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New Jersey Educational Facilities Authority v. Gruzen Partnership

Decided: July 22, 1991.

NEW JERSEY EDUCATIONAL FACILITIES AUTHORITY AND JERSEY CITY STATE COLLEGE, PLAINTIFFS-RESPONDENTS,
v.
THE GRUZEN PARTNERSHIP, CERAMI CONSTRUCTION COMPANY, AND TRAVELERS INDEMNITY COMPANY, DEFENDANTS-APPELLANTS, AND THE CONDITIONING COMPANY AND THE NORTH RIVER INSURANCE COMPANY, DEFENDANTS



On certification to the Superior Court, Appellate Division, whose opinion is reported at 237 N.J. Super. 310 (1989).

For affirmance in part and reversal in part -- Chief Justice Wilentz, and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- None. The opinion of the Court was delivered by O'Hern, J.

O'hern

[125 NJ Page 68] This appeal concerns the doctrine of " nullum tempus occurrit regi " (no time runs against the king). The question here is whether a general statute of limitations runs against today's sovereign, the State (or one of its agencies), when it asserts a claim in contract. We agree with the Appellate Division that no difference in principle can be found to warrant departure from the general rule in the context of a suit brought by the New Jersey Educational Facilities Authority (NJEFA) and Jersey City State College (JCSC) seeking to redress defective design and construction of a student-center building. The activities performed by NJEFA and JCSC were governmental in nature

and the two agencies are sufficiently identified with the State to warrant application of the doctrine.

However, we believe that despite its different evolution, the doctrine of nullum tempus is but an aspect of sovereign immunity. This Court has previously determined that the doctrine of sovereign or governmental immunity, in the areas of the State's tort and contract liability, does not accord with notions of fundamental justice applicable to our elected representative form of government. Willis v. Department of Conservation and Economic Dev., 55 N.J. 534, 264 A.2d 34 (1970); P T & L Constr. Co. v. Commissioner, Dep't of Transp., 55 N.J. 341, 262 A.2d 195 (1970). Because its abolition represented such a clean break with the past, the Court decided that the doctrine would be abolished prospectively, leaving the Legislature ample opportunity to step into the field. The Legislature responded by enacting the Tort Claims Act, N.J.S.A. 59:1-1 to :12-3, and the Contractual Liability Act, N.J.S.A. 59:13-1 to -10.

Having yielded the greatest aspect of sovereign immunity, immunity from any suit at all, it would be anomalous in the extreme not to conclude that the sovereign who can now be sued should not have to bring its own suit in a timely manner.

Hence, consistent with Willis and P T & L Construction Co., we abrogate the immunity doctrine of nullum tempus insofar as it applies to immunity of the State or its agencies from the application of statutes of limitations in contractual matters. To avoid disruptions of governmental fiscal affairs currently positioned on the continued existence of the doctrine, we make our decision effective December 31, 1991. We commend the matter to the consideration of the Legislature for any modification of this disposition in light of the special needs of governmental agencies.

I

We need not engage in an extended discussion of the merits of the application of the common-law doctrine of nullum tempus

to the circumstances of this case. The facts and legal principles of decision are well set forth in the reported opinion of the Appellate Division. New Jersey Educ. Facilities Auth. v. Conditioning Co., 237 N.J. Super. 310, 567 A.2d 1013 (1989). We granted certification, 121 N.J. 629, 583 A.2d 325 (1990), because of the broader significance of whether the doctrine should have continued existence.

Assuming the validity of nullum tempus, we are fully in accord with the Appellate Division's conclusions on the application of the doctrine to the circumstances of this case. The pivotal issue, of course, is whether the doctrine of nullum tempus applies to NJEFA and to JCSC. The question arises in the context of a multi-million dollar construction contract to build a student center for JCSC at its campus in Hudson County, New Jersey. NJEFA financed the project and arranged for the construction of the facility through the Division of Building and Construction (DBC) of the State's Treasury Department. The DBC engaged the Gruzen Partnership as the architects for the project and the Cerami Construction Company as the general contractor. The building was defective in several respects and NJEFA, later joined by JCSC, brought this suit for damages.

The sub-questions for decision are whether the subordinate State agencies involved were acting in a governmental rather than a proprietary capacity and whether those agencies were entitled to the same protection as the State itself would be. See New Jersey Higher Educ. Assistance Auth. v. Carlock, 247 N.J. Super. 471, 589 A.2d 671 (Law Div.1991) (when the State's contractual claim is from its inception inherently public in nature rather than simply a private claim received by assignment, nullum tempus applies). This first question arises from a distinction that courts have long made in curtailing the doctrine of sovereign immunity. See Trenton & Mercer Cty. Traction Corp. v. Township of Ewing, ...


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