Lennar Hingham Holdings, LLC (“Lennar”) built a twenty-eight-building, 150-unit condominium project containing twenty-four discrete phases over a seven-year span. The condominium association subsequently brought an action against Lennar and others alleging design and construction defects to four main components of the common elements: “decks and columns,” “roofing/flashing,” “exterior walls/flashing/building envelope,” and “irrigation system.” In response, the defendants argued that the plaintiff’s claims with respect to six of the twenty- eight buildings were barred by Massachusetts’s six-year statute of repose, G. L. c. 206 § 2B.
The United States District Court for the District of Massachusetts previously held that all twenty-eight of the condominium’s buildings should be treated as a single improvement for purposes of application of the statute of repose. Subsequently, the court certified the following question to the Massachusetts Supreme Judicial Court: Where the factual record supports the conclusion that a builder or developer was engaged in the continuous construction of a single condominium development comprising multiple buildings or phases, when does the six-year period for an action of tort relating to the construction of the condominium’s common or limited common elements start running?
The plaintiff association argued that the meaning of the term “improvement,” as used in the statute, was crucial to determining when the six-year statute of repose is triggered. Plaintiff claimed the entire condominium project was a single “improvement” based on factors such as the terms of the master deed, which created a single legal entity, the pace and continuity of the construction, and the fact that the defendants were involved in the project from beginning to end. Thus, adopting the plaintiff’s view, the entire project would be considered a single “improvement” as opposed to 28 separate improvements. Opposing this argument, the defendants argued that the statute of repose was triggered as each building in the project was opened for use based on the various certificates of occupancy issued by the town.
The Massachusetts Supreme Court disagreed with the plaintiff’s arguments and found each building constituted a separate improvement for purposes of the statute of repose. As each building was issued its certificate of occupancy, the Court found “improvement” to mean each individual building. Additionally, the Court found that “where a particular improvement is integral to and intended to serve multiple buildings within a single phase, or buildings across multiple phases, or even the condominium development as a whole, the statute of repose begins to run when that discrete improvement is substantially complete and open to its intended use.” The Court reasoned that the legislature’s intent, when enacting the statute, was to strike a reasonable balance between the right to a remedy for owners such as the plaintiff and the need to have an outer limit on the tort liability of those involved in the construction process.
This case is a win for contractors, owners, developers, and architects as their potential liability is further limited under Massachusetts’s statute of repose for multi-phase or multi-building projects. Despite this ruling, contractors of all tiers will still want to ensure they have adequate insurance coverage during the entirety of the applicable statute of repose period for any and all work they complete. As a result, it is critical to review your products-completed operations coverage within your commercial general liability policy to ensure it will cover you for the entirety of the statute of repose applicable in the jurisdiction in which you perform the construction activities.