New Jersey Court Clarifies Trigger Dates for Statute of Repose in Construction Defect Actions

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

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.  New Jersey, 2012 WL 1057939 at *6.

Here, Perma-Pipe was hired to perform work related to the centralized system for hot water distribution in a New Jersey state prison.  The hot water distribution system began to fail a few years after the state prison was complete.  The State filed suit against several entities, including Perma-Pipe, more than ten years after most of the facilities at the state prison were put to use but three days prior to the ten year anniversary of the issuance of certificates of substantial completion for the prison.  The Court held that Perma-Pipe finished all of its work at the prison, and had no on-going responsibilities at the prison of any kind, more than ten years prior to the institution of the suit.  As to other contractors who performed work at the prison, 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.  Although the construction of the project was broken up into three separate phases with liquidated damages due for the failure to complete each phase in a timely manner, the four remaining contractors were unable to demonstrate the intent to apply separate periods of repose to the multiple phases of construction with respect to claims related to the hot water distribution system and, as such, did not substantially complete their work at the prison more than ten years prior to the institution of the suit.

Although the claims against Perma-Pipe would have been untimely based on the court’s analysis of the trigger date for the statute of repose, Perma-Pipe was the manufacturer of the allegedly defective piping materials and the New Jersey statute of repose for construction litigation does not apply to claims related to the manufacturing of an allegedly defective product.  Rather, the statute of repose only provides protection to contractors, buildings, planners, and designers that are involved in a construction project.  Although the claims against Perma-Pipe were brought more than ten-years after the substantial completion of Perma-Pipe’s work on the prison, Perma-Pipe was not afforded the protection of the ten-year statute of repose.