In a Construction Defect Case, the Supreme Court Again Clarifies Statute of Limitations Law

The Palisades at Fort Lee Condominium Association, Inc. v. 100 Old Palisade, LLC, ___ N.J. ___ (2017).  This opinion, by Justice Albin for a unanimous Court, involved a lengthy construction defect litigation.  The issue was when the plaintiff condominium association’s claims “accrued” for purposes of the six-year property damage statute of limitations, N.J.S.A. 2A:14-1.  That statute states that a case must be commenced within six years “after the cause of any such action shall have accrued.”

Each of the two courts below took a different approach to that question.  The Law Division granted defendants’ motion for summary judgment, finding that plaintiff’s several cases, which were filed in 2009 and 2010, were untimely because the statute of limitations began to run in 2002 when the construction was substantially complete.  The Appellate Division, in reversing that ruling, held that the statute did not begin to run until the condominium association took over control of the development in 2007 ,once 75% of the units were sold, which the law says is when an association can take control.  Since the lawsuits were filed within six years of that date, that court said, the cases were timely.

Applying de novo review to the legal issue presented, the Supreme Court rejected both of those approaches.  Justice Albin acknowledged that although the Supreme Court had “developed a body of law” regarding the application of the statute of limitations, “the differing viewpoints of the Appellate Division, trial court, and parties illustrate that the legal principles set forth in our jurisprudence are still susceptible to varying interpretations.”

The proper view, Justice Albin explained, is that because the statute of limitations has a discovery rule, the six-year period runs from the time that a plaintiff “knows or reasonably should know of an actionable claim against an identifiable defendant.”  Sometimes that trigger date is the date of substantial completion, but that is not necessarily so.  The Court thus found the Law Division’s view improper.  The Court also rejected defendants’ argument, which was that “so long as plaintiff discovered the basis for an actionable claim within six years from the date of substantial completion, plaintiff had to file within the time remaining in the limitations period.”  Offering some hypothetical examples, Justice Albin showed that “[t]hat construct yields an absurd result.”

But the Appellate Division’s view fared no better.  “The statute-of-limitations clock is not reset every time property changes hands.”  Instead, “[a] cause of action, for purposes of N.J.S.A. 2A:14-1, accrues when someone in the chain of ownership first knows or reasonably should know of an actionable claim against an identifiable party.”  So if either of the Association’s two predecessors in title (the original developer, and defendant Old Palisade, LLC, which acquired the property and converted it from a rental to a condominium) met that standard, the Association’s cases would have be untimely.

Ultimately, however, the Court could not decide whether the suits were barred.  There were not sufficient facts about who know what and when.  Accordingly, having clarified the law, the Court remanded for further proceedings, including a hearing under Lopez v. Swyer, 62 N.J. 267 (1973).

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