Pennsylvania litigators in the construction world are intimately familiar with the Commonwealth’s Statute of Repose. Enacted in 1976, the statute imposes a complete bar to claims by litigants seeking to hold a builder accountable for defects in construction (as well as design, planning, supervision, or observation thereof) 12 years after completion of construction.
“The Statute of Repose imposes a complete bar to claims more than 12 years after construction is completed — but what happens when the work wasn’t ‘lawfully performed’?“
To many, 12 years seems like a long time, and the barring of claims after that time is apparently reasonable. This has not stopped the issue from being litigated over the years, and litigants testing the bounds of what claims actually fall within the statute’s purview.
The Aloia case: A challenge to traditional interpretation
The most recent and, at this time in the construction industry, the most important case involving the scope of the statute is Aloia v. Diament Building Corp., an action filed in March 2021. Aloia is a case brought by subsequent purchasers of a home, the construction of which was completed, according to the latest issued certificate of occupancy, in February 2007. Traditionally, the Statute of Repose in this case would bar an action filed after February 2019, and the builder, not surprisingly, argued that it does.
The plaintiffs’ argument: Was the work “Lawfully” performed?
However, getting creative, the plaintiffs argued that the statute does not apply because they have asserted that the builder violated the International Residential Code (IRC), thereby rendering the performance of the construction “unlawful.” The statute expressly applies to “any person lawfully performing or furnishing” construction services. 42 Pa. C.S.A. § 5536 (a). By extension, they argued that since the construction (allegedly) violated the IRC, the builder cannot be considered to have been lawfully performing the construction and therefore, the statute does not apply in this particular case.
“At the heart of Aloia is a fundamental question: Does a building code violation erase statutory protections for builders?”
Key issues before the Supreme Court of Pennsylvania
The case, which was dismissed on a motion for summary judgment at the trial court level based on application of the Statute of Repose, a ruling affirmed by the Superior Court of Pennsylvania, has been certified for appeal to the Supreme Court of Pennsylvania. The Court is poised to consider two issues on appeal: (1) whether the date of issuance of a certificate of occupancy is dispositive for purposes of determining completion of construction under the statute; and (2) whether the statute bars an action where building codes make certain violations “unlawful” thereby raising a question of fact as to whether the construction was “lawfully performed.”
“If the Court agrees that ‘lawfully’ excludes code-violating work, the definition of completion — and liability — could shift dramatically.”
Industry response and broader implications
A number of trade organizations have filed amicus briefs with the Court defending the application of the Statute of Repose in this case. The issue, which has garnered a great deal of attention across the construction industry, from residential to commercial, and industrial builders and owners alike, is being considered at the legislative level as well.
“The outcome of Aloia could fundamentally reshape how risk is allocated in construction — from residential homes to complex commercial builds.”
The Court’s decision could have far-reaching implications for all players in the industry, not to mention the definition of “lawfully” as it applies in the legal world.
Stay tuned — the outcome of Aloia could redefine the boundaries of liability for Pennsylvania’s builders. If you have questions concerning this case or other construction law matters, please contact Veronica Morrison or another member of the McNees Construction and Procurement Law Practice Group.