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Philips Lighting Company v. Franklin Development Associates

A-6477-96T2 (N.J. Super. App. Div. 1998) (Unpublished)

STATUTE OF LIMITATIONS; CONTRACTORS—When a buyer knows of a construction defect, the statute of limitations runs from the time of the structure’s substantial completion. There is no equitable tolling of the statute even if the buyer forbears from acting while the contractor endeavors to remedy the defect.

In 1986, a turnkey buyer took possession of a newly constructed building pursuant to a purchase-construction agreement. At and after the time it took occupancy of the building, it was aware of and sought remedies for problems with the building’s curtain wall window system. Despite repeated efforts, the window supplier could not remedy the problem. Much later, the buyer sued the developer and others because of those defects. Summary judgment was entered against the buyer based on the 6 year statute of limitations found in N.J.S. 2A:14-1. On appeal, the buyer argued it was entitled to the benefit of the discovery rule and an equitable tolling of the statute, because it did not have knowledge of the extent of the defects until several years after the certificate of occupancy for the building was issued.

The buyer conceded that the six year statute applied. Case law holds that the time limit on an action for construction deficiencies begins upon substantial completion of the structure. With this in mind, the Appellate Division easily found that the statute began to run no later than the date the certificate of occupancy was issued which was more than 6 years prior to the filing of the complaint. This finding did not resolve the issue of whether the company was entitled to the discovery rule and/or the right to have an equitable tolling of the statute. In this regard, the Court concluded that the discovery rule was inapplicable because the facts demonstrated that the company had knowledge of problems with the original windows when it first took possession of the building. The Court then held that there should be no equitable tolling of the statute because the company had ample time within the original 6 year period in which to determine that the problem was serious and most likely ongoing. Consequently, it affirmed summary judgment against the buyer.

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