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G&L Associates, Inc. v. 434 Lincoln Avenue Associates

318 N.J. Super. 355, 723 A.2d 1016 (App. Div. 1999)

STATUTE OF LIMITATIONS—The commencement of the running of the statute of limitations may be altered by the terms of an agreement such that if payment is required within thirty days after billing, the statute does not start running until after the thirty days have passed.

This appeal involves a suit brought by a tax appeal consultant, against its client, seeking payment for services rendered pursuant to a fee agreement. On October 12, 1989, the tax appeal consultant entered into an agreement with the property owner and performed services as agent and consultant in connection with an appeal of real estate tax assessments for the 1989 and 1990 tax years. The consultant was to receive 20% of the amount of the tax savings resulting from the appeal. The property owner was to pay the fee within thirty days after the consultant’s billing. The consultant successfully completed services by securing a property tax reduction reflected in a judgment filed on December 13, 1991. In March 1992, the municipality refunded the money to the property owner’s attorney. Upon hearing that a refund rather than a credit toward future tax bill had been requested, the consultant sent a March 25, 1992 letter to the property owner informing it that a bill would be sent after it received the refund from the municipality. Subsequently, on April 6, 1992, a bill was sent, but the property owner directed its attorney not to pay the consultant out of the refund. On January 20, 1998, the tax consultant sued for its fee. The lower court ruled that the six-year statute of limitations accrued on December 13, 1991, the date the tax appeal judgment was entered and, therefore, the consultant’s claim was untimely. On appeal, the consultant argued that the lower court erred by invoking the six-year statute of limitations using the December 13, 1991 judgment date instead of the later date when the tax refund was made and payment was demanded. The Appellate Division agreed with the consultant. In determining when a cause of action accrues, the inquiry is when the party seeking to bring the action had an enforceable right. Pursuant to the agreement, the consultant was entitled to 20% of the amount of the tax savings. The lower court relied upon a section of the agreement reading: “[t]he tax savings may be reflected or evidenced either by a judgment notice detailing the reduction of the real estate assessment, by a reduced tax bill, or by a rebate or refund of taxes paid.” Another section of the agreement provided that the property owner was to pay the fee within thirty days after billing from the consultant. To the Appellate Division, the agreement reflected the industry practice to use the refund paid by the municipality to pay the tax consultant so that the taxpayer does not have to reach into its own pocket to pay the fee. The Court believed that such an arrangement is analogous to the contingency method of payment universally observed in tort litigation. Further, the commencement of the running of the statute of limitations may be altered by the terms of a writing. Here, the Court apparently believed that the provision requiring payment within thirty days after billing was, in effect, a written agreement as to when the statute of limitations would commence.


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