A recent decision from the Fourth Court of Appeals of Texas provides meaningful guidance on how courts will evaluate latent construction defect claims, the applicability of the discovery rule, and the limits of the economic loss doctrine.
Construction projects often involve intricate designs, multiple stakeholders, and complex performance obligations. When problems surface years after completion, parties must navigate a difficult landscape that blends contract law, tort doctrines, and statutory deadlines. A recent decision from the Fourth Court of Appeals of Texas provides meaningful guidance on how courts will evaluate latent construction defect claims, the applicability of the discovery rule, and the limits of the economic loss doctrine. In Morningside Ministries v. Koontz McCombs Construction, Ltd., the court reversed summary judgment entered in favor of the general contractor and project manager, reviving the owner's claims and offering important lessons for owners, contractors, and insurers facing construction defect disputes.
Background of the Dispute
Morningside Ministries operates senior living communities across Texas. In 2012, It contracted with Koontz McCombs Construction, Ltd. (Koontz) to construct The Overlook, a significant expansion of Morningside's Menger Springs campus in Boerne. The contract required Koontz to build 100 new senior living units along with common areas and site improvements, and placed responsibility for construction quality, including the work of subcontractors, on Koontz.
Reprinted courtesy of Spencer E. Dunn, Wood Smith Henning Berman and Melissa Osio Martinez, Wood Smith Henning Berman
Mr. Dunn may be contacted at sdunn@wshblaw.com
Ms. Martinez may be contacted at mosiomartinez@wshblaw.com