Statute of Repose: is Equipment Installed as Part of Building Renovations Considered a "Product" or "Construction?"

Statute of Repose: is Equipment Installed as Part of Building Renovations Considered a "Product" or "Construction?"

Liability
November 1, 2018

Resolution of the question is critical to the application of product liability statutes or construction law and their often differing statutes of limitation and repose.  It was recently addressed in Puente v. Resources Conservation Co., Int'l, No. 76604-0-I, 2018 WL 5146983 (Wash. App. Oct. 22, 2018).  There, the personal representative of the estate of Javier Puente sued several parties under product lability law when he suffered fatal boric acid burns while performing maintenance on a pump system installed in a manufacturing facility.  The estate sued under product liability law, but the trial court granted summary judgment based upon a six-year statute of repose governing construction related to "any improvement upon real property."  Id. at * 1. 

The State of Washington Court of Appeals reversed, and held as follows:  "With respect to those who service or design items installed within a building, … they could easily avoid product liability law, if they desired, by simply bolting, welding the equipment or fastening it in some other manner to the building…. Mechanical fastenings may attach a machine to the building, but they do not convert production equipment into realty or integrate machines into the building structure, for they are not necessary for the building to function as a building."  Id. at * 4 (internal quotation marks and citations omitted).  While integral to the manufacturing process at issue, the faulty equipment installed in the facility was not so integrated into the facility as to render it part of the structure.  Indeed, the court held that the equipment was "simply 'house[d]' within the environmental building."

Because the court deemed the equipment unnecessary to the function of the building (unlike an HVAC system for example), it concluded that it was not "construction" and was, therefore, subject to product liability law, and not subject to a six-year statute repose that would bar the claim.  When considering actions and defenses arising out of the installation of equipment in construction projects that is not integral to building operations, counsel should carefully consider whether product liability or construction law applies in each jurisdiction.  Varying applications will have significant effect on the law governing particular claims and defenses.