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Fabcon East, L.L.C. v. The Stegla Group, Inc.

2011 WL 773038 (U.S. Dist. Ct. D. N.J. 2011) (Unpublished)

CONTRACTS; STATUTE OF LIMITATIONS — Even where a contract set forth a private statute of limitations, a party may waive its limitation defense by acknowledging the debt or making partial payments to the debtor or by making repeated assurances that the debt would be paid.

A subcontractor alleged that its final invoices to a contractor were never paid. The contractor did not dispute the debt, but rather argued that the billing was time barred and uncollectible under the contracts. The contracts specified that all actions against the contractor had to be commenced within one year after final completion. The complaint was filed more than two years later and the contractor sought summary judgment. The subcontractor argued the contractor should be estopped from asserting such a defense because the contractor had lulled it into believing that it would be paid. It also argued that the contractor, by admitting the debt, waived the statute of limitations and that the one-year contractual limitation period contradicted the payment process described in other portions of the agreement and should not be enforced.

Here, the Court observed that the subcontractor presented substantial evidence that the contractor admitted to, and agreed to pay, the debt, including certifications from the contractor’s accounts receivable department and also that there was evidence of partial payments made after the expiration of the claimed time limit. Consequently, there was a significant possibility that the contractor waived its limitations defense by acknowledging or making partial payments on the debt or by making repeated assurances that the debt would be paid. The Court found that discovery was needed on these issues, making summary judgment premature.

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