Jocama Construction Corp. v. American Planned Communities

A-7487-97T5 (N.J. Super. App. Div. 1999) (Unpublished)
  • Opinion Date: July 29, 1999

DEBTS; STATUTE OF LIMITATIONS—Neither an oral acknowledgment nor an oral promise to pay an old debt will serve to take that debt out of the statute of limitations bar.

A contractor began performing work for a developer in November of 1986. In 1988, the parties agreed that the work would be billed on an “open credit basis,” and that the developer would make “regular periodic payments.” Between 1986 and 1992, the contractor submitted separate invoices to the developer for each of a number of jobs. Each invoice called for interest if payment was not made within 30 days. Four regular payments, not corresponding to specific invoice amounts, were made until May, 1990. Nevertheless, the contractor continued to perform work through September, 1992. Sometime in 1992, the contractor demanded payment of the entire, substantial outstanding balance. The developer’s president orally acknowledged the full amount of the debt explaining that it could not make payment, and offered instead to transfer certain real property in satisfaction of the debt. That offer was rejected. Despite further communications, no payment was made and a collection action was filed in October, 1996. Under the applicable statute of limitations, unless an exception applies, no claim could be made more than six years after the cause of action had accrued. The contractor sought the benefit of a common law exception for a “running account,” based on the theory that a payment is an acknowledgment of the entire debt. However, the Court pointed to its previous holdings that partial payment on a running account, without more, does not constitute an acknowledgment of the entire debt claim. Moreover, the contractor sued more than six years after the developer’s last payment. The contractor further contended that the developer acknowledged the debt within the six year period, thereby reviving its claim and starting a new limitations period. Unfortunately for the contractor, the applicable statute provides: “[i]n actions at law grounded on any simple contract, no acknowledgment or promise by words only shall be deemed sufficient evidence of a new or continuing contract, so as to” take the case out of the statute of limitations bar. Consequently, the developer’s oral acknowledgment did not bar the claim.