State v. Perini Corp., 425 N.J. Super. 62 (App. Div. 2012). N.J.S.A. 2A:14-1.1a establishes a ten-year statute of repose for actions involving alleged deficiencies “in the design, planning, surveying, supervision or construction of an improvement to real property.” Writing for the panel in this case, Judge Ashrafi faced three issues: (1) does the ten-year period of repose “run from the substantial completion of a phase or component of a construction project or from completion of the entire project; (2) what is the relevance of multiple and successive certificates of substantial completion in determining the date from which the ten-year period runs; and (3) is a manufacturer that designs and supplies material for a construction project in accordance with customized specifications entitled to protection under the statute of repose?”
The project at issue was a state prison complex that was built in the 1990’s. The prison’s hot water system began to fail in 2000. The State sued several defendants on April 28, 2008, more than ten years after most of the prison facilities were already in use, but three days short of ten years after the State issued the last of its certificates of substantial completion for the project. The trial court granted summary judgment based on the statute of repose. The State appealed, and the Appellate Division reversed.
The State argued that only completion of the entire project triggered the statute of repose. Defendants contended that completion of any phase or component of a project started the statute running as to that phase or component. Judge Ashrafi found, first, that the hot water system was not separately an “improvement to real property” as contemplated by N.J.S.A 2A:14-1.1a. As to such a system, he held, subcontractors whose work on the overall project concludes once the component at issue is completed and who have no further duties may rely on the running of the statute of repose because the date they finished working is a clear delineation of the end of their work on the project. But that conclusion did not apply to defendants here, who had continuing responsibilities on the project. It would be unworkable to start the statute of repose running at different times for different components where a contractor continues to work on the overall project even after a given component is done.
Judge Ashrafi noted that the parties had the right to determine by contract that any given component constitutes an “improvement to real property” whose completion would trigger the statute of repose. He concluded, however, that the parties here had not done that.
Finally, on the question of whether one of the defendants, who had manufactured pipe for the hot water system but had also performed some design work or work at the site, could invoke the statute of repose, the panel determined that there were genuine disputes of material fact that precluded summary judgment for that defendant. Manufacturers are not covered by the statute of repose, and whether that defendant’s other activities at the site brought it within the statute would have to await trial.
Judge Ashrafi’s opinion is an excellent orientation about the statute of repose. His answer to the main issues in the case were pragmatic ones that attempt to make the statute workable in the context of a multi-phase project. Whether defendants will seek Supreme Court review of what the panel acknowledged was an issue of first impression in the context of multi-phase projects, and whether the Court will grant certification if it is sought, remain to be seen.