Repose and Limitations Periods

Time deadlines are clearly an important part of construction claims. Additionally, States impose limitations and repose periods on the time frame to bring a legal action. The difference between a repose period and a limitations period is that the repose period begins to run from a specific envent set forth in a statute, such as completion of the work. Furthermore, the statute of limitations can bar a claim even if the repose period has not expired. Likewise the repose period can bar a claim even if the limitations period has not expired



Md. and DC have 10 year repose periods for personal injury and property damage claims. Md.'s repose period begins to run when the project is fit for its intended use. DC's repose period begins to run from the date of project completion. Repose periods are usually implicated by latent defect cases, where the defect could not have been discovered but eventually caused personal injury or property damage during the 10 year time frame. If the injury occurred outside the ten year time frame, then the claim is completley barred, even if the statute of limitations periods have not expired



Md. and DC have three year limitations periods. In Md. the limitations period begins to run when the plaintiff knew or should have known of his or her claim. In DC., at least for breach of contract claims, the limitations period begins to run from the time of breach.



Thus, the limitations period and repose periods often intersect. For example, an owner can suffer property damage from defective work two years after completion and will then have three years to bring suit. However, if an owner suffers property damage nine years after completion, it will have only one year to bring a claim because of the ten year repose period.

For further questions contact Matt Hjortsberg at (410) 583-2400 or at Hjortsberg@bowie-jensen.com

The Pitfalls of Using Your Name as Your Company’s Name

Many construction companies are named after their founder, like “Smith Construction”, “Larry’s Plumbing”, and “Johnson Electric”. But companies that make use of surnames may have problems obtaining exclusive trademark rights in those names -- rights that the company could enforce against competitors that adopt confusingly similar names. This is a brief explanation of why you may want to rethink using your name as your company’s name.

A company can obtain enforceable trademark rights without formally registering its trademark, so long as the company makes commercial, public use of the trademark. That is, a company must use the word or phrase to identify and distinguish the goods or services that it sells to the public. Obtaining trademark rights means that a company has the right to prevent others from making commercial use of the same or substantially similar trademark for the same or similar goods or services, in manner that is likely to cause public confusion.

Some words or phrases can never be trademarked because they are generic – like “construction” and “plumbing” – yet other words may become a trademark, but only after very long, substantial and continuous use that makes the words immediately distinguishable among the public. One example of words that are difficult to trademark are last names. Thus, company names that the public would commonly recognize as primarily a surname, such as “Thompson Construction”, cannot be protected unless the name has been used for so long, so pervasively, and so exclusively that the name achieves a unique sense of recognition among the general public (in legal circles, this is called "secondary meaning"). For example, there is no question that “McDonald’s” and “Nordstrom” are surnames that have achieved this heightened recognition, so they are now protectable trademarks (that is, even if your last name is “McDonald” – you could not open any food-related business and call it “McDonald’s”).

The best advice for obtaining trademark rights is to steer away from using a last name, or any word that could look like a last name. For example, you could use your initials (e.g., “JSG Construction”), or use words that are not obvious surnames (e.g., “Permacore Contractors” and “Hayview Construction”), all of which are much more likely to achieve trademark protection, assuming, of course, that another company is not already using those names.

Building Plans: Implied Warranty of Accuracy

A well-settled principle in Maryland construction law is if a contractor is bound to build a project in accordance to the plans and specifications prepared by the building owner, the contractor will not be responsible for the consequences of defects in the plans and specifications. This responsibility to the contractor is not affected by standard contract clauses requiring contractors to visit the site, check the plans, and to inform themselves of the requirements of the work. Plans and specifications provided by an owner contain an “implied warranty” of accuracy. This essentially means a contractor should be able to assume plans and specifications are reliable enough to use as the basis for the purpose intended.

If there are defects in the plan and specifications and the contractor incurs damages as a result, the contractor may be able to recover its damages from the owner. Recovery by the contractor could include damages suffered for delays in the work arising out of the defective plans and specifications and an equitable adjustments because of increased costs.

There are, however, provisions to protect owners. If a contractor knows or should have known defects existed in the plans and specifications prior to construction, but continues with the construction regardless of the defect, a contractor will be precluded from recovering any alleged damages. Contractors should ensure there are no obvious defects with the plans or specifications or they will be held responsible for any costs resulting from the defective plans and specifications. Prior to submitting a bid for work, a contractor should ask questions if any ambiguities exist in the bid documents. A simple telephone call to the procurement officer or owner will save parties from possible issues and additional costs down the road. Also, if the contractor discovers an issue with the plans and specifications during construction, it would be best to notify the owner of the potential problems. Defective plans and specifications also need to cause actual damage to the contractor.

Owners should beware of defective plans and specifications when hiring contractors to construct or renovate a private house, commercial building, or even remodeling office space. The burden, however, is on both the owner and the contractor to ensure the plans and specifications are accurate.

If you have further questions, please contact Michael Siri at 410-583-2400 or siri@bowie-jensen.com.

"The Bramble Rule:" Md. Contract law Takes a Foothold Nationally

In 2005, the Maryland Court of Appeals, in a case captioned National Union Fire Insurance Company v. Bramble, released a decision that the 45 day response time found in the 1984 AIA A312, as well as other payment bonds, requires that the surety include in its response letter (1) the amounts disputed and (2) the basis for challenging the amount in dispute. The surety company's failure to include other reasons for challenging the amounts resulted in a waiver of those defenses. In 2006, the United Stated District Court for the Eastern District of Virginia followed the reasoning of the Maryland Court of Appeals and found that the surety had waived any defense that was not raised in its response letter.

In October of 2007, the United States District Court for the Middle District of Florida also elected to follow the reasoning of the Maryland Court of Appeals, and set forth what it characterized as the "Bramble Rule:" i.e., if the surety fails to respond within the contractually required time frame, or fails to include a defense in its response, the surety thereafter waives its right to raise any defense not set forth in the response letter.

Certainly, the spread of the Bramble Rule to other States validates Maryland's requirement that surety companies must also comply with the contractual requirements created by their bonds, and will provide contractors with more protection.

For further questions, contact Matt Hjortsberg at (410) 583-2400 or at Hjortsberg@bowie-jensen.com.