In this collection case a private lender challenged the court’s dismissal of his breach of contract claims because of the legal doctrine known as the statute of limitations. Between 2007 and 2008, the plaintiff extended a series of loans to the defendant family member totaling $111,250, which he failed to repay. Plaintiff filed a complaint for failing to repay the loans, in which he alleged defendants breached numerous oral agreements, engaged in a series of bad faith promises, committed fraud in the inducement, and was unjustly enriched.
There was one (1) major problem with his case. The creditor waited to file his collection lawsuit for over ten (10) years.
The Statute of Limitations
With respect to the statute of limitations, the court found that N.J.S.A. 2A:14-1 requires a contractual claim or liability to be filed within six years from the date the cause of action accrues. The court then determined that “the latest date of accrual of the cause of action was June 14, 2008, meaning the statute of limitations ended (at the latest) June 14, 2014” and plaintiff filed his complaint in 2018, nearly four years after this date.
The court rejected plaintiff’s argument that defendant’s verbal “acknowledgement and promise to repay the debt in 2016 remove[d] the statute of limitations bar.” Although the court found that plaintiff did meet with defendant in August 2016, and that he “orally told plaintiff that he would be paid back”, the court nevertheless rejected plaintiff’s argument under N.J.S.A. 2A:14-24. The court noted that the statute expressly provides that “‘no acknowledgement or promise by words only’ . . . shall suffice to take any case out of the statute of limitations” absent a writing. Because plaintiff failed to provide any written agreement, the court concluded that the “stature of limitations bar [was] not lifted.”
N.J.S.A. 2A:14-24 reads as follows:
In actions at law grounded on any simple contract, no acknowledgement or promise by words only shall be deemed sufficient evidence of a new or continuing contract, so as to take any case out of the operation of the applicable statute of limitations, or to deprive any person of the benefit thereof, unless such acknowledgement or promise shall be made or continued by or in some writing to be signed by the party chargeable thereby.
“In addition to the requirement of a writing, it is also necessary that the acknowledgement relied upon to extend the statute of limitations be such that in its entirety fairly supports an implication of a promise to pay the debt immediately or on demand.” Thus, in order “[t]o constitute a promise to pay sufficient to remove the bar of the statute of limitations the promise [also] must be unconditional and unqualified.”
To discuss your NJ business law, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Business Law Attorney