Limitations period on design contract starts when design is fully approved and not when design is initially stamped

The Supreme Court of Virginia has held that final approval of a design triggered commencement of the limitations period, and not submission of the original stamped drawings. The design firm had argued that the original submittal was the triggering date, in part because the project owner had also signed off, but the Virginia high court has disagreed.

The engineering firm submitted its design plans to the county for a below-ground rainwater tank on January 2, 2007. The project owner had previously approved the plans in late December 2006. The design went through review by various county agencies and sub-agencies, with comments and minor adjustments in the design during that process. The county did not finally approve the design until August 5, 2009, more than 30 months after the initial submittal. The subsurface tank later failed, portions of the grade-level parking lot were cordoned off for many months, occupancy of the building was delayed, and the owner eventually filed suit. The five-year Virginia statute of limitations on negligent design would have run its course before suit was filed, if the earlier date was the proper trigger date.

The engineering contract called for the firm to participate in and respond to public agency review. So that review, and any modification of the design per the public review, was part of the engineer’s base scope of services. (It may well be that critical aspects of the original design were not modified during this review period, which would have given the engineer one reason to argue that the original design date should control; the court decision does not shed light on that point.) Thus, when final county approval issued in August 2009, the five-year clock began. Per the court, “the date on which the county approved the final site plan was the date on which [the engineer’s] obligation concerning the engineering design phase was completed, and [the owner] accepted the engineering plans, marking the beginning of the statute of limitations period for the negligent design claim.”

Clearly, the scope of the engineer’s services and how those services were defined, were critical factors in the court’s analysis. A word to the wise when drafting. The case is William H. Gordon Assoc. v. Heritage Fellowship, 2016 Va. LEXIS 11 (Feb. 12, 2016), available here.