Opinion
C.A. No. 00-2436 (DRD).
February 23, 2001.
Ruth M. Meyer, Esq., Berger Bornstein, P.A., Morristown, N.J., Counsel for Plaintiff.
John M. O'Reilly, Esq., Drinker Biddle Shanley LLP, Florham Park, N.J., Local counsel for Defendants.
Michael G. Sarli, Esq., Gidley, Sarli Marusak, L.L.P., Providence, RI., Home counsel for Defendants, admitted pro hac vice.
OPINION
This matter is before the court on the defendants' collective motion to dismiss the plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(6), and plaintiff's cross-motion for leave to file an amended complaint under Rule 15(a) should defendants' motion be granted. For the reasons that follow, defendants' motion is granted and plaintiff's motion is denied.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Plaintiff owns a shopping plaza (the "plaza") in New Brunswick, New Jersey. In its amended complaint, plaintiff alleges that defendants Beazer East, Inc., Cooley Incorporated, and Cooley Roofing Systems Incorporated ("CRSI") designed, manufactured, and jointly marketed a "roofing system" that they installed on the plaza. Amended Complaint, 11/14/00, ¶ 8, at 2; ¶ 16, at 3; ¶ 33, at 6. Though plaintiff fails to allege in its amended complaint on what date it took title to the plaza or on what date the defendants installed the roofing system, the plaintiff does therein repeatedly refer to, and base its claims in part upon, a "commercial roofing system warranty" (the "warranty") made by CRSI to one Carlyle Real Estate Limited Partnership — XVII (whose relationship to the plaintiff is nowhere alleged in the amended complaint) on or about July 25, 1989. The warranty has been submitted as Exhibit B to the Certification of John M. O'Reilly submitted by defendants in support of their motion for summary judgment. The authenticity of the warranty is not in question.
The relationship between Cooley Incorporated and Cooley Roofing Systems Incorporated is wholly unclear from the record. The court has been apprised, however, that Cooley Roofing Systems Incorporated has changed its corporate name, and is now registered with the Secretary of State of Rhode Island and Providence Plantations as Cooley Engineered Membranes, Inc.
When a plaintiff makes reference to and relies upon a written warranty in its complaint, and a defendant later submits a copy of the warranty in support of its motion to dismiss under Rule 12(b)(6), the court may consider the warranty as part of the complaint, and may construe its meaning in disposing of the motion to dismiss without the conversion of the motion under Rule 12(b) into a Rule 56 motion for summary judgment. Everett v. Brad Ragan, Inc., 2000 WL 360240, at *1 (S.D.Ala. March 28, 2000); see generally Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3rd Cir. 1993).
The warranty, prepared by CRSI, indicates by its typewritten terms that a licensed roofer, New Brunswick Roofing Metal Co. of South Plainfield, New Jersey, installed on the plaza a new, mechanically fastened roofing system featuring 90,000 square feet of cool top membrane, 3,600 linear feet of cool top and CPE coated metal flashing, and phenolic foam insulation one and one-half inches thick. O'Reilly Certification Ex. B at 2. The warranty further indicates that the installation began on December 18, 1986 and was completed on July 1, 1987. Ibid. The warranty was signed by the president of CRSI on or about July 25, 1989; in accordance with its preprinted terms, the warranty became effective on July 1, 1987, the date installation of the roofing system was completed, and ran for ten years, through July 1, 1997. Ibid.
New Brunswick Roofing Metal Co. is not a party to this action.
Plaintiff alleges that the phenolic foam insulation in the roofing system was defectively manufactured, in that sulfuric acid leaches from the foam when it becomes wet. Certification of Lawrence S. Berger in Opposition to Defendants' Motion for Summary Judgment, ¶ 6, at 2. This leaching of sulfuric acid allegedly has caused severe damage to the metal roof decking beneath the foam, ibid., which damage has allegedly compromised the structural integrity of the roof. Id. ¶ 9, at 3; Am. Compl. ¶ 13, at 3. Based on these allegations, plaintiff has lodged in its amended complaint claims against the defendants for breach of express warranty, product liability, negligence, and breach of the covenant of good faith and fair dealing. Am. Compl. ¶ 11, at 3; ¶ 16, at 3; ¶ 19, at 4; ¶¶ 21, 22, at 4; ¶ 25, at 5; ¶ 28, at 5; ¶ 34, at 6. Plaintiff has also alleged that the defendants took measures intended to obfuscate and forestall discovery of the defects in the roof during the warranty period. Id. ¶ 33, at 6.
In lieu of answering plaintiff's amended complaint, defendants have moved to dismiss the plaintiff's complaint with prejudice under Rule 12(b)(6). Defendants advance a host of arguments in their briefs, but one dispatches plaintiff's entire case: the running of New Jersey's applicable ten- year statute of repose prior to plaintiff's commencement of this action pretermitted the accrual of any and all causes of action arising out of the facts alleged by the plaintiff. Defendants' motion to dismiss under Rule 12(b)(6) must therefore be granted. As this automatic divestment of rights is absolute and irreversible, any attempt by plaintiff to amend its complaint would be futile, and so plaintiff's motion for leave to amend under Rule 15(a) must therefore be denied.
DISCUSSION
Choice of State Substantive Law
Jurisdiction over the subject matter of this action lies in diversity under 28 U.S.C. § 1332. Therefore, state substantive law controls its resolution. Erie R.R. v. Tompkins, 304 U.S. 64, 77-78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938); 28 U.S.C. § 1652 (1948) (commonly known as the Rules of Decision Act). As no contract exists between the plaintiff and the defendants, and the warranty contains no choice-of-law provision, determination of which state's substantive law controls generally would be made by resort to New Jersey's choice-of-law rules, as New Jersey is the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1940). However, as the parties have implicitly agreed that New Jersey law shall control, and as New Jersey has an interest in the outcome of this action — the plaza lies on New Jersey soil — New Jersey law controls. Schiavone Constr. Co. v. Time, Inc., 735 F.2d 94, 96 (3rd Cir. 1984); see Am. Fuel Corp. v. Utah Energy Dev. Co., 122 F.3d 130, 134 ("[W]here the parties have agreed to the application of the forum law, their consent concludes the choice of law inquiry."); Citicorp Indus. Credit, Inc. v. Fed. Ins. Co., 672 F. Supp. 1105, 1106 n. 1 (N.D.Ill. 1987).
Plaintiff's original complaint was defective in its allegations of diversity jurisdiction. Plaintiff was accorded an opportunity under 28 U.S.C. § 1653 to amend its defective jurisdictional allegations; plaintiff cured these defects in its amended complaint.
New Jersey's Statute of Repose
Defendants rightly argue that the accrual of any and all claims plaintiff might bring has forever been foreclosed by New Jersey's apposite ten-year statute of repose, which reads, in pertinent part, as follows:
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 serve as a bar to all such actions both governmental and private but shall not apply to actions against 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.
N.J. Stat. Ann. § 2A:14-1.1.a (1967, as amended) (West 2000). The function of the statute is to define substantive rights, rather than to alter or to modify a remedy, Rosenberg v. Town of N. Bergen, 61 N.J. 190, 199, 293 A.2d 662, 667 (1972), and so it is considered part of New Jersey substantive law. Van Slyke v. Worthington, 265 N.J. Super. 603, 610, 628 A.2d 386, 389 (Law Div. 1992). As this statute therefore is controlling under Erie and the Rules of Decision Act, its legal effect must be explained.
The statute is not a statute of limitations, but a statute of repose. The distinction is critical. The expiration of a statute of limitations operates as a bar to the filing and prosecution of a suit upon an accrued cause of action. E.g. Burd v. N.J. Tel. Co., 149 N.J. Super. 20, 28, 372 A.2d 1355, 1359 (App.Div. 197 7). As the running of a statute of limitations commences with the accrual of a cause of action, the running of a statute of limitations may be equitably tolled under the discovery rule: "in appropriate cases a statute of limitations shall not be deemed to run until a wrong has been discovered or should have been discovered," Rosenberg, 61 N.J. at 197, 293 A.2d at 665. The discovery rule will avail a plaintiff if the defendant has fraudulently concealed the plaintiff's injury from the plaintiff. Baird v. Am. Med. Optics, 155 N.J. 54, 71-72, 713 A.2d 1019, 1028 (1998).
By contrast, expiration of a statute of repose does not bar a cause of action, but rather prevents a cause of action from ever arising. Rosenberg, 61 N.J. at 199, 293 A.2d at 667 (declaring § 2A:14-1.1 to be a statute of repose, construing its effect, and upholding its state and federal constitutionality). Under § 2A:14-1.1, "the time within which suit may be brought commences with the completion [the performance or furnishing] of services and construction," and not with the accrual of a cause of action. O'Connor v. Altus, 67 N.J. 106, 121, 335 A.2d 545, 553 (1975). Therefore, neither the defendant's fraudulent concealment of plaintiff's injury nor any other circumstances under which the discovery rule would toll a statute of limitations will toll the running of a statute of repose. Neuner v. C.G. Realty Capital Ventures — I, L.P. ( In re Sharps Run Assocs., L.P.), 157 B.R. 766, 783 (D.N.J. 1993). Indeed, the enunciation of the discovery rule was one of the reasons for the enactment of § 2A:14-1.1, to which the discovery rule does not apply. Rosenberg, 61 N.J. at 194-98, 293 A.2d at 664-66, cited in Ebert v. S. Jersey Gas Co., 157 N.J. 135, 138, 723 A.2d 599, 601 (1999).
For the defendants to prevail under § 2A:14-1.1, they must show (1) that the roofing system is an improvement to real property; (2) that they performed or furnished the design, planning, supervision of construction or construction of the roofing system; and (3) that plaintiff filed suit more than ten years after defendants' performance or furnishing of such services and construction. N.J. Stat. Ann. § 2A:14-1.1.a; cf. Noll v. Harrisburg Area YMCA, 537 Pa. 274, 281, 643 A.2d 81, 84 (1994) (construing Pennsylvania's cognate statute of repose). This defendants have done.
Improvements to Real Property
Work done to real property, including an addition or modification, will constitute an improvement to real property under § 2A:14-1.1 if it is required for the structure actually to function as intended, Wayne Township Bd. of Educ. v. Strand Century, Inc., 172 N.J. Super. 296, 300, 411 A.2d 1161, 1163 (App.Div. 1980) (citation omitted), or if its removal would materially damage the realty, Hall v. Luby Corp., 232 N.J. Super. 337, 339, 556 A.2d 1317, 1318 (Law Div. 1989). Certainly, the roofing system, which comprises 90,000 square feet of cool top membrane, 3,600 linear feet of cool top and CPE coated metal flashing, and phenolic foam insulation one and one-half inches thick, O'Reilly Certification Ex. B at 2, is required for the plaza to function as an enclosed shopping center, and its removal would materially damage the plaza. The roofing system is therefore an improvement to real property under § 2A:14-1.1. See also Horosz v. Alps Estates, Inc., 136 N.J. 124, 131, 642 A.2d 384, 388 (1994) (stating by example, in ruling on whether ten years had elapsed under § 2A:14-1.1, that accrual of a claim for defective design or construction of a roof would be extinguished despite intervening repair work done within the ten-year period); cf. Bernard Sconinger Shopping Ctrs., Inc. v. J.P.S. Elastomerics Corp., 102 F.3d 1177, 1178 (11th Cir. 1997) (holding the installation of over 100,000 square feet of roofing membrane and fiberboard was a valuable addition to a department store and therefore qualified as an improvement to real property); Miller v. Consol. Aluminum Corp., 729 F. Supp. 1154, 1160 n. 14 (stating in dictum, in construing Ohio's cognate statute of repose, that a roof is undoubtedly an improvement to real property).
Class of Covered Entities
Section 2A:14-1.1 will by its terms permanently immunize from all liability on plaintiff's claims those defendants who performed or furnished the design, planning, supervision of construction or construction of the roofing system, so long as the other requirements of the statute of repose are met. It must be noted that § 2A:14-1.1 will not protect manufacturers and sellers of products that ultimately found their way into an improvement to real property when those manufacturers or sellers were uninvolved in the design, planning, or construction of improvements to real property. Strand Century, 172 N.J. Super. at 302, 411 A.2d at 1164. "Implication in the design and planning state of the improvement to realty itself or of [an] integral component thereof, not mere design of a fungible product or fabrication of a product from specifications which product is later incorporated in the building, is required." Id., 172 N.J. Super. at 303, 411 A.2d at 1164.
Plaintiff has alleged that the defendants defectively designed, manufactured, and installed the roofing system. Am. Compl. ¶ 16, at 3; ¶ 20, at 4; ¶ 24, at 4; ¶ 27, at 5; ¶ 34, at 6. This brings the defendants squarely within the class of entities granted immunity from liability by § 2A:14-1.1.
Calculation of Ten-Year Period
Plaintiff has unqualifiedly relied in its amended complaint upon the warranty, which states that the installation of the roofing system began on December 18, 1986 and was completed on July 1, 1987. O'Reilly Certification Ex. B at 2. The statute of repose thus expired on July 1, 1997. N.J. Stat. Ann. § 2A:14-1.1.a. Plaintiff filed its original complaint in this action on May 18, 2000.
As the discovery rule has no application to a statute of repose, plaintiff's allegations of fraudulent concealment — that the defendants took measures intended to obfuscate and forestall discovery of the defects in the roof during the warranty period, Am. Compl. ¶ 33, at 6 — are unavailing. Neuner, 157 B.R. at 783.
Futility of Amending the Complaint
Though there are, surprisingly, no cases directly in point, it is clear that it would be futile for plaintiff to amend its amended complaint, as any and all of its claims against the defendants have been completely and permanently extinguished by the running of the statute of repose.
CONCLUSION
For the foregoing reasons, the defendants' motion to dismiss the plaintiff's complaint with prejudice shall be granted, and the plaintiff's motion for leave to file an amended complaint shall be denied. An appropriate order shall enter.