## Facts

- Target Stores, Inc. (Target) developed the Chesterfield Crossing Shopping Center project in Chesterfield County, Virginia, which included a Target building and other retail buildings, including one owned by Kohl’s Department Stores, Inc. (Kohl’s).
- In 1997, S.W. Rodgers Co., Inc. (Rodgers) performed earth-moving work on the project and, for that work, purchased a synthetic fill product called “Xtra Fill” from ReUse Technologies, Inc. (ReUse).
- Xtra Fill was used as fill material in the project’s site work; the last delivery of Xtra Fill to Rodgers occurred in July 1997.
- After construction was completed, significant structural distress (including cracking) appeared in the buildings at the shopping center.
- Various parties in interest (including building owners and project participants) sued each other in related actions; the claims were consolidated in the Eastern District of Virginia.
- Multiple parties asserted that the damage was caused by Xtra Fill expanding after installation.
- Rodgers, after being brought into the litigation, filed a complaint against ReUse seeking indemnification and framing its claim in contract/warranty terms tied to the sale of Xtra Fill.
- ReUse moved for partial summary judgment, arguing that (1) negligence-based claims were barred by Virginia’s five-year statute of repose for improvements to real property (Va. Code § 8.01-250) and (2) contract/warranty-based indemnity claims were barred by the four-year UCC statute of limitations (Va. Code § 8.2-725).

## Issues

1. Whether Virginia Code § 8.01-250 bars negligence-based claims against ReUse arising from alleged defects in Xtra Fill used in constructing an improvement to real property when the claims were asserted more than five years after ReUse furnished the material.
2. Whether Virginia Code § 8.2-725 bars Rodgers’s contract/warranty-based indemnification claim against ReUse because the last tender of delivery of Xtra Fill occurred in July 1997 and the claim was not asserted until 2002.
3. Whether styling the claim as “indemnification” changes the UCC accrual date from tender of delivery to a later date tied to the filing of third-party claims, discovery of the defect, or Rodgers’s potential liability to others.

## Decision

- The court granted ReUse’s motion for partial summary judgment as to negligence-based claims that were within Virginia Code § 8.01-250’s statute of repose.
- The court treated ReUse’s furnishing of Xtra Fill for incorporation into the project as conduct covered by § 8.01-250 because the claims arose out of the alleged defective and unsafe condition of an improvement to real property.
- The court granted ReUse’s motion for partial summary judgment as to contract/warranty-based claims governed by Virginia Code § 8.2-725 where those claims were asserted more than four years after tender of delivery.
- The court held that the UCC limitations period ran from tender of delivery (no later than July 1997) and was not postponed by later discovery of the alleged defect or by the fact that the claim was pleaded as indemnification.
- Claims not reached by the motion (or not fitting within the time bars addressed) were left for further proceedings in the consolidated action.

## Legal Principles

- Virginia Code § 8.01-250 is a statute of repose that extinguishes certain tort claims arising from the defective and unsafe condition of an improvement to real property five years after the performance of the relevant services or the furnishing of the relevant materials.
- For § 8.01-250, the focus is on the relationship of the defendant’s work or materials to the construction of the improvement, and the repose period runs without regard to when the defect is discovered.
- Virginia Code § 8.2-725 sets a four-year statute of limitations for actions for breach of contract for sale under the UCC.
- Under § 8.2-725, a breach of warranty or sales-contract claim generally accrues at tender of delivery, even if the defect is latent and even if the plaintiff learns of the problem later.
- A party cannot avoid § 8.2-725’s accrual rule by relabeling a time-barred warranty or sales-contract claim as “indemnification” when the claimed duty to reimburse is based on the alleged breach in the underlying sale of goods.

## Conclusion

In this consolidated construction-defect dispute over alleged damage caused by Xtra Fill, the court ruled that negligence claims against the fill supplier were extinguished by Virginia’s five-year construction statute of repose and that Rodgers’s contract/warranty-based indemnification claim was governed by the UCC and accrued upon tender of delivery, making it untimely when first asserted more than four years after the last 1997 delivery.


Kohl's Department Stores v. Target Stores, 290 F. Supp. 2d 674 (2003)