Purchasers of new homes who don't file construction defect lawsuits within eight years are out of luck, at least according to the Arizona Supreme Court.
In the first ruling of its kind on the issue, the justices said the eight-year limit on homeowner lawsuits enacted by the Legislature is absolute. They concluded that the fact that some homeowners filed suit within the proper time period did not mean everyone else could file later.
The decision most immediately affects claims by more than three dozen homeowners against Shea Homes. But the ruling becomes precedent for future cases.
Attorney Robert Willis, who represents the homeowners, said he is weighing whether to ask the Supreme Court to reconsider the issue. But he acknowledged that if the high court refuses, it likely will mean that the 9th U.S. Circuit Court of Appeals, which is actually handling the case, will dismiss the claims.
The original lawsuit was filed in 2003 in Maricopa County Superior Court by several homeowners in the Carriage Lane subdivision in Gilbert.
A judge refused to create a class-action lawsuit, allowing them to represent all the homeowners. While these original plaintiffs settled, others then filed their own lawsuit.
The first, filed in 2006, was dismissed because they had not followed procedures in state law requiring them to give Shea an opportunity to repair the homes. Another suit - the one that remains - was filed in 2007.
Ultimately the case wound up in federal court because Shea Homes is incorporated in Nevada. After a federal judge dismissed the claim as being filed too late, it wound up at the federal appellate court.
In an unusual, but not unprecedented, move, the federal appellate judges asked the Arizona Supreme Court to look at the question of whether there are any exceptions to that requirement to file defect suits within eight years.
At the heart of that question are rulings by the U.S. Supreme Court dealing with "tolling" of statutes of limitations. That essentially means the clock stops during that period.
The justices of the top federal court said that the time limits for filing a lawsuit are stayed while a trial judge considers whether to grant class-action status in a lawsuit. What the 9th Circuit wanted to know was whether the Arizona Supreme Court believes that federal court precedent supersedes the strict eight-year statute of limitations in state law.
Justice John Pelander, writing for the state high court, said no.
He said before Arizona legislators enacted the limits, homebuilders "faced an indeterminable period of liability exposure."
That is because the general law is that the time limit for filing a lawsuit starts running at the time of the defect or when a reasonable person would have found the defect. That allowed a homeowner to claim a defect did not become apparent until many years after the home was built.
And Pelander said that, in a question between a conflict between a legally enacted statute - the eight-year limit - and a court-made rule on tolling, the statute takes precedent.
In this case, the judge said, the time limit began running on Nov. 6, 1997, the date of the final inspection by the town of Gilbert. He said that means the current lawsuit, filed in 2007, simply comes too late.
"If the Legislature wishes to permit class-action tolling ... it may of course amend the statute," Pelander wrote. Otherwise, he wrote, the U.S. Supreme Court precedent cannot override the law.