Posted On: November 12, 2012 by Gene Markin

Recovering Damages Under the Statute of Repose

Under the statute of repose, no action to recover damages for any deficiency in the design, planning, surveying, supervision or construction of an improvement to real property may be brought more than ten (10) years after the performance of “such services and construction.” N.J.S.A. § 2A:14-1.1. Essentially, the statute of repose provides that an injury occurring more than ten years after completion of improvements to real property does not give rise to a cause of action at all.

The New Jersey Supreme Court has held that the ten-year statute of repose for bringing an action against a contractor or an architect begins to run as of “substantial completion” of the real property. Russo Farms v. Vineland Bd. of Educ., 144 N.J. 84, 117 (1996). The Court defined “substantial completion” as the date when construction is sufficiently complete so that an owner can occupy or utilize the building. Therefore, generally when the architect certifies as much to the owner and a Certificate of Occupancy is issued attesting to the building’s fitness for occupancy, the real property is substantially complete and the statute of repose begins to run.

One important concept has evolved from recent developments of case law interpreting the statute of repose: the start date for the ten-year time limit of the statute of repose is not the same for all contractors and design professionals on a particular project; the start date differs depending on a party’s continued involvement with a construction project. See State v. Perini Corp., 425 N.J. Super. 62 (App. Div. 2012). The Perini Court engaged in a lengthy discourse of the relevant case law interpreting New Jersey’s statute of repose from which it derived three guiding principles: First, the trigger date is the date of substantial completion, not completion of every last task of the contractor; Second, separate trigger dates apply to subcontractors that have substantially completed their work, even if the improvement as a whole is not completed and ready for use and a certificate of occupancy has not been issued; Third, the trigger date for any single contractor runs from completion of that contractor’s entire work on the “improvement,” not from discrete tasks. [425 N.J. Super. at 74-75 (internal quotations omitted).] This means that certain contractors, who performed services on a job site early on, can benefit from a repose period that commences earlier than the date of substantial completion.

Thus, while the statute of repose commences as to the developer, general contractor and architect upon substantial completion, the analysis is not the same for each individual contractor who will claim the benefit of the repose period ten years after the date the contractor walked away from the project having rendered all of his services and discharged all of his responsibilities

Finally, it is important to note that the strict limitations of the statute of repose only apply to those claims “arising out of the defective and unsafe condition of an improvement to real property.” N.J.S.A. § 2A:14-1.1. The statute as plainly worded applies to parties whose professional work is functionally related to and integrated with a building plan or design, and which gives rise or contributes to a defective and unsafe condition.

The New Jersey Supreme Court has pointed out that the statute of repose does not provide that all claims against planners, and designers, including surveyors, vanish after the passage of ten years from the performance of services. Rather, the statute of repose includes as a significant limiting qualification the requirement that a condition be both defective and unsafe. This means that in determining which actions fall within the statute, a court must first determine, as a threshold issue, whether the claimed condition is one that can be classified as "defective and unsafe."

An unsafe condition exists when the work created a situation hazardous to the well-being and safety of persons or property coming into contact with the improvement or structure. See, e.g., Newark Beth Israel Medical Center v. Gruzen and Partners, 124 N.J. 357 (1991) (prospect that building an addition to a hospital as designed would render the completed building dangerously susceptible to wind created an unsafe and hazardous condition even though the design flaw did not pose a threat to the building as then presently constructed) Rosenberg v. Town of N. Bergen, 61 N.J. 190, 197-98 (1972) (holding that a negligently paved road created an unsafe condition); Cnty. of Hudson v. Terminal Constr. Corp., 154 N.J. Super. 264, 267 (App. Div. 1977) (holding that negligently installed ceramic tiles that began to crumble and fall created a hazardous condition), certif. denied, 75 N.J. 605 (1978); Salesian Soc'y v. Formigli Corp., 120 N.J. Super. 493, 496 (Law Div.1972) (holding that the leakage of water that damaged the building's support structure created an unsafe condition), aff'd o.b., 124 N.J. Super. 270 (App. Div. 1973); cf. E.A. Williams, supra, 82 N.J. at 170-71 (surveying error, resulting in improper spacing between buildings, did not rise to the level of a dangerous and unsafe condition); N.C. State Ports Auth. v. L. A. Fry Roofing Co., 294 N.C. 73, 86 (1978) (action against contractor for damages from leaky roof was not subject to statute of repose because no unsafe condition was found).

Accordingly, in order for the statute of repose to even apply, defendants will have to show that their work created an unsafe or hazardous condition.

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