By: Amy Anderson, Partner, Jones Walker
August 10, 2023

After nearly any event that causes inefficiency, delay, or extra cost on a project, there are some things you should always do: review the contract and document the inefficiency, delay, or cost.  However, how you document the particular issue likely changes depending on what is in your contract, your position on the project, and the outcome you hope to reach.  In reviewing the inefficiency, delay, or cost, one thing to always consider is how long you have to actually recoup damages you may incur if they were caused by another party on the project.  In every jurisdiction (state or federal), there is likely to be some outer limit to when you can bring litigation or arbitration against an opposing party to recover damages another party causes to you.  This is generally called a statute of limitations or statute of repose, although it goes by other names depending on your state.

The length of time will be specific to the locality.  For example, in Texas, you have four years to bring a breach of contract claim but only two years to bring a negligence claim.  Whether you fall under the two year or four year period may be highly fact intensive, depending on your claims.  Do you have a contract directly with the party that is at fault?  Is the claim based on your contract or some tort outside of the contract?

However, if you wait too long to bring that claim, the other party likely has a defense that your claim is barred by the statute of limitations.  This is often called an “affirmative defense.”  Does this mean you are totally out of luck?

As with almost anything, the answer depends on a lot of things.  Most directly and as already noted, the actual limitations period will depend on what state’s law controls and the statutes or common law in that state.  Each locality will have specific timing requirements for almost every type of claim.  In certain states, it may be incredibly important that you file your lawsuit before the deadline expires.  In others, you may need to leave sufficient time to serve the other party.

Even aside from the particular limitations period, some states will have exceptions or defenses to the statute of limitations or statute of repose.  For example, the “discovery rule” in some states means that the limitations do not begin to “accrue” (the clock does not start) until the “damage” was discovered or could have been discovered with reasonable diligence.  The full contours of any particular jurisdiction’s “discovery rule” are also incredibly specific to your locality.

Do Not Delay.

It is entirely understandable that you may try to remedy whatever caused the damage before pursuing litigation against the party that caused the harm.  Prioritizing business relationships has substantial benefit for the business and future contracts.  For example, if a subcontractor installs faulty work that ultimately causes rip and tear damage to other parts of the project, it likely makes sense to prioritize completing the repair to the entirety of the project.  In doing so, it is important to document all costs and communications in a way that can be utilized in pursuing the costs against the subcontractor to the extent allowed by the contract.  There are jurisdictions, however, where the time limit to file certain claims is one year.  If the business decision to remedy the faulty work overtakes the bigger picture, you will be left with empty pockets and little remedy (or none).

Check Your Contract.

There are states in which parties may validly shorten a limitations period by contract.  Even if you have confirmed that your limitations period is sufficiently long to allow you to pursue the remedy before the litigation and you are within the limitations period prior to filing, you may still face a limitations challenge if the contract defines a smaller window for any claims.

Just as importantly, waiting until the last minute may not release you from any pre-suit notice provisions in your contract.  Reviewing those and following them closely (preferably perfectly) prior to filing suit before the limitations expire is incredibly important.

Don’t Hit the Limit.

Keep in mind that certain states may require documentation with your lawsuit, like an affidavit of merit or certificate of merit.  These are sometimes time-intensive to obtain and will create obstacles to timely filing in some states if you wait until just before the limitations period expires to pursue your suit.

There is no question that there are a lot of moving parts to consider at each stage of a project, including each time there is a change order, claim, delay, or inefficiency that you believe is causing monetary damage to you.  It would be hard to overstate, however, how important it is not to lose sight of the forest for the trees – you only have a limited period to bring a lawsuit or arbitration.  Failure to pursue the lawsuit timely may forever limit your right of recovery against the party causing you damages.

“The Construction Industry Team at Jones Walker LLP is one of the most highly regarded and award-winning construction law practices in the nation. Our experienced construction attorneys understand the complex dynamics between — and the unique priorities of — project participants and can craft effective solutions that minimize disputes, manage risks, and help keep projects moving from conception to completion.”

The views expressed in this article are not necessarily those of ConsensusDocs. Readers should not take or refrain from taking any action based on any information without first seeking legal advice.