Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.J. Super.: Homebuyers’ suit over builder misrepresentations of septic systems time-barred, (Aug 31, 2016)

By Linda O’Brien, J.D., LL.M.

An action by homebuyers against a residential home builder for alleged misrepresentations regarding the septic systems installed in their homes was barred by a 10-year statute of repose, the New Jersey Superior Court in Bridgeton has ruled (Caprioti v. Beazer Homes Corp., August 30, 2016, Geiger, R.).

Beazer Homes constructed and sold homes in the developments known as Greenwich Meadows, The Reserve at Mullica Station, and Harrison Run. The homes sold by Beazer included an infiltrator or chamber septic tank system (ISTS) instead of a conventional stone and pipe septic tank system (CSTS). Purchases of the homes began in August 2004, with the last home purchase occurring on December 13, 2005.

In 2010, certain Beazer home purchasers began experiencing issues with the ISTS, including septic system failure, sewage backup, poor drainage, and objectionable sewage odor coming from the septic field. On December 24, 2015, a group of 47 homebuyers filed suit against Beazer, alleging violations of New Jersey’s Consumer Fraud Act (CFA) in connection with the sale of these homes. They claimed that Beazer deceptively and falsely stated that each "septic system is to be capable of properly handling normal flow of household effluent." The plaintiffs also alleged that Beazer concealed: (1) that the homes were equipped with an ISTS rather than a CSTS (which had a longer minimum life expectancy); (2) the useful life of ISTS (which often failed prematurely); and (3) the differences between ISTS and CSTS.

Beazer moved for dismissal of the claims as barred by the 10-year statute of repose, which governed the "recovery of damages for any deficiency in the design, planning, surveying, supervision or construction of an improvement to real property."

The plaintiffs’ claims were time-barred because the complaint was filed more than ten years after all of the plaintiffs’ homes were completed as well as more than ten years after the plaintiffs purchased their homes, according to the court. First, the court noted, there were no genuine material facts at issue with respect to the dates of completion of construction and purchase of the homes in question. The plaintiffs did not claim that the design, construction, or installation of the septic systems violated any statute or regulation; the septic systems were installed without the required permits; the written sales contracts with Beazer violated any statute or regulations; or that Beazer warranted the septic systems for a defined period of time.

The plaintiffs’ contention that the statute of repose did not apply because their claims arose from Beazer’s unlawful sales practices and the inadequacy of the septic systems was not discovered until long after the date of sale was rejected. The court noted that their attempt to exclude any claim "to recover damages for any deficiency in the design, planning, surveying, supervision or construction of an improvement of real property," did not alter the fundaments of their cause of action against Beazer.

Following the decision in Cumberland City Bd. v. Vitetta, 431 N. J. Super. 596 (2013), the court noted that a statute of repose fixes the beginning and end time period that a party has to file a complaint, irrespective of the date of injury. Additionally, the law was well-settled that there was no equitable tolling of a statute of repose. Here, the court stated, the 10-year statute of repose applied to work that constituted an "improvement to real property." The design, construction and installation of septic systems constitute improvements to real property and the alleged septic system failures created an unsafe and hazardous condition with the ambit of the statute of repose. Since the plaintiffs’ claimed damages arising from allegedly defective and unsafe conditions of an improvement to real property, those claims were subject to and barred by the 10-year time limitation, the court concluded.

The case is No. GLO-L-45-16.

Attorneys: (Salmon, Ricchezza, Singer & Turchi, LLP) for Michael Caprioti. (Archer & Greiner, P.C.) for Beazer Homes Corp.

Companies: Beazer Homes Corp.

Cases: StateUnfairTradePractices NewJerseyNews