The Palisades at Fort Lee Condominium Association, Inc. v. 100 Old Palisades, LLC

SYLLABUS
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)
The Palisades at Fort Lee Condominium Association, Inc. v. 100 Old Palisade, LLC
(A-101/102/103/104-15) (077249)
Argued April 25, 2017 -- Decided September 14, 2017
ALBIN, J., writing for the Court.
Plaintiff, The Palisades at Fort Lee Condominium Association, Inc., filed lawsuits alleging that defendants,
the general contractor and three subcontractors, defectively constructed a building complex now under the
Condominium Association’s control. The issue is whether plaintiff filed the lawsuits before the expiration of the
statute of limitations.
In December 1999, Palisades A/V Acquisitions Co., LLC retained AJD Construction Co., Inc. to serve as
the general contractor on the project. AJD then hired various subcontractors, including Forsa Construction, Inc.,
Benfatto Masonry, Inc., and Luxury Floors, Inc. The chief architect on the project certified that The Palisades was
“substantially complete” as of May 1, 2002. For the next two years, A/V rented units in The Palisades complex. In
June 2004, A/V sold The Palisades to 100 Old Palisade, LLC (Old Palisade), which converted the rental apartments
and units into condominiums. Old Palisade retained Ray Engineering, Inc. to inspect the common elements of the
property. Ray Engineering issued a report dated October 1, 2004 (the Ray Report), stating: “Generally, the
structure of the building, townhomes and parking deck appeared to be in good condition.”
Old Palisade did not relinquish control of the Condominium Association to the unit owners until seventy-
five percent of The Palisades’ units had been sold. That occurred in July 2006. The Condominium Association then
retained the Falcon Group to inspect The Palisades’ common elements. The Falcon Group issued a report on June
13, 2007 (the Falcon Report), detailing construction-related defects.
Based on the Falcon Report, the Condominium Association filed a series of complaints in the Law Division
that generally allege that defendants breached express and implied warranties of good workmanship, habitability,
and merchantability and performed their duties negligently. Defendants moved for summary judgment, alleging that
plaintiff filed its claims beyond the six-year statute of limitations, N.J.S.A. 2A:14-1.
The trial court granted defendants’ motions and dismissed plaintiff’s complaints as time-barred. The court
found that the statute of limitations began to run upon substantial completion of The Palisades—May 1, 2002. In the
trial court’s view of the discovery rule, the Condominium Association had sufficient time within the six-year
limitations period to bring its claims against defendants.
A panel of the Appellate Division rejected the trial court’s conception of how the discovery rule operates in
construction-defect cases. According to the panel, the “causes of action against defendant contractors did not accrue
until June 13, 2007, when the unit-owner-controlled Board received Falcon’s report.” The panel concluded that
plaintiff filed its complaints against defendants within the six-year period, which commenced on June 13, 2007.
The Court granted defendants’ petitions for certification. 227 N.J. 154 (2016); 227 N.J. 151 (2016); 227
N.J. 151 (2016); 227 N.J. 145 (2016).
HELD: A construction-defect cause of action accrues at the time that the building's original or subsequent owners first
knew or, through the exercise of reasonable diligence, should have known of the basis for a claim. From that point, the
plaintiff has six years to file a claim. A subsequent owner stands in no better position than a prior owner in calculating
the limitations period. If a prior owner knew or reasonably should have known of a basis for a construction-defect
action, the limitations period began at that point. Here, the Court cannot determine when the accrual clock commenced
for each defendant based on the record before it and accordingly remands to the trial court.
1. N.J.S.A. 2A:14-1 provides that “[e]very action at law for . . . any tortious injury to real . . . property . . . shall be
commenced within 6 years next after the cause of any such action shall have accrued.” In construing accrual
statutes, the Court has eschewed “a rigid and automatic adherence to a strict rule of law” that would produce unjust
results. Lopez v. Swyer, 62 N.J. 267, 273-74 (1973). Under the discovery rule, “in an appropriate case a cause of
action will be held not to accrue until the injured party discovers, or by an exercise of reasonable diligence and
intelligence should have discovered that he may have a basis for an actionable claim.” Id. at 272. (pp. 17-20)
2. In Caravaggio v. D’Agostini, 166 N.J. 237, 246, 248 (2001), the Court gave the plaintiff the benefit of the full
two-year limitations period from the date of accrual, even though she had over a year-and-one-half remaining on the
statute of limitations if the starting date were fixed at the time of the allegedly negligent operation. Russo Farms v.
Vineland Board of Education, 144 N.J. 84, 115 (1996), stands for the proposition that in a construction-defect case,
the date on which an architect certifies to the owner that the structure is substantially complete typically will start the
running of the six-year property-tort statute of limitations, N.J.S.A. 2A:14-1, unless, despite the exercise of
reasonable diligence, the plaintiff is unaware of an actionable claim. Importantly, the Court in Russo Farms gave
the plaintiffs the benefit of the full six-year limitations period, notwithstanding that the plaintiffs would have had
four years to file their claims if the clock began at the time of substantial completion. Russo Farms and Caravaggio
applied the same discovery-rule template to different accrual statutes. The Court therefore rejects defendants’
argument 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. (pp. 20-27)
3. The Court also rejects the approach taken by the Appellate Division—that the six-year statute of limitations could
not accrue before plaintiff gained full control of the Condominium Association. The statute-of-limitations clock is
not reset every time property changes hands. However, if the original owner was unaware of an actionable claim,
despite the exercise of reasonable diligence, then the accrual clock begins when a subsequent owner knew or
reasonably should have known of the existence of the claim. 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. A condominium association is not exempted from this long-standing rule. (pp. 27-30)
4. Based on the record, the Court cannot perform the accrual calculation because it requires findings of fact to
determine when A/V Acquisitions, Old Palisade, or the Condominium Association—all entities in the chain of
ownership—first knew or, through the exercise of reasonable diligence, should have known of a cause of action
against each defendant. Whether the accrual clock began when the Ray Report or the Falcon Report issued or at
some time before, after, or in between requires a detailed inquiry. To answer those questions, the trial court must
conduct a Lopez hearing and examine the documentary evidence and deposition transcripts presented by the parties
and, in its discretion, take testimony from relevant witnesses. (pp 30-32)
5. The Legislature enacted the statute of repose in construction-defect cases, N.J.S.A. 2A:14-1.1(a), to insulate
construction professionals from indefinite liability through operation of the discovery rule. The ten-year repose
statute begins at the date of a project’s substantial completion and sets the outer limit for the filing of a construction-
defect claim. The complaints against all defendants were filed within this ten-year period. Therefore, N.J.S.A.
2A:14-1.1(a) does not stand as a bar to plaintiff’s claims. (pp. 32-34)
6. In summary, the date that a structure is deemed substantially complete oftentimes is when a cause of action
accrues. But many construction defects will not be obvious immediately. In such instances, a cause of action does
not accrue until the plaintiff knows or, through the exercise of reasonable diligence, should know of a cause of
action against an identifiable defendant. A plaintiff who is a successor in ownership takes the property with no
greater rights than an earlier owner. If the earlier owner knew or should have known of a cause of action against an
identifiable defendant, the accrual clock starts then. The determination of when a claim accrued ordinarily should be
made at a Lopez hearing. At the hearing, the plaintiff will bear the burden of proving that the claim accrued at a
time after a project’s substantial completion. (pp. 34-35)
The judgment of the Appellate Division is REVERSED. The matter is REMANDED to the trial court for
proceedings consistent with this opinion.
CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, PATTERSON, FERNANDEZ-VINA,
SOLOMON, and TIMPONE join in JUSTICE ALBIN’s opinion.
2
SUPREME COURT OF NEW JERSEY
A-101/102/103/104
September Term 2015
077249
THE PALISADES AT FORT LEE
CONDOMINIUM ASSOCIATION, INC.,
Plaintiff-Respondent,
v.
100 OLD PALISADE, LLC, CRESCENT
HEIGHTS OF AMERICA, INC., CRESCENT
HEIGHTS ACQUISITIONS, LLC, 100 OLD
PALISADE HOLDINGS, LLC, 100 OLD
PALISADE HOLDINGS II, LLC, 100 OLD
PALISADE HOLDINGS III, LLC, EREZ
BASHARI, PEIRU WEN, LENNY WARSHAW,
NISSIM LANCIANO, SHARON
CHRISTENBURY, JOSEPH ZDON, PABLO
DE ALMAGRO, EPHRAIM BASHARI, SONNY
KAHN, individually and as Trustee
of the SK Business Trust, SK
BUSINESS TRUST, RUSSELL W. GALBUT,
individually and as Trustee of the
RF Business Trust, RF BUSINESS
TRUST, BRUCE A. MENIN,
individually and as Trustee of the
MENIN 1998 FAMILY TRUST, MENIN
1998 FAMILY TRUST, F&G MECHANICAL
CORP., MANNIX EXTERIOR WALL
SYSTEMS, INC., SOUTH SHORE
CONTRACTING, INC., PATWOOD
CONTRACTING CO., INC., d/b/a
PATWOOD ROOFING, MTA CORP., MAARV
WATERPROOFING, B&B IRON WORKS,
INC., RAY ENGINEERING, INC.,
STEVEN W. RAY, P.E., METRO GLASS,
INC., and ROMITCH CO.,
Defendants-Appellants,
and
AJD CONSTRUCTION CO., INC., LUXURY
1
FLOORS, INC., BENFATTO MASONRY,
INC., and FORSA CONSTRUCTION,
INC.,
Defendants-Appellants.
100 OLD PALISADE, LLC, CRESCENT
HEIGHTS OF AMERICA, INC., CRESCENT
HEIGHTS ACQUISITIONS, LLC, 100 OLD
PALISADE HOLDINGS, LLC, 100 OLD
PALISADE HOLDINGS II, LLC, 100 OLD
PALISADE HOLDINGS III, LLC, EREZ
BASHARI, PEIRU WEN, LENNY WARSHAW,
NISSIM LANCIANO, SHARON
CHRISTENBURY, JOSEPH ZDON, PABLO
DE ALMAGRO, EPHRAIM BASHARI, SONNY
KAHN, individually and as Trustee
of the SK Business Trust, SK
BUSINESS TRUST, RUSSELL W. GALBUT,
individually and as Trustee of the
RF Business Trust, RF BUSINESS
TRUST, BRUCE A. MENIN,
individually and as Trustee of the
MENIN 1998 FAMILY TRUST, MENIN
1998 FAMILY TRUST,
Defendants/Third-Party
Plaintiffs,
v.
APPLIED PROPERTY MANAGEMENT CO.,
INC., a/k/a APPLIED DEVELOPMENT
COMPANY, IRONSTATE DEVELOPMENT
COMPANY, a/k/a IRONSTATE
DEVELOPMENT, LLC, IRONSTATE
HOLDINGS, LLC, COSTAS KONDYLIS &
ASSOCIATES, P.C., COSTAS KONDYLIS
& PARTNERS, LLP, CONSTANTINE A.
KONDYLIS, a/k/a COSTAS KONDYLIS,
GOLDSTEIN ASSOCIATES CONSULTING
ENGINEERS, P.C.,
Defendants/Third-Party
Defendants.
2
AJD CONSTRUCTION CO., INC.,
Third-Party Plaintiff,
v.
PATWOOD CONTRACTING CO., INC.,
d/b/a PATWOOD ROOFING, MTA CORP.,
MAARV WATERPROOFING, INC.,
BENFATTO CONSTRUCTION CORP., B&B
IRON WORKS, INC.,
Third-Party Defendants.
SOUTHSHORE CONTRACTING, INC.,
Third-Party Plaintiff,
v.
ARQ PAINTING & CONTRACTING, INC.,
Third-Party Defendant.
APPLIED PROPERTY MANAGEMENT CO.,
INC., THE PALISADES A/V COMPANY,
LLC, APPLIED PALISADES, LLC,
APPLIED DEVELOPMENT COMPANY, INC.,
improperly pleaded as d/b/a
APPLIED DEVELOPMENT COMPANY,
IRONSTATE DEVELOPMENT, LLC,
IRONSTATE HOLDINGS, LLC,
Fourth-Party Plaintiffs,
v.
WENTWORTH PROPERTY MANAGEMENT
CORPORATION, WORTHMORE
CONSTRUCTION & MAINTENANCE CO.,
INC.,
Fourth-Party Defendants.
3
Argued April 25, 2017 – Decided September 14, 2017
On certification to the Superior Court,
Appellate Division.
Eric S. Schlesinger argued the cause for
appellant Forsa Construction (Golden,
Rothschild, Spagnola, Lundell, Boylan &
Garubo, attorneys; Eric S. Schlesinger and
Russ M. Patane, of counsel and on the
briefs, and Francesca E. Cheli, on the
briefs).
Stephen C. Cahir argued the cause for
appellant Luxury Floors, Inc. (Law Office of
William E. Staehle, attorneys; Stephen C.
Cahir, on the brief).
Mark D. Shifton argued the cause for
appellant Benfatto Construction Corp.
(Seiger Gfeller Laurie, attorneys; Mark D.
Shifton of counsel and on the briefs, and
Chester D. Ostrowski, on the brief).
John H. Osorio argued the cause for
appellant AJD Construction Co., Inc.
(Marshall Dennehey Warner Coleman & Goggin,
attorneys; John H. Osorio, Walter F.
Kawalec, III, and Pauline E. Tutelo on the
briefs).
Raymond A. Garcia of the Connecticut bar,
admitted pro hac vice, argued the cause for
respondent (Lum, Drasco & Positan and Garcia
& Milas, attorneys; Paul A. Sandars, III, of
counsel and on the brief, and Raymond A.
Garcia, and Nicole Liguori Micklich, of the
Connecticut and Rhode Island bars, on the
brief).
Gene Markin argued the cause for amicus
curiae Community Association Institute
(Stark & Stark, attorneys; Gene Markin and
John Randy Sawyer, on the brief).
4
Michael S. Zicherman submitted a brief on
behalf of amicus curiae Associated
Construction Contractors of New Jersey
(Peckar & Abramson, attorneys; Charles F.
Kenny, of counsel, and Michael S. Zicherman,
of counsel and on the brief).
JUSTICE ALBIN delivered the opinion of the Court.
Plaintiff, The Palisades at Fort Lee Condominium
Association, Inc., filed lawsuits alleging that defendants, the
general contractor and three subcontractors, defectively
constructed a building complex that is now under the Condominium
Association’s control. The issue before us is whether plaintiff
filed the lawsuits before the expiration of the statute of
limitations.
N.J.S.A. 2A:14-1 is a statute of limitations generally
governing tort-based property-damage claims. Under that
statute, a construction-defect action must be commenced within
six years “after the cause of any such action shall have
accrued.” Ibid. The heart of the controversy in this case is
the point at which plaintiff’s causes of action “accrued.”
The trial court determined that the six-year statute of
limitations began to run in May 2002, when the building was
substantially complete. Applying its conception of the
discovery rule, the court found that the building’s owners knew
or reasonably should have known of any defects within the six-
year period and therefore should have filed the lawsuits by May
5
2008. Because the Condominium Association did not initiate the
first lawsuit until after that date, the court dismissed the
actions against all defendants.
The Appellate Division reversed, concluding that the
Condominium Association’s claims accrued in June 2007, when it
undertook full unit-owner control of the building and became
“reasonably aware” of actionable claims of construction defects
based on the report of a construction expert it had retained.
The Condominium Association filed all complaints against
defendants within six years of that date.
We now hold that neither the trial court nor the Appellate
Division applied the correct legal standard for determining when
the construction-defect actions accrued pursuant to N.J.S.A.
2A:14-1. Although N.J.S.A. 2A:14-1’s six-year statute of
limitations typically commences upon substantial completion of a
structure, the discovery rule applies to the accrual of a claim
under N.J.S.A. 2A:14-1. Under that rule, the limitations clock
does not commence until a plaintiff is able to discover, through
the exercise of reasonable diligence, the facts that form the
basis for an actionable claim against an identifiable defendant.
Caravaggio v. D’Agostini, 166 N.J. 237, 246 (2001).
Over time, as in this case, ownership of a building may
change hands. A construction-defect lawsuit must be filed
within six years from the time that the building’s original or
6
subsequent owners first knew or, through the exercise of
reasonable diligence, should have known of the basis for a cause
of action. A subsequent owner stands in no better position than
a prior owner in calculating the limitations period. If a prior
owner knew or reasonably should have known of a basis for a
construction-defect action, the limitations period began at that
point.
In light of the legal paradigm just articulated, we cannot
determine when the accrual clock commenced for each defendant
based on the record before us. Accordingly, we remand to the
trial court to conduct a Lopez1 hearing and to make findings of
fact to settle that issue.
I.
A.
The Palisades is a residential building complex located in
Fort Lee, New Jersey. The centerpiece of The Palisades is a
forty-one story high-rise consisting of a thirty-story
residential tower set atop an eleven-story parking garage.
Within The Palisades complex are mid-rise apartments, townhomes,
and various recreational facilities.
Palisades A/V Acquisitions Co., LLC (A/V Acquisitions)
developed The Palisades project on property that it had
1 Lopez v. Swyer, 62 N.J. 267 (1973).
7
acquired. In December 1999, A/V Acquisitions retained AJD
Construction Co., Inc. (AJD) to serve as the general contractor
on the project. AJD then hired various subcontractors,
including Forsa Construction, Inc., Benfatto Masonry, Inc., and
Luxury Floors, Inc., to perform specialized work on the project.
Forsa Construction built the high-rise tower and garage,
Benfatto Masonry constructed the exterior walls, and Luxury
Floors installed flooring throughout the common areas. The
chief architect on the project certified that The Palisades was
“substantially complete” as of May 1, 2002, the date on which
certificates of occupancy had been issued for various floors and
units.
For the next two years, A/V Acquisitions rented apartments
and units in The Palisades complex. In June 2004, A/V
Acquisitions sold The Palisades to 100 Old Palisade, LLC (Old
Palisade),2 which converted the rental apartments and units into
condominiums pursuant to the Condominium Act, N.J.S.A. 46:8B-1
to -38. As part of the condominium conversion process, Old
Palisade retained Ray Engineering, Inc. to inspect the common
elements of the property. Ray Engineering issued a report dated
2 The parties refer to Old Palisade, Crescent Heights
Acquisitions, Inc., and Crescent Heights of America, Inc.
interchangeably. These companies appear to be part of the same
corporate family. For the sake of consistency and clarity, we
use only the name Old Palisade.
8
October 1, 2004 (the Ray Report), stating: “Generally, the
structure of the building, townhomes and parking deck appeared
to be in good condition.” The report noted the presence of
“some spalling of concrete” and “some sporadic cracking of the
concrete” in the parking deck. The spalling and cracking,
however, did “not appear to be a structural concern at the
present time.”
In converting The Palisades to a condominium form of
ownership, Old Palisade attached the Ray Report to its public
offering statement on January 27, 2005, and to the master deed.
According to the master deed, the condominium association would
be responsible for the administration and maintenance of the
building’s common areas and facilities.
Although The Palisades at Fort Lee Condominium Association,
Inc. (the Condominium Association or plaintiff) was incorporated
on February 23, 2005, Old Palisade did not relinquish control of
the Condominium Association until seventy-five percent of The
Palisades’ units had been sold. See N.J.S.A. 46:8B-12.1(a)
(“Unit owners . . . shall be entitled to elect all of the
members of the governing board . . . upon the conveyance of 75%
of the units in a condominium.”). That occurred in July 2006.
At that point, the unit owners took full control of the
Condominium Association.
The unit-owner-controlled Condominium Association then
9
retained the Falcon Group, an engineering and architectural
services firm, to inspect The Palisades’ common elements for any
construction defects. The Falcon Group issued a report on June
13, 2007 (the Falcon Report), detailing construction-related
defects in the building’s exterior walls, roofing, concrete
flooring, and plumbing, and in other areas, such as the parking
garage and landscaping.
B.
Based on the Falcon Report, the Condominium Association
filed a series of complaints in the Superior Court, Law
Division, including one against defendants AJD and Luxury Floors
on March 12, 2009, one against Benfatto Masonry on April 16,
2009, and another against Forsa Construction on September 7,
2010.3 The complaints generally allege that defendants breached
express and implied warranties of good workmanship,
habitability, and merchantability and performed their duties
negligently.
At the completion of discovery, AJD, Luxury, Benfatto, and
Forsa (collectively defendants) moved for summary judgment,
alleging that plaintiff filed its claims beyond the six-year
statute of limitations, N.J.S.A. 2A:14-1.
3 Plaintiff filed an initial complaint followed by nine amended
complaints against the parties whose names appear on the caption
of this case. The plaintiff’s actions against all parties,
other than defendants, have been resolved.
10
C.
The trial court granted defendants’ motions and dismissed
plaintiff’s complaints as time-barred. The court found that the
six-year statute of limitations governing construction-defect
claims, N.J.S.A. 2A:14-1, began to run upon substantial
completion of The Palisades complex -- May 1, 2002. The court
recognized that, under the discovery rule, “a cause of action
will be held not to accrue until the injured party discovers, or
by an exercise of reasonable diligence and intelligence should
have discovered that he may have a basis for an actionable
claim,” quoting Belmont Condominium Ass’n, Inc. v. Geiberl, 432
N.J. Super. 52, 83 (App. Div.), certif. denied, 216 N.J. 366
(2013). The court, however, held that so long as “the plaintiff
has sufficient knowledge of its claim and there remains a
reasonable time under the applicable limitations period to
commence a cause of action, the action will be time barred if
not filed within that remaining time,” citing Torcon, Inc. v.
Alexian Brothers Hospital, 205 N.J. Super. 428, 437 (Ch. Div.
1985).
The court noted that the October 2004 Ray Report, appended
to Old Palisade’s public offering statement, “outlined a number
of [construction] deficiencies” and that, “[e]ven assuming that
the [Condominium] Association was not reasonably aware of the
defects until [the issuance of the Falcon Report in June 2007],
11
there was still an entire year left in the statute of
limitations for the Association to bring a claim.” In short, in
the trial court’s view of the discovery rule, the Condominium
Association had sufficient time within the six-year limitations
period to bring its claims against defendants.
The court also rejected plaintiff’s argument that its
causes of action did not accrue until the formation of the
Condominium Association. The court concluded that defendants
“could not have reasonably anticipated that they would be liable
in perpetuity . . . for alleged construction defects that were
previously known or should have been known” to The Palisades’
prior owners.
The court denied plaintiff’s motion for reconsideration.
D.
In an unpublished per curiam opinion, a panel of the
Appellate Division reversed the trial court’s order dismissing
plaintiff’s claims on statute-of-limitations grounds. The panel
rejected the trial court’s conception of how the discovery rule
operates in construction-defect cases, asserting that “by its
plain terms, [N.J.S.A. 2A:14-1] indicates that a claimant would
have the benefit of the full limitations period to file its
complaint after the cause of action has accrued.” The panel
found that “it would be unreasonable for the statute of
limitations to run on the claim of a condominium association,
12
unless a unit owner, or group of unit owners, took on that
responsibility.” The panel therefore determined that the
Condominium Association’s “causes of action did not accrue until
the unit owners took full control of the Association’s governing
Board, and the Board had sufficient facts upon which to assert
actionable claims against defendant contractors.”
According to the panel, the Condominium Association did not
have sufficient facts to assert actionable claims against
defendants until its receipt of the Falcon Report, which
identified, in greater detail than the Ray Report, construction
defects in The Palisades. Therefore, the “causes of action
against defendant contractors did not accrue until June 13,
2007, when the unit-owner-controlled Board received Falcon’s
report.” The panel concluded that plaintiff filed its
complaints against defendants within the six-year limitations
period, which commenced on June 13, 2007.
Last, the panel dismissed defendants’ assertions that such
an outcome would render contractors “forever liable.” It
observed that N.J.S.A. 2A:14-1.1(a), the statute of repose,
limits to a ten-year period, starting at a project’s substantial
completion, the liability of contractors and therefore restricts
“an expansive application of the discovery rule.”
This Court granted defendants’ petitions for certification.
Palisades at Fort Lee Condo. Ass’n v. 100 Old Palisade, LLC, 227
13
N.J. 154 (2016); Palisades at Fort Lee Condo. Ass’n v. 100 Old
Palisade, LLC, 227 N.J. 151 (2016); Palisades at Fort Lee Condo.
Ass’n v. 100 Old Palisade, LLC, 227 N.J. 151 (2016); Palisades
at Fort Lee Condo. Ass’n v. 100 Old Palisade, LLC, 227 N.J. 145
(2016). This Court also granted the motions of Associated
Construction Contractors and Community Association Institute to
participate as amici curiae.
II.
A.
Defendants, collectively or individually, submit that the
Appellate Division erred in concluding that the statute of
limitations did not begin to run until after The Palisades’ unit
owners took full control of the Condominium Association.
Defendants assert that, for purposes of determining the accrual
date of a construction-defect case, the purchaser of a building
stands in the shoes of the prior building owners. Under
defendants’ construct, the original owner, A/V Acquisitions,
which knew or reasonably should have known of alleged defects by
the time of the Ray Report, conveyed the rights it possessed --
and no greater rights -- to subsequent owners in the chain of
ownership. Defendants thus argue that the Condominium
Association is not entitled to a reset of the statute of
limitations based on when it took ownership responsibility of
The Palisades.
14
Defendants also agree with the trial court that the
discovery rule -- as a rule of equity -- does not apply if a
plaintiff knows or has reason to know of a cause of action
against an identifiable defendant within the limitations period.
From this perspective, the discovery rule is not applicable
“until after the normal period of limitations runs.” Thus,
defendants argue that plaintiff had a year left to file its
claims after receipt of the Falcon Report and no excuse for not
taking action until almost two years afterwards.
Last, defendants contend that the Appellate Division
wrongly held that the ten-year statute of repose, N.J.S.A.
2A:14-1.1(a), sets the outer limit for all construction-defect
actions. Defendants point out that the repose statute only bars
construction claims “arising out of the defective and unsafe
condition of an improvement to real property.” N.J.S.A. 2A:14-
1.1(a) (emphasis added). Defendants reason that under the
Appellate Division’s construct, architects and contractors have
limitless liability for construction defects that do not raise
safety concerns.
Amicus curiae Associated Construction Contractors advances
similar arguments.
B.
Plaintiff submits that the statute of limitations did not
begin to run on the Condominium Association’s claims until the
15
unit owners took control of the governing board. Plaintiff
insists that the prior owners’ knowledge of construction defects
on the property, or their failure to exercise reasonable
diligence in discovering those defects, did not trigger the
limitations period against the Condominium Association.
Plaintiff contends that it did not have sufficient knowledge to
assert adequate claims against defendants until June 13, 2007 --
the day it received the Falcon Report, which identified
construction defects not mentioned in the earlier Ray Report.
From that point, plaintiff reasons, its causes of action accrued
and the six-year limitations period commenced. Last, plaintiff
asserts that the ten-year statute of repose protects contractors
from potential liability in perpetuity.
Amicus curiae Community Association Institute echoes many
of these arguments.
III.
Our primary task is to determine whether plaintiff filed
its construction-defect claims within the six-year limitations
period allowed by N.J.S.A. 2A:14-1. To resolve that issue, we
must decide when plaintiff’s causes of action “accrued” for
purposes of N.J.S.A. 2A:14-1. Accrual of an action is the
trigger that commences the statute-of-limitations clock.
We are not writing on a blank slate in construing the
statutory term “accrued.” Although we have developed a body of
16
jurisprudence on this subject, 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.
Determining the meaning of the statutory word “accrued” as
well as the metes and bounds of the discovery rule are matters
of law. We review issues of law de novo, according no deference
to the interpretative analysis of either the Appellate Division
or trial court, except as we are persuaded by the reasoning of
those courts. Zabilowicz v. Kelsey, 200 N.J. 507, 512 (2009);
see also Manalapan Realty, L.P. v. Twp. Comm. of Township of
Manalapan, 140 N.J. 366, 378 (1995) (“A trial court’s
interpretation of the law and the legal consequences that flow
from established facts are not entitled to any special
deference.”).
A.
We begin our analysis with the statute of limitations that
generally governs tort-based property-damage claims, including
plaintiff’s construction-defect lawsuits. N.J.S.A. 2A:14-1
provides:
Every action at law for trespass to real
property, for any tortious injury to real or
personal property, for taking, detaining, or
converting personal property, for replevin of
goods or chattels . . . shall be commenced
within 6 years next after the cause of any
such action shall have accrued.
17
[(emphasis added).]
The Legislature did not define “accrued” in N.J.S.A. 2A:14-1 or
other similar statutes of limitations and therefore left to the
judiciary the role of infusing this term with meaning. See
Rosenau v. City of New Brunswick, 51 N.J. 130, 137 (1968).4
Statutes of limitations, by their nature, are intended to
compel plaintiffs to file their lawsuits within a prescribed
time to allow defendants a fair opportunity to respond and
safeguard their interests. Gantes v. Kason Corp., 145 N.J. 478,
486 (1996). Such statutes encourage diligence and penalize
dilatoriness by allowing the dismissal of stale claims. Ibid.
In construing accrual statutes, however, we have eschewed “a
rigid and automatic adherence to a strict rule of law” that
would produce unjust results. Lopez, supra, 62 N.J. at 273-74.
That is because, in the realm of tort law, a plaintiff may not
realize immediately that he suffered a personal injury or
property damage or know that he has a cause of action against an
identifiable wrongdoer. See Kendall v. Hoffman-La Roche, Inc.,
209 N.J. 173, 192 (2012); see also Beauchamp v. Amedio, 164 N.J.
4 The personal-injury statute of limitations is also an accrual
statute and has been the subject of repeated judicial
interpretation. N.J.S.A. 2A:14-2(a) provides: “Every action at
law for an injury to the person caused by the wrongful act,
neglect or default of any person . . . shall be commenced within
two years next after the cause of any such action shall have
accrued.” (emphasis added).
18
111, 117 (2000); Baird v. Am. Med. Optics, 155 N.J. 54, 65-66
(1998).
Equitable principles -- principles that comport with
notions of fundamental fairness -- govern the accrual date of a
legal claim. See Caravaggio, supra, 166 N.J. at 245. The
trigger point for the start of a cause of action under an
accrual statute is when “the facts presented would alert a
reasonable person, exercising ordinary diligence, that he or she
was injured due to the fault of another.” Id. at 246. This
simple elucidation of our law has been the product of decades of
evolving jurisprudence.
More than fifty years ago, in Fernandi v. Strully, we
recognized that equitable principles applied to the accrual of a
personal-injury claim governed by a two-year statute of
limitations. 35 N.J. 434, 439 (1961). In that case, based on
an x-ray examination, the plaintiff discovered that the
physicians, who had operated on her three years earlier, had
left a wing nut in her abdomen during surgery. Id. at 435-36.
The plaintiff filed her negligence claim one year later -- four
years after the operation. Id. at 436. We held that because
the plaintiff’s “cause of action was unknown and unknowable to
her” until discovery of the wing nut on the x-ray, her claim did
not accrue until that point. Id. at 451.
In Lopez, supra, we called the equitable approach taken in
19
Fernandi the “discovery rule.” 62 N.J. at 273. Under that
rule, “in an appropriate case a cause of action will be held not
to accrue until the injured party discovers, or by an exercise
of reasonable diligence and intelligence should have discovered
that he may have a basis for an actionable claim.” Id. at 272.
The qualifier to the discovery rule was how to determine the
“appropriate case” for its application. The Court listed a
number of non-exhaustive factors, such as “the nature of the
alleged injury, the availability of witnesses and written
evidence, the length of time that has elapsed since the alleged
wrongdoing, whether the delay has been to any extent deliberate
or intentional, [and] whether the delay may be said to have
peculiarly or unusually prejudiced the defendant.” Id. at 276.
Later, in Fox v. Passaic General Hospital, the Court
refined Lopez’s language qualifying the discovery rule, stating
that the “rule should be as simple and uncomplicated as is
consistent with the achievement of justice.” 71 N.J. 122, 125
(1976). The Court expressed concerns about the difficulties
that trial judges would face in deciding the “reasonableness” of
time left for a plaintiff to file a claim when the discovery
occurred within the two-year limitations period. Id. at 126.
To eliminate uncertainty in calculating the limitations period,
the Court maintained that “the plaintiff should normally have
the benefit of the legislative policy determination that he may
20
institute his action at any time within two years from the date
of such accrual.” Ibid. (emphasis added). The rationale for
that approach “is that the cause of action does not ‘accrue’
until discovery.” Id. at 127. Thus, Fox made clear that the
accrual clock generally does not begin to tick until, through
the exercise of reasonable diligence, the plaintiff discovers --
whether inside or outside the typical two-year limitations
period -- the basis for an actionable claim. See id. at 126-27.
Having set forth that straightforward standard, the Fox
Court added some equitable qualifiers:
[I]f a defendant can establish (a) that the
lapse of time between the expiration of two
years after the actionable event and the date
of institution of the suit “peculiarly or
unusually prejudiced the defendant[,]” and (b)
that there was a reasonable time for plaintiff
to institute his action between discovery of
the cause of action and expiration of said two
years after the actionable event, the cause of
action may be dismissed on limitations
grounds.
[Id. at 128 (citation omitted).]
Those added conditions, like the earlier qualifying language in
Lopez, apparently confounded Fox’s goal of adopting “a simple
and uncomplicated” formulation of when a cause of action
accrued. See id. at 125. Fox’s foremost principle -- that the
plaintiff is normally entitled to the full limitations period
upon discovery of an actionable claim, id. at 126 -- becomes a
common theme in our jurisprudence, see, e.g., Caravaggio, supra,
21
166 N.J. at 250 (quoting Moran v. Napolitano, 71 N.J. 133, 134
(1976)). However, Fox’s qualifying language fell into disuse by
1980 and has not been employed again in an opinion of our Court.
Twenty-five years after Fox, our discovery-rule
jurisprudence was still far from a model of clarity, leading
Justice Long to comment: “The discovery rule, incorporating as
it does a notion of simple justice, has been anything but simple
in application . . . . Decades after its enunciation, lawyers
and judges are still grappling with its application.”
Caravaggio, supra, 166 N.J. at 240. In Caravaggio, we set out
to bring greater certainty and predictability to the calculation
of the limitations period under the discovery rule.
Caravaggio involved a medical-malpractice claim governed by
a two-year statute of limitations. Id. at 240-41, 243. On May
23, 1993, the defendant surgeon operated on plaintiff’s
fractured femur, inserting a rod through it to stabilize the
fracture. Id. at 240-41. Two months later, the plaintiff “felt
a ‘snap’ in her leg,” and a week afterwards, an x-ray “revealed
that the rod had broken.” Id. at 241. On October 21, 1993, the
surgeon removed and replaced the broken rod and informed the
plaintiff “that there was something wrong with the rod and that
she should take it to [her] lawyer.” Id. at 242. An analysis
of the rod revealed that it was not defective. Id. at 243. On
September 15, 1995, the plaintiff filed a medical malpractice
22
claim, alleging that the surgeon negligently inserted the rod.
Ibid.
The Court determined that the two-year limitations period
accrued on October 21, 1993, when the plaintiff had an
objectively reasonable basis to know that the surgeon injured
her through his alleged negligence. Id. at 250-51, 253. The
Court gave the plaintiff the benefit of the full two-year
limitations period from the date of accrual, even though she had
over a year-and-one-half remaining on the statute of limitations
if the starting date were fixed at the time of the allegedly
negligent operation. See ibid. The Court did not hold that,
after discovering her cause of action, the plaintiff had to file
her malpractice claim within a reasonable period in the time
remaining on the two-year limitation clock. See ibid.
In distilling our discovery-rule jurisprudence, the Court
reached the following holding: “[W]hen a plaintiff knows of an
injury, and knows that it is the fault of another, but is
reasonably unaware that a third party may also be responsible,
the accrual clock does not begin ticking against the third party
until the plaintiff has evidence that reveals his or her
possible complicity.” Id. at 250. The Court emphasized that
this rule does not require that a plaintiff have perfect
knowledge to support a claim against an identifiable defendant
before an action will accrue. See id. at 246. Under this
23
construct, a plaintiff’s cause of action may accrue at different
times against different defendants, depending on when the
plaintiff knew or reasonably should have known he had an
actionable claim against each defendant. Id. at 248.
Absent from the discussion in Caravaggio is any of the
qualifying language in Fox, i.e., peculiar or unusual prejudice
to a defendant. See Fox, supra, 71 N.J. at 128. The qualifying
language in Fox created two different standards for when a cause
of action accrues -- one for when discovery occurs within two
years of a personal injury and another for when discovery occurs
more than two years after the injury. Under the Fox framework,
a court does not inquire whether a defendant was peculiarly
prejudiced if the plaintiff discovered his personal-injury cause
of action eight years after the injury was inflicted. The
plaintiff is simply entitled to the full two-year limitations
period upon discovery. Yet, under that same framework, a
defendant could argue that he was peculiarly prejudiced if the
plaintiff discovered his cause of action one-and-one-half years
after the injury but did not file within the six months’ time
remaining under the two-year limitations statute.
That approach obviously lacks symmetry. In those two
examples, there is no satisfactory reason why, once accrual is
triggered, the limitations period is not the same two-year
period.
24
Caravaggio provided the template for when a cause of action
commences in accrual statutes of limitations: accrual occurs
when a plaintiff knows or, through the exercise of reasonable
diligence, should know of the basis for a cause of action
against an identifiable defendant.
B.
Our discovery-rule jurisprudence has evolved mostly in
construing the personal-injury statute of limitations. We have
applied the discovery rule, however, to other similarly worded
accrual statutes, including the notice requirement in the New
Jersey Tort Claims Act, N.J.S.A. 59:8-8, see Elazar v. Macrietta
Cleaners, Inc., ___ N.J. ___, ___ (2017) (slip op. at 11-14),
and the tort-based property-damage statute of limitations,
N.J.S.A. 2A:14-1, see Russo Farms v. Vineland Bd. of Educ., 144
N.J. 84, 115 (1996). Importantly, the discovery rule applies to
property-tort lawsuits arising from construction defects, as
illustrated in Russo Farms, supra. See 144 N.J. at 115.
In that case, a board of education constructed a school on
property located across the street from the plaintiffs’
farmland. Id. at 91-92. Construction on the school was
substantially complete on September 5, 1979. Id. at 92-93.
Shortly after the school’s completion, rainwater began to flood
plaintiffs’ farmland, causing soil erosion, poor crop yield, and
diminution of the property’s value. Id. at 93-94. Not until
25
1981, however, did the plaintiffs become reasonably aware that
faulty construction of the school’s drainage system was causing
the runoff onto their property. Id. at 98-99, 115. At this
point, the plaintiffs were “on notice of a potential claim”
against the architect and contractor who constructed the school.
Id. at 115. Applying the discovery rule, the Court calculated
the six-year limitations period from the point of accrual in
1981 and determined that the plaintiffs were required to file
suit by 1987. See ibid. Because the plaintiffs did not file
their claims against the architect and contractor until 1990,
those late claims were dismissed. Id. at 115, 119.
Russo Farms stands for the proposition that in a
construction-defect case, the date on which an architect
certifies to the owner that the structure is substantially
complete typically will start the running of the six-year
property-tort statute of limitations, N.J.S.A. 2A:14-1, unless,
despite the exercise of reasonable diligence, the plaintiff is
unaware of an actionable claim. See id. at 115-16.
Importantly, the Court in Russo Farms gave the plaintiffs the
benefit of the full six-year limitations period, notwithstanding
that the plaintiffs would have had four years to file their
claims if the clock began at the time of substantial completion.
See id. at 115. Russo Farms and Caravaggio applied the same
discovery-rule template to different accrual statutes of
26
limitations.
We therefore reject defendants’ argument 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.
Under defendants’ interpretation of the discovery rule, on one
hand, plaintiff had six years from substantial completion of The
Palisades -- until May 1, 2008 -- to file its claims because the
Falcon Report issued on June 13, 2007, which allowed plaintiff
nine months to file. On the other hand, defendants apparently
concede that plaintiff would have had a full six years to file
if discovery of the construction defects occurred on May 2,
2008, one day after the limitations period ended. That
construct yields an absurd result. Clearly, defendants are no
worse off in presenting a defense if the six-year limitations
period commenced on June 13, 2007, rather than on May 2, 2008.
Moreover, if the date of accrual -- the date that the
plaintiff knows or reasonably should know of an actionable claim
against an identifiable defendant -- signals the beginning of
the limitations period, then consistency and predictability will
be advanced when all parties can calculate the precise time for
the filing of claims.
C.
We also reject the approach taken by the Appellate Division
27
-- and advanced by plaintiff -- that the six-year statute of
limitations could not accrue before plaintiff gained full
control of the Condominium Association. An owner of a building
cannot convey greater property rights to a purchaser than the
owner possessed. If the building’s owner knew or reasonably
should have known of construction defects at the time of the
sale of the property, the purchaser takes title subject to the
original owner’s right -- and any limitation on that right -- to
file a claim against the architect and contractors. See
O’Keeffe v. Snyder, 83 N.J. 478, 502 (1980); see also Byrne v.
Autohaus on Edens, Inc., 488 F. Supp. 276, 280-81 (N.D. Ill.
1980) (noting that when owner knows or has reason to know of
injury, limitations statute begins to run for all potential
future plaintiffs in chain of title). Thus, a subsequent owner
will stand in the shoes of a prior owner for statute-of-
limitations purposes. See CAMSI IV v. Hunter Tech. Corp., 282
Cal. Rptr. 80, 85 (Ct. App. 1991) (noting that if owner does not
file claim within statutory period, “claim will be barred for
that and all subsequent owners”).
For example, if the building’s original owner does not file
a construction-defect lawsuit within the six-year limitations
period from accrual of an actionable claim, the purchaser taking
title has no right to revive a lapsed claim. In certain
circumstances, the purchaser may have a claim against the seller
28
for fraudulent concealment or some other cause of action. See,
e.g., Dep’t of Envt’l Prot. v. Ventron Corp., 94 N.J. 473, 503
(1983).
The statute-of-limitations clock is not reset every time
property changes hands. However, if the original owner was
unaware of an actionable claim, despite the exercise of
reasonable diligence, then the accrual clock begins when a
subsequent owner knew or reasonably should have known of the
existence of the claim. 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. See O’Keeffe, supra, 83 N.J. at
502.
A condominium association does not enjoy a preferred status
exempting it from this long-standing rule. If the owner of an
apartment building does not file a timely construction-defect
lawsuit and then sells the building to a new owner, who has no
right to revive the claim, a construction-defect lawsuit does
not spring to life when the new owner converts the apartments
into condominiums.
Here, A/V Acquisitions retained defendant AJD as the
general contractor, which in turn hired the defendant
subcontractors, to construct the project known as The Palisades.
A/V Acquisitions then sold The Palisades to Old Palisade, which
29
converted the building’s units from rental to condominium
ownership. Old Palisade controlled the condominium association
until seventy-five percent of the units were sold. With respect
to the right to file a construction-defect lawsuit against
defendants, Old Palisade took title subject to the rights of A/V
Acquisitions, and the plaintiff Condominium Association took
title subject to any limitation on the rights of the two
predecessor owners.
We now assess how those principles apply to determining the
accrual of plaintiff’s claims against defendants.
D.
A/V Acquisitions arranged for the construction of The
Palisades. Defendants AJD, Forsa Construction, Benfatto
Masonry, and Luxury Floors worked on the construction of The
Palisades, which was “substantially complete” as of May 1, 2002.
Thereafter, A/V Acquisitions rented apartment units from The
Palisades. In June 2004, Old Palisade purchased the property,
converting the rental units into condominiums. As part of the
condominium-conversion process, Old Palisade retained Ray
Engineering to inspect the property. On October 1, 2004, Ray
Engineering issued a report stating that the buildings and
parking deck “appeared to be in good condition,” although the
deck had some spalling and cracking, which was not of structural
concern at the time. Old Palisade attached the report to its
30
public offering statement and the master deed.
After selling seventy-five percent of the condominium
units, Old Palisade relinquished control of the Condominium
Association to the unit owners in July 2006. The Condominium
Association then retained the Falcon Group to inspect The
Palisades complex. That inspection led to a report issued on
June 13, 2007, detailing defects in the exterior walls, roofing,
concrete flooring, plumbing, and other areas.
The trial court determined that the accrual of the six-year
limitations period under N.J.S.A. 2A:14-1 commenced on May 1,
2002, the date of substantial completion, and that the timing of
the Ray and Falcon Reports allowed plaintiff sufficient time to
file its claims before May 1, 2008. Because plaintiff did not
file its initial and amended complaints until after that date,
the court dismissed plaintiff’s actions. As we have explained,
the trial court erroneously calculated the accrual date.
Based on the record before us, we cannot perform that
calculation because it requires findings of fact to determine
when A/V Acquisitions, Old Palisade, or the Condominium
Association -- all entities in the chain of ownership -- first
knew or, through the exercise of reasonable diligence, should
have known of a cause of action against each defendant. Whether
the accrual clock began when the Ray Report or the Falcon Report
issued or at some time before, after, or in between requires a
31
detailed inquiry. To answer those questions, the trial court
must conduct a Lopez hearing and examine the documentary
evidence and deposition transcripts presented by the parties
and, in its discretion, take testimony from relevant witnesses.
E.
We cannot end our analysis without noting the distinction
between an accrual statute of limitations and a statute of
repose, which has some bearing on this case. As discussed, an
accrual statute generally has no certain end date, given that
the trigger of the limitations period may depend on when a
plaintiff discovers the basis for his cause of action. In
contrast, a repose statute has fixed beginning and ending dates,
thus providing certainty to defendants when their exposure to
liability concludes. See Town of Kearny v. Brandt, 214 N.J. 76,
93 (2013); Daidone v. Buterick Bulkheading, 191 N.J. 557, 567
(2007).
The Legislature enacted the statute of repose in
construction-defect cases, N.J.S.A. 2A:14-1.1(a), to insulate
construction professionals -- such as architects, planners,
designers, builders, and contractors -- from indefinite
liability through operation of the discovery rule. Town of
Kearny, supra, 214 N.J. at 93; see Russo Farms, supra, 144 N.J.
at 116. N.J.S.A. 2A:14-1.1(a) provides that:
No action . . . to recover damages for any
32
deficiency in the design, planning, surveying,
supervision or construction of an improvement
to real property . . . shall be brought against
any person performing or furnishing the . . .
construction of such improvement to real
property, more than 10 years after the
performance or furnishing of such services and
construction. This limitation shall serve as
a bar to all such actions . . . at the time
the defective and unsafe condition of such
improvement constitutes the proximate cause of
the injury or damage for which the action is
brought.
[(emphasis added).]
The ten-year repose statute begins at the date of a project’s
substantial completion. Town of Kearny, supra, 214 N.J. at 93-
94; Russo Farms, supra, 144 N.J. at 117-18. The statute of
repose sets the outer limit for the filing of a construction-
defect claim. For example, if for purposes of the property-
damage statute of limitations, N.J.S.A. 2A:14-1, a construction-
defect action accrues eight years after a project’s substantial
completion, a plaintiff will only have two years to file a claim
before it is barred by the repose statute. The parties in this
case agree that the date of substantial completion of The
Palisades was May 1, 2002. The complaints against all
defendants were filed within this ten-year period. Therefore,
N.J.S.A. 2A:14-1.1(a) does not stand as a bar to plaintiff’s
claims.
Defendants’ critique of N.J.S.A. 2A:14-1.1(a) does bear
mentioning. Because the repose statute appears to bar only
33
claims involving “defective and unsafe” conditions arising from
construction, defendants posit that this statute will not apply
to a defective condition that does not raise safety concerns.
Our charge here is not to rewrite the repose statute. See
DiProspero v. Penn, 183 N.J. 477, 492 (2005). If the wording in
this statute, as defendants believe, has the effect they suggest
and does not represent good public policy, defendants’ appeal on
this issue must be to the Legislature.
IV.
In summary, the following principles guide application of
the property-tort statute of limitations in construction-defect
cases. The date that a structure is deemed substantially
complete oftentimes is when a cause of action accrues because
some construction defects will be readily apparent on inspection
and therefore the plaintiff will have a reasonable basis for
filing a claim. But many construction defects will not be
obvious immediately. In such instances, a cause of action does
not accrue until the plaintiff knows or, through the exercise of
reasonable diligence, should know of a cause of action against
an identifiable defendant. A plaintiff who is a successor in
ownership takes the property with no greater rights than an
earlier owner. If the earlier owner knew or should have known
of a cause of action against an identifiable defendant, the
accrual clock starts then.
34
The determination of when a claim accrued ordinarily should
be made at a Lopez hearing. At the hearing, the plaintiff will
bear the burden of proving that the claim accrued at a time
after a project’s substantial completion. See Lopez, supra, 62
N.J. at 276. The plaintiff is in the best position to establish
when he first knew or reasonably should have known of his cause
of action. The court’s decision must be based on objective
evidence. See Caravaggio, supra, 166 N.J. at 246. The court
may consider documentary evidence, deposition transcripts, and,
in its discretion, take testimony. Last, the court must state
its reasons for its findings of facts.
The test set forth above is not novel. It has evolved from
our jurisprudence and should result in ease of application and
predictable outcomes. Caravaggio articulated this approach for
the statute of limitations governing personal injury cases, id.
at 249-50, and this Court applied that test recently in a case
involving the accrual date of a cause of action under the Tort
Claims Act, Elazar, supra, ___ N.J. at ___ (slip op. at 11-14).
V.
For the reasons expressed, we reverse the judgment of the
Appellate Division and remand to the trial court to conduct a
Lopez hearing to determine when plaintiff’s causes of action
accrued against each defendant.
35
CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, PATTERSON,
FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE ALBIN’s
opinion.
36