Lawrence ex rel. Situated v. Gen. Panel Corp.

822 S.E.2d 800

Mark LAWRENCE, Individually and on Behalf of Others Similarly Situated, Plaintiff,

v.GENERAL PANEL CORP., a Division of Perma "R" Products, Inc., Defendant.

Appellate Case No. 2017-002350

Opinion No. 27856

Supreme Court of South Carolina.

Heard September 19, 2018

Filed January 4, 2019

Blake A. McKie and J. Rutledge Young III, both of Duffy & Young, LLC, of Charleston, for Plaintiff.

Everett A. Kendall II, and Richard E. McLawhorn, both of Sweeny Wingate & Barrow, P.A., of Columbia, for Defendant.

JUSTICE FEW :

This Court accepted the following certified question from the United States District Court for the District of South Carolina:

Did South Carolina Act 27 of 2005 amend section 15-3-640 of the South Carolina Code (Supp. 2018) so that, in an action for damages based upon a defective improvement to new-construction real property, the date of "substantial completion of the improvement" is measured from the date of the certificate of occupancy (unless the parties establish a different date by written agreement), superseding the Supreme Court of South Carolina's decision in Ocean Winds Corp. of Johns Island v. Lane , 347 S.C. 416, 556 S.E.2d 377 (2001) ?

I. Facts and Procedural History

Mark Lawrence constructed his home near Mount Pleasant, South Carolina, using structural insulated panels manufactured by General Panel Corporation. Structural insulated panels—referred to in the residential construction industry as SIPs—are a structural alternative to traditional wood-frame construction. Lawrence claims faulty installation of the General Panel SIPs used in constructing his home allowed water intrusion, which in turn caused the panels to rot, damaging the structural integrity of his home. He brought this claim in federal district court alleging General Panel was liable for providing defective installation instructions to the subcontractor installing the SIPs.

General Panel filed a motion for summary judgment in the district court. The motion was based on section 15-3-640—a statute of repose—which provides, "No actions to recover damages based upon or arising out of the defective or unsafe condition of an improvement to real property may be brought more than eight years after substantial completion of the improvement." General Panel's entitlement to summary judgment under section 15-3-640 depended on the date of "substantial completion." The subcontractor completed the installation of the SIPs in Lawrence's home by March 2007. The home was not finished, however, until over a year later. Charleston County issued a certificate of occupancy on December 10, 2008. Lawrence filed his lawsuit against General Panel on December 8, 2016, more than eight years after installation of the SIPs, but less than eight years after the certificate of occupancy was issued.

II. Ocean Winds and the 2005 Amendments

In Ocean Winds , also a certified question from the district court, the entity that "developed, built, and owned a condominium project on Seabrook Island" brought a lawsuit against the manufacturer of windows installed in the condominium buildings. 347 S.C. at 417, 556 S.E.2d at 378. The developer sought indemnity for liability the developer might incur to the homeowners' association for water intrusion and other structural problems resulting from defective windows. Id. The certified question in that case asked us to determine whether the section 15-3-640 statute of repose¹ ran from "substantial completion of the installation of the windows or ... substantial completion of the building as a whole." 347 S.C. at 418, 556 S.E.2d at 378. We held "the statute of repose began running when installation of the windows was complete." 347 S.C. at 419, 556 S.E.2d at 379.

Under Ocean Winds , therefore, the date of substantial completion for installation of the SIPs in Lawrence's home was March 2007. As the district court found in its certification order, "If Ocean Winds is still good law, Plaintiff's claims are barred." However, as the district court also found, "If Ocean Winds has been superseded by [the 2005 amendments to section 15-3-640 ], the statute of repose does not bar any of Plaintiff's claims."

The 2005 amendment that is important to this case added a sentence to section 15-3-640. The new sentence provides, "For any improvement to real property, a certificate of occupancy ... shall constitute proof of substantial completion of the improvement ..., unless the contractor and owner ... establish a different date of substantial completion." Act No. 27, 2005 S.C. Acts 107, 110; § 15-3-640. We accepted this certified question from the federal district court to determine whether the Legislature intended to "supersede" our holding in Ocean Winds when it added that sentence to section 15-3-640. Lawrence argues the Legislature intended the date of substantial completion always to be the date of the issuance of a certificate of occupancy. General Panel argues that was not the Legislature's intent.

III. Analysis

We begin our analysis of what the Legislature intended by amending section 15-3-640 by considering subsection 15-3-630(b)—the definition of "substantial completion"—which the Legislature has not changed since the subsection was originally enacted in 1970. See Act 1071, 1970 S.C. Acts 2397. First, if the Legislature intended the date of substantial completion always to be the date of issuance of a certificate of occupancy, the obvious best step to achieve that purpose would be to amend the definition of the term. The fact the Legislature did not amend the definition—or the subsection that contains it—indicates to us it was not the Legislature's intent to make the date uniform in all cases.

Second, the text of subsection 15-3-630(b) defines substantial completion as "that degree of completion of a project ... or a specified area or portion thereof ... upon attainment of which the owner can use the same for the purpose for which it was intended." S.C. Code Ann. § 15-3-630(b) (2005). If the Legislature intended the date of substantial completion always to be the date of the certificate of occupancy, which occurs only upon completion of the entire project, it would no longer be necessary to provide that substantial completion could be "completion of ... a specified area or portion" of a project, as subsection 15-3-630(b) continues to provide. To interpret the 2005 amendments as Lawrence argues would render the "specified area or portion" language—perhaps the entirety of subsection 15-3-630(b)—meaningless. See Florence Cty. Democratic Party v. Florence Cty. Republican Party , 398 S.C. 124, 128, 727 S.E.2d 418, 420 (2012) ("the Court should seek a construction that gives effect to every word of a statute rather than adopting an interpretation that renders a portion meaningless" (citing Hinton v. S.C. Dep't of Prob., Parole & Pardon Servs. , 357 S.C. 327, 342, 592 S.E.2d 335, 343 (Ct. App. 2004) ) ).

Third, subsection 15-3-630(b) was the basis of our decision in Ocean Winds . There, we found the windows "were ‘a specified area or portion’ of the larger condominium project." 347 S.C. at 419, 556 S.E.2d at 379 (quoting subsection 15-3-630(b) ). We then held, "Upon their incorporation into the larger project, ... Ocean Winds ... could use the windows ‘for the purpose for which [they were] intended.’ " Id. (quoting subsection 15-3-630(b) ). We held "the statute of repose began running when installation of the windows was complete." Id. We specifically stated, "The definition of ‘substantial completion’ contained in § 15-3-630 requires this result." Id. If the Legislature intended to "supersede" our holding in Ocean Winds , it was necessary to address the basis of our holding—subsection 15-3-630(b). It makes no sense for the Legislature to "supersede" our interpretation of subsection 15-3-630(b) by amending a different section—15-3-640.

We find, therefore, the Legislature did not intend the date of substantial completion to be the date of the issuance of a certificate of occupancy in all cases. Our conclusion is supported by consideration of the obvious purpose the Legislature legitimately had in adding the new sentence to section 15-3-640 in 2005. When a project is nearing completion, there are often ongoing issues the contractor or a subcontractor must address. For example, the installation of a sprinkler system, a sound system, or even the heating and air conditioning system, is frequently followed up by months—even years—of adjustments, upgrades, or repairs. This work could potentially extend the date of substantial completion for that "specified area or portion," or the entire project. The purpose of the new sentence was to provide prima facie "proof of substantial completion," despite any ongoing work on a particular area or portion. Under the revised version of section 15-3-640, the statute of repose begins to run at the latest on the date of the certificate of occupancy, even if there is ongoing work on any particular part of the project.

Lawrence concedes it was at least part of the Legislature's intent to create this "latest" date for the statute of repose to begin. He argues, however, the Legislature also intended to create an "earliest" date for projects where there is a certificate of occupancy.

Under Lawrence's interpretation, subsection 15-3-630(b) would have no effect on projects where a certificate of occupancy has been issued, but the subsection would control in situations where no certificate has been issued.² We disagree with Lawrence's interpretation. First, his argument takes us back to our original position that the obvious step for the Legislature to take to achieve what Lawrence argues was its purpose would have been to amend the definition of substantial completion. Under Ocean Winds , the subsection 15-3-630(b) definition of substantial completion applied in all cases. It makes no sense that the Legislature now intends the definition to apply only in some cases, but did not amend the subsection containing the...