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Miles v. Deluxe Building Systems, Inc.

A-5697-07T1 (N.J. Super. App. Div. 2009) (Unpublished)

STATUTE OF REPOSE; PRODUCTS LIABILITY ACT — Modular or mass-produced homes are included within the meaning of improvements under the 10-year Construction Statute of Repose and are not products covered by the Products Liability Act.

A company manufactured and designed prefabricated, modular, single-family homes. These were shipped to its customer’s building sites in eighty-five to ninety percent complete condition. The homes were then finished by independent builders. A husband and wife purchased one of these modular homes from a “certified” builder who was part of a network associated with the manufacturer. More than seventeen years after the house was constructed, the husband was injured when the deck, attached to the second floor of the home, collapsed. The husband sued the manufacturer and the independent builder. The husband contended that the builder brought the deck in pieces and attached the deck to the home. The manufacturer claimed that in the atypical instance where it would agree to supply a deck to a home, it would build and attach the deck to the home while it was still in the factory.

The Law Division granted the manufacturer’s summary judgment motion based on the Statute of Repose with respect to: (a) the design of the house and deck; and (b) the husband’s claims against the manufacturer arising out of the Products Liability Act (PLA). The husband appealed.

The Appellate Division affirmed. It rejected the husband’s argument that the complaint was time barred because the deck was not an improvement to real estate within the scope of the Statute of Repose. The statute of limitations under the PLA would not have barred the action, but the Court did not view the deck as a “product” under the PLA. New Jersey’s construction Statute of Repose, unlike a statute of limitations, does not bar the cause of action; its effect, rather, is to prevent what might otherwise be a cause of action from ever arising. It held that the statute commanded that an injury occurring more than ten years after the negligent act allegedly responsible for the harm forms no basis for recovery. The construction Statute of Repose’s enactment reflected a legislative preference, from a public policy standpoint, for finality of construction-related claims. The Court pointed out that New Jersey courts have read the statute broadly to accomplish this purpose.

It also agreed with the lower court that the modular home and attached deck were improvements to real property in that they enhanced the use of the property, involved the expenditure of labor or money, were more than a mere repair or replacement, and were permanent in nature. It saw no reason to exclude modular or mass-produced homes from the meaning of improvements to real property. It found that even conventional on-site construction involved the use of important elements fabricated elsewhere. Further, it found that even if it were to consider the house and deck as “products” subject to the PLA, they would still be “improvements to real property.” Thus, it ruled that nothing in the PLA created an exception to the strict time limits of the Statute of Repose for realty improvements. On the other hand, it made a distinction between “stock items” that one pulls of the shelf in a store, and a modular home that is customized to the preferences of the homeowners. Finally, it held that principles of equitable tolling could not suspend the ten-year statutory period of repose, even if the alleged defect was latent and not discovered until after the ten years had run.

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