of the Ebinger suit was not settled. And by the time that suit was settled, the five-year time period had passed. So, tough luck for Venus, as they are basically punished because the Louisiana court system can be so slow…
Two bottom lines here:
The five-year time period for actions involving construction defects by residential building contractors always begins when the building is first occupied, i.e. when the certificate of occupancy is obtained; but
Just because the time period starts to run does not mean that you, as a contractor being sued for defects, have a right to bring a third-party contractor into the same suit for indemnification; your right is established if and when the original case is settled against you.
Remembering these nuances as a residential building contractor can make all the difference when it comes to how much liability you will bear if you are ever sued for construction defects.