JOHN DAIDONE, et al. v. BUTERICK BULKHEADING, INC., et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5652-04T15652-04T1

JOHN DAIDONE and LAURA

DAIDONE, Husband and Wife,

Plaintiffs-Appellants,

v.

BUTERICK BULKHEADING, INC., SCOTT

LEPLEY, LEPLEY DESIGN GROUP

and LEPLEY-MCCORRY ARCHITECTS,

P.C.,

Defendants-Respondents.

_______________________________________________________________

 

Argued May 24, 2006 - Decided August 15, 2006

Before Judges Stern and Parker.

On appeal from the Superior Court of

New Jersey, Law Division, Ocean County,

Docket No. L-1607-04.

Richard J. Allen, Jr., argued the cause

for appellants (Kipp & Allen, attorneys;

Mr. Allen, on the brief).

Richard J. Shackleton argued the cause

for respondent Buterick Bulkheading

(Shackleton & Hazeltine, attorneys; Mr.

Shackleton, on the brief).

Daniel J. Cogan argued the cause for

respondents Scott Lepley, Lepley Design

Group and Lepley-McCorry Architects

(Hoagland, Longo, Moran, Dunst & Doukas,

attorneys; Mr. Cogan, of counsel; Richard W.

Gaeckle, on the brief).

PER CURIAM

Plaintiffs John and Laura Daidone appeal from a grant of summary judgment dismissing their complaint under the Statute of Repose, N.J.S.A. 2A:14-1.1, governing construction projects.

In 1992, plaintiffs retained Scott Lepley, Lepley Design Group and Lepley-McCorry Architects, P.C. (Lepley or Lepley defendants) to design a house for them on property they owned in Forked River. Lepley's design plans were certified on February 17, 1993. The plans were approved by the Lacey Township Construction Official on June 23, 1993. The Lepley defendants did not thereafter provide any additional professional or construction administration services to plaintiffs.

In 1993, plaintiffs hired defendant Buterick Bulkheading, Inc. (Buterick) to install pilings for the foundation in accordance with the plans provided by Lepley. The piling work was completed in mid-May 1993. Upon completion of the work, Buterick retained a professional engineer who certified that the pilings had been driven in accordance with the architectural plans. Buterick then submitted a bill to plaintiffs, which was paid in full on May 24, 1993, with a company check from "DRN Contracting." Buterick did no further work on the house. Construction was completed more than a year later and a certificate of occupancy was issued on June 14, 1994.

Mr. Daidone served as the general contractor for building the house. He testified in his deposition: "I was doing the work. I was the principal contractor." Mr. Daidone testified that he did the framing and concrete work himself with the help of some friends. On appeal, however, plaintiffs reject the general contractor label, stating in their brief that "although Defendants tried to describe [Mr. Daidone] as a general contractor, implying that he is a construction expert, there is no evidence to support that contention. It is admitted that Daidone is a computer industry professional."

In 1999, approximately five years after the house was completed, plaintiffs began noticing that "something was not right, that something was going on with the house." The house appeared to be "settling" on the slab foundation. The "settling" was beginning to cause significant damage to the house: the hot water and heating pipes were bending out of the ceiling; the main gas pipe was bent to the point where it could have cracked and filled the house with natural gas; the wastewater sewer pipe was ripping out of the ceiling and threatening to flood the house with raw sewage; there was stress on the electrical panel that threatened to snap the home's wiring; there was stress on the pipes from the wall to the hot water heater and the furnace; some doors and windows could not be opened or closed; and the wall in the garage was separating and allowing birds and vermin to enter the garage. In his deposition, Mr. Daidone testified that the condition of the house presented "[s]afety concerns, absolutely safety concerns." In particular, he testified that the stresses on the pipes and the electrical panel presented "safety issues . . . . They condemned the house. We couldn't have lived in the house." Mrs. Daidone testified in her deposition that she was concerned about safety issues as well.

Although the "safety issues" became apparent in 1999, plaintiffs waited until late 2001 to retain an engineer to evaluate the problems. On January 2, 2002, Tariq Bashir, a professional engineer with Gentech Engineering Associates, P.C. (Gentech), issued a report in which he opined "that the basement structure had settled due to the underlying soft soils and organics present" and "that the loads imposed by the basement and the underlying compressible soils will continue to have negative draw-down effects on the pilings for the house. We strongly recommend that corrective action should be taken as soon as possible to avoid further damage."

Between March and July of 2002, plaintiffs undertook the repairs recommended by Gentech at a cost of approximately $90,000. Plaintiffs did not file their complaint, however, until June 2, 2004.

In the complaint, plaintiffs alleged that Buterick breached its contract; breached warranties of workmanship and materials; was negligent; breached an applied covenant of good faith and fair dealing; violated the Consumer Fraud Act; engaged in common law fraud and destroyed evidence. The complaint further alleged that the Lepley defendants were negligent in breach of their contractual duty.

After extensive discovery, defendants moved for summary judgment on the grounds that they had completed their work for plaintiffs more than ten years prior to the filing of the complaint and the claims should be dismissed under the Statute of Repose. The motions were granted.

In this appeal, plaintiffs argue that (1) defendants have not met their burden under the Statute of Repose of proving that the condition of the house rendered it "defective and unsafe" rather than merely proving that the defects impaired the functionality of the building; and (2) the trial court did not properly apply the case law to the Statute of Repose.

I

The Statute of Repose, N.J.S.A. 2A:14-1.1, is a limitation on liability for damages stemming from unsafe conditions of improvements to real property. The statute provides in pertinent part:

No action, whether in contract, in tort, or otherwise, to recover damages for any deficiency in the design, planning, surveying, supervision or construction of an improvement to real property, or for any injury to property, real or personal, or for any injury to the person, or for bodily injury or wrongful death, arising out of the defective and unsafe condition of an improvement to real property . . . shall be brought against any person performing or furnishing the design, planning, surveying, supervision of construction or construction of such improvement to real property, more than 10 years after the performance or furnishing of such services and construction.

The purpose of the statute is to protect architects and contractors from never-ending liability for their work on construction projects. Russo Farms, Inc. v. Vineland Bd. of Educ., 144 N.J. 84, 116-17 (1996). "Before the statute was enacted, the development of several trends in the common law created the possibility that architects and contractors could be sued for injuries long after a project was completed, and the statute 'meant to cut back on the potential of this group to be subject to liability for life.'" Id. at 116 (quoting Ramirez v. Amsted Indus., 86 N.J. 332, 356 (1981)). The statute "prevents what might otherwise be a cause of action from ever arising. Injury occurring more than ten years after the performance of the negligent act simply forms no basis for recovery. The injured party literally has no cause of action." E.A. Williams, Inc. v. Russo Dev. Corp., 82 N.J. 160, 167 (1980). As such, the statute serves "to define substantive rights [rather] than to alter or modify a remedy." Cyktor v. Aspen Manor Condo. Ass'n, 359 N.J. Super. 459, 470 (App. Div. 2003) (citing Rosenberg v. North Bergen, 61 N.J. 190, 199 (1972)). It creates a "substantive right . . . not to have to defend ancient claims or obligations." Cyktor, supra, 359 N.J. Super. at 470.

Plaintiffs contend that the Statute of Repose is an affirmative defense imposing on defendants the burden of producing evidence to support the defense and the burden of persuasion. They argue that defendants did not meet their burden of proving that the statute applied to them because they did not demonstrate that the defects in the house "created an unsafe condition as opposed to a condition that impaired the functionality of the building." Defendants maintain that the statute is applicable but that it is not an affirmative defense shifting the burden to them. "Rather, the Statute of Repose implicates the very ability to sustain a cause of action."

"Statutes of limitations are ordinarily held not to be self-executing and therefore are required to be pleaded as an affirmative defense" pursuant to R. 4:5-4. Pressler, Current N.J. Court Rules, comment 36.1 on R. 4:5-4 (2006). Our Supreme Court has stated that the Statute of Repose "is not a conventional statute of limitations. In fact, it is not really a statute of limitations at all, at least in the traditional understanding of that term." E.A. Williams, supra, 82 N.J. at 167; see also Greczyn v. Colgate-Palmolive, 183 N.J. 5, 18 (2005) (holding that the Statute of Repose "is not a statute of limitations but one of repose"). The Statute of Repose

is a special statutory limitation or "hybrid." On the one hand, it bars a right of action from coming into existence if the accident occurs subsequent to the ten-year period; but as to those events happening before the statutory period has run, the provision disallows, like any other statute of limitations, the institution of suit after the prescribed ten years.

[Pitney Bowes v. Baker Indus., 277 N.J. Super. 484, 488 (App. Div. 1994) (citing O'Connor v. Abraham Altus, 67 N.J. 106, 121-22 (1975)).]

The Supreme Court, however, has referred to the Statute of Repose as an affirmative defense. See e.g., E.A. Williams, supra, 82 N.J. at 164. The Court has explained that all "statutes of limitations are statutes of repose and the principal consideration underlying their enactment is one of fairness to the defendant[,]" and that "[t]he essential characteristic of a statute of limitations is the doctrine of repose." Zaccardi v. Becker, 88 N.J. 245, 262 (1982) (citations omitted). We are convinced that the Statute of Repose is an affirmative defense, imposing the burden of proving it on defendants.

In granting defendants' motion for summary judgment, the trial judge stated:

Plaintiff's attorney now asserts in the opposing certification [that] defendants didn't prove that the house was in an unsafe or dangerous condition . . . and that the plaintiff is only a computer expert, not a builder. Well, [Mr. Daidone] built this house. He took out the construction permit and he apparently had a construction company - I forget the name of it, DNR, or something like that, doesn't matter - and his wife is the one that paid Buterick on that building company check.

I think the plaintiff also slumbered on his rights. He had an engineering report that was dated 1/2/02 showing the footing defects, but he never brought a suit until 6/2/04. I think for purposes of this case the bulkheader was substantially complete when he did his work as a sub, got out, and was paid. It was done, and I think the designer similarly completed his work when this plan was approved by the Construction Official. So that's my interpretation of substantial completion for purposes of this case.

I find that . . . the bulkheader or the architect, designers are entitled to the protection of the Statute of Repose; and that the claimed defects constitute defective and unsafe conditions covered by the Statute. They're not just owner dismay or economic injury. There was no diligence in bringing this suit and the Complaint was filed outside of the ten-year Statute just by the dates that we've already mentioned. I think we have all the requisite dates on the record.

So I'm going to give Summary Judgment for both defendants.

Plaintiffs argue that the trial court erred in dismissing the complaint because defendants failed to demonstrate "that the defects alleged by Plaintiffs created unsafe conditions, not mere 'owner dismay and economic injury,'" which are not covered by the Statute of Repose. Defendants maintain, however, that "there is no genuine issue of material fact as to whether or not the alleged defects in the work presented a defective or unsafe condition." We agree.

Mr. Daidone, who now claims that he was not an expert in home design or construction, served as the general contractor for the project and did the framing and concrete work himself along with friends. The only sub-contractors hired during the construction phase were the licensed plumber and licensed electrician. Most importantly, both plaintiffs stated unequivocally that the settling of the house created safety issues which would have forced the municipality to condemn the house.

Although plaintiffs argue that defendants are required to present expert testimony to establish "defective and unsafe" conditions under the statute, there is no basis for that assertion. Moreover, where a fact is undisputed, the opposing party need not present evidence to prove it. See Scott v. Salerno, 297 N.J. Super. 437, 447 (App. Div.), certif. denied, 149 N.J. 409 (1997). Plaintiffs' non-expert testimony "may be admitted if it (a) is rationally based on the perception of the witnesses and (b) will assist in . . . determining a fact in issue." N.J.R.E. 701. Expert testimony is required only when the proffered evidence is beyond the common knowledge and experience of an average juror and the expert's "specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue." N.J.R.E. 702; see State v. Kelly, 97 N.J. 178, 208 (1984).

A reasonable juror does not need an expert to understand that there are safety issues associated with a bent gas main that could crack and fill the house with natural gas and cause an explosion or affixiation; that a wastewater sewer pipe ripping out of the ceiling could flood the house with unsanitary raw sewage; that stress on an electrical panel could snap the wiring and lead to a fire or electrocution; or that cracked walls and doors could create health and safety hazards arising from animal bites, excrement or parasites.

We are satisfied that under the circumstances here, defendants were not obligated to produce evidence that the conditions were "defective and unsafe" in order to invoke the Statute of Repose as an affirmative defense. See Horosz v. Alps Estates, Inc., 136 N.J. 124, 131 (1994); Newark Beth Israel Med. Ctr. v. Gruzen, 124 N.J. 357, 365 (1991).

II

Plaintiffs maintain that the trial court did not properly apply Russo Farms and Greczyn and that it incorrectly found that the Statute of Repose runs from a date other than issuance of the certificate of occupancy. Plaintiffs maintain that the certificate of occupancy is the only date from which the statute runs regardless of how long it took to complete the project. They maintain that Russo Farms and Greczyn support that position.

In Russo Farms, the plaintiffs were property owners across from the cite on which the Vineland Board of Education constructed a school. 144 N.J. at 92. Defendant Glen Kahley, an architect, designed the building and supervised construction. Ibid. Defendant Art Anderson, the general contractor, was responsible for all construction work. Ibid. On September 5, 1975, the State Department of Education issued an Occupancy Permit because "its 'inspection of the project indicates that the building is substantially completed.'" Id. at 92-93. In 1977, the Board hired defendant Daniel W. Jacobs, P.E., and Lippincott Engineering Associates to perform tests and recommend a design to ensure a proper drainage system. Id. at 92.

In July 1990, the plaintiffs filed a complaint against a number of the defendants, including the architect and the contractor, because drainage from the school allegedly caused damage to their property. Id. at 93-4. The engineers, Jacobs and Lippincott, were granted summary judgment on the basis of the Statute of Repose and were dismissed from the suit. Id. at 95. In considering the claims against the architect and the general contractor, the Court determined that the Statute of Repose runs from "substantial completion" of the project. Id. at 117. "Substantial completion is defined by the AIA (and the contract in this case, which was modeled on an AIA form) as the date when 'construction is sufficiently complete . . . so the owner can occupy or utilize' the building. Substantial completion occurs when the architect certifies such to the owner and a certificate of occupancy is issued attesting to the building's fitness." Ibid. (citations omitted). Although the plaintiffs had argued that the Statute of Repose did not begin to run until the "punch list" of disputed items was completed, the Court found "substantial completion" on the date the certificate of occupancy was issued. The grant of summary judgment dismissing the complaint against the architect and the general contractor was affirmed. Id. at 117-19.

In Greczyn, the Court was addressing the issue of whether the plaintiff could amend the complaint to substitute the name of a designer for a fictitious defendant after expiration of the ten-year Statute of Repose. 183 N.J. at 7. The Court noted that it had previously

repudiated the "completed and accepted rule" outright in Totten v. Gruzen, 52 N.J. 202, 245 A.2d 1 (1968), a year after the enactment of N.J.S.A. 2A:14-1.1. As we have pointed out, the "tendency away from the completed and accepted rule was so clearly established as to make it reasonable to assume that the Legislature took that trend into account in enacting the statute." O'Connor, supra, 67 N.J. at 118, 335 A.2d at 551 (citing Rosenberg, supra, 61 N.J. at 197 n.2, 293 A.2d at 666 n.2). The demise of the "completed and accepted rule" "left those involved in the design and construction of improvements to real property vulnerable indefinitely to liability for injuries arising from a structure's defect." E.A. Williams, supra, 82 N.J. at 166, 411 A.2d at 700 (citing O'Connor, supra, 67 N.J. at 117-18, 335 A. 2d at 550-51; Rosenberg, supra, 61 N.J. at 197-98, 293 A. 2d at 665-66). N.J.S.A. 2A:14-1.1 was "a legislative response seeking to delimit th[at] greatly increased exposure," Rosenberg, supra, 61 N.J. at 194, 293 A.2d at 664, and to "prevent 'liability for life' against contractors and architects." Russo Farms, supra, 144 N.J. at 117, 675 A.2d 1077, 1093 (1996).

[Id. at 10-11.]

See also O'Connor v. Altus, 67 N.J. 106, 118 (1975) (recognizing that the "tendency away from the 'completed and accepted' rule was so clearly established as to make it reasonable to assume that the legislature took that trend into account in enacting" N.J.S.A. 2A:14-1.1) (citing Rosenberg, supra, 61 N.J. at 197 n.2; Totten, 52 N.J. at 210 (holding, a year after the enactment of N.J.S.A. 2A:14-1.1, that architects and engineers "are not to be relieved from liability merely because their work had been completed and accepted by the owner" because such liability may rest "on the basis of improper design as well as on contractors for defective materials, equipment and workmanship").

That, however, is not the end of our analysis. In Welch v. Engineers, Inc., 202 N.J. Super. 387, 397 (App. Div. 1985), we held that "the date when the ten-year time-bar matures under N.J.S.A. 2A:14-1.1 and the period of repose begins must be measured from the final date the person claiming repose and immunity from suit furnishes any and all services or construction which it has undertaken at the job site." In Hopkins v. Fox & Lazo Realtors, 242 N.J. Super. 320, 328 (App. Div. 1990), we held that the ten-year Statute of Repose commences "when the architect or contractor completes its task with respect to the property involved in the claim." We added that "when an architect . . . completes the work for which he was commissioned, he should be able to look back ten years and one day after the completed performance of his work and know there is repose from liability." Id. at 327.

The apparent inconsistency between Russo Farms and our decisions in Welch and Hopkins is harmonized in the factual underpinnings of each case. In Russo Farms, the architect and general contractor participated in the entire construction phase of the project such that their work was not "substantially complete" until the certificate of occupancy was issued. In Welch and Hopkins, however, the engineers and architects completed their work in the very early stages of the project and had no further involvement with the construction.

Here, the defendants are similarly situated. Lepley completed and certified the design plans which were approved by the township construction official on June 23, 1993. Buterick completed its work in installing the pilings by mid-May 1993 and was paid in full on May 24, 1993. Neither Lepley nor Buterick had any involvement in the construction thereafter.

Plaintiffs argue that public policy favors a uniform date for commencement of the Statute of Repose and that the issuance of the certificate of occupancy establishes a clear date for all of the participants in the construction project. We are not persuaded by that argument, particularly in this case where plaintiffs knew as early as five years after issuance of the certificate of occupancy that there were serious "safety issues" with the house and knew definitively on January 2, 2002 when Gentech rendered its report that remedial action would have to be taken. Nevertheless, plaintiffs waited another year and a half before filing the complaint.

We see no reason for extending the commencement date for the Statute of Repose to the issuance of the certificate of occupancy under the circumstances here, where the architect and the bulkheader completed their work more than a year before the certificate of occupancy was issued and plaintiffs failed to file a timely complaint when they had notice of their injury five years after the certificate of occupancy was issued.

Accordingly, we affirm the trial judge's grant of summary judgment in favor of defendants Lepley and Buterick.

Affirmed.

 

(continued)

(continued)

17

A-5652-04T1

 

August 15, 2006