A party seeking to avoid liability by asserting the defense of the statute of repose bears the initial burden of proof that the statute bars the claims asserted. In order for the statute of repose to bar a claim against those protected by the statute, the claim must be that a defective condition exists, and that the condition has resulted in an unsafe condition.
The statute of repose provides in pertinent part that:
No action . . . arising out of the defective and unsafe condition of an improvement to real property, nor any action for contribution or indemnity for damages sustained on account of such injury, 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.
[N.J.S.A. § 2A:14-1.1 (emphasis added).]
The statute as plainly worded applies to parties whose “professional work is functionally related to and integrated with a building plan or design, [and] which gives rise or contributes to a defective and unsafe condition.” See E.A. Williams Inc. v. Russo Development Corp., 82 N.J. 160, 169 (1980) (emphasis added).
Unlike the model Statute of Repose, New Jersey’s Statute of Repose expressly requires that a claim be barred only if it arises from deficiencies in the design, planning, supervision or construction of an improvement to real property, and relates “to a resulting condition which is itself defective and unsafe.” The New Jersey Supreme Court in E.A. Williams specifically pointed out that the Statute of Repose “does not provide that all claims against planners, and designers, including surveyors, vanish after the passage of ten years from the performance of services.” Rather, the Court expressly observed that New Jersey’s Statute of Repose “very pointedly includes . . . as a significant limiting qualification” the requirement that a condition be both defective and unsafe. To illustrate the point of this limitation, the E.A. Williams Court cited a North Carolina case involving a leaky roof as an example of a claimed defective condition that would not be barred by New Jersey’s Stature of Repose because the claim did not also involve an unsafe condition.
Our Supreme Court has specifically held that the “defective and unsafe” requirement of the statute of repose operates to limit the type of cases that fall under the statute. Thus, in determining which actions fall within the statute, a court must first determine, as a threshold issue, whether the claimed condition is one that can be classified as “defective and unsafe.” The Supreme Court’s holdings in E.A. Williams, supra, and Newark Beth Israel Medical Center v. Gruzen and Partners, 124 N.J. 357 (1991), illustrate this difference.
In E.A. Williams, the New Jersey Supreme Court was confronted with the issue of whether a surveying error, resulting in improper spacing between buildings, rose to the level of a dangerous and unsafe condition. The Court found that it did not, concluding that the surveying mistake created merely a “functional impairment with consequential economic losses entailed in its correction,” a defect that may well “cause the owner dismay and economic injury.” The Court recognized that the statute’s major impetus was to limit liability of contractors and professionals, for damages from injury to persons and property, and consequences that ordinarily flow from unsafe conditions. The surveyor was not protected by the statute because a surveying error did not create a defective and unsafe condition.
In contrast, in the Newark Beth Israel case, the defendants (architects) were hired by the plaintiff (a hospital) to design an addition to the hospital. During the design phase, defendants were aware that plaintiff was planning to construct an addition to the structure. Twelve years later, when plaintiff attempted to construct an addition, it learned of structural problems with defendants’ design. The architects asserted the Statute of Repose as a defense. The Supreme Court determined that the Statute of Repose did in fact apply to bar plaintiff’s action. The Court found that even though the statute did not apply in the case of general functional impairments, the functional impairment in this case was directly related to an “unsafe condition” because additional stories made the building “dangerously” vulnerable to wind. The design created an unsafe condition that prevented the property from being used for its intended purposes. The Court distinguished its decision from E.A. Williams, by finding that safety considerations dominated.
The Newark Beth Israel Court addressed the meaning of “functional impairment” as espoused in E.A. Williams, and held that “[e]very defective and unsafe condition will impair a building functionally, in that one cannot use it if it is unsafe. The converse however, is not necessarily true – every functional impairment does not necessarily carry with it an unsafe and defective condition.” In the Court’s view, “expensive and inconvenient changes based on efficiency” were deemed insufficient to trigger the Statute of Repose.
In 2002, our Appellate Division reiterated that a threshold determination must be made as to whether the Statute of Repose applies to a claim against a party seeking the statute’s protection. The Court in Diana v. Russo Development Corp., 352 N.J. Super. 146 (App. Div. 2002), a case involving a worker that was killed at a construction site after falling from a ladder, reiterated the concept that “if the plaintiff cites a particular defect or error that does not constitute an unsafe condition, the statute does not apply”.
Therefore, Plaintiffs have to be very conscious about the allegations they make in construction defect cases because there is a fine line between asserting damages and creating a foundation for the application of the statute of repose.