Friday, August 18, 2017

Appeals Court of Massachusetts: The Statute of Repose for a Designer Standard of Care Claim Did Not Start Running with the Issuance of a TCO

In 2002, Defendant Carter-Burgess (Carter) entered into an “Architectural/Engineering Services Agreement” with the developer of a proposed retail complex located in Reading, Massachusetts. The agreement contained typical provisions which identified the agreed upon standard of care for design services as well as providing indemnification requirements. Also in the agreement, Jordan’s Furniture (Jordan) was identified as a “potential tenant.”  The complex Carter designed consisted of two retail stores stacked vertically in a single facility with Jordan occupying three floors. Jordan utilized the second floor as its warehouse space complete with a floor to ceiling “high rack” storage system and a “stockpicker” lift machine which acted as a forklift to access the upper reaches of the “high rack” system.  Carter’s design for the second floor deck was a suspended 135,000 S.F. reinforced concrete slab supported by girders and beams.  Carter later testified that it accounted for the 9,300 lbs. “stockpicker” when it designed the warehouse slab assembly incorporating additional structural members at specific locations. 

As construction operations were winding down, Carter requested a temporary certificate of occupancy (TCO) on September 2, 2004 which allowed Jordan’s employees to begin product display installations on the second floor.  Carter further requested an additional TCO on September 14, 2004 to allow for displays to be installed on the third floor.  At that time, 54% of the facility was available for Jordan’s employees to install its merchandise displays.  The store opened to the general public on October 29, 2004. 

In April of 2005, Jordan’s employees noticed that specific portions of the second floor slab were crumbling and notified Carter of the problem.  Carter recommended that a third-party consultant be engaged to diagnose the situation which Jordan accepted. The consultant produced a report in July of 2005 stating that the problem was a result of concrete freezing shortly after placement.  A second consultant concurred with the findings.  The recommended remediation procedure from Carter was to remove and replace a large section of the slab. The original general contractor, Suffolk Construction (Suffolk), assumed responsibility for the work and completed it in March 2006. In October of the same year, Jordan once again noticed cracking at the newly repaired slab areas and informed Carter.  Carter inspected and agreed to produce a report which it did nearly six months later in April 2007.  In its report, Carter identified the cracking was due to shrinkage of the newly installed concrete (not a structural integrity issue) plus Suffolk’s failure to properly install structural steel reinforcing members.  Suffolk rejected Carter’s claims confident it had installed the structural steel per the contract drawings and it contended once again that the cause of the deficient slab was Carter’s inadequate design for the rolling “stockpicker.” No resolution could be reached with Suffolk and Carter asserting blame to the other party. In 2009 Jordan engaged a forensic engineer who determined that the damage to the slab was the result of an inadequate design by Carter.

At a bench trial, it was determined that the second floor slab was, “inadequate for [its] intended use, and negligently designed, with the concentrated demand of the stockpicker exceeding the capacity of the floor as designed” and that negligent design, “constituted a deviation from the exercise of reasonable care required of members of the engineering profession engaged in the design of commercial facilities.” The judge awarded compensatory damages based upon the cost of necessary repairs in the amount of $1,744,793.  Both sides appealed with Jordan claiming that Carter contractually agreed to a higher standard of care and promised a specific result, thus breaching its contract and express warranty.  Jordan further asserted that it is entitled to indemnification from Carter for its attorney’s fees.  Carter argues that the suit is barred by the statute of limitations and statute of repose. 

The Court first examined Jordan’s claim for breach of contract and breach of express warranty claims.  The trial court judge found that these claims were duplicative of the negligence claim and dismissed them accordingly.  Jordan argued that the owner-architect agreement established a heightened duty of care for the designer. The Court sided with the trial judge by finding the relevant portions of the contract did not in fact require any additional standards beyond what is the generally accepted standard of professional practice for a designer.  The Court also rejected Jordan’s claim that as a matter of contract, it was entitled to be indemnified by Carter for fees and costs.  The Court stated that the owner-architect provision was narrowly drawn and there was not a reasonable inference by either party that a prospective building tenant would fall under the indemnification terms of the agreement.

The Court next reviewed the statute of limitations and statute of repose for architects who provide "`individual expertise' in the business of designing, planning, constructing, and administering improvements to real estate." Dighton v. Federal Pac. Elec. Co., 399 Mass. 687, 696 (1987).  The statute of limitations for such a negligence claim is three years.  The statute of repose for damages "arising out of any deficiency or neglect in the design, planning, construction or general administration of an improvement to real property . . . shall be commenced . . . [no] more than six years after the earlier of the dates of: (1) the opening of the improvement to use; or (2) substantial completion of the improvement and the taking of possession for occupancy by the owner." M.G.L  c. 260, § 2B .  Jordan filed its claim against Carter on September 17, 2010.  

The Court began its analysis with the statute of repose and Carter’s assertion that the TCO’s issued in September of 2004 marked the opening of the improvement for use.  The Court agreed with the trial judge and rejected that argument by finding that the TCO’s issues in 2004 had the narrow and specific purpose to allow Jordan’s employees to install merchandise.  The Court also noted that Jordan’s was not allowed to utilize the main entrance, the IMAX theatre, and other retail space on the second and third floors prior to the third October TCO.  Finally, it was noted that as of September 14th, Jordan’s main entrance, exterior façade, warehouse, parking lot, and site work were not complete.  The Court next analyzed the statute of limitations claim with Carter asserting that Jordan had knowledge or sufficient notice that it was harmed before its cause of action could accrue. The Court once again agreed with the trial judge when it concluded that Jordan could not have reasonably known that any time prior to September 17, 2007 the cause of the deficient concrete was the result of Carter’s faulty design.  The Court further noted that Jordan had in fact acted diligently to ascertain the cause of the cracked concrete and Carter repeatedly insisted that it was the fault of others, which contradicts its position.

The Court affirmed the trial courts judgment in full and award of $1,744,793.

The author, Brendan Carter, is a contributor to The Dispute Resolver and a former Student Division Liaison to the Forum on Construction Law.  He is the Director of Industry Advancement & Labor Relations with the AGC of Massachusetts based in Wellesley, MA.  He may be contacted at 781.786.8916 or

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