The New Jersey Appellate Division recently decided the matter of McGinty v. K. Hovnanian at Somerset, A-6100-07 (March 17, 2009), in which the Plaintiffs argued that a leak caused by construction defects in their common interest community unit in 1985 gave rise to a lawsuit filed in 2004.  The Plaintiffs, parents and children, lived in the home from 1985 until 1990.  When the family first moved in, they had a water leak from a bathroom pipe, which caused damage and mold growth.  The children claim in their 2004 lawsuit that exposure to toxic substances caused them to suffer from neurotoxicity with attention and cognitive problems.  The Defendants filed motions for summary judgment under the New Jersey Statute of Repose, N.J.S.A. seeking to dismiss their construction defect claims.


The Plaintiffs had several responsive arguments, each of which the court rejected.  The court found that the statute of repose began to run upon substantial completion of McGinty’s unit, not the completion of the entire 2,663 unit development nearly ten years later, as argued by the Plaintiffs.  The court relied upon the Supreme Court cases of Daidone v. Buterick Bulkheading, 191 N.J. 557, 564 (2007), in which the Supreme Court found that the Statute of Repose began to run upon "substantial completion" of their unit, not the entire project. 


The court also found that although Hovnanian performed repairs on the construction defects after the certificate of occupancy was issued, those repairs were "temporary and cosmetic" and thus did not constitute a separate improvement to the property, and even if they were separate improvements, the complaint was not filed within ten years of those repairs. 


Interestingly, the plaintiffs further argued that the statute of repose was not meant to deny recovery to a person who is in direct privity with the negligent party, but was intended only to apply to a third-party social guest, with no direct privity to the owner-builder.  The court rejected this argument as well, finding no such language in the statute. 


All of the claims, including the personal injury claims, were extinguished within 10 years of the date of the certificate of occupancy.  This decision reinforces the strict nature of the statute of repose and the New Jersey Judiciary’s strict adherence to the letter and intent of the statute as drafted by the legislature.  If you or your Association has incurred construction defects, contact the author of this article to discuss your rights under the statute of repose and other applicable statutes and rules.