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Diamond v. New Jersey Bell Telephone Co.

Decided: May 20, 1968.

HOWARD AND DORA DIAMOND T/A MORRISTOWN PICTURE FRAME AND GLASS COMPANY, PLAINTIFFS-APPELLANTS,
v.
NEW JERSEY BELL TELEPHONE COMPANY, (A CORPORATION OF THE STATE OF NEW JERSEY), AND GRAY CONSTRUCTION COMPANY (A CORPORATION OF THE STATE OF NEW JERSEY), DEFENDANTS-RESPONDENTS



For reversal -- Chief Justice Weintraub and Justices Jacobs, Francis, Hall and Schettino. For affirmance -- None. The opinion of the court was delivered by Schettino, J.

Schettino

[51 NJ Page 595] This case requires another examination of when a cause of action "accrues" for statute of limitations purposes. See also New Market Poultry Farms, Inc. v. Fellows, 51 N.J. 419 (1968); Rosenau v. City of New Brunswick, 51 N.J. 130 (1968); Fernandi v. Strully, 35 N.J. 434 (1961).

In 1957, defendant Bell Telephone Company installed an underground conduit on plaintiffs' property in Morristown.*fn1 The conduit was installed over plaintiffs' sewer line and, allegedly, the work was performed in such a negligent manner as to break the "clean-outs" on the sewer line. As a result, sediment gradually accumulated in the line until, on February 1, 1966, a back-up occurred and plaintiffs' property was flooded. Until that moment, plaintiffs had been unaware of any damage or malfunction in the sewer line. But after the back-up, plaintiffs caused excavations to be made which disclosed the condition of the sewer line and the cause of that condition.

In July 1966, approximately five months after the sewer line became clogged, plaintiffs instituted a negligence action against the two defendants. Defendants moved for judgment on the pleadings on the basis that the action was barred by the statute of limitations. The trial court denied the motion.

On appeal from this interlocutory order, the Appellate Division reversed in an opinion which held that the action had accrued in 1957 and, consequently, was barred by the six-year limitations period contained in N.J.S. 2 A:14-1. 97 N.J. Super. 1 (1967). We granted certification. 50 N.J. 405 (1967).

Traditionally, "a plaintiff's cause of action accrues for limitation purposes when he suffers actual consequential damage or loss from the defendant's negligence." Rosenau v. City of New Brunswick, supra, 51 N.J., at p. 138; see "Developments in the Law -- Statutes of Limitations," 63 Harv. L. Rev. 1177, 1201 (1950). Where the plaintiffs' only injuries here those flood damages resulting from the sewer back-up, their claim might well fall within this "actual damages" doctrine. The back-up did not occur until 1966 and the negligence suit was filed in that same year. At oral

argument, however, it became evident that plaintiffs' damages consist primarily of the costs of repairing the broken sewer "clean-outs" -- harm sustained upon the installation of the underground conduit in 1957. Under the customary rule that ignorance of a claim does not toll the running of the limitations period (see Fernandi v. Strully, supra, 35 N.J., at p. 439), this suit would have been barred after 1963.

We must, therefore, consider the applicability of the recently evolved discovery rule. Under that doctrine, a cause of action accrues only when the plaintiff knows or should reasonably know of his injury. In that manner he is relieved of the impossible task of asserting a claim before its existence may reasonably be known to him.

In New Jersey, the discovery rule has, to date, been applied only in certain limited circumstances -- in a foreign object malpractice case (Fernandi v. Strully, supra) and in the case of a negligent land survey (New Market Poultry Farms, Inc. v. Fellows, supra). We have recognized, however, that other situations may well be appropriate for extension of the same salutary rule. See Fernandi v. Strully, supra, 35 N.J., at p. 439. For reasons to be expressed, we are of the opinion that the case before us presents one such appropriate instance.

Many courts have recognized the obvious inequity of allowing a limitations period to expire while actionable harm is hidden beneath the surface of the earth, unascertainable either by ordinary observation or by special alertness on the part of a landowner. In the early case of Lewey v. H.C. Frick Coke Co., 166 Pa. 536, 31 A. 261 (1895), defendants had tunneled deep under the plaintiff's adjacent property and removed 4,000 bushels of coal. Eleven years later plaintiff first became aware of the trespass and sued for damages. Defendants raised in opposition the statute of limitations normally applicable to trespass actions. In rejecting that defense, the Pennsylvania Supreme Court held that the statute of limitations did not commence against an underground trespass until the time of actual discovery of the

trespass, or until the moment when discovery reasonably became possible. ...


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