Defense Verdict in New Jersey Defect Septic System Trial

February 1, 2017
Hackensack, New Jersey

HACKENSACK, February 1, 2017  Hawkins Parnell Thackston & Young LLP obtained a defense verdict at the conclusion of a bench trial before the Honorable James DeLuca of the New Jersey Superior Court of Bergen County. Roy Viola was lead counsel to the homeowner who sold the property in question and was ultimately responsible for the replacement of the septic system.

The case arose from the alleged negligent installation of a septic system at a property purchased in 2004 by the plaintiff. At the time of the sale, plaintiff insisted that the defendants (through a Power-of-Attorney with her brother) remove and replace the septic system. However, since this could not be completed prior to closing, the parties entered into a Post-Closing Repair and Escrow Agreement, whereby funds were placed into an escrow account to cover the costs of any inadequate repairs made by the seller; this included the subject septic system. The Agreement required plaintiff to conduct an inspection of the septic system upon completion and, if there were no defects in the work, the escrow monies would be returned to the client. The funds were returned in October 2004. 

Plaintiff did not discover a defect until the attempted sale of the property in 2014, more than 10 years after the septic system was installed. At trial, plaintiff admitted they did not conduct an inspection of the septic system before releasing the escrow monies. 

Judge DeLuca ruled that New Jersey’s 6-year statute of limitations applied to this transaction. Plaintiff maintained that the 6-year period did not begin to run until having actual knowledge of the defect under the “discovery rule” that generally applies to tort actions. HPTY argued that the statute barred plaintiff’s claims and that the “discovery rule” didn’t apply to contract actions, except in extreme circumstances. After testimony, Judge DeLuca found in favor of the defendants, noting that HPTY’s interpretation of the law was accurate and that plaintiff failed to meet the burden of proof regarding his failure to inspect and discover the defect. The Court further held that plaintiffs’ own expert could not state with certainty that the original septic tank was improperly installed in accordance with the plans and specifications. Plaintiffs’ failure to inspect at that time pursuant to the Agreement’s terms started the Statute of Limitations.  

Oliver, et al. v. Miller, et al., Case No.: BER-L-44627-15 (N.J. Super. Ct., Bergen Cty.)

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