State v. Cruz Const. Co., Inc.

Citation652 A.2d 741,279 N.J.Super. 241
PartiesSTATE of New Jersey, Plaintiff-Respondent, v. CRUZ CONSTRUCTION COMPANY, INC., Cruz Construction Corporation, and Safeco Insurance Company of America, Defendants-Appellants.
Decision Date02 February 1995
CourtNew Jersey Superior Court – Appellate Division

John F. Neary and Michael J. Forrester, Roseland, for appellants Cruz Const. Corp. and Safeco Ins. Co. of America (Connell, Foley & Geiser and Lum, Hoens, Conant, Danzis & Kleinberg, attorneys; Theodore W. Geiser and Colin M. Danzis, of counsel; Mr. Neary, Mr. Danzis and Dennis J. Drasco, on the brief).

Wayne J. Martorelli, Philadelphia, PA, for respondent State of N.J. (Duane, Morris & Heckscher, Philadelphia, PA, and Deborah T. Poritz, Atty. Gen., attorneys; Helene P. Chudzik, Deputy Atty. Gen., of counsel; Mr. Martorelli, on the brief).

Steven E. Brawer, West Orange, for amicus curiae Const. Industry Advancement Program of New Jersey (Mandelbaum, Salsburg, Gold, Lazris, Discenza & Steinberg, attorneys; Mr. Brawer, of counsel; Mr. Brawer and Adrienne L. Isacoff, on the brief).

Before Judges MICHELS, STERN and KEEFE.

The opinion of the court was delivered by

MICHELS, P.J.A.D.

We granted defendants Cruz Construction Corporation (Cruz) and Safeco Insurance Company of America (Safeco) leave to appeal from an order of the Law Division that denied their motions to dismiss the complaint of plaintiff State of New Jersey (State) on the ground that the claims asserted against them were barred by the ten-year limitation period of N.J.S.A. 2A:14-1.1.

Briefly, Cruz and the State entered into a written contract on October 10, 1975, under which Cruz was to construct a reservoir pipeline 3.6 miles in length linking the North Dam of the Round Valley Reservoir in Clinton, New Jersey, to a release structure located in Whitehouse Station, New Jersey. In accordance with the contract, Safeco, as Cruz's surety, issued a performance bond for the benefit of the State, obligating Safeco with respect to Cruz's performance under the contract. In 1977, Cruz completed its work under the contract with the State.

On June 15, 1988, a section of the pipeline installed by Cruz ruptured, resulting in the discharge of a claimed 40 million gallons of water and requiring closure of the pipeline until repairs could be completed. The State repaired the ruptured section of the pipeline in December 1988, and placed the line back in operation in June of 1989. Upon further inspection, the State discovered that the damage was more extensive than previously believed and that the pipeline had to be shut down and replaced in its entirety.

The State instituted this action against Cruz and Safeco on February 7, 1993, alleging that Cruz breached its contract by constructing the pipeline with defective materials which failed to conform to contract specifications. The State claimed that the costs and expenses incurred in repairing the pipeline were $5,940,000 and that the estimates of the costs to fully replace the reservoir pipeline would be an additional $25,300,000. Therefore, the State sought to recover a total of $31,240,000.

Cruz and Safeco moved to dismiss the action on the ground that the claims were time-barred by the provisions of N.J.S.A. 2A:14-1.1. Judge Herr in the Law Division held, generally, that in view of Rutgers v. Grad Partnership, 269 N.J.Super. 142, 634 A.2d 1053 (App.Div.1993), certif. denied, 135 N.J. 470, 640 A.2d 851 (1994) and the doctrine of nullum tempus, which was extended by a Supreme Court order even though abrogated by the Court in N.J. Educ. Facilities v. Gruzen, 125 N.J. 66, 592 A.2d 559 (1991), the State's claims were insulated from the operation of N.J.S.A. 2A:14-1.1, and, therefore, were not time-barred by the statute. We agree and affirm.

N.J.S.A. 2A:14-1.1, which applies to claims brought against contractors, provides:

No action whether in contract, in tort, or otherwise to recover damages for any deficiency in the design, planning, supervision or construction of an improvement to real property, or for any injury to property, real or personal, or for an injury to the person, or for bodily injury or wrongful death, arising out of the defective and 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, 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. This limitation shall not apply to any person in actual possession and control as owner, tenant, or otherwise, of the improvement at the time the defective and unsafe condition of such improvement constitutes the proximate cause of the injury or damage for which the action is brought.

While it is unquestioned that this statute applies to claims brought by private entities, N.J.S.A. 2A:14-1.1 does not apply to claims brought by the State. In Rutgers v. Grad Partnership, Rutgers, The State University of New Jersey, sued several defendants in 1993, based on their improper design and installation of glass drainage pipes as part of the construction of a new building at the Rutgers New Brunswick campus completed in 1963. The trial court dismissed the action because it was brought outside of the ten-year statute of repose of N.J.S.A. 2A:14-1.1. We reversed, holding that the doctrine of nullum tempus applied to N.J.S.A. 2A:14-1.1 and that, therefore, Rutgers' claim was not subject to the ten-year statute of repose. 1 The result was that Rutgers was permitted to bring its action even though the construction work had been completed nearly 30 years before the suit was brought. We based our ruling on the notion that "[a]bsent inclusion either expressly or by implication of the State in a statute of limitations, nullum tempus operates so that such a statute, should not be read to affect adversely the State's rights." Rutgers, supra, 269 N.J.Super. at 146, 634 A.2d 1053. See also Livingston Bd. of Ed. v. U.S. Gypsum, 249 N.J.Super. 498, 505, 592 A.2d 653 (App.Div.1991).

Although Cruz and Safeco maintain that Rutgers was decided incorrectly, we are satisfied that its holding is consistent with fundamentally sound and well-settled principles of statutory interpretation. It is settled that "[i]f a change in the common law is to be effectuated, the legislative intent to do so must be clearly and plainly expressed." DeFazio v. Haven Savings and Loan Ass'n., 22 N.J. 511, 519, 126 A.2d 639 (1956); Lisi v. Parnell, 201 N.J.Super. 321, 327, 493 A.2d 40 (App.Div.1985). See Fivehouse v. Passaic Valley Water Comm., 127 N.J.Super. 451, 456, 317 A.2d 755 (App.Div.), certif. denied, 65 N.J. 565, 325 A.2d 699 (1974).

Nullum tempus is a common law doctrine. Since there is no clear or express legislative intent apparent in the language of N.J.S.A. 2A:14-1.1 to change this common law principle, it logically follows that nullum tempus cannot be deemed to have been altered by the enactment of the statute. As we stated in Rutgers, " N.J.S.A. 2A:14-1.1 does not expressly or by implication apply to a cause of action brought by the State." Rutgers, supra, 269 N.J.Super. at 146, 634 A.2d 1053. Thus, under both Rutgers and settled principles of statutory interpretation, N.J.S.A. 2A:14-1.1 would not apply to the State to time-bar these claims.

Cruz and Safeco maintain that aside from Rutgers, all other cases which have dealt with N.J.S.A. 2A:14-1.1 have not applied the doctrine of nullum tempus, and in so doing have barred lawsuits which were brought by the State more than ten years after the completion of work. See Wayne Tp. Bd. of Ed. v. Strand Century, Inc., 172 N.J.Super. 296, 411 A.2d 1161 (App.Div.1980); County of Hudson v. Terminal Construction Corp., 154 N.J.Super 264, 381 A.2d 355 (App.Div.1977), certif. denied, 75 N.J. 605, 384 A.2d 835 (1978). However, none of these cases considered or even mentioned the doctrine of nullum tempus. Moreover, it cannot be inferred that since nullum tempus was not raised by either the litigants or the courts, the courts decided that nullum tempus cannot apply to N.J.S.A. 2A:14-1.1. To the contrary, the cited cases did not consider the doctrine of nullum tempus at all, while the Rutgers court specifically relied on it.

Cruz and Safeco also contend that N.J.S.A. 2A:14-1.1 is a statute of repose, not a statute of limitations, and thus the doctrine of nullum tempus cannot apply. They base their argument on the reasoning that nullum tempus was designed to avoid the forfeiture of government claims due to a lack of diligence on the part of public officials in timely prosecuting them once having learned of them, and that "the public should not have to suffer by reason of the neglect of a governmental employee." Gruzen, supra, 125 N.J. at 75, 592 A.2d 559. Defendants claim that such reasoning would have no impact on a statute of repose because repose statutes have an automatic bar after a specified time after completion of work, whereas statutes of limitations focus on the date a cause of action accrues. This argument is not persuasive. While some courts have made a distinction between statutes of limitations and statutes of repose, many others indicate that the difference is unimportant. Most significantly, Rutgers, which dealt directly with N.J.S.A. 2A:14-1.1, held that it is a hybrid statute, and that the doctrine of nullum tempus could be applied to it. We reasoned:

We can find, however, no basis for limiting nullum tempus to only what might be characterized as pure statutes of limitation and neither do we think the characterization of N.J.S.A. 2A:14-1.1 as a statute of repose either necessarily accurate, or if accurate, much of a distinction.... But whether N.J.S.A. 2A:14-1.1 is considered an atypical statute of limitations, a hybrid, or a repose...

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