U.S. Supreme Court Upholds State Law Claims Cut Offs for Contamination Damages
June 1, 2014
On June 9, 2014, in CTS Corp. v. Waldburger, the U.S. Supreme Court held that the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”) does not preempt state statutes of repose, which cut off certain state law claims for recovery of damages caused by contamination. (Case No. 13-339, 573 U.S. — (2014).) The Supreme Court’s holding allows for exceptions to liability in actions involving contamination where statutes of repose apply, and may open the door to new legislation enacting additional statutes of repose that will limit the reach of environmental damage claims. The potential application of statutes of repose should be carefully considered in property damage or personal injury actions involving contamination.
Statutes of limitations and statutes of repose both relate to the time frame in which a plaintiff is required to file its claims, but they operate differently and serve different purposes. Statutes of limitations provide that a plaintiff must file its claims within a certain period of time from the date the claim accrues. In a personal injury or property damage case, a claim generally accrues on the date the injury occurs or the date the injury is discovered. The “discovery rule” is sometimes applied to toll the statute of limitations on state law tort claims for recovery of damages related to contamination. Statutes of repose cut off a claim regardless of when the claim accrued. For example, in California, a 10-year statute of repose applies to certain claims relating to latent construction defects – even if the plaintiff is not injured by the defect until more than 10 years have passed from completion of the development or improvement, the plaintiff’s claim would still be barred by this statute of repose. (See Cal. Code Civ. Proc. § 337.15.)
A plaintiff’s claim can be barred by a statute of repose before the statute of limitations ever begins to run. In CTS Corp. v. Waldburger, the plaintiffs’ state law tort claims accrued when the plaintiffs discovered contamination on their property caused by the operations of the defendant, a prior owner. A state law statute of repose in North Carolina barred any tort suit against a defendant more than 10 years after the last culpable act. In this case, the defendant’s last culpable act was selling the contaminated property to the plaintiffs 24 years earlier. Because, as the Court held, CERCLA does not preempt this statute of repose, the plaintiffs’ state law tort claims against the defendant were barred.
The distinctions between statutes of limitations and statutes of repose were central to the Court’s analysis. The Supreme Court held that although CERCLA expressly preempts state law statutes of limitations on tort actions for personal injury or property damages arising from the release of a hazardous substance, pollutant, or contaminant into the environment, (42 U.S.C. § 9658), this provision does not extend to state statutes of repose. Under CERCLA, claims for damages caused by contamination accrue when the plaintiff discovers, or reasonably should have discovered, the harm. CERCLA’s preemption of state law statutes of limitations applies to ensure that, even if a plaintiff files state law tort claims rather than CERCLA claims, the statute of limitations on those claims will only start to run when the plaintiff discovered or should have discovered the harm. However, the Court noted that Congress did not include language clearly preempting state statutes of repose in CERCLA, it only explicitly referred to statutes of limitations, and that the distinct purposes for statutes of repose weighed against reading that language into the statute. Congress chose to leave this area of state law untouched, allowing state legislatures to decide when a statute of repose should bar environmental damage claims.