OKLAHOMA SUPREME COURT BROADENS APPLICATION OF STATUTE OF REPOSE

Tort liability is a nationwide concern. Virtually every business is exposed to some degree of potential liability, and no business or business owner is immune. There is some relief for those engaged in the construction industry in Oklahoma, however. The Statute of Repose protects certain parties from liability arising from certain conduct involved in the construction process. Parties eligible for protection by the Statute are (i) parties that own, lease, or are in possession of an improvement to real property; (ii) parties that perform or furnish the design, planning, supervision, or observation of construction of an improvement to real property; and (iii) parties that actually perform the construction of an improvement to real property.

In addition to limiting the parties eligible for protection, the Statute limits the conduct which will be overlooked. Three criteria must be met: First, the improvement at issue must have been substantially complete for in excess of ten (10) years; Second, the conduct giving rise to liability must involve (i) a deficiency in the design, planning, supervision, or observation of construction, or (ii) the actual construction of an improvement to real property; and Third, the liability must arise out of the specific deficiency and (i) involve an injury to or wrongful death of a person, or (ii) involve an injury to property.

Historically, the Statute has been applied to protect architects, engineers, contractors, and subcontractors. It has generally not been available to protect manufacturers of goods incorporated in a construction project. However, in the recent case of JBall v. Harnischfeger Corporation, 65 O.B.J. 2050 (June 14, 1994), the Oklahoma Supreme Court defined more precisely the manner in which the Statute of Repose should be applied in the case of a manufacturer of goods. In that case, Charles Ball was injured when he fell from an overhead bridge crane designed and manufactured by Harnischfeger, and installed at the Johnson Terminal over ten years prior to the accident. Ball sued Harnischfeger, claiming that his injuries arose from a defect in the design and manufacture of the crane. Harnischfeger claimed the Statute protected it from the liability asserted by Plaintiff. In considering the issue, the Court pointed out that a mere supplier of goods is ordinarily not protected by the Statute. However, when the goods supplied are not mass produced, but are specifically designed and manufactured for use in the particular project, the Statute does protect the designer or manufacturer from liability.

The Court concluded that the proper focus in considering whether a manufacturer is protected by the Statute, is upon the activity in which the manufacturer is engaged, rather than upon its status as a “manufacturer”. The Court noted that “it is the specialized expertise in rendition of particularized design which separates those protected from mere manufacturers and suppliers”. The crane at issue in this case was not a standardized product, but was customized to meet the unique needs of the building. Thus, the manufacturer was protected under the Statute.

The Court went on to note, however, that while the Statute would protect the manufacturer with respect to some of its activities, it could still be liable for conduct not covered by the Statute. For instance, a manufacturer may be protected under the Statute for the design and manufacture of an elevator, but may still be liable if the claim asserted is based upon the manufacturer’s conduct in servicing or repairing the elevator. Therefore, while this case broadens the application of the Oklahoma Statute of Repose to include manufacturers of products, the conduct which gives rise to the potential liability is critical to a proper assessment of the Statute’s applicability to a particular circumstance.

Steven K. Metcalf

This Newsletter addresses recent items of interest in various areas pertaining to the construction industry. While the Newsletter may alert you to potential problems or changes in the law, it does not attempt to offer solutions, opinions, or advice concerning specific problems. Such legal advice or opinion can only be given by an attorney after careful consideration of the facts unique to a given situation. Inquiries concerning this Newsletter or its subject matter should be directed to its contributors, Steven K. Metcalf, Esq. at (918) 430-3703 or William H. Spitler, Esq. at (918) 430-3704.