State v. Perini Corporation (070558)

SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)

State v. Perini Corporation (A-121/122/123/135-11) (070558)

Argued September 23, 2014 -- Decided April 30, 2015

CUFF, P.J.A.D. (temporarily assigned), writing for a unanimous Court.

In this appeal, the Court must determine when the ten-year limitations period of the statute of repose,
N.J.S.A. 2A:14-1.1(a), begins to run with respect to the installation of a high temperature hot water (HTHW) system
of a multi-phase construction project. In addition, the Court is asked to decide whether the statute of repose applies
to claims pertaining exclusively to allegedly defective materials supplied for the HTHW system.

In February 1995, the State executed a contract with Perini Corporation (Perini) to design and build South
Woods in Bridgeton (the Project), a twenty-six building medium- and minimum-security correctional facility. Perini
subcontracted with L. Robert Kimball & Associates, Inc. (Kimball) as the architect and engineer. Defendant Natkin
& Company (Natkin) was designated the principal contractor for heating, ventilation, and air conditioning (HVAC).
The design that Kimball provided to Perini included an underground HTHW distribution system to serve the entire
Project. It also included a central plant from which the hot water was distributed to the various buildings that
comprised the Project. Perma-Pipe, Inc. (Perma-Pipe) manufactured the underground piping used in the HTHW
system. Natkin furnished and installed the underground piping system and the boilers and heat exchangers housed
in the central plant. Defendant Jacobs Facilities, Inc. (Jacobs), formerly known as CRSS Constructors, Inc., was
retained by the State to provide construction oversight services.

The contract provided that the Project would be constructed in three phases. Phase I included the central
plant and certain inmate housing units. Certificates of substantial completion for those elements were executed on
May 16, 1997. Approximately 960 inmates occupied the Phase I housing units soon thereafter. Phase IIA included
housing units for another 960 inmates. Certificates of substantial completion for those buildings were executed
between July 15, 1997 and October 27, 1997. Phase II encompassed approximately ten buildings, including a
minimum-security unit housing more than 1000 inmates, with May 1, 1998, as the date of substantial completion.
The various buildings comprising the Project were connected to the HTHW distribution system as they were
completed. A certificate of substantial completion was not issued specifically for the HTHW system.

On April 28, 2008, the State filed a complaint against Perini, Kimball, Natkin, Jacobs, and Perma-Pipe in
which it alleged that the HTHW system failed in March 2000, and on several subsequent occasions, and that these
failures were caused by various defects including design defects, defective site preparation for the pipes, defective
pipes, and deficient system design. The State asserted breach of contract against Perini, negligence and professional
malpractice against Kimball, negligence and breach of contract against Natkin, and breach of contract against
Jacobs. Against Perma-Pipe, the State asserted a claim under the New Jersey Products Liability Act (PLA), N.J.S.A.
2A:58C-1 to -11, as well as breach of implied warranties, negligence, and strict liability in tort.

All defendants moved for summary judgment, arguing that the Project was substantially complete well
before April 28, 1998, and that, therefore, the statute of repose barred the State’s complaint. The State contended
that the date of substantial completion of the Project was not until May 1, 1998, if not December 1998. Relying
primarily on the occupancy of inmates at the facility on or before April 28, 1998, the court determined that the
HTHW system was substantially complete before April 28, 1998. Therefore, the trial court found that the State’s
complaint was barred by the ten-year statute of repose and granted summary judgment in favor of contractor-
defendants Perini, Kimball, Natkin, and Jacobs. On the other hand, the trial court denied Perma-Pipe’s motion for
summary judgment, concluding that it was a manufacturer of goods and therefore its liability was governed by the
PLA and the statute of repose did not apply to it.

The Appellate Division reversed the orders granting summary judgment in favor of defendants Perini,
Kimball, Natkin, and Jacobs. The panel held that the statute of repose was triggered when defendants substantially
completed their work on the entire project, no earlier than May 1, 1998, the date when the minimum-security unit
and garage were certified as substantially complete. The panel determined that the State’s April 28, 2008 complaint
was timely filed. In addition, the Appellate Division held that the statute of repose does not bar the State’s claims
against Perma-Pipe because it was a manufacturer of a product rather than a designer or installer of a system.

The Court granted the contractor-defendants’ motions for leave to appeal, 210 N.J. 476 (2012), and Perma-
Pipe’s cross-motion for leave to appeal, limited to the issue of whether the statute of repose applies to bar the State’s
claims against it, 211 N.J. 606 (2012).

HELD: The statute of repose does not begin to run on claims involving an improvement that serves an entire
project such as a high temperature hot water (HTHW) system -- including those parts constructed in multiple,
uninterrupted phases -- until all buildings served by the improvement have been connected to it. In addition, the
statute of repose does not apply to claims relating solely to manufacturing defects in a product used in the HTHW
system.

1. Prior to the enactment of the statute of repose, liability for deficiencies in a construction project was governed by
the common law “completed and accepted rule.” In Totten v. Gruzen, 52 N.J. 202, 210 (1968), this Court replaced
that rule with the limitations on liability derived from ordinary negligence principles. In 1967, New Jersey adopted
a statute of repose, N.J.S.A. 2A:14-1.1(a). The statute applies only to work that constitutes an “improvement to real
property.” Generally, “an improvement to real property permanently increases the property’s value.” Ebert v. S.
Jersey Gas Co., 157 N.J. 135, 139 (1999). (pp. 14-17)

2. Calculation of the ten-year limitations period for the statute of repose generally commences one day after
issuance of the certificate of substantial completion for the project. Substantial completion is “the date when
construction is sufficiently complete . . . so the owner can occupy or utilize the building.” Russo Farms, Inc. v.
Vineland Bd. of Educ., 144 N.J. 84, 117 (1996). When a designer, planner, or person participating in the
construction of an improvement to real property has continuing responsibility throughout the construction of the
project or a specific improvement, the ten-year limitations period commences when the project has been certified as
substantially complete. (pp. 17-20)

3. The HTHW system is an improvement to real property and the work performed on this system falls within the
scope of the statute of repose. The HTHW system is designed to form a unified whole that interacts with and is
connected to every structure of the prison complex. Neither the nature of the HTHW system, the course of
construction, nor defendants’ role in the construction of the Project permits the issue date of the Phase I certificates
of substantial completion to trigger the statute of repose time calculation. The record also does not support a finding
that the HTHW system was substantially complete on May 16, 1997, after the issuance of the certificate of
substantial completion for the central plant. As a system designed to supply heat and hot water to every building in
the Project, the Court is loath to embrace an application of the statute of repose that would permit separate trigger
dates for each section of the HTHW system as a building it serves comes on line. The ten-year statute of repose
limitations period commenced to run on the day after the final certificates of substantial completion issued for the
final buildings served by the HTHW system. The final certificates were issued on May 1, 1998. The State filed its
complaint on April 28, 2008. The statute of repose therefore does not bar the complaint. (pp. 20-27)

4. Manufacturers of standardized products and sellers of such products are not subject to the statute of repose, but
rather “are covered by the statute of limitations applicable to the [PLA].” Dziewiecki v. Bakula, 180 N.J. 528, 532
(2004). Perma-Pipe’s role was that of a manufacturer of a product used in the construction of the HTHW system.
While the piping for the Project served a specialized purpose to meet the specific dimensions and specifications of
the system designed by Kimball and installed by Natkin, the piping and the various fittings manufactured by Perma-
Pipe are nonetheless a product and Perma-Pipe cannot take refuge in the statute of repose. (pp. 27-30)

The judgment of the Appellate Division is AFFIRMED as MODIFIED.

CHIEF JUSTICE RABNER; JUSTICES ALBIN and SOLOMON; and JUDGE FUENTES
(temporarily assigned) join in JUDGE CUFF’s opinion. JUSTICES LaVECCHIA, PATTERSON and
FERNANDEZ-VINA did not participate.

2
 SUPREME COURT OF NEW JERSEY
A-121/122/123/135
September Term 2011
070558

STATE OF NEW JERSEY,

Plaintiff-Respondent,

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-Appellants.

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,

1
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,

and

PERMA-PIPE, INC.,

Defendant-Appellant.

Argued September 23, 2014 – Decided April 30, 2015

On appeal from the Superior Court, Appellate
Division, whose opinion is reported at 425
N.J. Super. 62 (App. Div. 2012).

Andrew J. Carlowicz, Jr., argued the cause
for appellant L. Robert Kimball &
Associates, Inc. (Hoagland, Longo, Moran,
Dunst & Doukas, attorneys).

Peter J. Smith argued the cause for
appellants Perini Corporation, Fidelity and
Deposit Co. of Maryland, Swiss Reinsurance
America Corporation, Munich Reinsurance
America, Inc., and United States Fidelity
and Guaranty Company (Connell Foley,
attorneys; Mr. Smith and Thomas J. O’Leary,
on the briefs).

James T. Malysiak, a member of the Illinois
bar, argued the cause for appellant Jacobs
Facilities, Inc. (Margolis Edelstein,
attorneys; Bruce E. Barrett, on letter in
lieu of brief).

2
 Vincent P. Tomkiewicz, a member of the
Illinois bar, argued the cause for appellant
Perma-Pipe, Inc. (McLaughlin & Cooper,
attorneys; Mr. Tomkiewicz, William F.
Hartigan, Jr., and Edward F. Ruberry, a
member of the Illinois bar, on the briefs).

Christopher A. Edwards, Deputy Attorney
General, argued the cause for respondent
(John J. Hoffman, Acting Attorney General of
New Jersey, attorney; Lewis A. Scheindlin,
Assistant Attorney General, of counsel; Mr.
Edwards, Wayne J. Martorelli, Deputy
Attorney General, on the briefs).

Patrick J. Greene, Jr., submitted a brief on
behalf of amicus curiae Building Contractors
Association of New Jersey (Peckar &
Abramson, attorneys; Mr. Greene, Charles F.
Kenny, and Frank A. Hess, on the brief).

JUDGE CUFF (temporarily assigned) delivered the opinion of

the Court.

In this appeal, the Court must determine when the ten-year

limitations period of the statute of repose, N.J.S.A. 2A:14-

1.1(a), begins to run with respect to the installation of a high

temperature hot water (HTHW) system of a multi-phase

construction project. In addition, the Court is asked to decide

whether the statute of repose applies to claims pertaining

exclusively to allegedly defective materials supplied for the

HTHW system.

The sole focus of this case is an allegedly defective HTHW

system that services the South Woods State Prison (South Woods).

Built to mitigate the “over-crowded conditions” experienced by

3
the Department of Corrections, the contract governing the design

and construction of the facility provided that housing units for

more than 3000 inmates and all accessory structures would be

constructed in three phases. These phases were designed to

allow the State to begin housing prisoners in orderly and

expeditious waves. Soon after the construction of South Woods

was completed, the HTHW system experienced a series of

widespread failures.

As a result of the failure of the HTHW system, the State of

New Jersey (State) filed suit against the entities involved in

the design and construction of South Woods and the HTHW system.

The State filed its complaint on April 28, 2008, more than ten

years after it began using the HTHW system and housing the first

group of inmates, but less than ten years after the system was

connected to all of the buildings constructed under the

contract. The issue before the Court is whether the ten-year

statute of repose commenced to run when the first inmates

occupied the correctional facility or when the final buildings,

including the 1000-plus bed minimum-security unit, were

connected to the HTHW system.

We hold that the statute of repose does not begin to run on

claims involving an improvement that serves an entire project -

- including those parts constructed in multiple, uninterrupted

phases -- until all buildings served by the improvement have

4
been connected to it. Here, the statute of repose did not bar

any of the State’s claims because the three phases proceeded

apace and the HTHW system was not complete until all buildings

were connected to it. In addition, we hold that the statute of

repose does not apply to claims relating solely to manufacturing

defects in a product used in the HTHW system.

I.

In February 1995, the State executed a contract with Perini

Corporation (Perini) to design and build South Woods in

Bridgeton (the Project), a 3176-bed medium- and minimum-security

correctional facility, at a cost of approximately $203 million.

Situated on an eighty-four-acre site, the Project consists of

twenty-six buildings, including six general housing units, one

detention unit, one minimum-security unit, and one

inpatient/extended care unit. The buildings received heat and

hot water from the underground HTHW distribution system. The

Project was designed to be constructed in three phases, with all

construction to be completed within 1095 days of issuance of the

notice to proceed (NTP).

In its contract with the State, Perini was designated the

designer/builder. It designated L. Robert Kimball & Associates,

Inc. (Kimball) as the architect, the civil engineering

consultant, the structural engineering consultant, the

mechanical engineering consultant, the electrical engineering

5
consultant, the detention equipment consultant, and the

electronic security consultant. Perini also designated various

other entities as principal contractors or main contractors for

specific portions of the work. Defendant Natkin & Company

(Natkin) was designated the principal contractor for heating,

ventilation, and air conditioning (HVAC). Defendant Jacobs

Facilities, Inc. (Jacobs), formerly known as CRSS Constructors,

Inc., was retained by the State to provide construction

oversight services.

The design that Kimball provided to Perini included an

underground HTHW distribution system to serve the entire

Project. It also included a central plant where water was

heated by a series of boilers and heat exchangers and from which

the hot water was distributed to the various buildings that

comprised the Project. The hot water flowed through a network

of underground pipes consisting of insulated black steel carrier

piping within a galvanized steel casing. Perma-Pipe, Inc.

(Perma-Pipe) manufactured the underground piping used in the

HTHW system. Pursuant to its subcontract with Perini, Natkin

furnished and installed the underground piping system and the

boilers and heat exchangers housed in the central plant.

The contract provided that the Project would be constructed

in three phases –- Phase I, Phase IIA, and Phase II -- but the

entire project was to be completed 1095 calendar days following

6
issuance of the NTP. The contract also provided that Phase I

was to be completed no later than 730 days from issuance of the

NTP, Phase IIA was to be completed no later than 910 calendar

days from issuance of the NTP, and Phase II, no later than 1095

days from issuance of the NTP.

Phase I encompassed the central plant, perimeter fencing,

site work within the perimeter, a patrol roadway, security and

fire elements of the Project, and certain inmate housing units.

The central plant contained the boilers and heat exchangers for

the HTHW system. Certificates of substantial completion for

those various elements were executed on May 16, 1997.

Approximately 960 inmates occupied the Phase I housing units

soon thereafter. Phase IIA encompassed several other buildings,

including housing units for another 960 inmates. Certificates

of substantial completion for those buildings were executed

between July 15, 1997 and October 27, 1997. Phase II

encompassed approximately ten buildings, including a minimum-

security unit housing more than 1000 inmates and a garage. The

certificates of substantial completion for the minimum-security

unit and the garage list May 1, 1998, as the date of substantial

completion. The various buildings comprising the Project were

connected to the HTHW distribution system as they were

completed. A certificate of substantial completion was not

issued specifically for the HTHW system.

7
 II.

On April 28, 2008, the State filed a complaint against

Perini, Kimball, Natkin, Jacobs, and Perma-Pipe in which it

alleged that the HTHW system designed by Kimball, constructed by

Perini and Natkin, and overseen by Jacobs failed in March 2000

and on several subsequent occasions. The State alleged that

since the first failure in March 2000, “there have been a total

of ten (10) HTHW carrier pipe failures, including failures in

both the supply and return pipelines” and failures of isolation

valves. The State alleged that the system failures were caused

by various defects including design defects, defective site

preparation for the pipes, defective pipes, and deficient system

design. Due to recurrent system failures, the State concluded

that the entire system had to be replaced. The State asserted

breach of contract against Perini, negligence and professional

malpractice against Kimball, negligence and breach of contract

against Natkin, and breach of contract against Jacobs. Against

Perma-Pipe, the State asserted a claim under the New Jersey

Products Liability Act (PLA), N.J.S.A. 2A:58C-1 to -11, as well

as breach of implied warranties, negligence, and strict

liability in tort.

All defendants moved for summary judgment. Each defendant

argued that the Project was substantially complete well before

April 28, 1998; therefore, the statute of repose, N.J.S.A.
8
2A:14-1.1(a), barred the State’s complaint. The State contended

that the date of substantial completion of the Project was not

until May 1, 1998, if not December 1998. The trial court

granted summary judgment in favor of defendants Perini, Kimball,

Natkin, and Jacobs. Relying primarily on the occupancy of

inmates at the facility on or before April 28, 1998, the court

determined that the HTHW system was substantially complete

before April 28, 1998. Therefore, the trial court found that

the State’s complaint was barred by the ten-year statute of

repose. On the other hand, the trial court denied Perma-Pipe’s

motion for summary judgment. The court concluded that Perma-

Pipe was a manufacturer of goods and therefore its liability was

governed by the PLA and the statute of repose did not apply to

it.

On leave granted, the Appellate Division reversed the

orders granting summary judgment in favor of defendants Perini,

Kimball, Natkin, and Jacobs and affirmed the order denying

summary judgment to Perma-Pipe. State v. Perini Corp., 425 N.J.

Super. 62 (App. Div. 2012). The panel concluded that the

separate phases of a project can have separate trigger dates for

the statute of repose. Id. at 78. However, the panel held that

regardless of the nature of the project, the statute of repose

does not provide for separate trigger dates for components of a

project that do not qualify as discrete “improvements to real

9
property.” Ibid. The panel determined that the record did not

support a finding that the HTHW system was a separate

improvement to real property. Id. at 79. Therefore, the

statute of repose was triggered when defendants substantially

completed their work on the entire project. Ibid. Accordingly,

the panel held that the statute of repose was triggered no

earlier than May 1, 1998, the date when the minimum-security

unit and garage were certified as substantially complete, and

the State’s April 28, 2008 complaint was timely filed. Ibid.

In addition, the Appellate Division affirmed the trial court’s

holding that the statute of repose does not bar the State’s

claims against Perma-Pipe because it was a manufacturer of a

product rather than a designer or installer of a system. Id. at

80-81.

We granted the contractor-defendants’ motions for leave to

appeal, 210 N.J. 476 (2012), and Perma-Pipe’s cross-motion for

leave to appeal, limited to the issue of whether the statute of

repose applies to bar the State’s claims against it, 211 N.J.

606 (2012). We also granted amicus curiae status to Building

Contractors Association of New Jersey.

III.

A.

Perini argues that the Appellate Division erred in

concluding that the HTHW system was not a separate improvement

10
to real property within the meaning of the statute of repose.

Perini maintains that the Appellate Division contravened its

prior decisions in Port Imperial Condominium Ass’n v. K.

Hovnanian Port Imperial Urban Renewal, Inc., 419 N.J. Super. 459

(App. Div. 2011) and Brown v. Jersey Central Power & Light Co.,

163 N.J. Super. 179 (App. Div. 1978), certif. denied, 79 N.J.

489 (1979), which deemed structural improvements that are

integral to the structure itself to be “improvements to real

property.” Accordingly, Perini submits that the prison could

not function without the HTHW system, and the statute of repose

was triggered when the State began to house inmates at South

Woods more than ten years prior to the filing of the complaint

by the State.

Similarly, Kimball argues that the statute of repose was

triggered when the State took over beneficial use and operation

of the HTHW system. Kimball emphasizes that the State began

using the HTHW system and started to house inmates in May 1997,

after the substantial completion of the site work and the

central plant, which housed the boilers for the HTHW system.

Accordingly, Kimball submits that the statute of repose was

triggered in May 1997 when the State was able to use the HTHW

system, and that the trigger date is not affected by the

completion of the minimum-security unit and the garage.

B.

11
 Perma-Pipe argues that it is also entitled to the

protections of the statute of repose. Perma-Pipe maintains that

it was not merely a manufacturer of the piping for the HTHW

system but was also involved in the design, planning, and

installation of the system. In addition, Perma-Pipe contends

that it did not supply a “stock item” or standardized product

for the Project, but rather a specialized system that required

several design changes during construction. Perma-Pipe also

submits that the Appellate Division erred in interpreting

Dziewiecki v. Bakula, 180 N.J. 528 (2004), as establishing a

blanket proposition that manufacturers are not subject to the

statute of repose. Accordingly, Perma-Pipe contends that the

State’s complaint is untimely because the statute of repose was

triggered in 1997 when the State began using the HTHW system and

inmates occupied buildings in the first phase of the Project.

C.

The State maintains that its complaint was timely filed.

In particular, the State argues that even though its claims

relate only to the HTHW system, the ten-year limitations period

is triggered by substantial completion of the entire Project,

not just a portion of it. It emphasizes that the HTHW system

was designed to serve the entire Project. As a result, the

State submits that the Appellate Division correctly determined

12
that the statute of repose was triggered no earlier than May 1,

1998, when the entire Project was substantially complete.

Regarding Perma-Pipe’s appeal, the State maintains that the

statute of repose does not apply to product liability claims.

Moreover, the State argues that it did not assert any claims

pertaining to Perma-Pipe’s other purported roles as designer and

planner of the HTHW system.

D.

Amicus curiae Building Contractors Association of New

Jersey (BCANJ) urges this Court to reverse the Appellate

Division’s decision. BCANJ contends that the panel failed to

give effect to the certificates of substantial completion, which

should have been interpreted as also declaring the components of

a project, such as the HTHW system, as substantially complete.

In addition, BCANJ argues that the Appellate Division

inappropriately stated in dicta that individual subcontractors

working on a component of a project would have separate trigger

dates under the statute of repose. BCANJ submits that this

statement represents an unwarranted extension of this Court’s

decision in Daidone v. Buterick Bulkheading, 191 N.J. 557

(1997). In particular, BCANJ argues that Daidone, which

involved an owner acting as general contractor, should be

confined to the facts of that case. Otherwise, Daidone’s

holding will unfairly burden the last remaining party on a

13
project with liability for the failures of the other parties to

the contract. Last, BCANJ asks this Court to hold that third-

party claims for contractual indemnification and contribution

will be deemed as having accrued on the date on which the

plaintiff originally filed the action.

IV.
A.
The first issue before the Court is whether defendants

Perini, Kimball, Natkin, and Jacobs are entitled to summary

judgment and dismissal of the complaint filed against them based

on the statute of repose. In reviewing a grant or denial of

summary judgment, an appellate court is bound by the same

standard as the trial court under Rule 4:46-2(c). Town of

Kearny v. Brandt, 214 N.J. 76, 91 (2013); 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). To the extent that the grant or denial of summary

judgment is based on an issue of law, we owe no deference to an

interpretation of law that flows from established facts.

Kearny, supra, 214 N.J. at 92. Here, the date of the

14
commencement of the limitations period of the statute of repose

is a question of law subject to plenary review. See ibid.

(citing Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140

N.J. 366, 378 (1995)).

B.

Prior to the enactment of the statute of repose, liability

for deficiencies in a construction project was governed by the

common law “completed and accepted rule.” E.A. Williams, Inc.

v. Russo Dev. Corp., 82 N.J. 160, 165 (1980). In Totten v.

Gruzen, 52 N.J. 202, 210 (1968), this Court repudiated the rule,

replacing it with the limitations on liability derived from

ordinary negligence principles.

In 1967, New Jersey adopted a statute of repose. N.J.S.A.

2A:14-1.1(a) provides as follows:

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, . . . arising out of the
defective or unsafe condition 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.

15
As discussed in several prior opinions of the Court, the statute

of repose responded to the expanding liability of contractors,

builders, planners, and designers occasioned by the rejection of

the “completed and accepted rule,” the expanding application of

the discovery rule, and the evolving development of strict

liability in tort for injuries arising from defective conditions

in newly constructed buildings. See, e.g., Horosz v. Alp

Estates, Inc., 136 N.J. 124, 128 (1994); Newark Beth Israel Med.

Ctr. v. Gruzen, 124 N.J. 357, 362 (1991); E.A. Williams, supra,

82 N.J. at 165-66; O’Connor v. Altus, 67 N.J. 106, 117-19

(1975); Rosenberg v. Town of N. Bergen, 61 N.J. 190, 194-98

(1972). The statute of repose is construed broadly to

effectuate its purpose. Town of Kearny, supra, 214 N.J. at 93.

The statute of repose applies only to work that constitutes

an “improvement to real property.” N.J.S.A. 2A:14-1.1(a).

Generally, “an improvement to real property permanently

increases the property’s value.” Ebert v. S. Jersey Gas Co.,

157 N.J. 135, 139 (1999). When a court must determine whether

work is an improvement to real property, it should consider

“‘whether the modifications or addition enhances the use of the

property, involves the expenditure of labor or money, is more

than mere repair or replacement, adds to the value of the

property, and is permanent in nature.’” Ibid. (quoting Van Den

16
Hul v. Baltic Farmers Elevator Co., 716 F.2d 504, 508 (8th Cir.

1983)).

A service line carrying natural gas from a central main

onto a residential property is an improvement to real property,

id. at 139-40, as is an in-ground swimming pool installed at a

home, Dziewiecki, supra, 180 N.J. at 533. A structural

improvement, such as a transfer switch assembly cabinet, is an

improvement to real property when it is “required for the

structure to actually function as intended.” Brown, supra, 163

N.J. Super. at 195-96.

Calculation of the ten-year limitations period for the

statute of repose generally commences one day after issuance of

the certificate of substantial completion for the project.

Russo Farms, Inc. v. Vineland Bd. of Educ., 144 N.J. 84, 118

(1996). In Russo Farms, the Court explained that

“‘[s]ubstantial completion has a definite meaning in the

construction industry.’” Id. at 117 (quoting Perini Corp. v.

Greate Bay Hotel & Casino, Inc., 129 N.J. 479, 500 (1992),

overruled on other grounds by In re Tretina Printing, Inc. v.

Fitzpatrick & Assocs., Inc., 135 N.J. 349 (1994)). As defined

by the American Institute of Architects and incorporated in its

model contract, it is “the date when construction is

sufficiently complete . . . so the owner can occupy or utilize

the building.” Ibid. (internal quotations marks omitted). To

17
be sure, there may be instances in which another event signals

the commencement of the limitations period. However, any

departure from the date when the certificate of substantial

completion is issued is driven by the facts of the individual

case. For example, in Town of Kearny, supra, the Court held

that the ten-year period under the statute of repose commenced

on the date the first temporary certificate of occupancy was

issued because the certificates of substantial completion bore

neither the date of issuance nor the date of project completion.

214 N.J. at 95-96.

As noted in Town of Kearny, “[o]ur caselaw distinguishes

between defendant contractors who are hired to perform limited

services and defendants with supervisory responsibilities that

span the entire project, in determining the date upon which the

ten-year period begins for purposes of the [statute of repose].”

Id. at 93. For example, in Daidone, supra, the homeowners acted

as the general contractor and subcontracted with several

professionals and contractors to perform specific tasks in the

design and construction of their home. 191 N.J. at 560-61. An

architectural firm designed the house and another contractor

installed the pilings for the home’s foundation. Ibid.

Following completion of their work, neither the architect nor

the piling contractor performed any other work on the project.

The Court concluded that the ten-year period of the statute of

18
repose commenced to run the day on which each contractor

completed all work for the project. Id. at 566. Similarly, in

Hopkins v. Fox & Lazo Realtors, 242 N.J. Super. 320, 322 (App.

Div. 1990), an architect had been retained by a residential

developer to provide plans for a prototype house. The architect

performed no other work on the house plans and did not supervise

the construction of any houses erected by the developer. Ibid.

Under these circumstances, the appellate panel concluded that

“the statute’s purpose is best served by finding that the ten-

year statutory period begins when the architect or contractor

completes its task with respect to the property involved in the

claim.” Id. at 328.

By contrast, when a designer, planner, or person

participating in the construction of an improvement to real

property has continuing responsibility throughout the

construction of the project or a specific improvement, the ten-

year limitations period commences when the project has been

certified as substantially complete. Town of Kearny, supra, 214

N.J. at 94. Thus, in Town of Kearny, the statutory ten-year

period commenced for the designer, who supervised construction

of a police/fire facility and certified substantial completion

of the work, when the first temporary certificate of occupancy

was issued. Ibid. In Welch v. Engineers, Inc., 202 N.J. Super.

387, 396 (App. Div. 1985), the Appellate Division refused to

19
segment a contractor’s responsibilities into stages for

triggering the ten-year statute of repose period because the

contractor had continuing responsibility for the project as a

designer and builder. The panel reasoned as follows:

The functions of design, planning, supervision
or construction of improvements to realty
could be treated either separately or
unitarily when a single defendant performs two
or more or indeed all of these functions, as
[Engineers, Inc.] did here, without distorting
or diluting the language used by the
Legislature. . . . [W]e think the Legislature
most likely meant that when a person rendered
any construction-related services on a
particular job, finished them and walked away
from the job-site with the work accepted, that
person could look back ten years and one day
“after the performance or furnishing of such
services and construction,” N.J.S.A. 2A:14-
1.1, and know there was repose from liability.
We do not think that the Legislature intended
to let repose turn on serial cut-off dates
accruing through various stages of the work,
turning on fact-sensitive determinations and
various analytic approaches to construction
staging.

[Ibid.]

C.

Here, the State argues that the Project must be considered

a unitary undertaking, although the work was divided into phases

and each individual building was occupied upon its completion.

It emphasizes that construction continued, uninterrupted, on

other housing units and accessory structures even after the

first wave of inmates arrived. Stated differently, the

20
completion of the Project did not experience a lull in activity

weeks, months, or years in length. Further, Perini, Natkin, and

Jacobs were involved continuously from the commencement of

construction through the completion of the Project. Kimball, as

the designer with supervision responsibilities, was involved

continuously from the very inception of the Project through

completion of construction.

The State also contends that the certificate of substantial

completion issued for the central plant, which housed the

boilers used for the HTHW system, did not encompass the entirety

of the HTHW system. Rather, the network of underground pipes

was a critical element of the HTHW system. The State insists

that the system could be considered substantially complete only

when the last of the buildings it was designed to service were

connected to the system.

Perini, Kimball, Natkin, and Jacobs emphasize that the

Project was constructed in phases; therefore, calculation of the

ten-year period should commence with the completion of each

phase of the Project. In addition, they assert that the central

plant was substantially completed on May 15, 1997, thereby

triggering commencement of the ten-year repose period on May 16,

1997, the day that the State assumed possession of the building.

Based on that calculation, the ten-year period for filing the

State’s complaint expired in May 2007, many months before the

21
April 28, 2008 filing date. Implicit in this argument is the

notion that the certificate of substantial completion for the

central plant encompassed the entire HTHW system.

Viewing the facts contained in the summary judgment record

in the light most favorable to the State, the non-moving party,

we conclude that the statute of repose does not bar the State’s

complaint against defendants Perini, Kimball, Natkin, and

Jacobs. Several factors compel this conclusion.

As a threshold matter, we conclude that the HTHW system is

an improvement to real property. Therefore, the work performed

on this system falls within the scope of the statute of repose.

We reject, however, the argument advanced by Perini and Kimball

that the statute of repose was triggered on May 16, 1997, after

the certificates of substantial completion were executed for the

central plant and the housing units for the first wave of

inmates.

There can be no serious argument that the HTHW system is

not an improvement to real property. The system provides heat

and hot water to every building in the Project. The HTHW system

does not simply enhance the use of and add value to the Project;

South Woods could not function as a correctional facility

housing more than 3000 inmates without heat and hot water.

However, having determined that the HTHW system is an

improvement to real property within the scope of the statute of

22
repose does not lead to the inexorable conclusion that

completion of the central plant and occupancy of the initial

group of inmate housing units triggered the ten-year statute of

repose limitations period. A “system” is “a regularly

interacting or interdependent group of items forming a unified

whole.” System Definition, Merriam-Webster.com,

http://www.merriam-webster.com/dictionary/system (last visited

April 17, 2015). Here, the HTHW system is designed to form a

unified whole that interacts with and is connected to every

structure of the prison complex. The central plant where the

boilers are located may be viewed as the origination point of

this system, but it is by no means independent of the

underground pipes that are connected to it to bring heat and hot

water to every facet of the prison complex. Neither the nature

of the HTHW system, the course of construction, nor defendants’

role in the construction of the Project permits the issue date

of the Phase I certificates of substantial completion to trigger

the statute of repose time calculation.

Defendants Perini, Kimball, Natkin, and Jacobs were

involved continuously throughout construction of the Project.

Defendant Perini was the general contractor for the Project.

Natkin, as the HVAC subcontractor, and Jacobs, as the

construction supervisor, oversaw compliance with plans and

specifications for every aspect of the Project. They remained

23
continuously involved in the Project much like the designer and

general contractor in Welch, and the designer/construction

supervisor in Town of Kearny. Kimball not only designed the

Project but also provided oversight and consultation services

throughout construction of the Project. Unlike the architect in

Hopkins, who submitted a prototype plan for a house and had no

further involvement in the construction of any house based on

that plan, or the designer in Daidone, who did nothing more than

submit plans for the plaintiffs’ house, Kimball not only

designed the Project but also remained continuously involved in

the execution of its design.

The record also provides no support for the position

advanced by Perini, Kimball, Natkin, and Jacobs that the HTHW

system was substantially complete on May 16, 1997, after the

issuance of the certificate of substantial completion for the

central plant. Such a position ignores the design of the HTHW

system of which the boilers are only a component part, albeit a

critical part. This argument also ignores that the HTHW system

was not designed to only serve the buildings in Phase I that

house 960 inmates.

The HTHW system was designed to serve every building in

the Project. Therefore, contrary to defendants’ assertion, it

is of no significance that the minimum-security unit is located

outside of the fenced perimeter of the Project. The minimum-

24
security unit, housing more than 1000 inmates, is a critical

element of the Project and receives all of its heat and hot

water from the HTHW system. As a system designed to supply heat

and hot water to every building in the Project, we are loath to

embrace an application of the statute of repose that would

permit separate trigger dates for each section of the HTHW

system as a building it serves comes on line. Such an approach

is inconsistent with the purpose of the statute of repose and

frustrates the ability of the owner to evaluate whether the

system, as designed and constructed, operates as intended.

The record also provides no support for the contention

advanced by Perini, Kimball, Natkin, and Jacobs that the

completion of each phase of the contract triggered the statute

of repose for all work performed for that phase. To the

contrary, the record demonstrates work on the Project flowed

virtually seamlessly from phase to phase once the NTP issued.

The record also demonstrates that the purpose of the division of

the Project into phases was to permit the Department of

Corrections to address system-wide overcrowding by moving

inmates into a portion of the facility while construction

proceeded on the balance of the Project.

It is for these reasons that defendants’ concern that

selecting the date of the certificate of substantial completion

issued for the minimum-security unit and the garage will subject

25
them and other similarly situated contractors in other cases to

endless liability is unfounded. The Project had a discrete

start and end date. The improvement at issue provides every

building in the Project with a critical service –- heat and hot

water. There were no lengthy gaps of time between one phase and

another. Under these circumstances, it is only sensible that we

focus on the issuance of the certificates of substantial

completion for the last buildings connected to the HTHW system

as the trigger for calculating the commencement of the ten-year

repose period.

Neither the contract nor the specifications require a

separate certificate of substantial completion for the HTHW

system. No certificate ever issued for only the HTHW system.

The failure to require a separate certificate for the HTHW

system supports the conclusion that neither the owner nor the

designer and builder ever contemplated that the system would be

completed on a piecemeal basis. Rather, as an improvement

designed to service every building in the facility, it was

complete only when the HTHW system was connected to every

building it was designed to serve.1

1 The parties are free to stipulate to a substantial completion
date via contract. See Town of Kearny, supra, 214 N.J. at 95;
Trinity Church v. Lawson-Bell, 394 N.J. Super. 159, 170 (App.
Div. 2007).
26
 In sum, we conclude that the ten-year statute of repose

limitations period commenced to run on the day after the final

certificates of substantial completion issued for the final

buildings served by the HTHW system. The final certificates

were issued on May 1, 1998. The State filed its complaint on

April 28, 2008. The statute of repose therefore does not bar

the complaint.

V.

Finally, we address the Perma-Pipe appeal. Perma-Pipe

manufactured and supplied the piping required for the HTHW

system. It also participated in laying the pipe throughout the

site. Perma-Pipe acknowledges that the statute of repose is

normally not extended to similarly situated manufacturers of

construction materials. It maintains, however, that it was

inextricably involved in the design and fabrication of the HTHW

system and is thereby within the ambit of the statute of repose.

In its complaint, the State asserts three causes of action

against Perma-Pipe: breach of implied warranties of

merchantability and fitness for a particular purpose (Count

Five); negligence and strict liability in tort (Count Six); and

breach of its duty under the PLA (Count Seven). It is

undisputed that defendant Kimball designed the Project in its

entirety and the design included the HTHW system. Perma-Pipe

27
manufactured the insulated black steel carrier piping used in

the HTHW system.

The statute of repose applies when

(1) the injury sustained by plaintiff resulted
from a defective and unsafe condition of an
improvement to real property; (2) [the
defendant was] responsible for performing or
furnishing the design, planning, surveying,
supervision of construction, or construction
of the improvement; and (3) the injury
occurred more than ten years after the
performance or furnishing of the services.

[Dziewiecki, supra, 180 N.J. at 531-32.]

By contrast, manufacturers of standardized products and

sellers of such products are not subject to the statute of

repose, but rather “are covered by the statute of limitations

applicable to the [PLA].” Id. at 532. When a person or entity

has served as a manufacturer and an installer and thereby falls

under the coverage of the statute of repose and the PLA, and the

cause of the injury is attributable to both, the responsibility

should be allocated between the two. Id. at 533. The practical

effect of allocation may render one of the causes of the injury

actionable and the other non-actionable, if the civil action is

not commenced within ten years of substantial completion of the

improvement. Ibid.

The facts in Dziewiecki illustrate the distinction between

manufacturing/distribution and installation. In that case, the

Court held that the inground pool surrounded by a concrete apron

28
was an improvement to real property. Id. at 532. The installer

of this improvement fell within the coverage of the statute of

repose. Id. at 533. On the other hand, the seller and

distributor of a pool kit composed of galvanized steel walls, a

vinyl liner, braces behind the walls, and a coping package “did

not fall within the class of persons or entities protected by

the [statute of repose].” Id. at 531.

A review of the record, particularly the November 7, 1995

letter accompanying Perma-Pipe’s proposal and the terms and

conditions of the provision of its product, demonstrate that

Perma-Pipe’s role was that of a manufacturer of a product used

in the construction of the HTHW system. For example, the

summary of Perma-Pipe’s proposal in the November 1995 letter

states that “Perma-Pipe’s standard hot water distribution system

is a completely drainable and dryable system.” (Emphasis

added). Perma-Pipe stated that the piping and fittings would be

manufactured to job specifications using standard straight

sections of piping and “our Poly-Piping and Kits product line.”

It also proposed “to furnish our POLY-THERM product for the

chilled water distribution system for the . . . project.”

In its Terms and Conditions of Sale, Perma-Pipe also

advised the buyer that fabrication would not commence until the

buyer provided “all job dimensions and angles” and any

deviations “from the consulting engineer’s designs must be

29
counter-approved by the engineer” before fabrication would

commence. In addition, the Terms and Conditions of Sale

expressly stated that the buyer would compensate Perma-Pipe for

any costs incurred by it due to changes in drawings or

dimensions.

To be sure, the record reveals that Perma-Pipe provided

technical assistance and support during installation. The

record also demonstrates that Natkin, not Perma-Pipe, installed

the piping. In short, while the piping for the Project served a

specialized purpose to meet the specific dimensions and

specifications of the system designed by Kimball and installed

by Natkin, the piping and the various fittings manufactured by

Perma-Pipe are nonetheless a product and Perma-Pipe cannot take

refuge in the statute of repose.

VI.

In sum, we hold that the HTHW system is an improvement to

real property and falls within the scope of the statute of

repose. We reject, however, the position advanced by defendants

Perini, Kimball, Natkin, and Jacobs that the ten-year statute of

repose limitations period commenced to run when the HTHW system

began to supply heat and hot water to the buildings completed in

Phase I. The HTHW system was designed to supply heat and hot

water not to some but to all buildings in the system, including

the 1000-plus bed minimum-security unit substantially completed
30
on May 1, 1998. The statute of repose for a single improvement

that is intended to supply critical utilities, such as heat and

hot water, cannot be considered substantially complete until it

has been connected to every building it is intended to serve.

In this appeal, the multi-phase construction schedule had no

effect on when the statute of repose limitations period

commenced. This three-phase project proceeded seamlessly from

one phase to another with no substantial gaps in construction.

We need not address in this appeal the implications for statute

of repose purposes of a multi-phase project that proceeds with

substantial idle intervals between phases.

Finally, we conclude that Perma-Pipe supplied a product

that was incorporated in the HTHW system and is therefore not a

professional contractor whose services fall within the scope of

the statute of repose.

VII.

The judgment of the Appellate Division is therefore

affirmed as modified.

CHIEF JUSTICE RABNER; JUSTICES ALBIN and SOLOMON; and JUDGE
FUENTES (temporarily assigned) join in JUDGE CUFF’s opinion.
JUSTICES LaVECCHIA, PATTERSON and FERNANDEZ-VINA did not
participate.

31
 SUPREME COURT OF NEW JERSEY

NO. A-121/122/123/135 SEPTEMBER TERM 2011

ON APPEAL FROM Appellate Division, Superior Court

STATE OF NEW JERSEY,

Plaintiff-Respondent,

v.

PERINI CORPORATION, ET AL.,

Defendants-Appellants.
______________________________
STATE OF NEW JERSEY,

Plaintiff-Respondent,

v.

PERINI CORPORATION, ET AL.,

Defendants,

and

PERMA-PIPE, INC.,

Defendant-Appellant.

DECIDED April 30, 2015

Chief Justice Rabner PRESIDING

OPINION BY Judge Cuff (temporarily assigned)

CONCURRING/DISSENTING OPINION BY

DISSENTING OPINION BY

AFFIRMED AS
CHECKLIST
MODIFIED
CHIEF JUSTICE RABNER X
JUSTICE ALBIN X
JUSTICE SOLOMON X
JUDGE CUFF (t/a) X
JUDGE FUENTES (t/a) X
TOTALS 5