STATE OF NEW YORK
       ________________________________________________________________________
 
                                         1696
 
                              2001-2002 Regular Sessions
 
                    IN SENATE
 
                                   January 29, 2001
                                      ___________
 
       Introduced  by  Sens. VOLKER, ALESI, HOFFMANN, JOHNSON, LIBOUS, MALTESE,
         MARCELLINO, MARCHI, McGEE, PADAVAN -- read twice and ordered  printed,
         and when printed to be committed to the Committee on Codes
 
       AN ACT to amend the civil practice law and rules, in relation to provid-
         ing  a  statute  of  limitations  for certain actions against licensed
         engineers and architects and to repeal section 214-d, subdivision  (h)
         of  rule  3211  and subdivision (i) of rule 3212 of the civil practice
         law and rules relating thereto
 
         The People of the State of New York, represented in Senate and  Assem-
       bly, do enact as follows:
 
    1    Section  1.  Statement  of findings and purpose. The legislature finds
    2  that (a) the open-ended and continuing liability imposed upon members of
    3  the design professions and  construction  contractors,  due  to  alleged
    4  deficiencies  relating to improvements to real property, has resulted in
    5  an unfair burden on such professionals and a  general  increase  in  the
    6  cost  of  both public and private improvements to real property, (b) the
    7  cost of maintaining adequate insurance coverage is so expensive  that  a
    8  significant  number of design professionals and construction contractors
    9  are forced to forego insurance coverage altogether to the  detriment  of
   10  the  public's safety and welfare. The legislature further finds that the
   11  best designed and constructed improvement is dependent upon proper main-
   12  tenance to preserve its integrity and safety and it is  thus  of  impor-
   13  tance to the public safety and welfare to ensure than an owner maintains
   14  and  repairs  that  which  is the property of the owner. The legislature
   15  therefore finds that it is necessary and desirable to establish  a  time
   16  limit  after which tort claims for personal injury or wrongful death may
   17  not be asserted against such professionals and contractors. That statute
   18  of repose set forth herein, with a claim accruing on the date  that  the
   19  improvement  was  completed,  will preserve the liability of the profes-
   20  sional and contractor during a period in which the defects, if any, will
 
        EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD05304-01-1

       S. 1696                             2
 
    1  be revealed, and  therefore  will  establish  an  appropriate  limit  on
    2  liability, while affording adequate protection to the public.
    3    § 2. Section 214-d of the civil practice law and rules is REPEALED and
    4  a new section 214-d is added to read as follows:
    5    §  214-d.  Limitations  on  certain actions against professional engi-
    6  neers, architects, landscape architects, land surveyors or  construction
    7  contractors.  1. Except as otherwise provided in subdivision two of this
    8  section, no action to recover damages for injury to the  person  or  for
    9  wrongful death or for damage to property nor any action for contribution
   10  or indemnity for damages sustained on account of such injury or wrongful
   11  death  or damage to property arising from any defect in the structure or
   12  improvement resulting from  the  design,  planning,  or  supervision  of
   13  construction of an improvement to real property shall be brought against
   14  a  professional  engineer, architect, landscape architect, land surveyor
   15  or construction contractor more than ten years after the  completion  of
   16  such improvement.
   17    2.  If, by reason of such defect, an injury to the person or an injury
   18  causing wrongful death or an injury to property occurs during the  tenth
   19  year  after  completion, an action to recover damages for such injury or
   20  wrongful death or damage to property may  be  brought  within  one  year
   21  after  the  date on which such injury occurred, but in no event may such
   22  action be brought more than eleven years after  the  completion  of  the
   23  improvement.
   24    3.  The  limitations  prescribed  by  this  section shall not apply to
   25  actions brought by one in contractual or professional privity  with  the
   26  engineer,  architect, landscape architect, land surveyor or construction
   27  contractor and shall not be asserted by way of defense by any person  in
   28  actual  possession or control as owner, tenant, or otherwise, of such an
   29  improvement at the time any defect in such improvement  constitutes  the
   30  proximate cause of the injury or death for which it is proposed to bring
   31  an action.
   32    4.  For  purposes of this section an improvement shall be deemed to be
   33  "completed" (a) when, after the improvement has been started,  a  perma-
   34  nent certificate of occupancy is issued by the municipality in which the
   35  improvement  is  situated,  if  such  is  required or is actually issued
   36  pursuant to law or regulation; or (b) if a public improvement, upon  the
   37  acceptance of the improvement by the owner, if a certificate of occupan-
   38  cy  is not required and has not been issued or (c) on the earlier of the
   39  following dates, if the provisions of paragraphs (a)  and  (b)  of  this
   40  subdivision  do not apply (i) four months prior to the last day on which
   41  mechanic's lien, resulting from work performed  or  materials  furnished
   42  with respect to such improvement, can be filed; or (ii) upon the owner's
   43  final  payment  for services rendered or materials supplied with respect
   44  to such improvement.
   45    5. An architect, engineer, landscape architect, or land surveyor shall
   46  mean a person licensed or registered as an  architect,  engineer,  land-
   47  scape  architect  or  land  surveyor,  pursuant to the provisions of the
   48  education law or any  partnership  or  corporation  lawfully  performing
   49  architectural,   engineering,   landscape   architectural  or  surveying
   50  services.
   51    § 3. Subdivisions 4 and 5 of section 214 of the civil practice law and
   52  rules, as separately amended by chapters 485   and 682 of  the  laws  of
   53  1986, are amended to read as follows:
   54    4.  an  action  to recover damages for an injury to property except as
   55  provided in [section] sections 214-c and 214-d;

       S. 1696                             3
 
    1    5. an action to recover  damages  for  a  personal  injury  except  as
    2  provided in sections 214-b, 214-c, 214-d and 215;
    3    §  4. Subdivision (h) of rule 3211 and subdivision (i) of rule 3212 of
    4  the civil practice law and rules are REPEALED.
    5    § 5. Nothing contained in this act shall  be  construed  as  affecting
    6  rights, obligations or duties arising under any contract entered into or
    7  any cause of action resulting from an injury which occurred prior to the
    8  effective date of this act.
    9    §  6.  This  act  shall  take  effect on the first day of January next
   10  succeeding the date on which it shall have become a law and shall  apply
   11  to all actions commenced on or after its effective date.

 
BILL NUMBER: S1696
 
SPONSOR: VOLKER

 
TITLE:  AN ACT to amend the Civil Practice Law and Rules, in relation
to providing a statute of limitations for certain actions against
licensed engineers and architects and to repeal section 214- d, subdivi-
sion (h) of rule 3211 and subdivision (i) of rule 3212 of the Civil
Practice Law and Rules relating thereto.
 
 
PURPOSE:  To establish time limits after which tort claims for
personal injury or wrongful death may not be asserted against design
professionals and construction contractors.
 
 
SUMMARY OF PROVISIONS:  Repeals section 214(d), subdivision (h) of
Rule 3211 and subdivision (i) of Rule 3212, and adds a new section
214(d) to the Civil Practice Law and Rules (CPLR) to establish a ten
year statute of repose for professional injury or wrongful death actions
brought against professional engineers, architects, landscape archi-
tects, land surveyors or construction contractors.  The accrual date for
the limitations period would be the date of completion of the project.
The term completion is defined in subsection 4 of the proposed statute.
The bill also includes a one year extension of time (or grace period) so
that if an injury or death occurs during the tenth year after completion
of the project the plaintiff will have an extra year to commence an
action.
 
Subsection 3 of the proposed statute provides that the affirmative
defense shall not be asserted by an architect, engineer, landscape
architect, land surveyor or construction contractor in actual possession
or control of the premises at the time an injury occurs. Subsection 3
also limits the applicability of the ten year statute of repose to third
party actions, thereby leaving in tact the existing 3 or 6 year statute
of limitations governing actions by an owner/client.
 
 
EXISTING LAW:  Under current law, a cause of action grounded on a
theory of simple negligence brought by a third party (not an owner of
building or structure) against a design professional or construction
contractor is governed by a three year statute of limitations and the
cause of action does not accrue until the injury takes place -- even if
the plaintiff is injured 20, 30, 50 or 100 years after the design
professional has completed work on the building or structure. (See Cubi-
to v. Kriesburg, 51 N.Y.2d 900, affirming 69 A.D.2d 738 (1980)).
Although there is an expedited procedure for those claims brought more
than 10 years after the completion of the design professionals' or
contractors' work, design professionals and contractors remain answera-
ble to alleged negligence claims commenced indefinitely after project
completion; many design professionals and contractors are thus forced to
carry insurance coverage even after they retire from the profession. The
insurance problem is exacerbated because insurance coverage is only
available on a "claims-made" basis rather than an "occurrence" basis --
thereby requiring the professional and contractor to maintain insurance
coverage well into retirement.
 
 
JUSTIFICATION:  When a contractor or design professional's client
(i.e, an owner of a building) sues a contractor or design professional,
the CPLR's general statute of limitation rules apply and operate to cut
off any claim within a three year or six year period. In an action
brought by an owner/client against a design professional or contractor
for damages resulting from a personal injury based on negligence, a
three year statute of limitations applies and the cause of action
accrues at the time of injury. A malpractice claim against a design
professional or contractor by an owner/client carries a three year stat-
ute of limitations and the cause of action accrues upon competition of
the project. Similarly, an owner/client claim based on breach of
contract is governed by a six year statute of limitations and the cause
of action accrues upon completion of the contractual duties.
 
Chapter 682 of the Laws of 1996, which instituted an expedited procedure
for claims against design professionals brought more than 10 years after
completion of work, was a positive, yet modest, first-step to protect
design professionals from meritless claims that are brought years, some-
times decades, after completion of a design professional's work.
 
It is still unfair, however, to hold design professionals and contrac-
tors liable for errors in design where injuries are sustained many years
after the rendition of services and where the design professional or
contractor no longer has supervision or control over the premises. This
legislation recognizes the fact that there comes a time when a structure
passes from a well-designed building to a well-maintained building. The
bill seeks to place liability on the person in the best position to
correct the defects -- the present owner of the building, and to relieve
the design professional and the contractor from the threat of perpetual
liability that exists under current law.
 
The outer limit of a ten year statute of repose was selected because a
study of insurance claims against design professionals and contractors
prepared for the American Institute of Architects demonstrated that the
majority of third party claims are brought within seven years of project
completion. More specifically, the study indicates that if a ten year
statute of repose were in place and the claims were measured from
completion of the project, 100% of all claims brought during the study
period would have been allowed. The additional one year grace period
which sets an outside limit of eleven years for those injured in the
tenth year following completion of the project, would provide additional
assurance that injured parties will have a right of recourse. These
numbers demonstrate that the problem is not the number of actual claims
brought after ten years -- the problem is the threat of potential
lawsuits which forces design professionals and contractors to carry
insurance coverage long after the project has been completed and for
years after they supposedly retire from the profession.
 
Further justification for establishing a statute of repose is that the
longer the period of time between the completion of the structure and
the injury, the greater the opportunity for some intervening negligence
to occur. The longer the owner is in possession of the improvement,
using it, altering it, and maintaining it, the more likely it is that an
injury will be the result of the owner's negligence rather than that of
the design professionals or contractors.
 
Thirty-two other states have enacted legislation establishing a statute
of repose of seven years or more with completion of the project serving
as the accrual date for the cause of action.
 
 
LEGISLATIVE HISTORY:  1999-00,S.2272/A.3474.
 
1997-98,S.5008/A.7598.
 
 
FISCAL IMPLICATIONS:  None.
 
 
EFFECTIVE DATE:  The first day of November after the date it becomes
law.