by Adam L. Browser
A construction project is plagued by uncertainty. Will the project encounter unforeseen conditions? Will it proceed as scheduled? These, and other uncertainties, plague projects until completion. But uncertainty remains even after a project is completed as an owner can pursue a contractor for a construction defect until the statute of limitations expires. Moreover, owners have recently attempted to use CPLR § 214-c, a tolling statute designed for “toxic torts”, to circumvent the statute of limitations and pursue contractors for alleged construction defects that happened long ago. This article discusses three such attempts, which, albeit unsuccessful, do not eliminate this new uncertainty.
CPLR 214-c was enacted in 1986 to provide a remedy to people who suffered injury from exposure to toxic substances like asbestos, but whose injuries did not manifest until many years after the exposure. For CPLR 214-c to apply: (a) the injury must be caused by latent effects of exposure to a substance or substances; and (b) the action must be brought within three years from discovery of the injury or when, through the exercise of reasonable diligence, the injury should have been discovered, whichever is earlier.
On its face, CPLR 214-c does not appear to apply to an owner’s claim against a contractor for a construction defect. Moreover, it is well settled that an owner’s claim against a contractor for a construction defect is considered a breach of contract even if the claim is characterized as negligence. As such, the statute of limitations is six years, and begins to run when the work is completed. Application of CPLR 214-c to construction defect claims appears to violate this well settled rule.
However, the specific language of CPLR 214-c does not limit itself to personal injury claims; indeed, claims for property damage likewise benefit from a tolling of the statute of limitations. As such, owners that have discovered an alleged defect more than six years after construction was completed have attempted to use CPLR 214-c as a creative way to toll the statute of limitations and rescue their otherwise untimely claims. Few appellate courts have considered the applicability of CPLR 214-c to construction defect claims. Those that have, have refused to apply CPLR 214-c to the particular fact pattern at issue, but not to construction defect claims in general.
In Public Service Mutual Insurance Company v. Tri-Con Construction Corp., a contractor installed an exhaust system in a restaurant. Thirteen years later, a fire occurred allegedly caused by the exhaust system. The owner’s insurance company (as subrogee of its insured) sued the contractor claiming that it negligently installed the exhaust system, which caused the wooden infrastructure to decompose and combust. The contractor successfully moved to dismiss the complaint as untimely. The Second Department affirmed and refused to apply CPLR 214-c because heat was not the type of toxic substance contemplated by CPLR 214-c. While the Court rejected CPLR 214-c in that specific factual scenario, it did not rule that the statute was inapplicable to construction defect claims in general.
More recently, the Court of Appeals also refused to apply CPLR 214-c to a particular defect claim, but left open its applicability to other claims. In Germantown Central School District, v. Clark, Clark, Millis & Gilson, AIA, a building owner hired an architectural/engineering firm for an asbestos abatement project and the architectural/engineering firm and its consultant/subcontractor certified that the building was free of asbestos. Approximately 13 years later, the owner learned that the building was not asbestos-free and sued the architectural/ engineering firm and its consultant/subcontractor to recover the cost of removing the asbestos. The defendants moved to dismiss the complaint as untimely. The Supreme Court denied the motion and held that CPLR 214-c tolled the running of the statute of limitations.
The Third Department reversed and dismissed the complaint as time-barred, and the Court of Appeals affirmed the dismissal. The Court of Appeals held that the injury was not due to latent effects of exposure; rather it was immediate because it occurred when the asbestos was left in the building and there was no change in the consequence of the presence of asbestos over time. The Court of Appeals stated: Where as here, plaintiff’s property damage claim involves no additional damage to its building since the original implantation of the harmful substance – or, stated another way, where the passage of time has produced no change in the consequences of the presence of asbestos – the injury cannot be said to have resulted from the latent effects of exposure to the toxic substance.
Thus, the Court of Appeals held that CPLR 214-c did not apply to that specific factual scenario, but not, more generally, that it is inapplicable to owner’s claims against contractors for construction defects.
Relying on Germantown, earlier this year, the Second Department also rejected the application of CPLR 214-c to rescue an untimely construction defect claim. In Manhattanville College v. James John Romeo Consulting Engineer, P.C., the plaintiff hired a contractor who installed multiple boilers and hot water heaters in several buildings on plaintiff’s campus from 1991 to 1993. Six years later, in 1999, plaintiff discovered a carbon monoxide leak and commenced efforts to renovate the boiler system. In 2000, plaintiff sued, among others, the contractor for its alleged negligence in installing the boiler system. The contractor moved for summary judgment asserting that plaintiff’s construction defect claim was untimely (whether characterized as a tort or breach of contract).
In opposition, plaintiff alleged that CPLR 214-c tolled the running of the statute of limitations until 1999 when plaintiff first discovered the carbon monoxide leak. The Supreme Court denied the contractor’s motion. On appeal, the Second Department dismissed the claim and refused to apply CPLR 214-c to plaintiff’s claim because plaintiff had not alleged that the carbon monoxide caused any delayed or latent physical damage over the course of several years. The Second Department also noted that carbon monoxide, a gas, dissipates and therefore, it implied that carbon monoxide could not be a substance that caused the latent effects which trigger the application of CPLR 214-c.2.
To date, New York appellate courts have consistently refused to apply CPLR 214-c to rescue a construction defect claim brought more than six years after construction was complete. However, in light of the statutory language and the narrow holdings of Public Service, Germantown and Manhattanville, the possibility of an owner using CPLR 214-c to rescue an otherwise untimely construction defect claim is not foreclosed. Contractors, and their counsel, must be on guard to defend against construction defect claims from long ago, and cope with continuing uncertainty.
Adam L. Browser is a senior associate at Ruskin Moscou Faltischek, where he is a member of the firm’s Litigation Department and Construction Practice Group. He can be reached at (516) 663-6559 or firstname.lastname@example.org.
Reprinted with permission from the July/August, 2004 issue of the Nassau Lawyer.