AREAS OF INTEREST:  Statute of Repose (RSA 508:4-b, I); products liability. 

 

LEGAL IMPACT:  The statute of repose does not apply to product liability claims against manufacturers whose products happen to be incorporated by another entity into an improvement to real estate, but it may apply to bar claims against an entity that is directly involved in the transformation of the product into an improvement that enhances the real estate’s value or use. 

 

CASE CAPTION:  Phaneuf Funeral Home v. Little Giant Pump Co., et al, No. 2011-151 (June 29, 2012)

  

FACTUAL SUMMARY:

 

          In 1998, Phaneuf Funeral Home hired Boyer Interior Design to provide interior design services and light renovation work, including installation of a wall-mounted water fountain.  Boyer purchased the fountain, which was manufactured by Little Giant Pump Company, from Elegant Earth, Inc. The fountain’s power cord was supplied by Leviton Manufacturing Company.

 

            The water fountain was designed to be hung from a wall and plugged into an existing wall power outlet.  However, Phaneuf asked Boyer to undertake a more permanent installation.  To accommodate this request Boyer designed a back plate to be affixed to the wall, attached the fountain to it, and painted it so as to blend it in with the wall.  The installation was complete in 1999.

 

            On March 17, 2007 a fire caused damage to the funeral home.  Phaneuf brought a negligence and strict product liability action against Boyer, Little Giant, Elegant and Leviton alleging that the fountain’s defective pump and power cord caused the fire.

 

            All of the defendants filed summary judgment motions based on RSA 508:4-b, I, arguing that the 8-year statute of repose applicable to damages from construction barred the claims.  The trial court granted the motions and Phaneuf appealed.

 

HOLDING: Affirmed as to Boyer; reversed as to remaining defendants.

 

          RSA 508:4-b, I provides:

Except as otherwise provided in this section, all actions to recover damages…arising out of any deficiency in the creation of an improvement to real property, including without limitation the design, labor, materials, engineering, planning, surveying, construction, observation, supervision or inspection of that improvement, shall be brought within 8 years from the date of substantial completion of the improvement, and not thereafter.

           Phaneuf conceded that the claims were not filed within 8-years of the date of substantial completion, but argued that: 1) the statute did not apply to product liability actions; 2) the fountain did not constitute an improvement to real property; and 3) the statute applies only to those who provide products and services specifically designed for the improvement into which they are incorporated.

 

            The Court noted that the statute applied to “all actions” and declined to rule that all products liability claims were categorically excluded from its coverage.  However, it held that “improvement to real property” meant an alteration to or development of real property that either enhances or is intended to enhance its value or improves or is intended to improve its use for a particular purpose.  Since the water fountain was custom-designed by Boyer to become a permanent installation in the building’s structure and was intended to improve the home’s aesthetics, it constituted an “improvement to real property”.  Therefore, Boyer was entitled to rely on the statute of repose and the claims against it were barred.

 

            The claims against the remaining defendants, however, were not encompassed by the statute.  Since the statute applies to actions arising out of a deficiency in the “creation of an improvement”, it was intended to protect only entities that were involved in some way in the transformation of a product into an enhancement to the value or use of the real estate based on their role in that transformation.  The water fountain was a “generic product” intended to be hung on a wall - it was not designed or manufactured to become an improvement to real property.  The statute of repose was not intended to protect all manufacturers whose products are fortuitously incorporated into an improvement.  Elegant, Little Giant and Leviton were not involved in the process of improving the real estate and the statute did not apply as to them. 

 

            In a footnote, the Court stated that it need not decide whether some products are so inherently related to the construction industry that their manufacturers could claim the protection of RSA 508:4-b, leaving that issue open for another case.

            http://www.courts.state.nh.us/supreme/opinions/2012/2012062phaneuf.pdf