Natatorium Law


Well, not exactly natatorium law. But the indoor swimming pool at the Sherman Lake YMCA completed in 1999 now has four published contractual indemnity appellate opinions to its credit and threatens to become a legal subspecialty.

In 2009, the Court of Appeals held the lawsuit was time-barred based on application of the statute of repose that applies to architects, engineers and contractors. Don’t linger too long on that because later the Supreme Court reversed. It is the general six-year contract limitation period that applies to indemnity cases. The six years runs from when the claim first accrues.

The case went back to the Court of Appeals partly to figure out when the indemnity claim accrued. Focusing here only on indemnity, the Court of Appeals again decided in favor of Ahrens Construction, the potential stuckee under the contract. It ruled that there’d been no claim or demand made under the indemnity contract and, if there had been, Miller-Davis hadn’t presented sufficient proof to show that the natatorium moisture problem was caused by Ahrens’s failures. Wrong again.

On April 15, 2014, a unanimous Supreme Court held that the YMCA had indeed made a claim or demand on Miller-Davis. And its indemnity case was not barred by the 6-year statute of limitations (unlike Miller-Davis’s breach of contract case) because Ahrens’s failure to indemnify Miller-Davis was “distinct” from its breach of contract for failure to install the roof properly. That all makes sense.

But the Supreme Court does not tell us how to know when indemnity claims accrue. The Court says that breach of the indemnity agreement “necessarily occurred after Ahrens’s breach of the underlying promise to conform its work to the subcontract specifications.” True, but not a newsflash.

Miller-Davis offered three possible indemnity case accrual dates. All three dates are in 2003, long before Miller-Davis’s 2005 indemnity complaint was in danger of missing its six-year limitation period. Those three alternatives were February 2003 when Miller-Davis did a partial roof tear-off and discovered Aherns’s non-conforming work, August 2003 when Miller-Davis entered into an agreement with the YMCA to fix the roof, and December 2003 when an engineering firm certified that Miller-Davis had corrected Aherns’s defective work. The Supreme Court felt it didn’t have to decide which of these dates was the accrual date for the indemnity claim “because we agree the claim did not accrue before February 2003…”. But the significance of February 2003 in the indemnity scheme of things is not explained.

Since discovery dates don’t set limitation periods in motion unless the statute says otherwise, the state of Miller-Davis’s knowledge of the claim would not seem to be the long pole in any accrual tent. This new opinion sheds more heat than light on the issue of when indemnity claims accrue, particularly given the Supreme Court’s lack of attention to the role of tender under the indemnity agreement.

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