“Sales Misrepresentation” Claim Does Not Get Around Statute of Repose for Construction Defects

Gotta hand it to them. Plaintiffs who presumably recognized that any claim for design or construction defects would be barred by the New Jersey statute of repose filed a lawsuit alleging that the developer misrepresented the quality of the septic system, premature failure of which caused damage to the homebuyers who relied on the alleged misrepresentations. But a New Jersey trial court has dismissed a set of consolidated claims, ruling that the claims are truly claims for design or construction deficiencies and as such are barred by the state’s statute of repose.

A group of homeowners brought suit against the developer, claiming that the developer committed “unlawful sales practices” when it represented that the septic system for each house “is to be capable of properly handling normal flow of household effluent.” The claim was that the septic systems were of an inferior design, with a lower life expectancy than conventional systems. And since the plaintiffs had purchased their homes based on the developer’s representations, and they had only recently learned of the septic system problems, the homeowners argued that their claims under the NJ Consumer Fraud Act were timely.

The lawsuit was filed in December 2015. The developer moved to dismiss the claims of 47 plaintiffs who had purchased their homes more than 10 years prior to the date of the lawsuit, as barred by the statute of repose.

The court held that the design and construction of the septic systems were “improvements to real property.” As such, claims against the developer, even if couched in terms of misrepresentation, were in essence that the design or construction of the septic systems had not been properly carried out. Thus, the claims of 47 homeowners who had purchased their homes more than ten years prior to the lawsuit were dismissed.

This is a trial court decision, and is likely to be appealed. Stay tuned. The consolidated cases are against Beazer Homes, and the decision from the Superior Court of New Jersey, Law Division, Civil Part, Gloucester County, can be found at 2016 N.J. Super. Unpub. LEXIS 1994 (August 30, 2016) (LEXIS subscription required).