Court Deals Blow to Product Manufacturers

While this early decision delivered a serious blow to product manufacturers, the Brown court did affirm summary judgment for the product manufacturers for other reasons, and left open alternative interpretations of the statute.

The later decision of Wayne Twp. Bd. of Ed. v. Strand Century, Inc., 172 N.J. Super. 296 (App. Div. 1980), concentrated on the SOR’s interplay with product liability law, and gave manufacturers another avenue of defense. In that case a dimmer panel installed in a school auditorium’s lighting system caught fire resulting in property damage. The dimmer panel’s manufacturer was one of many defendants. First, the court held that the dimmer panel was an integral part of the auditorium’s electrical system, and an improvement to real property. In addition, there was a question of fact whether the manufacturer of the dimmer panel also assisted in the design and installation of the product. The court stated:

If [defendant] . . . participated to any extent in the design and planning stages of the lighting system and dimmer panel, as fabricated and installed in plaintiff’s auditorium, it is entitled to the repose of N.J.S.A. 2A:14-1.1. If, however, [defendant] merely sold a stock or shelf item out of its regular inventory or fabricated a product as designed and specified by the electrical engineer . . . for this project it was not within the repose of N.J.S.A. 2A:14-1.1. Wayne Twp., 172 N.J. Super. at 303.

The holding in Wayne Twp. placed defendants who wore “two hats” (i.e. installer and product manufacturer) in an awkward and potentially paradoxical position; the more involved the defendant was in the installation of an improvement to real property, the more likely they were to benefit from repose. This is certainly counterintuitive to common product liability defense strategy where defendants often try to argue that: 1) the product had no defect; 2) they had no involvement in the installation phase of the product; and 3) plaintiff’s loss was the result of the negligence of the installer. Under the analysis of Wayne Twp. there would potentially be scenarios where a defendant would be eager to prove his own negligent conduct in the installation or design of a product simply to show that he was involved in the installation completed 10 years prior to the suit, just so he can get out of the case on summary judgment using a repose argument.

While nothing in the text of the statute states that a product manufacturer who designs and constructs the improvement does not fit within the four corners of the statute, the Dziewiecki court quickly dismissed this argument.

Although we acknowledge that Fox “designed” the pool kit, in the sense that “products” are “designed,” we do not believe that those who design products for manufacturers and suppliers of standardized items were intended to be covered by the SOR. Id. at 532-33.