Two cases from Houston appellate courts show the relatively high bar that breach of contract claims must meet to satisfy the discovery rule. The cases show that parties in the construction industry must mind the details and cede no opportunity to confirm contractual performance—or risk waiving potential breach of contract claims that will materialize years after the project’s completion.
Accrual, Limitations and the Discovery Rule
“A claim for breach of contract accrues when the contract is breached.” But, in the construction industry, breaches can remain hidden for years. For example, a contractor might take a shortcut and sink fewer or shorter piles than specified, and let the owner discover the breach years later when the building’s façade starts to crack. Accordingly, in construction-defect cases, the general rule is that “limitations begin to run when an owner becomes aware of property damage.”
The limitations clock starts ticking as soon as the claimant becomes “aware of enough facts to apprize him of his right to seek judicial remedy.” Knowledge of an injury, “‘however slight,’” triggers accrual and the duty of reasonable diligence to inquire, “‘even if the fact of injury is not discovered until later, and even if all resulting damages have not yet occurred.’”
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Construction Law Practice Tip: Contract Claims and the Discovery Rule