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Russo Farms, Inc. v. Vineland Bd. of Educ.

May 7, 1996

RUSSO FARMS, INC., A NEW JERSEY CORPORATION; RFC CONTAINER CO., INC., A NEW JERSEY CORPORATION; THOMAS RUSSO; EVA RUSSO, HIS WIFE; PASQUALE RUSSO; MARIO RUSSO; ESTATE OF PASQUALE RUSSO, PLAINTIFFS-RESPONDENTS,
v.
VINELAND BOARD OF EDUCATION; CITY OF VINELAND; GLENN A KAHLEY; ART ANDERSON, INC., A NEW JERSEY CORPORATION, DEFENDANTS-APPELLANTS AND LIPPINCOTT ENGINEERING ASSOCIATION; DANIEL W. JACOBS, P.E.; JOHN DOE; JANE DOE AND MARY DOE (FICTITIOUS), DEFENDANTS.



On certification to the Superior Court, Appellate Division, whose opinion is reported at 280 N.J. Super. 320 (1995).

The opinion of the Court was delivered by Garibaldi, J. Chief Justice Wilentz and Justices Handler, Pollock, O'hern, Stein and Coleman join in Justice GARIBALDI's opinion.

The opinion of the court was delivered by: Garibaldi

(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).

RUSSO FARMS, INC., ET AL. V. VINELAND BOARD OF EDUCATION, ET AL. (A-75/76/77/78)

Argued January 17, 1996 -- Decided May 7, 1996

GARIBALDI, J., writing for a majority of the Court.

Russo Farms, Inc. and others (collectively, the Russos) assert that the Vineland Board of Education (the Board) the City of Vineland (the City), architect Glen A. Kahley (Kahley), and general contractor Art Anderson, Inc. (Anderson) are liable to them for damages to their crops and farmland from flooding that resulted from the improper siting and construction of a public school located across the street from their property and by an inadequate drainage system on a bordering street. The school was constructed in 1979 but the Russos did not file suit until 1990. The Russos were aware of general water erosion as early as 1980 and 1981. The Russos claim that by 1987, the flood waters had caused significant damage to the farmland, including soil erosion, soil-nutrient depletion, decreased crop production, and a diminution in property value. On August 24, 1987, Thomas Russo sent a letter to the Mayor of Vineland asking him to remedy the flooding problem. The Russos contend that this letter served as a notice of claim, a prerequisite to any suit against governmental entities under the Tort Claims Act, N.J.S.A.59:1-1 to -12-3, (the Act).

On June 11, 1990, the Russos filed an official notice of claim with the City and the Board. On July 18, 1990, the Russos filed a complaint against the City, the Board, Kahley, Anderson, Daniel Jacobs and Lippincott Engineering. The Russos asserted both tort claims and inverse condemnation claims against the City and the Board. They sought a preliminary injunction against the City and the Board to correct the drainage problem, as well as damages against Kahley. The Russos alleged negligent design and negligent construction of the school property. The Russos asserted negligence claims against Lippincott and Jacobs for their design and construction of the drainage system and asserted negligence claims against Anderson in respect of the construction of the school building.

On August 3, 1990, the trial court ordered the City to construct a detention basin on Grant Avenue between the Russos' property and the Board's property. The City complied, ending the water problem on Grant Avenue. In March 1991, the City sought an order compelling the Russos to remove the berm they had built along Southeast Avenue to prevent runoff from the road. The Russos counterclaimed, alleging that Southeast Avenue constituted a dangerous condition that caused additional flooding on the Russos' property. All claims have been consolidated.

In May 1991, Lippincott and Jacobs moved for, and were granted, summary judgment on the basis of the statute of repose, N.J.S.A.2A:14-1.1, which bars actions against architects and engineers that are filed ten years from the date of completion of the contract. The trial court denied Kahley's motion on the same basis, computing the date for final completion to be February 20, 1981, the date of the issuance of the final certificate for payment.

In April 1993, the trial court granted summary judgment as to all remaining defendants, including Kahley. Because the court deemed each claim to have arisen in 1980 or 1981 when the first injury to the Russos became apparent, the claims were barred by N.J.S.A.2A:14-1, the six-year statute of limitations for tortious injury to property. In addition, the claims against the City and the Board were also barred by the notice provisions of the Act. The trial court also held that Anderson was protected by the statute of repose, concluding that substantial completion occurred in September 1979 when the Certificate of Occupancy was issued. The trial court also held that the City owed no duty to the Russos to maintain or provide an adequate drainage system.

On appeal, the Appellate Division reversed, holding that a separate cause of action accrued with each incursion of flood water, and that the Russos could pursue claims against the City and the Board for each flood occurring within the limitations period, or at least those for which satisfy the notice provisions of the Act. The Appellate Division also held that the Russos' inverse condemnation claims continued to accrue as long as the Board's conduct caused the Russos' property to be subject to continual flooding. Therefore, the Russos were entitled to recover for injuries amounting to takings that their property sustained after July 18, 1984, six years prior to the date on which they filed their complaint. The Appellate Division declined to decide whether the alleged flooding amounted to a taking by either the Board or the City.

The court also concluded the continuing tort theory applied to claims against Kahley and Anderson. The court also held that the statute of repose did not begin to run until the date of full completion of all construction, which occurred in February 1981, less than ten years before suit was filed. Thus, the Russos could continue to assert claims against Kahley and Anderson for damage for floods within the statutory period of six years.

The Supreme Court granted certification to address whether the Act and the six-year statute of limitations governing actions for tortious injury to real property bar the Russos' claims against the Board and the City and whether that six-year statute of limitations and the ten-year statute of repose bar the Russos' action against Kahley and Anderson.

HELD: The dangerous condition claims against the City of Vineland the Vineland Board of Education may be pursued to the extent that injury was suffered within the relevant limitations period. The nuisance claim against the City will similarly be allowed for each injury suffered within the limitations period. The trial court should, on a more complete record, determine whether the nuisance claim against the Board also involves a continuing nuisance. The Russos, on the development of a more complete record, may also pursue their claim of inverse condemnation. The claims against Kahley and Anderson are time barred under both the six-year statute of limitations and the statute of repose.

1. The Russos' dangerous condition and nuisance claims against the Board and the City are governed by the Act, which bars a lawsuit that has not been filed within two years after accrual of the cause of action, or if notice of claim is not given to the public entity within ninety days. Although the Russos were initially aware of flood damage as early as 1980 or 1981, they invoke the "continuing ton" doctrine. Under that doctrine, when a court finds that a continuing nuisance has been committed, it implicitly holds that the defendant is committing a new tort, including a new breach of duty, each day, triggering a new statute of limitations. Because the defendant has a duty to remove the nuisance, and because the defendant's failure to remove the nuisance is a breach of that duty, each injury is a new tort. Therefore, claimants are able to collect damages for each injury suffered within the limitations period. (pp. 11-19)

2. In nuisance actions, it is important for statute of limitations purposes to ascertain whether the invasion or interference is "permanent" or "continuous." A nuisance is continuing when it is the result of a condition that can be physically removed or legally abated. In such a case, it is realistic to impute a continuing duty to the defendant to remove the nuisance, and to conclude that each new injury includes all elements of a nuisance, including a new breach of duty. However, when the nuisance is permanent and cannot be physically removed, it is unfair to impose a continuing duty to remove the nuisance, especially when a court has not and will not order the defendant to abate the nuisance. Because the nuisance was not permanent and a court ordered the City to abate it, the City had a continuing duty to abate the nuisance. As a result, each new injury suffered by the Russos was a new tort. The record is less clear about the nuisance claim against the Board. Therefore on remand the trial court should determine whether the nuisance claim attributable to the Board is physically and legally permanent or whether it could have been abated by installing a new or modified drainage system. If it could have been abated, then the nuisance claim against the Board should be reinstated. (pp. 19-21)

3. The continuing tort theory also applies to the Russos' dangerous condition claims against the Board and the City. Therefore, the statute of limitations for each injury runs from the date of that injury and the Russos may maintain a dangerous condition suit for each injury suffered within the time limits imposed by the Act. If it is assumed that the August 24, 1987 letter constituted sufficient notice under the Act, any claim accruing against the City prior to July 18, 1988 would be barred. Consequently, the tort claims against the City that are not barred by the two-year period of limitations are claims for damages sustained between July 18, 1988 and May 1990 when the flooding ceased. The Russos' counterclaim alleging that the City was liable for the dangerous condition on Southeast Avenue will be barred by the Act unless the Russos filed a notice of claim. Because no notice of claim was filed with the Board until June 11, 1990, the Act bars all claims against the Board except for those that accrued within ninety days prior to that date. (pp. 21-25)

4. Under the Act, if the City can establish plan or design immunity, it will not be held liable for a failure to improve the inadequate drainage system on Grant Avenue. Because the City has not presented any evidence about its initial decision establishing the drainage system, it has not met the burden of establishing such immunity. Therefore, summary judgment for the City is inappropriate, unless on remand, the City can meet the burden of proof required by the immunity provisions of the Act. (pp. 26-30)

5. Kahley and Anderson only face the negligence claims. There is no continuing tort relating to the negligent construction of the building; Kahley and Anderson breached their duty in 1980 and had no control over the school property after 1981. Further, the claims against Kahley and Anderson are barred by the statute of repose. The purpose of that statute was to limit the expanding liability of contractors, builders, planners and designers. The Appellate Division's analysis is inconsistent with that statutory purpose. The statute of repose commences with substantial completion, which occurred on September 5, 1979 when the certificate of occupancy was issued. Because suit was not filed until July 1990, more than ten years later, the claims against Kahley and Anderson are barred. (pp. 30-40)

Judgment of the Appellate Division is AFFIRMED IN PART and REVERSED IN PART. The claims against Kahley and Art Anderson are dismissed and the claims against the City and the Board are hereby remanded to the trial court for further proceedings consistent with this opinion.

CHIEF JUSTICE WILENTZ and JUSTICES HANDLER, POLLOCK, O'HERN, STEIN and COLEMAN join in JUSTICE GARIBALDI's opinion.

The opinion of the Court was delivered by GARIBALDI, J.

Plaintiffs assert that the Vineland Board of Education (the Board), the City of Vineland (the City), the architect, Glenn A. Kahley (Kahley), and the general contractor, Art Anderson, Inc. (Art Anderson), are liable to them for damage to their crops and farmland from flooding that was caused by the improper siting and construction of a public school across the street from their property and by an inadequate drainage system on a bordering street. The school was constructed in 1979, but plaintiffs did not file suit until 1990.

At issue in this appeal is whether the Tort Claims Act, N.J.S.A. 59:1-1 to -12-3, and the six-year statute of limitations governing actions for tortious injury to real property, N.J.S.A. 2A:14-1, bar plaintiffs' claims against the Board and the City, and whether that six-year statute of limitations and the ten-year statute of repose set forth in N.J.S.A. 2A:14-1.1 bar plaintiffs' action against the architect and the general contractor. Specifically, we must determine whether each incursion of floodwater constitutes a continuing tort, and whether the statute of repose begins to run from the date of substantial or full completion of construction.

I

Plaintiffs, individually and through various corporations (collectively, Russo), own or lease several connected parcels of land inVineland, New Jersey that have been used as a single unit for farming. Plaintiffs have owned three of the lots since 1970 and purchased seven other lots after 1985.

Those parcels of land are bordered on the south by Grant Avenue, and on one side by South East Avenue, a road that is perpendicular to and intersects with Grant Avenue. While Grant Avenue apparently has had a drainage system, the street historically has been the site of flooding due to inadequate drainage.

In 1977, the Board decided to construct the Dr. William Mennies School on the southern side of Grant Avenue, across from plaintiffs' property. The site chosen was on a portion of land with a higher elevation than both Grant Avenue and the Russo farmland across the street. The Board hired Kahley, an architect, to design the building, advise the Board, and supervise construction. He also was to review and approve requests for payment by the contractors.

The Board also hired Daniel W. Jacobs, P.E. and Lippincott Engineering Associates as structural engineers to perform tests and recommend a design to ensure a proper drainage system. Lippincott recommended to Kahley that the construction plans include one or two drainage basins to handle runoff of rainwater.

In March 1978, the State Department of Education approved the building plans, and construction began. In May 1978, the Board signed an American Institute of Architects (AIA) standard-form contract with Art Anderson, under which that company would act as general contractor, responsible for all construction work. Under the contract, Anderson was to be paid, every month, 90% of the amount earned in the prior month; on "Substantial Completion," 100% of the money was to be paid, less retainage "for all incomplete Work and unsettled claims." The entire unpaid balance was to be paid when the work was completed and a final certificate of payment was filed.

On September 5, 1979, the State Department of Education issued an Occupancy Permit because its "inspection of the project indicates that the building is substantially completed." Several days later, a Certificate of Substantial Completion, an AIA standard form, was issued by Kahley to the Board because "construction is sufficiently complete . . . so the owner can occupy or utilize" the building "for the use for which it is intended." Since September 1979, regular elementary school classes have been held in the building. On April 11, 1980, a request for final payment was submitted to the Board with a certification by Kahley that the project was 100% complete. Also on that date, an invoice was filed by Art Anderson seeking, pursuant to the contract, 100% of payment less retainage. In accordance with the contract, the surety consented to the release of final payment, less retainage.

Although the building was substantially completed in September 1979, a "punch list" of items that required completion was compiled, including replacement of damaged ceiling tiles, cleaning carpets, caulking doors, and installing toilet partitions. By November 7, 1980, most of these items were completed, and the punch list was fully completed by February 19, 1981.

The construction of the new school, however, allegedly caused damage to the plaintiffs' property. Their expert, Alan Cohen, stated that the contractor and architect negligently ignored the design specifications and constructed the drainage basins improperly. Instead of flowing into the basins, rainwater would run down the driveway, onto Grant Avenue, combine with the other water that Grant Avenue's inadequate drainage could not handle, and flood the Russo fields.

Thomas Russo testified at his deposition that

I started seeing water in the fields that . . . I had not seen before not too long after the School was built. . . . I do not remember if it was the first year or the first growing season or the . . . beginning of the next growing season. . . . A short time frame after the school was built.

Mario Russo described the early damage in 1980 and 1981 as "general water erosion. It was very evident that we had gullies through the . . . property. We also had standing water and as a result, very poor crops. Bare areas without crops wherever the water laid." Plaintiffs explained, however, that Vineland was suffering through a three-year dry spell that started around the time that the school was completed, and that therefore the flooding and damages were minimal in those early years. In the mid-1980s, the rains returned and the flooding worsened. By 1987, the floodwaters washed off the topsoil and left the farmland with an inferior layer of soil. Eventually, the Russo crops suffered from water rot and were severely damaged. Specifically, plaintiffs claim that the flood waters resulted in soil erosion, soil-nutrient depletion, decreased crop production and a diminution in value of their property.

At one point, plaintiffs had constructed a dike to protect the farmlands, but that resulted in worse floods on Grant Avenue, so it was removed. Later, plaintiffs constructed a berm on its property alongside South East Avenue to prevent the runoff from that road from flooding its property.

Thomas Russo spoke to several city officials in an attempt to remedy the problem. On August 24, 1987, he sent the following letter to the Mayor of Vineland:

Enclosed please find two copies of letters sent from our farming operation. After many phone calls to your office, I am confused about your casual attitude towards the problem.

We can no longer allow this situation to continue. We are again asking for you to come to the ...


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