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A Maryland appeals court has ruled that the state's statute of repose does not bar homeowners from bringing an action against the developer for failing to disclose that their property was a desecrated graveyard.
Louis Hickman ("Developer") developed a 200-acre farm that he owned into a 150-lot subdivision. The Developer also place various restrictive covenants on the lots, including one that required Developer approval for all construction plans. Lot number 96 ("Property") exchanged hands a number of times over the years, first being sold in 1975 and eventually being purchased in 1986 by Thomas and Deborah Carven ("Owners"). Following the purchase of the Property, the Owners' building plans for a home were approved by the Developer. In 1995, the Owners learned that their home was built over a graveyard, allegedly from which only the headstones had been removed in 1964.
The Owners filed a lawsuit against the Developer, alleging that the presence of the graveyard impaired the value of the Property. The lawsuit alleged that the Developer had engaged in deceit, breach of covenant of special warranties, and negligence. The Owners' complaint further alleged that the Developer had knowingly sold the Property without disclosing the presence of the graves. The Developer filed a motion for summary judgment with the trial court, claiming that the Owners' lawsuit was barred by Maryland's 20-year statute of repose.
The Maryland statute of repose ("Statute"), in pertinent part, provides that "no cause of action for damages accrues...[relating to] an improvement to real property more than 20 years after the date that the entire improvement first becomes available for its intended use." A statute of repose is different from a statute of limitations. A statute of repose is a legislatively fixed period of time in which a lawsuit must be brought. A statute of limitations is a defense that a party can raise where they argue that a lawsuit is time-barred, but the time period is subject to the "discovery rule" (a rule under which the limitation period doesn't begin until the basis for the lawsuit is discovered by the party). In this case, the trial court ruled that the Statute prevented the Owners from bringing a suit, since the subdivision was prepared more than 20 years prior to when the Owners first suffered their claimed injuries. The Owners appealed.
The Court of Special Appeals of Maryland reversed the trial court, ruling that the Statute did not affect the Owners' lawsuit. In reaching this decision, the court looked at the legislative history of the Statute. The Statute was intended to impose a limit on the recent expansion of liability to those making improvements upon real property, such as builders and developers. Maryland courts had developed a two-part test to determine if the Statute applied to bar a particular lawsuit: first, the "improvement to real property" must have caused the plaintiff's injuries; and second, twenty years must have passed since the completed improvement became available for use.
Applying the first part of the test to the facts of this case, the court ruled that the removal of headstones did not constitute an improvement to land, as contemplated in the Statute. Instead, the court found that what was meant by "improvement" was that a permanent structure or part of a permanent structure was constructed or added to the property. The removal of the headstones did not meet that definition. The court also ruled that the type of injury claimed by the Owners (financial harm) was not the type of injury that the Statute was intended to cover. The Statute was intended to address personal injuries or damage to property. Therefore, the court ruled that the Statute was not intended to bar the Owners' lawsuit, and so the court reversed the trial court and sent the case back to the trial court to conduct further proceedings.
Carven v. Hickman, 135 Md. App. 645, 763 A.2d 1207 (Md. Ct. Spec. App. 2000), aff'd, 784 A.2d 31 (Md. 2001).