The Subrogation Strategist

In Mondoux v. Vanghel, No. 2018-219, 2021 R.I. LEXIS 2, 2021 WL 264542, the Supreme Court of Rhode Island considered whether to apply the “discovery rule” to toll the ten year statute of limitations in R.I. Laws § 9-1-13(a) for the plaintiffs’ action for breach of the implied warranty of habitability. Stated another way, the court considered when the plaintiffs’ claim accrued with respect to latent defects. Guided by public policy and the need to provide a definite end for exposure to liability as reflected in Rhode Island’s construction-related ten year statute of repose, R.I. Laws § 9-1-29, the court applied a modified discovery rule.

Statutes of repose control a strict deadline that cutoff certain legal rights if not properly acted on by an injured party. Unlike statutes of limitations, which designate the length of time a party has to initiate legal proceedings after the date of injury, statutes of repose are designed to preclude a party from bringing a claim against a potential defendant after a specified period of time has run from the date of the occurrence of an event giving rise to the injury; not the injury itself. In construction cases, statutes of repose generally begin to run on the date of substantial completion.

As set forth in Mondoux, plaintiffs Reney A. Mondoux and Joseph N. Mondoux, Jr. (collectively, the Mondouxs) purchased a home alongside a lake in 1997 from the defendant, Peter A. Vanghel (Vanghel). At the time the Mondouxs purchased the house, construction was substantially completed.

In the Fall of 2012, the Mondouxs discovered interior water damage on a lakeside-facing wall. In July of 2013, after a further inspection, the Mondouxs confirmed the existence of water damage.

In July of 2016, the Mondouxs filed a complaint against Vanghel. The Mondouxs’ amended complaint, filed on August 11, 2016, included a count based on the implied warranty of habitability. Before the trial court, Vanghel argued that the Mondouxs’ claim for breach of the implied warranty of habitability was time-barred. The Superior Court, pursuant to Nichols v. R.R. Beufort & Assocs., Inc., 727 A.2d 174 (R.I. 1999), granted summary judgment in favor of Vanghel. The Mondouxs’ appealed that ruling.

Nichols addressed the statute of limitations period in R.I. Gen. Laws § 9-1-13 and allowed subsequent purchasers to pursue breach of implied warranties of habitability and workmanlike quality claims based on latent construction defects so long as the defects were discovered within a reasonable time. Guided by the statute of repose in R.I. Laws § 9-1-29, the Nichols court held that ten years was a reasonable amount of time to allow a plaintiff to discover latent defects and, once discovered, the plaintiff had three years to bring suit. Mondoux confirms that there is no distinction between original homeowners and subsequent homeowners with respect to determining how long a breach of the implied warranty of habitability claim remains actionable. Thus, the court extended the Nichols holding to apply to original homeowners.

As stated in Mondoux, “any homeowner has a period of ten years following substantial completion of the improvement to discover a latent defect” and a claim for breach of implied warranty will be timely if the homeowner files suit within three years of the date of discovery, or the date when the defect should have been discovered. Because the Mondouxs purchased their house after the date of substantial completion in 1997, they had until 2007 to discover the latent defect. They did not discover the defect, however, until July of 2013. Thus, the plaintiffs’ claim based on the breach of the implied warranty of habitability was time-barred.

The Mondoux case serves as an important reminder that subrogation professionals investigating claims must be aware of when the applicable Statute of Repose may run, in addition to the end date of the Statute of Limitations. For construction defect cases, it is crucial to know when the work was substantially completed, as this will likely start the clock on the Statute of Repose for improvements to real property.