Georgia Court of Appeals Rules that Eight-Year Statute of Repose Bars Long-Term Warranty

Written by: Patrick Fitzgerald

The broad language employed by the Georgia Court of Appeals in Southern States Chem., Inc. v. Tampa Tank & Welding, Inc., 2019 WL 5616691 (Ga. Ct. App. Oct. 31, 2019) could jeopardize long-term construction warranties in the face of Georgia’s eight-year statute of repose for any “action to recover damages . . . [f]or any deficiency in the . . . design, . . . or construction of an improvement to real property[.]”  O.C.G.A. § 9-3-51(a).

In Southern States, Southern States Chemical, Inc. (“Southern States”) hired Tampa Tank & Welding, Inc. (“Tampa Tank”) to repair Southern States’ storage tank in 2000.  The work was completed by 2002 but in 2011, the storage tank began to leak.  Under its contract with Southern States, Tampa Tank guaranteed its  worksmanship and materials for one year.  However, after Southern States initiated its action in 2012, it argued that a report from one of Tampa Tank’s subcontractors, which estimated that the repairs should last 43 years, amounted to a warranty.  The trial court disagreed, finding that any warranty claim was barred by the eight-year statute of repose.

On appeal, Southern States tried to convince the court that O.C.G.A. § 9-3-51 did not apply because its action was based on breach of contract rather than a construction defect and that “contractual obligations that extend beyond the period of repose should effectively waive the protections of the statute of repose[.]”  The court rejected that argument, finding that O.C.G.A. § 9-3-51 “makes no distinction among claims sounding in negligence and those sounding in contract.”  Because the repairs were completed in 2002 and no action was initiated until 2012, Southern States could not maintain an action against Tampa Tank.

Though there is an argument that the ruling only applies to implied contractual waivers, the court’s unequivocal language is some cause for concern that many long-term construction warranties, i.e., those that last longer than eight years, may now be invalid.