85 N.Y.2d 995 (1995)

In construction contracts containing both an arbitration clause and a statute of limitations clause tied to substantial completion, a certificate of suitability and acceptance can serve as a substitute for a certificate of substantial completion, triggering the statute of limitations, even if a formal certificate of substantial completion was never issued.

Summary

Oriskany Central School District contracted with Edmund J. Booth Architects for reroofing services. The contract included an arbitration clause for disputes, barred if legal proceedings would be time-barred, with the statute of limitations commencing at substantial completion. The school district sued the architect for breach of contract due to latent defects more than six years after accepting the work, arguing no formal certificate of substantial completion existed. The Court of Appeals held that the signed Certificate of Suitability and Acceptance of Building served as a substitute, triggering the statute of limitations, thus barring the action. CPLR 205(a) was inapplicable because the original action was time-barred.

Facts

1. On June 1, 1984, Oriskany Central School District (plaintiff) contracted with Edmund J. Booth Architects (defendant) for architectural services for reroofing two schools.
2. The contract contained an arbitration clause for disputes, but barred demands made after the statute of limitations for legal proceedings had expired.
3. Paragraph 11.3 of the contract stated the statute of limitations would begin running no later than the date of substantial completion.
4. The architect never issued a formal Certificate of Substantial Completion.
5. On December 18, 1985, both parties signed a “Certificate of Suitability and Acceptance of Building for Pupil Occupancy,” stating the project was completed per drawings and specifications.
6. On January 9, 1986, the architect signed an Application and Certificate for Payment, indicating work completion and final payment eligibility.
7. On January 27, 1986, the Board of Education accepted the building for pupil occupancy.
8. On April 8, 1992, the school district sued the architect for breach of contract, alleging latent roof defects.

Procedural History

1. April 8, 1992: School District filed a lawsuit against the Architect for breach of contract.
2. April 28, 1992: Architect answered, asserting a statute of limitations defense.
3. July 8, 1992: Architect moved to dismiss, arguing arbitration was the proper remedy.
4. July 22, 1992: Architect requested the motion be converted to compel arbitration.
5. August 18, 1992: School District cross-moved to dismiss the statute of limitations defense.
6. February 22, 1993: Architect formally demanded arbitration.
7. July 12, 1993: Supreme Court stayed the action and directed arbitration, finding the statute of limitations hadn’t expired.
8. Appellate Division reversed, citing the Certificate of Suitability and acceptance date, deeming the action time-barred.
9. The Court of Appeals granted leave to appeal.

Issue(s)

1. Whether the “Certificate of Suitability and Acceptance of Building for Pupil Occupancy” can substitute for a formal Certificate of Substantial Completion to trigger the statute of limitations in a construction contract with an arbitration clause.
2. Whether CPLR 205(a) applies to revive a claim that was already time-barred.

Holding

1. Yes, because the Certificate of Suitability and Acceptance served as an appropriate substitute, as the work was substantially complete according to the contract documents.
2. No, because CPLR 205(a) only applies to timely actions dismissed without prejudice, not to actions already barred by the statute of limitations.

Court’s Reasoning

The Court reasoned that while no formal Certificate of Substantial Completion was issued, the signed “Certificate of Suitability and Acceptance of Building for Pupil Occupancy” served as a valid substitute. This certificate indicated the project was completed according to the drawings and specifications. The Court referred to paragraph 8.1.3 of the General Conditions, defining substantial completion as when “construction is sufficiently complete…so the Owner can occupy or utilize the Work…for the use for which it is intended.” Since the school district accepted the building and occupied it for its intended purpose, the work was deemed substantially complete. The court emphasized that both parties signed the Certificate of Suitability and Acceptance, and the architect also signed an Application and Certificate for Payment, indicating completion. Because the lawsuit was filed more than six years after this date, it was time-barred. The Court also dismissed the school district’s reliance on CPLR 205(a), which provides a six-month extension to refile a dismissed action, stating that this provision does not apply when the original action was already barred by the statute of limitations. The agreement between the parties demonstrated their intent to start the statute of limitations running upon substantial completion, regardless of the formal issuance of a specific certificate.