This week’s blog was written by my Litigation Department associate, Voris M. Tejada, Esq.
The State of New Jersey, as plaintiff, sued following the failure of an underground high temperature hot water (“HTHW”) system at a state prison. In State v. Perini Corp., 2015 N.J. LEXIS 388 (N.J. 2015), the Supreme Court of New Jersey addressed whether the State’s Complaint was barred by the ten-year limitations period set forth in the statute of repose.
In February 1995, the State executed a contract with defendant Perini Corporation to design and build the South Woods State Prison (the “Project”). Perini then designated various other entities as contractors for specific portions of the work to be performed on the Project. The Project consisted of twenty-six buildings, and was designed to be constructed in three phases. The buildings received heat and hot water from an underground HTHW system.
The HTHW system was designed to serve the entire Project, and included a central plant from which the hot water was distributed to the various buildings that comprised the Project. A certificate of substantial completion for Phase I of the Project was issued on May 16, 1997, which included the central plant and housing for the first inmates. However, the remainder of the Project was not substantially complete until May 1, 1998. The various buildings comprising the Project were connected to the HTHW system as they were completed.
Soon after the Project was completed, the HTHW system experienced a series of widespread failures. As a result, the State filed suit against Perini and the other contractors involved in the design and construction of the HTHW system. The State filed its Complaint on April 28, 2008, more than ten years after it began using the HTHW system and housing the first inmates, but less than ten years after the HTHW system was connected to all of the buildings constructed under the contract.
The defendants moved for summary judgment, arguing that the State’s Complaint was barred by New Jersey’s statute of repose. The issue before the Court was whether the running of the statute commenced when the HTHW system began to supply heat and hot water to the buildings completed in Phase I, or whether the ten-year limitations period was triggered by substantial completion of the entire Project.
New Jersey’s statute of repose, codified at N.J.S.A. 2A:14-1.1(a), provides in relevant part that “[n]o action…to recover damages for any deficiency in the design, planning, surveying, supervision or construction of an improvement to real property,…shall be brought against any person performing or furnishing [such services], more than 10 years after the performance or furnishing of such services and construction.” As a threshold matter, the Court found that the HTHW system was an improvement to real property, and that the work performed thus fell within the scope of the statute of repose. However, the statute was not applicable to the State’s claims against the defendant manufacturer of the pipes and fittings used in the HTHW system. Manufacturers and sellers of standardized products are instead covered by the statute of limitations applicable to the Products Liability Act.
Viewing the facts in the light most favorable to the State, the Court concluded that the statute of repose did not bar the State’s Complaint against the defendants. The HTHW system was designed to supply heat and hot water to every building in the Project. The central plant could be viewed as the origination point of the system, but it was not independent of the underground pipes that were connected to it to bring heat and hot water to every facet of the prison complex. As an improvement designed to service every building in the facility, it was complete only when the HTHW system was connected to every building it was designed to serve. The Court thus concluded that the ten-year limitations period of the statute of repose started running on May 2, 1998, the day after the final certificates of substantial completion were issued for the final buildings served by the HTHW system. Because the State filed suit on April 28, 2008, the statute of repose did not bar its Complaint.
