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U.S. District Court Determines Massachusetts’ Statute of Repose Was Triggered Once Entire Multi-Phased Project Was Completed

By Bernkopf Goodman on 11.21.2019
Posted In: Client Alerts

By Peter McGlynn

Massachusetts General Laws c. 260, § 2B established a statute of repose (“Statute of Repose”) for tort claims arising out of the defective design and construction of real property and bars recovery for an injury occurring more than six years after the earlier of (1) the opening of the “improvement” for use; or (2) substantial completion of the “improvement” and the taking possession of the “improvement” by the owner.

On October 28, 2019, in D’Allessandro v. Lennar Hingham Holdings, LLC, U.S. District Court Judge Indira Talwani tackled the question of what constitutes an “improvement” under the Statute of Repose in the context of a multi-phased condominium project. Lennar Northeast Properties, Inc. (“Lennar”), a subsidiary of the Lennar Corporation, developed, marketed and constructed Hewitts Landing Condominium in Hingham, MA. The Condominium was a “phased construction” project consisting of 150 units in 28 buildings. Over the course of construction, Lennar, based on the architect’s affidavits of substantial completion, obtained certificates of occupancy from the Town of Hingham for five of six buildings and all of their units over six years prior to the commencement of the lawsuit.

The plaintiff – the trustees of the Hewitts Landing Condominium Trust – alleged that Lennar had negligently designed and constructed the Condominium and sued Lennar and its related entities for negligence, violations of G.L. c. 93A, breach of fiduciary duty and intentional and negligent misrepresentation. Lennar moved for summary judgment seeking dismissal of all of the plaintiff’s claims based upon the Statute of Repose.

As an initial matter, Judge Talwani held that plaintiff’s claims against Lennar for intentional and negligent misrepresentations and unfair business practices are not subject to the Statute of Repose since the statute does not apply to the marketing and sale of real property.

On the critical question of when the Statute of Repose began to run on the “improvement,” Judge Talwani held that Lennar did not engage in the separate design and construction of 150 individual units or 28 individual buildings, but instead “engaged in the design and construction of a single Condominium development.” According to Judge Talwani, all 150 units were conceived of as the potential scope of the project from the very beginning: Lennar used the same general contractor and architect for all units and buildings, and the project was legally defined as a single Condominium governed by a single Condominium trust. Consequently, Judge Talwani found that “the [Statute of Repose] starts running upon completion of the entire improvement . . . .” ; namely, completion of all 150 units in all 28 buildings.

There are several takeaways from this case. First, as noted by Judge Talwani in her decision, what constituted an “improvement” in D’Allessandro was based upon the “specific facts applicable” to it. In other words, different facts could yield a different result on that issue. Judge Talwani also found that the concerns the Massachusetts Legislature had in enacting the Statute of Repose – that builders and architects shouldn’t be sued years after their work was completed, when witnesses’ memories may have faded or were no longer available, or after documents were lost or destroyed – did not exist in this case. Lennar had been sued only two and a half years after completing the Condominium and it saw the Condominium project as a continuous one from start to finish.

D’Allessandro also appears to put a finer point on when the Statute of Repose begins to run on multi-phased construction projects since prior Massachusetts decisions mostly focused on when the owner obtained a certificate of occupancy or commenced beneficent occupancy. However, the case didn’t resolve the issue of whether or not the parties can contractually start the running of the Statute of Repose period earlier as that issue wasn’t before the court.

However, Judge Talwani commented that her decision was “consistent” with a “dearth of caselaw finding developers and general contractors may divvy up a large continuous project into separate phases in order to limit their liability . . . .” California courts have allowed parties to contractually limit statutes of limitations, and courts in other jurisdictions have enforced reduced limitations periods, but generally on contracts where the parties had equal bargaining power and an opportunity to negotiate the contract language.

In addition, many of the standard form contracts created by the American Institute of Architects (“AIA”) contain a ten year time period after which all claims are waived. However, the practical effect of that provision is limited since most jurisdictions’ limitations periods are far shorter than the longer period in the AIA contract forms.

About Peter McGlynn

Peter McGlynn specializes in litigation relating to construction, surety, malpractice, commercial and bankruptcy cases. McGlynn has tried to verdict or decision in excess of 150 cases throughout the United States representing general contractors, subcontractors, architects, engineers, lenders, sureties and owners, among others, on a wide array of commercial, construction, surety and bankruptcy disputes.

Peter is a fellow in the Construction Lawyers Society of America. He has been honored in Best Lawyers and Massachusetts Super Lawyers, has achieved an AV Preeminent Peer Review Rating by Martindale-Hubbell, and has been consistently highly ranked by Chambers and Partners USA: Best Lawyers in America for General Litigation.

For more information on Peter McGlynn, please click here.

About Bernkopf Goodman

For over a century, Bernkopf Goodman LLP has represented clients in complex, high-stakes real estate, business, and litigation matters. Our ability to provide sophisticated legal counsel efficiently and cost-effectively is an important demarcation of our firm. We have earned a reputation for offering the caliber and expertise of a large firm, with the agility and personalized service of a boutique firm.

Bernkopf Goodman LLP has an impressive track record of success that spans real estate development, construction, surety, corporate structure, bankruptcy, civil litigation and regulatory compliance, including zoning and municipal matters.