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Arizona Homebuilders Receive Favorable Decision on the Statue of Repose

October 10, 2011

Alfred Albano, et al. v. Shea Homes Limited Partnership, et al.,

Arizona Supreme Court
634 F.3d 524 (9th Cir. 2011)

In the matter of Alfred Albano, et al. v. Shea Homes Limited Partnership, et al., the Arizona Supreme Court recently held that American Pipe and Construction Co. v. Utah, 414 U.S. 538 (1974), class action tolling does not apply to Arizona’s Statute of Repose, Arizona Revised Statutes § 12-552.  The case was handled by Jill Ann Herman, the newest partner of Wood, Smith, Henning & Berman’s Arizona office.  

Why This Case Is Important  

Contrary to other State Court and Federal Court opinions, the Arizona Supreme Court has established that the Statute of Repose is an absolute bar and is not subject to tolling, absent amendment to the statute by the Legislature, thereby allowing developers and builders to limit potential liability exposure on contract claims for construction defects for a finite period of time.  

Facts of Case  

The underlying consolidated matters represented the third and fourth lawsuits alleging construction defects in homes located in the Carriage Lane community in Gilbert, Arizona.  In the first lawsuit which was filed as a putative class action, Mark Hoffman, et al. v. Shea Homes Limited Partnership, et al., the trial court denied class certification as untimely, as well as on the merits, since Plaintiffs failed to seek certification for more than two years following the filing of the complaint.  The named Plaintiffs settled their respective claims and the complaint was dismissed with prejudice.  A second lawsuit was then filed by the putative class members, alleging construction defects in their respective homes in the community, which was dismissed without prejudice for a procedural defect.  When the third and fourth lawsuits were filed, Shea removed the cases to Federal Court where they were consolidated.  Shea then filed a motion for summary judgment on the Statute of Repose, which was granted by the district court.   

The Appeal  

On appeal in the Ninth Circuit Court of Appeals, the homeowners contended that the district court erred in failing to apply American Pipe class action tolling from the time the Hoffman complaint was filed to denial of class certification.  Shea contended that the Statute of Repose was a finite period of time which could not be tolled.  Following oral argument, the Ninth Circuit certified three questions to the Arizona Supreme Court, including whether or not American Pipe tolling applied to Arizona’s Statute of Repose, Arizona Revised Statutes § 12-552 .  The Arizona Supreme Court accepted jurisdiction. Holding that the Statute of Repose, Arizona Revised Statutes § 12-552, cannot be tolled by judicial rule, the court focused on the purpose and operation of a statute of repose and stated that tolling was not consistent with the language of the statute.



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