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Application of ten-year statute of repose, NJSA 2A:14-1.1, clarified in multi-phase project setting.

October 1, 2012
New Jersey v. Perini Corp., 425 N.J. Super. 62 (N.J. Super. Ct. App. Div. 2012)

New Jersey's statute of repose essentially provides that no action may be brought to recover damages for any deficiency in the "design, planning, surveying, supervision or construction" of a project "more than 10 years after the performance or furnishing of such services and construction." Earlier cases have already established that the statute of repose runs from the date one's services for the project are substantially finalized. Therefore, the statute of repose will prohibit a claim against an early trade subcontractor once 10 years have elapsed after the subcontractor completed its work on the project, even though the entire project may not yet be substantially complete for more than 10 years. However, the general contractor will remain on the hook until 10 years have elapsed from the date of substantial completion for the entire project.

In this case, a New Jersey appellate panel clarified the trigger date for the ten-year statute of repose for construction litigation, N.J.S.A. 2A:14-1.1. The court held that the statute of repose is triggered upon substantial completion of the project. However, the court recognized that there can be separate trigger dates for subcontractors that have substantially completed all of their work on the project prior to the completion of the project as a whole. For these subcontractors, the court held that the statute of repose “runs from the completion of that contractor’s entire work on the ‘improvement,’ not from discrete tasks” performed by the subcontractor. As to any contractors that perform work at a particular multi-phase project, the court determined that the statute of repose did not begin to run until all work, of any kind, performed by those contractors was complete, unless the entities could show that it was the intent of the parties to treat separate phases of construction as “separate improvements,” therefore triggering a separate period of repose for each phase of construction.

The Perini case required the court to apply these concepts to phased construction. The state sued the general contractor, designer and pipe supplier for problems that developed with the underground hot water piping at a new state prison. The suit was filed on April 28, 2008. By contract, the prison was constructed in three separate phases—each with its own contractual substantial completion date. By April 27, 1998, ten years before the state filed suit, the state had issued substantial completion certificates for the entirety of the first two phases of the project and for all but two buildings included in the third phase—a garage and a housing unit located outside the main perimeter. However, no certificate of substantial completion was issued specifically for the hot water system. The court held that "multiple phases of a construction project that are clearly identified and documented can trigger separate periods of repose, even for the general contractor and other contractors that continue to work on the entire project." However, the court rejected the notion that there can be "separate trigger dates of repose for components of a project, whether multi-phase or not, that are not clearly identified in the documentary record as distinguishable improvements." In this case, the court found that the hot water system was not a clearly distinguishable component of the construction and was not substantially complete by April 27, 1998. As such, the state's claim was not untimely under the statute of repose.

Case Law Alert - 4th Qtr 2012

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