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Biniek v. Exxon Mobil Corp.

358 N.J. Super. 587, 818 A.2d 330 (Law Div. 2002)

CONTRACTORS; STATUTE OF REPOSE—Installing replacement underground storage tanks does not qualify as an activity constituting improvement to real property for the purpose of granting protection under the ten year construction statute of repose.

A company acted both as a “gasoline jobber,” delivering gasoline and motor oils to a service station and also replaced existing underground storage tanks in 1981. At least one of those tanks leaked, allegedly causing damages to neighboring property owners “as a result of exposure to contaminants that emanated from the gasoline station.” The company argued that the tank constituted “improvements to real property” and “construction activity” within the meaning of the ten year construction statute of repose. That statute, if applicable, would prevent a cause of action from ever arising with respect to injuries “occurring more than ten years after the performance of [a] negligent” act against a person who performed or furnished “the design, planning, supervision of construction or construction of [] improvement[s] to real property [] more than 10 years after the performance or furnishing of such services and construction.” This argument required the Court to determine “whether the sale and installation of the gasoline tanks by [the gasoline jobber] into a pre-existing piping system constitute[d] ‘the design, planning, supervision, or construction of an improvement to real estate’” within the meaning of the statute. First, the Court could not conclude that the gasoline jobber’s activity constituted, design, planning, supervision or construction of the gasoline tanks. Without doubt, it was a distributor and installer of pre-fabricated tanks. Consequently, the tanks were designed and manufactured by third parties. Vendors of products are not protected by the construction statute of repose. Further, it doesn’t matter even if it is necessary to attach the product to real property. The Court also found that the company “acted merely as a vendor and installer.” “[I]t sold and implemented a mass produced, interchangeable item. While it was necessary to attach [the tank] and make calibrations, the court view[ed] such conduct as distinguishable from the design of the entire system of gasoline delivery, which might have been considered improvements to the station.”

In addition, the Court did not find the activities to constitute an “improvement to real property” under the statute. To qualify, the relevant factors are “whether the modification 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.” Here, the Court characterized the 1981 activity as “mere replacement.” There were existing underground tanks and their replacement was “part of the normal upkeep and maintenance of the gasoline station.” According to the Court, “there [was] nothing to indicate that the newly installed tanks improved the gas station in the sense intended by the statute. Rather, they were necessary replacements of fungible items that had reached the endpoint of their useful life span. ... Further, the tanks [were] not permanent in nature, but instead [had] a finite useful period for use, as evidenced by their subsequent replacement.”


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