Lumsden v. Design Tech Builders, Inc.

CATHELL, Judge. Petitioners, Faye Lumsden, Ellen Hollander, Walter Lea-veil, Stephen Myers, Allan Zaic, and Colonel Ole P. Flaa, appeal from an order of the Circuit Court for Montgomery County granting summary judgment to respondent, Design Tech Builders, Inc. The appeal before this Court originated in the District Court of Maryland, which ruled that petitioners’ claims based on the implied warranties codified in Maryland Code (1974,1996 RepLVol., 1999 Cum.Supp.), section 10-203 of the Real Property Article were time-barred. The circuit court, in granting the motion for summary judgment below, agreed. Petitioners appealed to this Court for a writ of certiorari, which we granted.

We shall affirm. ⁴³⁷ I. Facts & Background Between August of 1992 and March of 1994, petitioners and other homeowners in the Leighton Woods Development in Silver Spring, Maryland, individually entered into contracts with respondent to purchase residential dwellings, which included the installation of driveways. 1 The Washington metropolitan area was hit by a severe ice storm during the winter of 1994. In response to this storm, the twelve homeowners, through their homeowner’s association, hired Cherry Valley Landscaping to conduct snow and ice removal services. On January 20, 1994, Cherry Valley Landscaping applied de-icing chemicals to the driveway surfaces to melt and remove the ice. In March of 1994, all twelve homeowners individually noticed that the surface of their driveways suffered from peeling and scaling.

The homeowners complained to respondent. There was an initial indication that the damage to the driveways had been caused by the application of de-icing chemicals by Cherry Valley Landscaping. However, in August of 1994, the homeowners discovered that the damage actually may have been caused by problems with the poured concrete used to construct the driveways. A seventeen-page report drafted by Professional Service Industries, Inc. indicated that the water-to-cement ratio of the core samples from three of the damaged driveways was very high, making the upper layer of the concrete soft and porous and susceptible to peeling and scaling.

On August 11, 1994, Ms. Hollander sent a copy of this report to Mr. David Weiss, President of Design Tech Builders, Inc. The homeowners, through Ms. Hollander, then began to further investigate the cause of the defective concrete to determine whether the mixture of the concrete was improper or whether the pour of the concrete had been done incorrectly. In a letter to Ms. Hollander dated October 10, 1995, Mr. Jim ⁴³⁸ Mack, Director of Engineering & Rehabilitation of the American Concrete Pavement Association stated that the soft porous cement part of the one-half inch of the driveway surface indicates that the surface was over-finished or over-worked, which caused more water and less cement to the surface prior to the cement curing. In an additional letter to Ms. Hollander, dated October 25, 1995, Mr. Scott F. Wolter, President of American Petrographic Services, Inc., stated that the use of de-icing chemicals did not cause the scaling of the driveways and that the damage was the result of the high water-cement ratio of the concrete during curing. Colonel and Mrs. Flaa had a separate, independent report sent to them on March 28, 1995 stating that the problem with the driveway was caused by an improper pour and cure of the concrete.

On April 21, 1995, the twelve homeowners sent a correspondence to respondent as a follow-up to their meeting in November of 1994, requesting that respondent correct the defect by replacement, repair, or otherwise. On April 8, 1996, the twelve homeowners filed small claims actions in the District Court of Maryland sitting in Montgomery County, alleging that respondent, Design Tech Builders, Inc., had breached its implied statutory warranty against defects because the homeowners’ driveway surfaces had become pitted and scaled. Respondent filed third-party complaints against two concrete subcontractors, the concrete supplier, the relevant homeowner association, and the snow removal service contracted with by the homeowner association. Respondent alleged that chemical de-icers, which the snow removal service had applied to the homeowners’ concrete driveways, was the cause of the damage to the driveway surfaces.

The twelve consolidated actions were tried in the District Court on October 20, 1998. On November 2, 1998, the trial court ruled that the consolidated claims were time-barred by Maryland Code (1974, 1996 Repl. Vol.), section 10-204(d) of the Real Property Article. On December 31, 1998, after the denial of a Motion for Reconsideration, eleven of the twelve homeowners appealed to the Circuit Court for Montgomery ⁴³⁹ County for a trial de novo.

On June 22,1999, respondent filed an Entry of Appearance, an Answer, a Motion for Summary Judgment, and a Motion to Consolidate the eleven cases. The circuit court set September 2, 1999 as the hearing date for the Motion for Summary Judgment. After the scheduled hearing, the circuit court granted respondent’s Motion for Summary Judgment and filed a Supplement to Oral Opinion on September 8, 1999. The circuit court agreed that petitioners’ claims were time-barred.

Before this Court is a consolidated appeal by six of the homeowners, petitioners, from the order of the trial court granting summary judgment to respondent. We granted a writ of certiorari to address one issue: Whether the two (2) year statute of limitations, pursuant to the Real Property Article [section] 10-204(d), commenced to run in March of 1994 following the winter thaw [when] the homeowners discovered scaling to their driveways or commenced in August of 1994 when the homeowners discovered that the driveway scaling was caused by a bad pour of concrete by the builder and not by ice melt applied during an ice storm in February [1994][.][ 2 ] ⁴⁴⁰ Pursuant to our evaluation of the “discovery rule,” we hold that the running of the statute of limitations in the case sub judice commenced in March of 1994 when petitioners first discovered that their respective driveways had been damaged and not in August of 1994 when they discovered the purported cause of the damage. Accordingly, we affirm.

II

Argument The issue before this Court is quite simple: we must ascertain when the statute of limitations in respect to petitioners’ breach of warranty causes of action began to run in order to determine whether petitioners’ claims were filed in a timely manner. The controlling statutes are sections 10-203 and 10-204 of the Real Property Article. 3 Section 10-203 states in relevant part: § 10-203. Implied warranties. (a) Warranties which are implied.—Except as provided in subsection (b) or unless excluded or modified pursuant to subsection (d), in every sale, warranties are implied that, at the time of the delivery of the deed to a completed improvement or at the time of completion of an improvement not completed when the deed is delivered, the improvement is: (1) Free from faulty materials; (2) Constructed according to sound engineering standards; (3) Constructed in a workmanlike manner; and (4) Fit for habitation.

(b) Exception.—The warranties of subsection (a) do not apply to any condition that an inspection of the premises ⁴⁴¹ would reveal to a reasonably diligent purchaser at the time the contract is signed. Section 10-204 provides in relevant part: (b) Expiration of warranty.—Unless an express warranty specifies a longer period of time, the warranties provided for in this subtitle expire: (1) In the case of a dwelling completed at the time of the delivery of the deed to the original purchaser, one year after the delivery or after the taking of possession by the original purchaser, whichever occurs first; (2) In the case of a dwelling not completed at the time of delivery of the deed to the original purchaser, one year after the date of the completion or taking of possession by the original purchaser, whichever occurs first; and (8) In the case of structural defects, 2 years after the date of completion, delivery, or taking possession, whichever occurs first. (d) Limitations of actions.—Any action arising under this subtitle shall be commenced within two years after the defect was discovered or should have been discovered or within two years after the expiration of the warranty, whichever occurs first. [Emphasis added.] This Court has held that these two sections apply to driveways and thus are controlling in the case at bar. See Andrulis v. Levin Constr.

Corp., 331 Md. 354, 363-64 , 628 A.2d 197, 201 (1993). Section 10-204(d) mandates that the period of limitations for a cause of action under this subtitle commences when the cause of action was discovered or should have been discovered. Therefore, we start our analysis by looking at the development of the “discovery rule” in relation to statutes of limitation in Maryland. As we said in Pennwalt Corp. v. Nasios, 314 Md. 433 , 550 A.2d 1155 (1988): Statutes of limitations have existed in Maryland and in other common law jurisdictions for hundreds of years.

See Ferguson, The Statutes of Limitation Saving Statutes, 12-14 (1978). The statutes were enacted in an effort to balance ⁴⁴² the competing interests of potential plaintiffs, potential defendants, and the public. The statutory period provided by a statute of limitations represents a compromise of these interests and “reflects a policy decision regarding what constitutes an adequate period of time for a person of ordinary diligence to pursue his claim.” Goldstein v. Potomac Electric Power Co., 285 Md. 678, 684 , 404 A.2d 1064, 1069 (1979). By creating a limitations period, the legislature determined that a plaintiff should have only so long to bring his action before he is deemed to have waived his right to sue and to have acquiesced in the defendant’s wrongdoing.

Limitations statutes therefore are designed to (1) provide adequate time for diligent plaintiffs to file suit, (2) grant repose to defendants when plaintiffs have tarried for an unreasonable period of time, and (3) serve society by promoting judicial economy. Pierce [v. Johns-Manville Sales Corp.], 296 Md. [656,] 665, 464 A.2d [1020,] 1026 [ (1983) ]. Historically, the general rule in Maryland was that an action accrued on the date of the wrong. Hahn v. Claybrook, 130 Md. 179, 182 , 100 A. 83 (1917).

Under this rule it was irrelevant when the plaintiff discovered or should have discovered that the defendant had wronged him. The date of the wrong rule operated adequately in most tort actions because the plaintiff was aware of his injury and the defendant’s wrongdoing almost immediately. Under those normal circumstances, the plaintiff had the full statutory period to pursue his claim. We later recognized that the date of the wrong rule did not provide equitable results in all cases.

Consequently, we created the “discovery rule” as an exception to the general rule. Id. at 437-38, 550 A.2d at 1157-58 . The discovery rule in Maryland has its origins in equity cases involving claims of fraud. The rationale was that the statute of limitations could not run until the victim became aware of the fraud.

See McDowell v. Goldsmith, 2 Md. Ch. 370, 391 (1851) (“[I]n the cases of fraud and mistake, the Statute of Limitations begins ⁴⁴³ to run from time of the discovery of the fraud or mistake.”). More recently, this Court re-applied this exception in medical malpractice cases. As we stated in Waldman v. Rohrbaugh, 241 Md. 137 , 215 A.2d 825 (1966): “The most modern view holds that the statute of limitations in a malpractice action does not commence to run until the negligence is discovered, or reasonably should be discovered. The discovery rule was probably first advocated in the case of Hahn v. Claybrook, [ 130 Md. 179 , 100 A. 83 ,] which involved a discoloration of the skin through excessive doses of argentum oxide.

The court followed the discovery rule, but held that the plaintiff should have discovered the injury more than three years prior to the commencement date of the action.” Id. at 143, 215 A.2d at 829 (quoting Note, The Statute of Limitations in Actions for Undiscovered Malpractice, 12 Wyo. L.J. 30, 34 (1957)). In Waldman , we ultimately held that the right of action for injury or damage from malpractice may accrue when the patient knows or should know he has suffered injury or damage. In many cases he will or should know at the time of or soon after the wrongful act that he has been the victim of negligent medical care; in other settings of fact it may be impossible for him, as a layman, unskilled in medicine, reasonably to understand or appreciate that actionable harm has been done him.

If this is fairly the fact, we think he should have the statutory time from the moment of discovery, the moment he knows or should know he has a cause of action, within which to sue. Id. at 145 , 215 A.2d at 830 . This holding effectively redefined the accrual point of a statute of limitations in medical malpractice cases to “when the plaintiff knows or should have known that he has a cause of action.” Pennwalt Corp., 314 Md. at 440 , 550 A.2d at 1159 . It did not take long for this Court to expand the use of the discovery rule beyond the scope of medical malpractice and into other professional malpractice cases.

See Leonhart v. Atkinson, 265 Md. 219 , 289 A.2d 1 (1972) (malpractice by accountant); Steelworkers Holding Co. ⁴⁴⁴ v. Menefee, 255 Md. 440, 258 A.2d 177 (1969) (malpractice by architect); Mumford v. Staton, Whaley & Price, 254 Md. 697 , 255 A.2d 359 (1969) (malpractice by attorney); Mattingly v. Hopkins, 254 Md. 88, 253 A.2d 904 (1969) (malpractice by civil engineer). “Our basic rationale in these cases, like Waldman , was that it was inherently unfair to deprive a diligent plaintiff the opportunity to bring the suit when he did not, and could not, know he had been injured due to the negligence of another.” Pennwalt Corp., 314 Md. at 440 , 550 A.2d at 1159 . In Pennwalt Corp., 314 Md. at 442 , 550 A.2d at 1160 , we noted that “[t]he discovery rule finally evolved from the exception to the general rule in Poffenberger v. Risser, 290 Md. 631 , 431 A.2d 677 (1981).” We held in Poffenberger, 290 Md. at 636 , 431 A.2d at 680 : Having already broken the barrier confining the discovery principle to professional malpractice, and sensing no valid reason why that rule’s sweep should not be applied to prevent an injustice in other types of cases, we now hold the discovery rule to be applicable generally in all actions and the'cause of action accrues when the claimant in fact knew or reasonably should have known of the wrong. See also Vigilant Ins. Co. v. Luppino, 352 Md. 481, 489 , 723 A.2d 14, 17 (1999) (“Generally, a cause of action for breach of a contract accrues, and the statute of limitations begins to run, when the plaintiff knows or should have known of the breach.”); Doe v. Maskell, 342 Md. 684, 690 , 679 A.2d 1087, 1090 , cert. denied, 519 U.S. 1093 , 117 S.Ct. 770 , 136 L.Ed.2d 716 (1997) (“[A] cause of action ‘accrues’ when plaintiff knew or should have known that actionable harm has been done to him.”); Hecht v. Resolution Trust Corp., 333 Md. 324, 334 , 635 A.2d 394, 399 (1994) (“[T]his Court [has] adopted what is known as the discovery rule, which now applies generally in all civil actions, and which provides that a cause of action accrues when a plaintiff in fact knows or reasonably should know of the wrong.”); Pierce v. Johns-Manville Sales Corp., 296 Md. 656, 668 , 464 A.2d 1020, 1027-28 (1983) (noting that the discovery rule “affords a reasonably diligent person ... the full benefit of the statutory period in which to file suit, retains ⁴⁴⁵ some degree of protection of a potential defendant’s right to repose, and promotes judicial efficiency.”).

Having established that a cause of action accrues only when the claimant knows or should know of the wrong, we next addressed when the statute of limitations begins to ran when the claimant’s knowledge of the wrong is implied from the facts and circumstances of a particular case. A claimant reasonably should know of a wrong if the claimant has “knowledge of circumstances which ought to have put a person of ordinary prudence on inquiry [thus, charging the individual] with notice of all facts which such an investigation would in all probability have disclosed if it had been properly pursued.” Poffenberger, 290 Md. at 637 , 431 A.2d at 681 (alteration in original) (quoting Fertitta v. Bay Shore Dev. Corp., 252 Md. 393, 402, 250 A.2d 69, 75 (1969)). We analyzed the meaning of this language in O’Hara v. Kovens, 305 Md. 280 , 503 A.2d 1313 (1986): Under the discovery rule as stated in Poffenberger limitations begin to run when a claimant gains knowledge sufficient to put her on inquiry.

As of that date, she is charged with knowledge of facts that would have been disclosed by a reasonably diligent investigation. The beginning of limitations is not postponed until the end of an additional period deemed reasonable for making the investigation. ... From that date the statute itself allows sufficient time— three years—for reasonably diligent inquiry and for making a decision as to whether to file suit. See Pierce v. Johns-Manville Sales Corp., 296 Md. 656, 668 , 464 A.2d 1020 (1983).

This application of the discovery rule serves the legislative policy that underlies the statute of limitations, id. at 665 , 464 A.2d 1020 , and at the same time puts the discovery rule claimant on a par with the claimant who has actual knowledge at the time of the tort such as the normal