(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
Argued February 27, 1995 -- Decided April 11, 1995
O'HERN, J., writing for a unanimous Court.
Metromedia Company (Metromedia) is a national conglomerate with numerous business interests,
including: computer software development; motion picture production and distribution; restaurant franchises;
and the manufacturing of motor vehicle engines and parts. In 1978, Metromedia leased space at the Harmon
Tower office complex in Secaucus, New Jersey, which is owned by Hartz Mountain Industries (Hartz), a New
Jersey partnership engaged in the development of commercial real estate. Metromedia's initial rent under
the lease with Hartz was $455,366.00 per year.
Metromedia was unhappy with the cleaning services provided by Hartz through the lease.
Therefore, Metromedia negotiated an agreement with Hartz under which Metromedia could hire its own
cleaning service that would be paid directly by Hartz upon the presentation by Metromedia of the bills for
those services. Metromedia's rent was to remain the same but, in effect, Hartz would be reimbursing
Metromedia for the cleaning costs. The agreement became effective on January 1, 1985.
Unfortunately, the parties failed to adequately discuss the process for issuing the monthly cleaning
service payments. For six and one-half years, Metromedia paid the bills for its cleaning service but did not
submit those bills to Hartz for reimbursement. In May 1991, a Metromedia employee discovered that Hartz
had not reimbursed Metromedia for the cleaning services and contacted Hartz' property manager for
Harmon Tower regarding payment under the cleaning-service agreement.
Initially, the manager denied the existence of an agreement. Eventually, the parties did attempt to
amicably resolve the dispute but were unable to do so. As a result, Metromedia filed suit in February 1992,
seeking reimbursement for cleaning service costs pursuant to the agreement. In its answer, Hartz asserted
that any claim for reimbursement for cleaning services arose in 1985 and was, therefore, barred by the six-year statute of limitations. The lower courts disagreed, finding that the cause of action did not arise until
Hartz refused to pay in May 1991.
The trial court did find that an agreement to reimburse for cleaning-service costs existed. The
court's calculations began with January 1, 1985 and, with certain adjustments, it allowed recovery for each
month thereafter, for a total due to Metromedia of $190,481.09. On appeal, the Appellate Division affirmed
the decision of the trial court with a minor adjustment for a duplicate billing of $2632.
The Supreme Court granted certification.
HELD: Under the installment contract theory of accrual of a cause of action, Metromedia's claims for a
monthly credit for cleaning services accrued on a monthly basis beginning on January 1, 1985;
however, any recovery for cleaning services for the period from January 1, 1985 to February 1, 1986
is barred by the six-year statute of limitations.
1. There was an agreement to credit Metromedia for cleaning services and Hartz failed to reimburse
Metromedia from January 1985 until May 1992. However, the Court disagrees in part with the lower courts'
resolution of the statute-of-limitations issue. (pp.3)
2. In determining when the statute of limitations period begins to run, the question is: when did the
party seeking to bring the action have an enforceable right? Here, the enforceable right arose immediately
on the completion of the cleaning services; therefore, the claims for a monthly credit accrued on a monthly
basis beginning on January 1, 1985. The Court applies this "installment contract" theory of accrual that has
been applied by courts in other periodic-payment cases. (pp. 3-4)
3. Under the installment contract approach, a new cause of action arises from the date each payment is
missed and the statute of limitations begins to run against each installment as it comes due. Under the
installment theory of accrual, Metromedia is entitled to recover for monthly credits commencing on February
1, 1986, six-years prior to the filing of the complaint. That would bar recovery for cleaning services due from
January 1, 1985 to February 1, 1986, resulting in an adjustment of $34,216. Thus, the amount owed by Hartz
to Metromedia is $153,633.09. (pp.4-5)
As MODIFIED, the judgment of the Appellate Division is AFFIRMED.
CHIEF JUSTICE WILENTZ and JUSTICES HANDLER, POLLOCK, GARIBALDI, STEIN and
COLEMAN join in JUSTICE O'HERN'S opinion.
SUPREME COURT OF NEW JERSEY
A-
100 September Term 1994
METROMEDIA COMPANY, a general
partnership,
Plaintiff-Respondent,
v.
HARTZ MOUNTAIN ASSOCIATES, a
New Jersey general partnership,
Defendant-Appellant.
Argued February 27, 1995 -- Decided April 11, 1995
On certification to the Superior Court,
Appellate Division.
David J. Hughes argued the cause for
appellant (Horowitz, Rubino & Patton,
attorneys).
Richard D. Stanzione argued the cause for
respondent (Hiering, Dupignac & Stanzione,
attorneys; Mr. Stanzione and Tracy A.
Armstrong, on the brief).
The opinion of the Court was delivered by
O'HERN, J.
This case provides an insight into the management practices
of large business enterprises. Plaintiff, Metromedia Company
(Metromedia), is a national conglomerate with diversified
business interests. Those interests include: computer software
development; restaurant franchises; motion picture production and
distribution; and the manufacturing of motor vehicle engines and
parts. In 1978, Metromedia became a tenant at the Harmon Tower
office complex in Secaucus, New Jersey, owned by Hartz Mountain
Industries (Hartz), a New Jersey partnership engaged in the
development of commercial real estate in that area. The initial
rent was $455,336.00 per year.
Dissatisfied with the cleaning services provided by Hartz
through the lease, Metromedia negotiated an agreement with Hartz
to resolve its concerns. Under that agreement, effective January
1, 1985, Metromedia could hire its own cleaning service and Hartz
would "pay the monthly amount of $2,632.00 directly to
[Metromedia's cleaning service] upon presentation of bills." The
rent due under the lease was to remain the same and Hartz would,
in effect, reimburse Metromedia for cleaning costs.
It appears that the parties did not thoroughly discuss the
mechanics for issuing the monthly payments. For six and one-half
years, Metromedia paid the bills from its cleaning service but
did not submit those bills to Hartz for reimbursement.
In May 1991, an employee of Metromedia realized that Hartz
had not reimbursed it for the cleaning services and contacted
Hartz' property manager for Harmon Tower regarding the cleaning-service agreement. The Hartz manager initially denied the
existence of such an agreement. On June 5, 1991, Metromedia's
Vice President and Controller sent a letter to the Hartz manager
and amicably inquired, "[D]o you have any suggestion as to how we
can best resolve the situation?"
The parties were unable to resolve the matter, and
Metromedia filed suit in February 1992. In its answer to
Metromedia's complaint, Hartz asserted that any claim for
reimbursement for cleaning services arose in 1985 and, therefore,
was barred by the six-year statute of limitations. N.J.S.A.
2A:14-1. The lower courts disagreed with Hartz. They held that
the cause of action did not arise until Hartz refused to pay in
May 1991.
On the merits, the trial court found that an agreement to
reimburse Metromedia for its expenditures on cleaning services
existed. The court's calculations began with January 1, 1985,
and with certain adjustments, it allowed recovery for each month
thereafter. While adjusting for months in which Metromedia did
not occupy all of the space under the lease and months for which
Metromedia could not locate any bills, the trial court entered
judgment in the amount of $190,481.09. The Appellate Division
affirmed with a minor adjustment for a duplicate billing of
$2632.00.
We agree with the trial court's resolution of the factual
issues. There was an agreement to credit Metromedia for the
cleaning services, and Hartz did not do so from January 1985
until May 1992. We disagree, in part, with the lower court's
resolution of the statute-of-limitations issue.
Ordinarily, "[f]or purposes of determining when a cause of
action accrues so that the applicable period of limitation
commences to run, the relevant question is when did the party
seeking to bring the action have an enforceable right."
Andreaggi v. Relis,
171 N.J. Super. 203, 235-36 (Ch. Div. 1979).
In the unusual circumstances of this case in which the procedure
for payment of cleaning services was unclear, it is possible to
view the cause of action as not arising until the rejection of
the claims presented by Metromedia to Hartz. But the
"enforceable right" arose immediately upon completion of the
cleaning services. We believe, therefore, that the claims for a
monthly credit accrued on a monthly basis commencing January 1,
1985. That is a familiar method for treatment of limitation
issues under installment contracts when no acceleration clause is
present.
Courts have used the "installment contract" approach in a
variety of situations. Coupons on county bonds due annually,
periodic payments for promissory notes, periodic payments under a
divorce settlement, and monthly payments under an equipment lease
have all been considered installment contracts for the purpose of
determining accrual of a cause of action. F.D. Stella Prods. Co.
v. Scott,
875 S.W.2d 462, 464-65 (Tex. Ct. App. 1994). In an
installment contract a new cause of action arises from the date
each payment is missed. 4 Arthur L. Corbin, Corbin on Contracts
§ 951 (1951 & Supp. 1994). Corbin has explained that absent a
repudiation, a plaintiff may sue for each breach only as it
occurs, and the statute of limitations begins to run at that
time. Corbin, supra, § 989. In Federal Deposit Insurance Corp.
v. Valencia Pork Store, Inc.,
212 N.J. Super. 335, 338 (Law Div.
1986) (citing Masonic Temple Ass'n. v. Kistner,
11 N.J. Misc. 761
(Sup. Ct. 1933)), rev'd on other grounds,
225 N.J. Super. 110
(App. Div. 1988), Judge Selikoff noted that, "[i]n the case of an
obligation payable by installments, the statute of limitations
may begin to run against each installment as it falls due." To
hold otherwise would allow a claimant to trigger the statute of
limitations upon presentation of a claim rather than having the
existence of a claim trigger the statute of limitations.
Plaintiff's complaint was filed on February 19, 1992,
approximately seven years and one month after its claims began to
accrue. Hartz concedes that under an installment theory of
accrual, plaintiff is entitled to recover for monthly credits
commencing on February 1, 1986 (six years before the suit was
filed). That would bar recovery for cleaning services due from
January 1, 1985 to February 1, 1986. The result is an adjustment
of $34,216.00.
As modified, the judgment of the Appellate Division is
affirmed. The amount due to plaintiff under its judgment is
$153,633.09.
Chief Justice Wilentz and Justices Handler, Pollock, Garibaldi, Stein, and Coleman join in this opinion.
NO. A-100 SEPTEMBER TERM 1994
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
METROMEDIA COMPANY, a general
partnership,
Plaintiff-Respondent,
v.
HARTZ MOUNTAIN ASSOCIATES, a
New Jersey general partnership,
Defendant-Appellant.
DECIDED April 11, 1995
Chief Justice Wilentz PRESIDING
OPINION BY Justice O'Hern
CONCURRING OPINION BY
DISSENTING OPINION BY