November 2018 will mark the 25th anniversary of a significant case regarding the limitations period for construction defect claims in Texas. In Bayou Bend Towers Council of Co-Owners v. Manhattan Construction Co., 866 S.W.2d 740 (Tex. App.—Houston [14th Dist.] 1993, writ denied) the Court held that even if the cause of a leak was not known, the limitations period begins to accrue at the time the nature of the injury should have been discovered through the use of reasonable diligence.
Bayou Bend Towers is a condominium regime in Houston, Texas that was substantially completed in 1981. The co-owners of the condominium were aware of leaks as early as 1982 and retained experts to detect the source of the leaks and repair them. Although the co-owners claim they did not discover the cause of the leaks until 1990, the Court held that they had been on notice since the discovery of the actual leak, not the cause of the leak. At the point of discovery of the injury (in this case the leaks), the discovery rule imposes a duty to exercise reasonable diligence and undertake further inquiry to discover the extent and nature of the injury. It is irrelevant if corporate officers change and later learn of the injury.
Although certain defenses can alter the limitations timeline, this case continues to highlight the importance to be both thorough and diligent when conducting repairs on a recently completed project.
Id. at 742.
Id. at 743.
Id. at 744.
Id. at 745.
The Court noted the condominium association’s failure to assert a fraudulent concealment defense as to certain parties waived the issue as to those parties. Fraudulent concealment can toll limitations until a party learns of facts that give rise to the cause of action. Id. at 746.
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