Richard Catena v. Raytheon Company, 145 A.3d 1085

Background

In 1987-88, First Fidelity Bank (FFB) discovered PCE-contaminated soil at a Teterboro property owned by defendant Andersen, excavated ~80–100 cubic yards, and replaced it with clean fill; FFB/Andersen did not notify DEP of the cleanup.
Andersen submitted affidavits to DEP in 1987 and 1988 stating, "on information and belief," that recent occupants had not handled hazardous wastes; DEP issued letters of nonapplicability and the sale closed to plaintiff Catena on November 1, 1988.
Catena did not know of contamination at purchase; his 1989 environmental assessment did not reveal PCE contamination.
In 1998, a PSI investigation ordered for refinancing disclosed PCE contamination; DEP required Catena to enter a Memorandum of Agreement (MOA) and remediate; Catena learned of contamination in May–June 1998.
Catena sued Andersen (2005) and later Wells Fargo (successor to FFB) (2008) for common law fraud and CFA violations, alleging fraudulent concealment of the 1987 cleanup; during discovery in 2007 Andersen produced EWMA/FFB documents revealing the earlier cleanup.
Trial court granted summary judgment as time-barred, reasoning Catena’s claims accrued in June/December 1998; Appellate Division reversed, applying the discovery rule to fraud claims and finding accrual occurred no earlier than May 21, 2002.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
When did fraud/CFA claims accrue under discovery rule?	Accrual occurred in Dec. 2007 (when EWMA reports were produced in Andersen’s deposition)	Accrual occurred by June 1998 (MOA/signing) or Dec. 1998 (DEP required remediation)	Accrual did not occur in 1998; accrual no earlier than May 21, 2002, so claims are timely
Whether discovery of contamination in 1998 is equivalent to discovery of fraud	Discovery of contamination did not put Catena on notice of defendants’ concealment or scienter	Discovery of contamination and DEP involvement should have alerted Catena to possible fraud	Court: contamination alone did not supply facts indicating Andersen/FFB knowingly concealed the 1987 cleanup; scienter not reasonably inferable in 1998
Whether plaintiff should have uncovered the 1987 cleanup via reasonable diligence or public records	Plaintiff lacked access to EWMA/FFB internal reports and had no reason to suspect them; reasonable diligence would not have revealed the concealed cleanup pre-suit	Plaintiff’s pre-suit investigations and delays show lack of diligence; public records and MOA should have sufficed to trigger accrual	Court: reasonable diligence would not have discovered the concealed EWMA reports or cleanup before compulsory discovery; no imputation of knowledge from public records
Whether equitable dismissal is appropriate due to prejudice from plaintiff’s delay	Delay resulted from defendant’s concealment; discovery rule protects plaintiff	Defendants prejudiced by lateness (lost documents/memory) and equity should bar claim	Court: equitable dismissal inappropriate; any prejudice flows from defendants’ concealment and plaintiff also bears loss-of-evidence risk

Key Cases Cited

Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520 (N.J. 1995) (summary judgment standard and drawing inferences for non-movant)
Lopez v. Swyer, 62 N.J. 267 (N.J. 1973) (formulation and application of the discovery rule)
Merck & Co. v. Reynolds, 559 U.S. 633 (U.S. 2010) (discovery rule in fraud context requires awareness of facts suggesting scienter)
Gennari v. Weichert Co. Realtors, 148 N.J. 582 (N.J. 1997) (elements of common law fraud)
SASCO 1997 NI, LLC v. Zudkewich, 166 N.J. 579 (N.J. 2001) (discovery rule applied to fraudulent transfer context and relevancy of industry custom)
Belmont Condo. Ass'n v. Geibel, 432 N.J. Super. 52 (App. Div. 2013) (CFA claim accrual tied to when ascertainable loss and true nature/extent of defect became evident)
Burd v. N.J. Tel. Co., 76 N.J. 284 (N.J. 1978) (date of discovery when plaintiff learns facts equating to a cause of action)