Southern States v. Tampa Tank: A Case to Watch on Statutory Amendment and Construction Defect Defenses
By: Rachel Mathews
The Georgia Supreme Court is currently considering an appeal that will determine whether the 2020 amendment to Georgia’s eight-year statute of repose for construction defects, O.C.G.A. § 9-3-51, can be retroactively applied to revive a previously barred cause of action arising from breach of contract. This decision has the potential to clarify issues related to statutory construction, due process and the obligation of contract under both the Georgia Constitution and Federal Contract Clause.
Under the original version of O.C.G.A. § 9-3-51 (1968), an eight-year statute of repose barred actions for damages due to “any deficiency” in specified construction and construction-related activities. Notably, the original statute did not make any distinction between actions sounding in tort or contract. However, in 2020, the Georgia legislature amended the statute to add a section providing “[t]his Code section shall not apply to actions for breach of contract, including, but not limited to, actions for breach of express contractual warranties.” Georgia Act 380, which contained the amendment, provided that the amendment was intended “to clarify actions that may be brought pursuant to Code Section 9-3-51” and “shall apply to causes of action which have accrued on or after January 1, 1968.”
The case currently before the Georgia Supreme Court, Southern States Chemical, Inc. v. Tampa Tank & Welding, Inc., S23A0273, arises from a leak in an above-ground storage tank owned and operated by the appellant, Southern States Chemical, Inc. The appellee, Tampa Tank & Welding, Inc., renovated the tank pursuant to a contract signed in 2000 between the parties that provided: “All material and workmanship are guaranteed for a period of twelve (12) months from the date of completion of this work.” The renovation of the tank was completed in 2002. Southern States discovered the leak in 2011, then filed suit a year later asserting claims for breach of warranty.
In 2019, the Georgia Court of Appeals affirmed the trial court’s ruling that Southern States’ breach of warranty claims was barred by the statute of repose under O.C.G.A. § 9-3-51. While Southern States’ petition for certiorari was pending, the Georgia legislature amended the statute of repose to exclude breach of contract actions from the scope of the statute. Due to this amendment, the Georgia Supreme Court vacated the Court of Appeals decision and remanded for reconsideration based on the new amendment.
The case was then remanded again to the trial court. On remand, the trial court granted Tampa Tank’s motion to dismiss and found that the retroactive application of the amendment to O.C.G.A. § 9-3-51 violates Tampa Tank’s constitutional right to due process. Specifically, the trial court found that the expiration of the statute of repose eight years after completion of the work gave Tampa Tank a vested right to be free from suit for purported construction defects and that “depriving it of this vested right by retrospective application of the amendment to the statute of repose would violate its constitutional right of due process under the federal and State constitutions.”
Southern States appealed the trial court’s ruling to the Georgia Supreme Court. Southern States argues, among other things, that the original 1968 statute of repose was never intended to apply to claims based in contract, and the 2020 amendment merely clarified the meaning of the statute. Tampa Tanks urges the court to uphold the trial court’s ruling that retroactive application of the amended statute would violate due process or, alternatively, would violate the State and federal constitutions’ Impairment and Contract Clause protections.
The Supreme Court conducted oral argument on these issues on February 9, 2023. The decision from this appeal could either put to rest a case that has been pending for over 10 years, or it could revive a cause of action previously thought to be extinguished. The result of this appeal could revive breach of contract actions thought to be barred by the statute of repose. The Georgia Supreme Court’s decision will be important in clarifying when a statutory amendment can apply retroactively and, more specifically, when the statute of repose in O.C.G.A. § 9-3-51 can be raised in construction defect cases.
Attorney Contact Info
Rachel Mathews
rachel.mathews@swiftcurrie.com
404.888.6201