Enforcing Contractual Time Bars on Architect Liability

In Gillespie Community Unit School District No. 7 v. Wight & Co., the fourth and final new civil case added to its docket at the close of the January term, the Illinois Supreme Court will address an important issue for Illinois' architects and construction contractors: the enforcement of contractually-agreed statutes of limitations.

The school district in Gillespie decided to build a new elementary school in 1998. The plaintiff entered into an agreement with the defendant to perform various services preliminary to the designing and construction of the new school building. Among the services the architects agreed to perform was investigating the extent of mining in the building site area, and assessing the risk that mining subsidence might imperil the structural stability of the new school. The architects in turn hired an engineering firm to assess the mining issues.

Once the preliminary work was completed, the school district entered into a further contract with the architectural firm and its contractor. That contract defined the "agreement" between the parties as including the earlier agreement which led to the mine analysis. The final contract further provided that the statute of limitations for any and all possible causes of action between the parties would begin to run not later that the substantial completion of the acts at issue, or at minimum, the date on which the defendant architect's services were completed.

The building was completed in the fall of 2002, and the school district took possession. In the early spring of 2009, a coal mine subsided beneath the building, causing extensive damage. A few weeks later, the building was declared a total loss. The school district sued the architects, alleging professional negligence, breach of implied warranty and fraudulent misrepresentation. The architects moved for summary judgment, alleging that the action was clearly time-barred. The Circuit Court agreed and dismissed.

The Fourth District affirmed. The school district argued that the accrual provision of what the parties called the "Standard Agreement" had not become part of the Pre-Referendum Service Agreement, but the Appellate Court disagreed, pointing out that the Standard Agreement defined several documents - including the Pre-Referendum Service Agreement - to constitute the "agreement." The school district argued that the accrual provision applied only to claims between the architect and its contractor, but the Appellate Court disagreed, finding that the defendants had defined the limits of their own liability, in part, by the completion of the contractor's work. The school district argued that "substantial completion" had never occurred given the alleged shortcomings of the mining analysis work, but the Appellate Court disagreed again, finding that the mining work was done under the Pre-Referendum Service Agreement, and the accrual provision, including the "substantial completion" language, was found in the Standard Agreement; one had nothing to do with the other. Finally, the Court rejected the district's claim that no statute of limitations at all applied to its claim for fraudulent misrepresentation. The Court pointed out that such claims were expressly exempted from 735 ILCS 5/13-214, the statute that provides limitations on claims arising from the design, planning, supervision, observation or management of construction. Therefore, by default the five-year catch-all statute of 735 ILCS 5/13-205 applied.

Gillespie should be decided in late 2013.

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