County of Hudson v. State
208 N.J. 1
| N.J. | 2011Background
- County of Hudson entered into 1987 and 1988 Facility Assistance Contracts with the State to house State prisoners in its jails.
- Disputes centered on per diem payments, bed counts, and how reimbursement was calculated under the contracts.
- 1997 suit for underpayment was settled in 1998, altering how the daily rate was calculated based on two State prisons' actual costs.
- May 2003: State advised overpayment and planned downward adjustments; September 2003: County disputed overpayments and alleged underpayments for beds and use.
- September 2005: County amended complaint to add new theories (over 100 beds, first 15 days, parole violators); trial court dismissed for failure to comply with Contractual Liability Act notice.
- Appellate Division partially reversed; later decisions held new contract claims discovered during litigation require a separate notice of claim under the Contractual Liability Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Must new contract claims discovered in litigation follow the CL Act notice? | Hudson argues discovery excuses notice. | State argues mandatory notice cannot be bypassed by discovery. | No; notice required regardless of discovery. |
| Does amendment of the complaint constitute substantial compliance with the notice requirement? | Hudson contends amendment suffices to satisfy notice. | State contends amendment cannot replace statutory notice. | No; filing an amended complaint does not substitute for formal notice. |
| Does the discovery rule apply to CL Act contract claims? | Hudson seeks equitable extension via discovery. | State argues discovery rule does not apply to contract claims. | Discovery rule does not apply to CL Act claims; accrual remains event-based. |
| If accrual is installment-based, do claims within ninety days of notice remain timely? | Hudson asserts staggered accrual allows timely later claims. | State relies on strict CL Act accrual and notice rules. | Yes; installment-like accrual limits timely claims to before ninety days prior to notice. |
Key Cases Cited
- County of Morris v. Fauver, 153 N.J. 80 (1998) (construction of Contractual Liability Act; accrual and notice rules applied to county contracts)
- Fauver, 707 A.2d 958 (N.J. 1998) (installment contract approach; discovery rule generally not applicable to contract actions)
- Lopez v. Swyer, 62 N.J. 267 (1973) (development of discovery rule in personal injury contexts)
- Galik v. Clara Maass Med. Ctr., 167 N.J. 341 (2001) (substantial compliance doctrine; equitable relief from strict notice where no prejudice)
- Morgan v. Union County, 268 N.J. Super. 337 (1993) (application of substantial compliance in Tort Claims Act context)