Tag Archives: Contracts – Enforcement

Not So Fast: Washington Court Finds the One-Year Limitations Period in a Residential Construction Contract Is Unenforceable


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In Tadych v. Noble Ridge Constr., Inc., No. 100049-9, 2022 Wash. LEXIS 545, the Supreme Court of Washington (Supreme Court) considered whether the lower court erred in enforcing a one-year accelerated limitations period clause in a construction contract. The Supreme Court considered the extent to which the provision hindered the plaintiffs’ statutory rights – as set forth in Wash. Rev. Code § 4.16.310 – which provides homeowners with a six-year repose period for construction defect claims.  The court found that the contractual provision’s shortening of the time period from six years to one year was a gross deprivation of the plaintiffs’ statutory rights and was unfairly one-sided in favor of the defendant.  As such, the court held that the provision was substantively unconscionable and, thus, unenforceable.

The plaintiffs, Gregory and Sue Tadych, hired the defendant, Noble Ridge Construction, Inc. (Noble Ridge), to build a custom home.  Noble Ridge provided its standard contract, which included a warranty provision.  The provision stated that “any claim or cause of action arising under this Agreement, including under this warranty, must be filed in a court of competent jurisdiction within one year (or any longer period stated in any written warranty provided by the Contractor) from the date of Owner’s first occupancy of the Project or the date of completion. . . .”  The provision also stated that “any claim or cause of action not so filed within this period [was] conclusively considered waived.”

The plaintiffs occupied their new home in April 2014.  In April 2017, the plaintiffs hired construction experts who confirmed several construction defects in the home, including poor structural ventilation, water intrusion and code violations.  Shortly thereafter, roughly three years after the plaintiffs first occupied the home, they sued Noble Ridge.  Noble Ridge filed a motion for summary judgment based on the one-year limitations period in the contract.  The trial court agreed that the one-year limitation period in the contract barred the plaintiffs’ claims and dismissed the case.  The Court of Appeals for the State of Washington (Court of Appeals) affirmed.

As noted by the Supreme Court, the question of whether a contract is unconscionable is a question of law to be reviewed de novo.  Washington recognizes two categories of unconscionability: substantive or procedural, either one of which is sufficient to void a contract.    The court defined substantive unconscionability simply as “unfairness of the terms or results,” and focused its analysis on the effect the contractual provision had on existing statutory rights available to the plaintiffs.

Discussing Wash. Rev. Code § 4.16.310, the court noted that it provides homeowners a six-year statute of repose period to seek damages for construction defects, which begins to run at substantial completion or termination of construction services.  The court also noted that the public policy underlying the statute is to allow sufficient time to investigate a claim while protecting against defending stale claims.  The legislature balanced these two possible harms when it established the six-year statutory repose period.  Thus, the court found that the one-year limitations provision effectively abolished the plaintiffs’ statutory rights under § 4.16.310.  As stated by the court, the shortening of the limitations period from six years to one year was one-sided in favor of the defendant that the provision was unconscionable, and thus enforceable. Since the plaintiffs’ lawsuit was timely under the statute, the court reversed the Court of Appeal’s decision and reinstated the plaintiffs’ case.

The Noble Ridge case reminds us that Washington provides protections against unconscionable contract provisions, particularly those that significantly hinder a claimant’s statutory rights.  As such, subrogation professionals practicing in Washington should consider this decision when reviewing accelerated limitation provisions as there may be legitimate challenges to substantively unfair terms.

This entry was posted in Construction Defects, Contracts, Statute of Limitations-Repose, Washington and tagged , , , , , .
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Too Costly to Be Fair: Texas Appellate Court Finds the Arbitration Clause in a Residential Construction Contract Unenforceable


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In Cont’l Homes of Tex., L.P. v. Perez, No. 04-21-00396-CV, 2022 Tex. App. LEXIS 7691, the Court of Appeals of Texas (Appellate Court) considered whether the lower court erred in refusing to enforce an arbitration clause in a construction contract between the parties. The Appellate Court considered the costs of the arbitration forum required by the contract in the context of the plaintiffs’ monthly household income. The court also compared the arbitration cost to the estimated cost of litigating the dispute. The court held that the arbitration clause was substantively unconscionable on the grounds that the arbitration costs were not affordable for the plaintiffs and not an “adequate and accessible substitute to litigation.”  The Appellate Court affirmed the lower court’s decision denying the defendant’s motion to compel arbitration. Continue reading

This entry was posted in Arbitration, Construction Defects, Contracts, Texas and tagged , , , , , .
Community Buildings

Public Policy Prevails: Homebuilders and Homebuyers Cannot Agree to Disclaim Implied Warranty of Habitability in Arizona


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In Zambrano v. M & RC II LLC, et al., 2022 Ariz. LEXIS 309, the Supreme Court of Arizona held that a homebuilder and homebuyer could not waive or disclaim the implied warranty of workmanship and habitability. While the court would normally enforce a contract between two parties – even if one side made a “bad deal” – they will not do so if the contract’s terms are against public policy. Continue reading

This entry was posted in Arizona, Construction Defects, Contracts, Public Policy, Warranty - Construction and tagged , , , , , .
Signing Agreement

In All Fairness: Illinois Appellate Court Finds That Arbitration Clause in a Residential Construction Contract Was Unconscionable and Unenforceable


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In Bain v. Airoom, LLC, No. 1-21-001, 2022 Ill. App. LEXIS 241, the Appellate Court of Illinois (Appellate Court) considered whether the lower court erred in enforcing an arbitration clause in a construction contract between the parties and, as a result, dismissing the plaintiff’s lawsuit. The Appellate Court found that even if the arbitration clause was enforceable, the appropriate action would have been for the court to stay the lawsuit, as opposed to dismissing the case entirely. The Appellate Court then considered the language of the arbitration clause and found that several provisions were substantively unconscionable, which rendered the entire arbitration clause unenforceable. The Appellate Court reversed the lower court’s decision compelling arbitration and reinstated the plaintiff’s complaint. Continue reading

This entry was posted in Arbitration, Construction Defects, Contracts, Illinois and tagged , , , , .
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Where-Forum Art Thou? Is the Chosen Forum Akin to No Forum at All?


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Many courts enforce forum selection clauses in contracts between parties. In W. Bay Plaza Condo. Ass’n v. Sika Corp., No. 3D21-1834, 2022 Fla. App. LEXIS 1637 (W. Bay Plaza), the Court of Appeal of Florida, Third District (Court of Appeal) answered the question of whether a mandatory forum selection clause in a manufacturer’s warranty was enforceable as to a condominium association, who was a non-signatory. The trial court enforced the forum selection clause – calling for litigation in New Jersey rather than Florida – and the Court of Appeal affirmed the ruling. Continue reading

This entry was posted in Construction Defects, Contracts, Florida, Privity, Warranty – Express and tagged , , , , , , .