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Jack Trocki Development Co., LLC v. City of Northfield

A-0230-10T4 (N.J. Super. App. Div. 2011) (Unpublished)

DEVELOPERS — A claim to recover an allegedly improperly held construction bond from a municipality must follow the procedures under the Tort Claims Act, but the date upon which the time periods run for such an action depends on the particular facts involved and when the developer began to suffer an injury as a result of the municipality’s allegedly wrongful conduct.

A real estate developer obtained zoning approval to subdivide property into thirty-eight residential lots and to construct single-family homes on the subdivided lots. Conditions were imposed as part of the approval. The developer was required to post a performance guarantee and a cash deposit and make certain physical improvements in accordance with engineering specifications issued by the municipality’s engineer. The project went forward and the developer transferred title to all but two lots. The transferee, a builder, constructed homes on the lots. The bond and the cash deposit were reduced as the project progressed, although substantial balances remained.

The developer sued the municipality for recovery of its bond and deposit, alleging the municipal engineer had accepted its work as satisfactory approximately two and one half years before the municipality ultimately called the performance bond. The municipality was requiring the developer to rectify perceived deficiencies in the work performed. The developer rejected this demand, alleging that any construction issues were related to the municipality’s permitted deviations from the original project plans. The municipality countered that the required remedial work had not been prompted by any negligent or improper act on its part. The engineer had apparently sent the developer a preliminary punch list identifying various items that allegedly needed to be corrected before there could be any further reduction of the bond. The developer referenced a letter that it had submitted in which it stated that site plans had been changed for the entire project without its permission or the approval of the planning board.

The municipality moved to dismiss the complaint with prejudice, invoking the procedural protections of the Tort Claims Act. It claimed the developer had failed to serve a tort claims notice within ninety days of the accrual of its cause of action, and that the developer had not filed suit within two years of the accrual of its claims. In opposition, the developer argued that the causes of action had not accrued until the bond was called in by the municipality, and that its tort claims were served within ninety days after that date. The lower court dismissed the action without prejudice, permitting the developer to re-file a new complaint against the municipality, but did not explain why it had granted the motion.

The municipality appealed, and the Appellate Division reversed, remanding the matter for further proceedings. The Court said that ordinarily a cause of action accrues when any wrongful act or omission results in any injury, however slight, for which the law provides a remedy. The Court could not tell from the record exactly when the developer began to suffer an injury as a result of municipality’s allegedly wrongful conduct, and found the lower court’s written opinion did not address critical timing issues relating to accrual. Therefore, the Court could not decide whether the lower court erred in dismissing the complaint without prejudice. The Court remanded for the further development of the record, after which the lower court was ordered to reexamine the merits of the municipality’s motion by engaging in a more definitive analysis of the timeliness issues.

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