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State of New Jersey v. Perini Corporation

March 30, 2012

STATE OF NEW JERSEY, PLAINTIFF-APPELLANT,
v.
PERINI CORPORATION, L. ROBERT KIMBALL & ASSOCIATES, INC., PERMA-PIPE, INC., NATKIN & COMPANY, JACOBS FACILITIES, INC., SUCCESSOR-IN-INTEREST TO CRSS CONSTRUCTORS, INC., FIDELITY AND DEPOSIT CO. OF MARYLAND, SWISS REINSURANCE AMERICA CORPORATION, SUCCESSOR-IN-INTEREST TO NORTH AMERICA REINSURANCE CORPORATION, MUNICH REINSURANCE AMERICA, INC., SUCCESSOR-IN-INTEREST TO AMERICAN RE-INSURANCE COMPANY, UNITED STATES FIDELITY AND GUARANTY COMPANY, DEFENDANTS-RESPONDENTS.
STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
PERINI CORPORATION, L. ROBERT KIMBALL & ASSOCIATES, INC., NATKIN & COMPANY, JACOBS FACILITIES, INC., SUCCESSOR-IN-INTEREST TO CRSS CONSTRUCTORS, INC., FIDELITY AND DEPOSIT CO. OF MARYLAND, SWISS REINSURANCE AMERICA CORPORATION, SUCCESSOR-IN-INTEREST TO NORTH AMERICA REINSURANCE CORPORATION, MUNICH REINSURANCE AMERICA, INC., SUCCESSOR-IN-INTEREST TO AMERICAN RE-INSURANCE COMPANY, UNITED STATES FIDELITY AND GUARANTY COMPANY, DEFENDANTS-RESPONDENTS, AND PERMA-PIPE, INC., DEFENDANT-APPELLANT.



On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-1144-08.

The opinion of the court was delivered by: Ashrafi, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued December 5, 2011

Before Judges A. A. Rodriguez, Sabatino and Ashrafi.

The opinion of the court was delivered by ASHRAFI, J.A.D.

The State of New Jersey appeals (A-3268-10) from an order for summary judgment dismissing its civil complaint for money damages against four contractors that took part in the building of South Woods State Prison in the mid-1990s. Applying the ten-year statute of repose for construction litigation, N.J.S.A. 2A:14-1.1, the trial court concluded that the State had not filed a timely complaint against the contractors.

One defendant, Perma-Pipe, Inc., appeals (A-3269-10) from denial of its motion for summary judgment pursuant to the same statute of repose. The trial court concluded that the statute did not apply to the State's claims of product defect against Perma-Pipe, the manufacturer of pipes that were used in the construction.

We reverse the grant of summary judgment to the four contractor defendants and affirm the denial of summary judgment to Perma-Pipe.

I.

The centralized underground system that distributes hot water throughout South Woods State Prison began failing in 2000, just a few years after construction of the prison was completed. The State claims that leaks and other defects in the pipes and isolation valves are so serious and widespread that the system must be replaced. A complete failure of the system will require that the prison be shut down and the inmate population relocated. According to the State, the malfunctioning of the system is the result of design deficiencies, construction defects, and product failure.

On April 28, 2008, the State filed suit against five companies that were responsible for the design, construction, and materials in building the prison's hot water system. That date was more than ten years after most of the facilities at South Woods State Prison were put into use and prisoners were housed there, but it was three days short of ten years from the date that the State issued the last of its certificates of substantial completion on the prison construction project.

All five defendants moved for summary judgment, arguing the State's claims were untimely under N.J.S.A. 2A:14-1.1a, which states in relevant 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, . . . 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. . . .

The primary dispute in the State's appeal is the date from which the ten-year period began to run triggering this statute of repose. Defendant contractors claimed, and the trial court agreed, that the relevant trigger date was before April 27, 1998, because the prison was occupied and in use by then. The State claimed that the relevant date was in December 1998, but in any event, no earlier than May 1, 1998, the date that it issued certificates of substantial completion for the final phase of the construction project.

In Perma-Pipe's appeal, the primary issue is whether the statute of repose applies to its role in the project. The State and the other defendants contend Perma-Pipe was a manufacturer of piping materials. Perma-Pipe contends it was a designer of a specialized piping system for the construction project.

In reviewing a grant or denial of summary judgment, we are bound by the same standard under Rule 4:46-2(c) that governs the trial court. Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007). We must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Viewed most favorably to the State, the summary judgment record established the following facts.

In February 1995, the State entered into a $203 million contract with defendant Perini Corporation to design and build the South Woods State Prison on an eighty-four-acre tract in Bridgeton. The contract provided for twenty-six separate buildings together with site work, roadways, parking, and perimeter fencing. In March 1995, the State entered into a separate contract with CRSS Constructors, Inc., the predecessor of defendant Jacobs Facilities, Inc., to oversee and supervise the construction project on behalf of the State.

Perini subcontracted with defendant L. Robert Kimball & Associates to provide architectural and engineering services and support, and with defendant Natkin & Company to provide the heating, ventilation, and air conditioning systems for the project. Natkin's responsibilities included the design and construction of a high temperature hot water system to distribute hot ...


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