In Daidone v. Buterick Bulkheading, A-60, 2007 N.J. LEXIS 706 (N.J. June 26, 2007), the New Jersey Supreme Court held that New Jersey's Statute of Repose clock begins to run, as to any given defendant, as of the date on which such defendant last performed services on the project, even if the whole of the project is not complete as of that date.
In Daidone, plaintiffs acted as their own general contractor in constructing their home, but hired an architect to prepare the design. The design, which included a piling system to support the structure, was completed and certified by the architect on February 19, 1993. After the local official approved the architect's plans on June 23, 1993, the architect rendered no further services to plaintiffs. The foundation pilings were thereafter installed by a subcontractor, whose final bill was paid in full by plaintiffs on May 24, 1994. A certificate of occupancy for the home was issued on June 14, 1994, and, thereafter, plaintiffs occupied it.
In 1999, plaintiffs began experiencing problems as a result of soft soils and organic material beneath the basement, which caused the home to settle on its foundations. Plaintiffs first sought expert assistance in late 2001. The expert opined that the pilings "may not" be of sufficient length and recommended repairs, which plaintiffs completed at a cost of approximately $90,000. Plaintiffs, however, did not file suit against the architect and piling subcontractor until June 2, 2004. Such date was within 10 years of the issuance of the certificate of occupancy, but more than 10 years after both the architect and piling subcontractor had performed and completed their services.
The trial court granted motions to dismiss made by the architect and piling subcontractor, on the ground that plaintiffs' complaint was barred by New Jersey's 10-year Statute of Repose, N.J.S.A. 2A:14-1.1, a ruling affirmed by the Appellate Division. The Supreme Court granted plaintiffs' petition for certification.
On appeal to the Supreme Court, plaintiffs argued that the proper commencement date for Statute of Repose computation purposes should be the date on which the certificate of occupancy issues. In a previous decision of the Supreme Court, Russo Farms, Inc. v. Vineland Bd. of Educ., 144 N.J. 84 (1996), the Court held, on the facts of that case, that the Statute of Repose commences upon substantial completion of the improvement at issue. In Russo Farms, the Court held that the Statute of Repose commenced as of the date on which the certificate of occupancy was issued, because such was also the date on which the project at issue was "substantially completed." In Daidone, presumably in an effort to build on the holding in Russo Farms, plaintiffs' urged the adoption of the certificate of occupancy date as a uniform, indisputable, bright-line date from which the Statute of Repose should run as to all aspects of a construction project.
The Supreme Court rejected plaintiffs' arguments and affirmed the lower court rulings, holding that the Statute of Repose commences on the date of issuance of the certificate of occupancy only where the designer's or contractor's services continue up to that date. Where, however, the particular defendant's design or construction services are completed before a certificate of occupancy is issued, and such defendant performs no further functions, then the Statute of Repose commences as of the date the designer or contractor defendant completed his or her portion of the work. The plain language of the Statute of Repose, the Court noted, compels this result because it clearly provides that an action for deficient design or construction of an improvement to real property cannot be brought more than 10 years "after the performance or furnishing of such services and construction."
The Court also emphasized the importance of the parties' contractual arrangements. In Daidone, plaintiffs elected to act as their own general contractor, thereby assuming the responsibility for coordinating trades and obtaining governmental approvals. Because, in this capacity, plaintiffs purchased design and construction services on an individualized, piecemeal basis, the Court found plaintiffs were attempting to "have it both ways," by arguing that the designer and contractor should be liable as if they had performed services throughout the duration of the project. Finally, the Court also noted that plaintiffs were aware of and corrected the defects well within the period of the Statute of Repose, and, therefore, their failure to timely file the complaint undermined their effort to avoid the consequences of the Statute of Repose.
Daidone dispels the notion that the Statute of Repose commences, in all cases and for all involved contractors and design professionals, on the date of issuance of the certificate of occupancy. Instead, Daidone compels a reviewing court to examine the facts and contractual relationships present in each case. Notably, the Supreme Court did not overrule Russo Farms, which, as noted above, held that the Statute of Repose commences upon substantial completion. Read together, these cases stand for the proposition that the Statute of Repose commences on the earlier of the date of substantial completion of the improvement at issue, or the last date on which the particular defendant rendered a service on the project.