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Board of Education v. W.R. Grace Corp.

April 10, 1992

BOARD OF EDUCATION OF THE CITY OF CLIFTON, BOARD OF SCHOOL ESTIMATE OF THE CITY OF CLIFTON, PLAINTIFFS,
v.
W.R. GRACE CORP.; U.S. GYPSUM, INC., PFIZER, INC. AND BASIC INC., INDIVIDUALLY AND AS SUCCESSORS IN TO GIBSONBURG LIME PRODUCTS CO. AND KELLY ISLAND LIME & TRANSPORT CO.; ASBESTOS CORP., LTD.; CAREY-CANADIAN INC.; ISAAC DEGENAARS CONSTRUCTION CO.; RANDAZZO CONSTRUCTION CO.; THOMAS CONSTRUCTION CO.; LASKER GOLDMAN CONSTRUCTION CO.; CONLIN CONSTRUCTION CO.; BERT THOMAS/ATKINS CONSTRUCTION CO.; ROMAGNINO CONSTRUCTION CO. MAHIEU CONSTRUCTION CO.; RIEFOLO CONSTRUCTION CO.; JOHN DOES 1-5 (AS YET UNIDENTIFIED); JOHN DOES 5-10 (AS YET UNIDENTIFIED); JOHN DOES 15-20 (AS YET UNIDENTIFIED), DEFENDANTS



Dwyer, J.s.c.

Dwyer

DWYER, J.S.C.

Defendant, Isaac DeGenaars Construction Company ("DeGenaars"), the general contractor for construction of School No. 14, moved for summary judgment in its favor against the complaint of plaintiffs, Board of Education of the City of Clifton and the Board of School Estimate of the City of Clifton (hereinafter collectively "Clifton"), on the basis that it having followed the plans and specifications furnished by Clifton and having had no discretion to deviate from them it is entitled to governmental immunity.

After taking notice of asbestos problems in certain school buildings, or additions to school buildings, Clifton filed the complaint on June 20, 1985 against the manufacturer and distributors of acoustical plaster which contained asbestos, and which type of product was incorporated into 10 of Clifton's school buildings. With respect to School 14, Clifton's architect specified the product by name and manufacturer in the contract awarded to DeGenaars. Exhibit G to the Certificate of Nancy McDonald ("McDonald's Certif.") dated February 7, 1992.

Clifton also sued the respective general contractors who had been awarded one or more contracts after competitive bidding to do the construction work which contains the aforesaid acoustical plaster.

Clifton essentially seeks the cost of removal of the asbestos from its schools.

On July 18, 1986 the defendant contractors, including DeGenaars, had the complaint dismissed as to them based on the statute of limitations in N.J.S.A. 2A:14-1.1 which bars action for damages against contractors for the construction of improvements to real property brought more than ten years after the completion of the construction.

On November 12, 1991, the Assignment Judge granted Clifton's motion to vacate the July 18, 1986 order and restore all the claims against the general contractors based on Livingston Board of Education v. U.S. Gypsum, 249 N.J. Super. 498, 505, 592 A.2d 653 (App.Div.1991) (Board of Education could allege a claim based on strict liability in tort against manufacturers of products containing asbestos and such claim was not subject to the bar of the statute of limitations. Such an agency is acting in a governmental capacity and is entitled to the benefit of the rule that time does not run against the sovereign.)

In New Jersey Educational Facilities Authority, et al. v. The Gruzen Partnership, et al., 125 N.J. 66, 592 A.2d 559 (1991) the Supreme Court held that:

[T]he doctrine of nullum tempus is abrogated with respect to the State or its agencies insofar as it would preclude the application of general statutes of limitation to the State. This decision shall not be effective or applicable to claims made by the State or its agencies prior to December 31, 1991. Id. at 76 [592 A.2d 559]

The November 22, 1991 order restoring the claims against the contractors is consistent with the decision in Gruzen, supra.

In terms of pleadings, present counsel for DeGenaars admits that the original complaint was filed and properly served on DeGenaars and that Clifton was given leave to file an amended complaint and second amended complaint by court order. Said

counsel states that the form of those documents add parties but do not change the allegations as to anyone and more importantly were not filed. This is confirmed by the docket entries for this file.

In the general allegations of the complaint it is alleged in paragraph 6 that DeGenaars and other named general contractors sold and installed asbestos bearing materials. In paragraph 8 Clifton alleged that it caused the construction of certain school buildings and additions thereto and as part of said construction products containing asbestos were placed on ceilings of classrooms, halls, laboratories, administrative offices, and other rooms located throughout the schools.

In paragraph 10 Clifton alleged that the existence of the asbestos in said products constituted an imminent danger to the health of children, administrators, employees and members of the public who use said school buildings.

Clifton alleged that some of the asbestos had invaded carpeting, upholstery and other items in the schools requiring cleaning, removal and/or replacement. Clifton further alleged that the presence of the asbestos disrupted the scheduling of operations, required Clifton to expend large sums to investigate, and will have to incur large sums to remove the asbestos.

The court will not mention the counts which are directed to the manufacturers and distributors of the product. By letter opinion dated November 8, 1991, Judge Alterman traced the history of the manufacturer of "Kilnoise," the acoustical plaster product in School 14, starting with Kelly Island Lime and Transportation Co. ("KILT") through several acquisitions and sales to Pfizer, Inc. ("Pfizer"). Judge Alterman found that Kilnoise had been installed in Clifton's schools beginning in the 1940's through 1962.

Judge Alterman concluded:

GLPC purchased the Kilnoise product line from Basic and sold it to Pfizer. Pfizer is liable for the Kilnoise manufactured and sold by KILT and KI, since it purchased from Basic all of the manufacturing assets of Basic. Pfizer benefitted

from the use of Kilnoise trade-name in manufacturing the same product line as its predecessor. Nieves v. Bruno Sherman Corp., supra. [86 N.J. 361, 431 A.2d 826 (1981)]

Judge Alterman further held that issues related to allocation of liability as between Basic Inc. ("Basic") and Pfizer were not before him then. He further held that there was no basis on the record before him for punitive damages.

Since the original complaint was filed on June 28, 1985, the provisions of the Products Liability Law, N.J.S.A. 2A:58-C-1 effective on July 22, 1987 are not applicable. See Dewey v. R. J. Reynolds Tobacco Co., 121 N.J. 69, 95, 577 A.2d 1239 (1990).

DeGenaars was the general contractor for Clifton for the construction of School No. 14 in 1952 and 1953.

Arthur Rigolo ("Rigolo") was the architect for Clifton School No. 14 (Dep. Vol. I, 33) and (Vol. II 245). The work started in 1952 and was completed in 1953 (Vol. II 245 and 250).

After the architect was selected Rigolo described the process for preparing the plans and specifications that prevailed in 1952.

He stated that schematic drawings outlining the building were prepared. The schematics had to be submitted to Clifton and then to the New Jersey Department of Education for approval ("NJDE").

After NJDE approval of the schematics, Clifton authorized the funding for the project.

The architect then prepared preliminary drawings which were not sufficiently detailed for either bid purposes or doing actual construction. Clifton and NJDE had to approve those plans.

When those plans were approved by both, the architect prepared the final working drawings and specifications. During the 1950's, public contracts for construction had to be split among five categories: (1) general construction; (2) iron and steel; (3) plumbing; (4) heating and ventilating; and (5) electrical. (Vol. I, 33, 39)

The working drawings show in drawing form what is to be done together with the notes on the drawings. The specifications set forth in words the equipment and materials to be used in the project. In Rigolo's words:

The specifications normally constitute the documents in which all the materials are described. (Vol. I, 36)

After the working drawings and specifications were complete, Rigolo sent them to NJDE for approval. At the relevant time, the NJDE had its own codes that were applicable to school buildings. Following a review process with NJDE representatives and correction for failure to meet code requirements, NJDE approved the working drawings and specifications. (Vol. I, 46, 49).

After the NJDE approved the plans and specifications, Clifton then proceeded to solicit bids for the five categories of work. (Vol. I, 50-51)

Rigolo recognized DB-20 dated August 14, 1952 as part of the specifications for Clifton School No. 14. (Vol. II, 246). They are attached as Exhibit "G" to McDonald's Certif.

It contained the specifications for General Construction, F-Lathing and Plastering.

Under 2. Materials on p. GC-F-1 it is stated:

(e) Lime : Hydrated finishing lime, Tiger Finish (Kelly Island Lime & Transport) and/or in accordance with ASTM:c6-31. Also white plaster of Paris (calcined Gypsum) in accordance with ASTM C28-40.

(f) Acoustical Plaster. Kilnoise (Kelley Island Lime and Transport) Per manufacturer's directions and Specs. See Room Finishing Schedule.

Rigolo stated that the general contractor had responsibility for doing the work but usually employed a subcontractor to do the lathing and plastering work. (Vol. I, 82)

In the first deposition to a question predicated on statements that during the period 1942 to 1962 there were various acoustical plaster products available for use, Rigolo stated:

I think there were . . .

I can think of two that -- maybe three that were available.

Q. Okay what were those that you were familiar with?

A. I think Sabinite was one, Kilnoise was another one. And your third one I can't remember.

But -- but you know that architects make use of Sweet's Catalog. (Vol. I, 97)

In the second deposition after Rigolo had identified and examined DB-20, there appears:

Q. All right. And is that document in the format which you utilized in the past?

A. Somewhat. It calls for acoustical plaster and it mentions -- parenthetically it mentions Kelley Island Lime and Transport.

Q. Okay. Am I correct that in this case you mention the use of Kilnoise as a product you don't list Sabinite as well.

A. In this one, no.

Q. Do you recall any reason for that?

A. I don't know.

Q. Okay.

A. I don't know.

Rigolo could not recall whether Kilnoise was used in School 14 from memory. (Vol. II, 245-247)

Rigolo and his staff reviewed the progress of the work and compliance with the plans and specifications several times a week. Clifton also had a Clerk of the Works on the job site daily during every working hour to see that the contractors and subcontractors complied with the plans and specifications. (Vol. I, 61, 62)

There is no dispute that Clifton School No. 14 contains Kilnoise.

There is no dispute that DeGenaars worked only on Clifton School No. 14.

The court now considers the legal basis for DeGenaars contention that as an independent contractor for a public 0 entity which provided the contact drawings and specifications to said contractor it should not be held liable for work performed in accordance with those plans and specifications.

It relies upon Vanchieri v. New Jersey Sports & Exposition Authority, 104 N.J. 80, 86, 514 A.2d 1323 (1986); McDermott v. TENDUN Constructors, 211 N.J. Super. 196, 511 A.2d 690 (App.Div.1986) certif. den. 107 N.J. 43, 526 A.2d 134 (1986); Rodriguez v. N.J. Sports and Exhibition Authority, 193 N.J. Super. 39, 45,

472 A.2d 146 (App.Div.1983) certif. den. 96 N.J. 291, 475 A.2d 586 (1984); Sanner v. Ford Motor Company, 154 N.J. Super. 407, 409, 381 A.2d 805 (App.Div.1977) certif. den. 75 N.J. 616, 384 A.2d 846 (1978); and Cobb v. Waddington, 154 N.J. Super. 11, 18, 380 A.2d 1145 (App.Div.1977).

In each of the above cases a third party who was injured sued either a public entity and an independent contractor or an independent contractor, which performed work for the relevant public entity under a contract drawn by the latter. In each case there was either a holding or a statement that the government contractor was immune 1 from a suit by a third party.

In Vanchieri, supra, the Supreme Court explained the rationale for the independent contractor defense and the limitations of its application. In that case Vanchieri with friends watched a preseason football game at Giant Stadium. After the game, Vanchieri and her friends waited in their seats for the crowd to disperse. After fifteen minutes she and her friends proceeded to leave.

They then proceeded to exit areas. While crossing a hallway three youngsters who were roughhousing, knocked Vanchieri down. She sustained severe injuries.

She sued the Sports Authority ("Authority") and Wackenhut Company ("Wackenhut"), the Authority's independent contractor to provide uniformed guards at Giant Stadium.

The Authority moved to dismiss upon alternative grounds of immunity under N.J.S.A. 59:1-1 et seq. Wackenhut had not pleaded as an affirmative defense contractor's immunity. But Wackenhut joined in the motion. The trial court granted summary judgment to both. The Appellate Division affirmed. The Supreme Court reversed. The decision sets forth the rationale.

NJSEA is a public entity within the meaning of the Tort Claims Act. Blazer Corp. v. NJSEA, 195 N.J. Super. 542, 547 [480 A.2d 953] (Law Div.1984), 2 aff'd, 199 N.J. Super. 107 [488 A.2d 1025] (App.Div.1985). "Public entity' includes the State, and any county, municipality, district, public authority, public agency, and any other political subdivision or public body in the State." N.J.S.A. 59:1-3.

A public employee, also entitled to statutory immunity, is an employee of a public entity. Although the term "employee" is defined broadly, independent contractors are expressly excluded from its scope. Id. Wackenhut is not entitled, under the language of the Act, to immunity from tort claims. Nonetheless, independent contractors in general, and Wackenhut Company in particular, do, under well-recognized principles, share to a limited extent the immunity of public entities with whom they contract.

When a public entity provides plans and specifications to an independent contractor, the public contractor will not be held liable for work performed in accordance with those plans and specifications. This rule rests on two important principles. First, the immunity of the entity itself would become meaningless if contractors complying with its design were liable in tort for defects in that design. Cobb v. Waddington, 154 N.J. Super. 11, 18 [380 A.2d 1145] (App.Div.1977), certif. den., 76 N.J. 235 3 [386 A.2d 859] (1978); Sanner v. Ford Motor Co., 144 N.J. Super. 1, 9 [364 A.2d 43] (Law Div.1976), aff'd, 154 N.J. Super. 407 [381 A.2d 805] (App.Div.1977), certif. den., 75 N.J. 616 [384 A.2d 846] (1978). If contractors never shared government immunity, their costs of doing business would be higher and those higher costs would be passed on to the government entities hiring the contractors. In respect of costs, therefore, the effect would be nearly the same as if the public entity were liable itself.

The second principle underlying public contractor immunity concerns notions of fairness. An independent contractor bound to specifications that are provided by a public entity and over which it has no control is not responsible for defects in those specifications. It would be fundamentally unfair to hold a contractor liable in that instance for injury caused by defective plans, at least in the absence of a blatant, obvious danger that the contractor should have brought to the attention of the public entity. Lydecker v. Freeholders of Passaic, 19 [91] N.J.L. 622, 626-27, 103 A. 251 (E. & A. 1912) [1918]; see also Comment, 4 "The Government Contractor Defense: An Overview," 27 How.L.Rev. 275 (1984) (The immunity of the contractor to shoulder alone the entire ...


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