for "sales contracts" in order to eliminate jurisdictional variations for business concerns operating nationwide. By its terms, section 2-725 relates to actions for breaches of contracts of sale and "presumably was not intended to apply to tort actions between consumers and manufacturers who were never in any commercial relationship or setting." Id. In a property damage strict products liability action, the Rosenau court noted that the lower court had properly applied the general statute of limitations, but had incorrectly determined that the cause of action had accrued when the defective meter was delivered rather than when the defect manifested itself and the plaintiff had first become aware of the defect. Id. at 143-44. The court stated that the lower court's approach had wholly ignored the tort basis of the claim as formulated in Santor "and incongruously served to bar their claim long before it arose and well before" the defective product had actually been installed. Id. at 144.
The Third Circuit has noted that tort law rests upon obligations imposed by law, rather than by the bargain made by the contracting parties. Glass Sand, supra, at 1169. "Contract law is largely inapposite to the problem of hazardous defects, because purchasers are not expected to bargain for a safe product -- they have a right to such a purchase correlative to the manufacturer's duty to provide" a safe product. Id. at 1175.
Application of a contract statute of limitations in a strict liability in tort setting makes little sense given the purpose of strict liability in tort of having the manufacturer bear the risk that the product will turn out to be dangerously defective. Under contract law, the manufacturer could disclaim responsibility for defects under certain circumstances. In addition, there are notice of breach of contract provisions with which a claimant must comply in order to prosecute an action. In Santor, as noted earlier, the court held that a notice of defect provision had no application to a strict liability in tort action. 44 N.J. at 68. The concern of finality underlying the statute of limitations of the UCC is simply inapplicable to a strict liability in tort action. Similarly, there is not present in the strict products liability context the policy permitting parties in a commercial setting to allocate risks in whatever manner they choose.
Statute of limitations are essentially equitable in nature. Lopez v. Swyer, 62 N.J. 267, 274, 300 A.2d 563 (1973). They are designed to stimulate litigants to prosecute their suits diligently "and 'to spare the courts from litigation of stale claims.'" Rosenau, supra, at 136, quoting Chase Securities Corp. v. Donaldson, 325 U.S. 304, 89 L. Ed. 1628, 65 S. Ct. 1137 (1945). Designed to penalize dilatoriness and to serve as measures of repose, 51 N.J. at 136 (citation omitted), "their whole purpose 'is to apply to persons who have good causes of action which they could, if so disposed, enforce, and to deprive them of the power of enforcing them after they have lain by for the number of years respectively and omitted to enforce them.'" Id. at 137 (quotation omitted).
In the strict products liability context, the defects are often unknown at the time the product is delivered. Santor, supra, at 64. The policy of placing the risk of a latently dangerous product on the manufacturer is to insure that the party who puts the dangerous product in the stream of commerce, rather than the innocent consumer, bears the burden of injury or damage as a result of the danger. See id. This policy is designed in part to stimulate manufacturers to undertake increased safety research and to take added precautions to make the product less dangerous. Beshada, supra, at 209. If the manufacturer is to bear the risk that a product will turn out to be dangerous even if the manufacturer did not know at the time the article left its hands, it makes no sense to impose a harsh statute of limitations in this case based upon the intricacies of the law of sales on a plaintiff who, it is alleged, could not have known of the danger of the defect at the time the product was delivered. It is precisely this risk that the doctrine of strict liability in tort has placed upon the manufacturer. As the Santor court stated, the manufacturer's obligation to provide a safe product "should not depend upon the intricacies of the law of sales." 44 N.J. at 65.
For many of these same reasons, the "discovery" rule should also apply to this type of case. As the Supreme Court of New Jersey has recently remarked, the dangers of asbestos may have been known to the industry as early as the 1930's. See Beshada, supra, at 197. If, in fact, the plaintiff had no knowledge of the dangerous propensities of the asbestos, regardless of whether or not the defendant had such knowledge, the principles underlying the doctrine of strict liability in tort mandate that the manufacturer who placed the asbestos in the marketplace and who profited thereby bear the cost of damage as long as the plaintiff acted with due diligence in prosecuting the action. The court is aware that the basis for invoking the discovery rule, although stated in plaintiff's brief, is not set forth in the complaint. Rather than dismiss the case on this basis, however, the court will afford plaintiff 20 days from the date of this opinion to amend its complaint in an appropriate manner. Thus, summary judgment will not be granted as to the tort claims based upon the statute of limitations. The warranty claims, however, are clearly barred by the four-year statute of limitations contained in section 2-725.
Ten-Year Statute of Repose
The court is satisfied that the action is not barred by the ten-year statute of repose for actions arising out of defective design of improvements to real property, N.J.S.A. 2A:14-1.1. Enactment of this statute was a legislative response to the discovery rule and the abrogation of the "completed and accepted" rule to tort claims arising from construction of improvements to real estate. Wayne Twp. Bd. of Educ. v. Strand Century, Inc., 172 N.J. Super. 296, 300-01, 411 A.2d 1161 (App. Div. 1980), citing Rosenberg v. North Bergen Twp., 61 N.J. 190, 196-97, 293 A.2d 662 (1972).
In Wayne Twp., the court made clear that the statute was intended to reach only those engaged in the design, planning and construction of improvements to real estate. Id. at 302. The court noted that the statute "was not intended to benefit manufacturers and sellers of products who were uninvolved in the design, planning and construction of improvements to real estate. Product design alone is not enough to trigger the applicability" of the statute. Id.
In Wayne Twp. the plaintiff had sued the owner of a subsidiary company which allegedly had participated in the design and manufacture of a dimmer panel used in a school auditorium. The defendant had stipulated that it had designed, manufactured and sold the dimmer panel in question. The Appellate Division noted that the trial court had correctly determined that the dimmer panel was an integral part of the permanent electrical system of the auditorium and was required for the structure to function as intended. Id. at 300, citing Brown v. Jersey Central Power & Light Co., 163 N.J. Super. 179, 195, 394 A.2d 397 (App. Div. 1978), certif. denied, 79 N.J. 489, 401 A.2d 244 (1979).
The court stated that if the defendant or its subsidiary participated to any extent in the design and planning of the lighting system used in the auditorium and of the dimmer panel, as fabricated and installed in the school auditorium, the ten-year statute of repose would apply. Id. at 303. The court also concluded, however, that if the defendant had "merely sold a stock or shelf item out of its regular inventory or fabricated a product as designed and specified by the electrical engineer or the electrical contractor for this project it was not within the repose of N.J.S.A. 2A:14-1.1." Id. The court explained that the legislature did not intend that the statute,
extend repose to the designers and manufacturers of all products or suppliers of materials which ultimately found their way into improvements to real estate. Implication in the design and planning stage of the improvement to realty itself or of integral component thereof, not mere design of a fungible product or fabrication of a product from specifications which product is later incorporated in the building is required.
Id. (footnote omitted).
In a footnote, the court noted Carter v. Hartenstein, 248 Ark. 1172, 455 S.W.2d 918 (Sup. Ct. 1970), in which the court held that a similar statute of repose applied to a defendant who both manufactured and installed an elevator in an office building. 172 N.J. Super. at 303 n. 3. The court also cited as support for its determination Reeves v. Ille Elec. Co., 170 Mont. 104, 551 P.2d 647 (Sup. Ct. 1976), in which the court held that the manufacturer of a whirlpool machine installed in the State University field house did not fall within the ambit of the statute of repose. Since in Wayne Twp. the record was unclear concerning the extent of the defendant's participation in the design phase of the electrical components, summary judgment was denied. 172 N.J. Super. at 303-04.
In the instant case, there is no allegation that USG played any role in the design, planning, supervision or construction of the plaintiff's schools. USG was neither an architect involved in the construction of the schools nor a contractor participating in its construction, the two types of parties the statute was primarily intended to protect. Rosenberg, supra, at 194-95, 197. Unlike the defendant in Carter, supra, USG played no role in the actual installation of the acoustical plaster. The asbestos sold by USG was not designed specifically for use in plaintiff's schools. Rather, it appears to have been mere stock material, available for use in a wide variety of settings, and which incidentally found its way into plaintiff's schools as a result of its use by a subcontractor. The defendant cannot under these circumstances gain the protection of the ten-year statute of repose merely as the result of the fortuity of having the product used as one of many products in the construction of the schools. Accordingly, the motion for summary judgment on this basis is also denied.
Finally, defendant USG contends that punitive damages are not available to a plaintiff in a suit for economic loss. USG may not prevail on this argument. New Jersey permits recovery of exemplary damages under certain circumstances in contract actions, and clearly permits recovery in the strict products liability context. Given the punitive and deterrent policies underlying the concept of exemplary damages in New Jersey, see Sandler v. Lawn-A Mat Chem. & Equip. Corp., 141 N.J. Super. 437, 358 A.2d 805 (App. Div. 1976), there is no policy basis for denying an award of punitive damages in an economic loss products liability suit if the plaintiff can establish the requisite egregious conduct on the part of the defendant.
In sum, defendant USG's motion for summary judgment is granted as to the warranty claims. In all other respects, the motion is denied. The court will enter an appropriate form of order.
This matter having been brought before the court upon motion by defendant U.S. Gypsum Co. for summary judgment, and the court, having considered the entire record, the briefs submitted and the arguments of counsel, and for good cause having been shown; it is on this 14th day of December 1982,
ORDERED that for the reasons stated in the court's opinion filed even date herewith, U.S. Gypsum Co.'s motion for summary judgment is granted concerning the claims for breach of warranty, and is denied in all other respects.