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New Jersey Educational Facilities Authority v. Conditioning Co.

Decided: December 13, 1989.

NEW JERSEY EDUCATIONAL FACILITIES AUTHORITY AND JERSEY CITY STATE COLLEGE, PLAINTIFFS-APPELLANTS,
v.
THE CONDITIONING COMPANY AND THE NORTH RIVER INSURANCE COMPANY, DEFENDANTS, AND CERAMI CONSTRUCTION COMPANY AND TRAVELERS INDEMNITY COMPANY, DEFENDANTS-RESPONDENTS. AND THE GRUZEN PARTNERSHIP, DEFENDANT AND THIRD-PARTY PLAINTIFF-RESPONDENT, V. TUREK ASSOCIATES, THIRD-PARTY DEFENDANT AND FOURTH-PARTY PLAINTIFF, V. DIVISION OF BUILDING AND CONSTRUCTION, FOURTH-PARTY DEFENDANT



Michels, R.s. Cohen and Brochin. The opinion of the court was delivered by Michels, P.J.A.D.

Michels

Plaintiffs New Jersey Educational Facilities Authority (Authority) and Jersey City State College (College) appeal from a summary judgment of the Law Division entered in favor of defendants The Gruzen Partnership (Gruzen), Cerami Construction Company (Cerami) and Travelers Indemnity Company (Travelers) in this action for damages arising out of the design and construction of the Student Union Building at the College. The trial court held that although the doctrine of nullum tempus occurrit regi (i.e., time does not run against the king) (nullum tempus) insulates the State and its agencies from the statute of limitations with regard to governmental functions, it provided no protection here, as plaintiffs' claim was based on a proprietary function. Plaintiffs contend that the doctrine of nullum tempus applies to protect the State and its agencies regardless of whether the claim concerns a governmental or proprietary function. We agree and reverse.

In August 1969, Gruzen entered into a contract with the State Division of Building and Construction (Division) to supervise the design and construction of a Student Union Building on the campus of the College in Jersey City, New Jersey. In October 1973, a contract to construct the building was awarded to Cerami. Cerami, which began work on the project shortly after the contract was signed, obtained a construction bond from Travelers to secure its performance. In November 1973, after work had commenced, the Division assigned its interest in

the contract to the Authority. Construction proceeded during the next several years and the building was substantially completed by February 1976.

The contract provided, among other things, that Gruzen was to make periodic visits to the campus during construction to determine whether the work was proceeding in accordance with the contract and to guard the owner against defects and deficiencies. In addition, it was also Gruzen's responsibility to determine the amount due Cerami and to issue certificates of payment. These certificates, pursuant to the agreement between the parties, constituted representations that the work had progressed to the point indicated and that the quality of the work was in accordance with the contract.

In June 1976, the first of a series of leaks in the structure was discovered. No one at that time knew the cause or extent of the leaks but everyone involved agreed to work together to determine the cause and to charge the appropriate party. Gruzen was later directed by the Division to determine the cause of the problems and make recommendations for corrective measures. Shortly thereafter, Cerami informed Gruzen that many of the leaks which had been reported had, in fact, been repaired. On June 15, 1976, Gruzen reported this to the Division. In July 1976, the College was informed by an expert hired by Cerami that the leaks, which had not yet been repaired, would be corrected with caulking and both the expert and Cerami stated that the leaks were due to condensation and various other causes.

In October 1976, Cerami represented that one of its subcontractors had inspected the roof and found no leaks and that the roof was watertight. In November 1976, another leak was observed. In response, Cerami again stated that the building had been inspected and that no leaks were observed, except for one which would be repaired.

Through early 1977, sporadic leaks and subsequent investigations continued, including numerous on-site investigations and

meetings among the parties, but no determination was made as to either the cause or responsibility for any water leaks. The Division believed that a complete investigation was necessary, and in April 1977, the Division so advised Cerami. By July 1977, the Division had received a report from Cerami that the roof was deliberately flooded to test for leaks and that no leaks were noticed. Cerami further reported that two minor leaks were noticed and that those leaks would be repaired.

Even though some sporadic leaking continued through February 1978, the Division was pleased with Cerami's position on the roofing problems. In fact, the Division was of the view that the roof had been installed in accordance with the contract since Gruzen had found no reason to change the specifications or require additional work. The Division's conclusions were based on the various representations made by Gruzen and Cerami. However, in May 1978, because a leak suddenly reappeared, the Division questioned whether water entered the building through the air intake system.

In March 1979, Gruzen was given a last opportunity to determine the source of any leaks. By May 1979, the cause of the leak had still not been determined. In fact, Gruzen reported that the task was extremely difficult and that further exploratory measures had to be taken. As late as July 1979, Cerami was still representing that it would repair any leaks that were present. In September 1979, after a roof analysis had been performed by an outside firm showing wet insulation, the Division determined, for the first time, that Cerami may have been responsible for the roof problems. In late August 1982, the College had a thermographic study of the roof ...


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