Court Opinion

ID: 4026247
Source: CourtListenerOpinion
Date Created: 2016-08-18 14:08:37.959277+00
Date Added: 2024-06-11T08:02:38.770138
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                  APPROVAL OF THE APPELLATE DIVISION

                                     SUPERIOR COURT OF NEW JERSEY
                                     APPELLATE DIVISION
                                     DOCKET NO. A-4636-13T4

RICHARD CATENA,

      Plaintiff-Appellant,
                                        APPROVED FOR PUBLICATION

v.                                          August 18, 2016

RAYTHEON COMPANY, individually            APPELLATE DIVISION
and as successor to Air
Associates, Inc. and Electronic
Communications, Inc.; HONEYWELL
INERNATIONAL, INC., individually
and as successor to Bendix
Corporation and Allied Corp.;
ORIGINIT FABRICS, INC.; ORIGINIT
FABRICS OF NEW YORK, INC.;
COMBINATES CORPORATION,

      Defendants,

and

DANIEL P. ANDERSEN; WELLS FARGO
BANK, N.A., a division of which
is Wachovia Bank, N.A., successor
to First Fidelity Bank,

     Defendants-Respondents.
___________________________________

          Submitted December 16, 2015 – Decided August 18, 2016

          Before Judges Alvarez, Ostrer and Haas.

          On appeal from the Superior Court of New
          Jersey, Law Division, Bergen County, Docket
          No. L-1267-11.
            Szaferman, Lakind, Blumstein & Blader, P.C.,
            attorneys for appellant (Janine G. Bauer, on
            the briefs).

            Fitzgerald and McGroarty, attorneys for
            respondent Daniel P. Andersen (Joseph P.
            McGroarty and Michael J. Malinsky, on the
            brief).

            Fox Rothschild LLP, attorneys for respondent
            Wells Fargo Bank, N.A. (Robert J. Rohrberger
            and Matthew S. Adams, on the brief).

    The opinion of the court was delivered by

OSTRER, J.A.D.

    This appeal requires us to apply the discovery rule to

claims of common law fraud and a violation of the New Jersey

Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20.                Plaintiff

Richard Catena appeals from the summary judgment dismissal of

his fraud claims against defendants David P. Andersen and Wells

Fargo Bank, N.A. (Wells Fargo).         The claims were based on the

allegation that Andersen and a Wells Fargo predecessor, First

Fidelity Bank (FFB), fraudulently concealed the facts that the

Teterboro    property     Catena    purchased      from    Andersen        was

contaminated   with   hazardous    waste   and   that   they   had   done     a

partial clean-up.     The trial court held that Catena should have

discovered the fraud in June 1998, when he learned the property

was contaminated.       As that was more than six years before he

filed his respective claims, the court concluded the claims were

time-barred under N.J.S.A. 2A:14-1.

                                    2                                A-4636-13T4
    We      disagree     with        the    trial        court's          reasoning.           The

limitations period began when Catena knew or through reasonable

diligence     should     have        discovered          the        fraud.         Under      the

circumstances,      Catena's         discovery          of     contamination         did       not

constitute    discovery        that        Andersen      and        FFB    concealed         their

knowledge    of    the   contamination            and    their       subsequent      cleanup.

Even with a diligent inquiry, a reasonable person would not have

discovered the fraud more than six years before the claims were

filed against Andersen and Wells Fargo in August 2005 and May

2008, respectively.         Therefore, we reverse.

                                             I.

    We discern the following facts from the record, extending

all favorable inferences to Catena as the non-movant.                                Brill v.

Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

    Catena's         fraud           claims         are            based      on         alleged

misrepresentations        by       Andersen       and        FFB    in     connection         with

Catena's     purchase     of       the     property          from    Andersen       in       1988.

Andersen     had    owned      the       property,       personally          or    through       a

partnership, since 1983.              That year, his partnership and First

National    Bank,    a   predecessor           to       FFB,       entered    into       a    loan

agreement    secured     by    a     mortgage       on    the       property.        In      1986,

Andersen acquired sole title, but his partnership defaulted on

the loan in 1987.           In August 1987, FFB took possession of the

                                              3                                        A-4636-13T4
property without obtaining title, intending to sell the property

and keep the proceeds to satisfy the debt.

    At     FFB's   direction,     Environmental    Waste    Management

Associates (EWMA) conducted an environmental assessment of the

property to determine if there were any environmental problems

on the property.   After taking soil samples, EWMA reported "high

levels of tetrachloroethylene," also known as perchloroethylene

(PCE), on the property.     Following EWMA's recommendations, in

the fall of 1987 FFB authorized roughly eighty to 100 yards of

contaminated soils to be excavated and replaced by clean fill.

Even after the excavation, however, EWMA could not guarantee FFB

that all the contaminated soil had been removed.

    FFB's attorney sent Andersen's attorney the EWMA reports in

December   1987,   along   with     a   letter    stating   that    the

contamination impeded the bank's ability to sell the property

and that prospective buyers had "expressed concern" about the

"environmental problem" on the property.         In another letter to

Andersen's attorney in March 1988, FFB's attorney wrote that FFB

expected Andersen to arrange for the removal of the excavated

soil that was still on the property.

    In June 1988, Andersen and FFB agreed that Andersen would

negotiate the sale of the property and sell the property "as

is," with FFB retaining the proceeds of the sale.       Their written

                                   4                          A-4636-13T4
agreement also stated that Andersen, at FFB's expense, would

remove the excavated soil evidently still being stored on the

property.        Thereafter, the contaminated soil was disposed of

offsite, and replaced by clean soil onsite.                          EWMA opined that

the    property      would     pass    inspection           under   the    Environmental

Cleanup Responsibility Act (ECRA).                      However, neither EWMA nor

FFB     informed       the    New     Jersey      Department        of     Environmental

Protection (DEP) of the cleanup.

       Catena    was    unaware       of   this   contamination           or    remediation

when he purchased the property.                   The June 29, 1988 contract of

sale    stated     Catena      was    buying      the   property      "as        is."     The

contract stated that Catena had inspected the premises to his

satisfaction, and no representations or warranties had been made

regarding the premises, other than those in the contract.

       However, the day before the sale, FFB provided Catena's

attorney a July 31, 1987 affidavit (1987 Affidavit) Andersen had

submitted to DEP.            The affidavit stated that the only occupants

of     the   property        since    1984   were       a    dry    wall       construction

contractor,      a   bank,      and   a    trucking      concern.          The    affidavit

stated that, "on information and belief," these occupants had

not "engaged on the Subject Property in any operations which

involve the generation, manufacture, refining, transportation,

treatment, storage, handling or disposal of hazardous substances

                                             5                                      A-4636-13T4
or wastes," and that, therefore, the property was not subject to

the requirements of ECRA.              The letter to Catena's attorney that

accompanied      this       affidavit       also      included           a     "letter    of

nonapplicability" (LNA) that DEP had issued based on the 1987

Affidavit.

      Following      execution      of    the    June      29,    1988       contract,   but

before the closing, Andersen submitted a second affidavit (1988

Affidavit)     to    DEP    on    August       12,   1988,       for   the     purpose    of

obtaining another LNA.              This affidavit also stated that, "on

information     and        belief,"      the     three       previously         identified

occupants     had    not    "engaged      on    the       Subject      Property    in    any

operations which involve the generation, manufacture, refining,

transportation,        treatment,        storage,     handling         or     disposal    of

hazardous substances or wastes . . . ."                         This affidavit failed

to mention that PCE-contaminated soil had been found on the

property in 1987.           Based on the 1988 Affidavit, DEP issued a

second LNA on September 1, 1988, which stated that the sale to

Catena was not subject to ECRA, with the caveat that the LNA was

not   a    finding    as    to   the     "existence        or    nonexistence      of    any

hazards to the environment at this location."

      On    November       1,    1988,    Catena      closed      on     the    sale,    and

acquired     title     from      Andersen.           In     1989,      Catena     retained

environmental        consultant        EcolSciences,            Inc.    to     perform    an

                                            6                                      A-4636-13T4
environmental assessment.                 EcolSciences' March 1989 assessment

stated that past uses of the property included: "production of

aircraft parts," "assembly of mechanical electrical parts," a

"textile    knitting       and     dyeing    operation,"         the    "manufacture      of

prefabricated exterior building facades," and "a distribution

center    for    screen-printing           inks   and    related        supplies."       The

assessment made no mention of contaminated soil or PCE, but

recommended further investigation of the possible presence of

other contaminants.

    Nearly a decade later, when Catena sought to refinance the

property, the prospective lender hired Property Solutions, Inc.

(PSI) to conduct an environmental investigation.                               In multiple

reports    completed         in     the    spring       of     1998,     PSI    documented

tetrachloroethylene              contamination          exceeding         DEP      cleanup

standards.            In   April      1998,       PSI        notified     DEP    of    soil

contamination on the property.

    Catena was made aware of PSI's findings as early as May 26,

1998,    when    he    was    provided       PSI's      May    26   report      disclosing

tetrachloroethane contamination exceeding DEP cleanup standards.

In that report, which was provided to DEP, PSI sought a "No

Further Action Required" letter from DEP.                              This report also

stated     the    "likely         cause"    of    the        contamination       was   "the

historical use of the property in airplane related industries."

                                             7                                     A-4636-13T4
       By letter dated June 4, 1998, DEP advised Catena that it

would not issue the requested no-action letter.                         DEP's letter

stated that Catena must apply for and execute a Memorandum of

Agreement     (MOA)     setting     forth         a    plan    to     clean   up    the

contamination.        The letter noted that a cleanup satisfying DEP

standards could result in DEP issuing a "no further action"

letter.     On June 22, 1998, Catena and DEP executed a MOA that

required him to conduct further investigation and submit a site

investigation report to DEP.                In the MOA, Catena acknowledged

that      hazardous     wastes         —        specifically,       PCE,      toluene,

ethylbenzene, and xylene — had been "used, generated, treated,

stored, disposed or discharged" at the site.

       Following   Catena's       submission          of   a   site    investigation

report in October 1998, DEP advised him, on December 22, 1998,

that the contaminated soil "must be addressed" and "remediated."

In July 1999, DEP notified Catena his MOA was "administratively

complete" and directed him to submit a schedule for implementing

the steps set forth in the MOA.                       To comply with the steps

required by the MOA, Catena once again retained EcolSciences to

further investigate the property.                     By letter dated March 21,

2000, EcolSciences reported to Catena the results of recent soil

sampling,    writing     that     it       had    detected     soil    contamination

requiring additional investigation and sampling.                        On June 27,

                                            8                                 A-4636-13T4
2000,       DEP   wrote     to     Catena       that    it     accepted        EcolSciences'

proposed work plan for additional investigation and soil and

groundwater sampling.

       For reasons that are unclear, EcolSciences' work plan was

not    implemented,         causing       DEP    to     terminate        the    MOA     due    to

inactivity        in   March      2001.         Following      another         delay,      Catena

entered into a new contract with EcolSciences in December 2003.

In a May 2004 letter, EcolSciences informed Catena that new soil

and     groundwater          sampling        revealed          a        "larger       area     of

contamination"         on    the    property,          including         ground      water    and

stream contamination in what was a "former oil recovery area"

used    by    prior    owner(s).          This      letter        also    recommended         that

Catena "retain an environmental lawyer to notify the prior owner

responsible for the former oil recovery area."

       On    August    22,     2005,      Catena       filed      his    initial      complaint

against      Andersen       and    the    successors         of    other       prior    owners,

asserting claims of common law fraud and violations of the CFA

and    other      environmental        protection        statutes.             The    complaint

alleged that defendants committed fraud by failing to disclose

the    contamination         on    the    property.            Catena      took      Andersen's

deposition in December 2007, at which time Andersen produced the

1987    EWMA      reports    and     communications            between      his      and   FFB's

attorneys.         These documents demonstrated that Andersen and FFB

                                                9                                       A-4636-13T4
knew that PCE-contaminated soil was excavated, stored, removed,

and then replaced with clean soil.

       Catena had not seen these documents before 2007.                         At his

deposition, Catena testified that no one informed him of any

environmental issues on the property at the time of the sale.

He conceded that, before buying the property, he did not ask

Andersen or FFB whether there were any environmental issues, or

investigate past uses of the property.                     Catena also asserted

that he was "under the impression that [the property] was clean"

when he bought it, and was "unaware that it was polluted."

       In    February       2008,    Catena      filed    an   amended    complaint

asserting a more detailed claim of common law fraud against

Andersen.         On May 21, 2008, he filed another amendment asserting

common      law    fraud    and     CFA   claims   against     Wells     Fargo,      the

successor to FFB.

       Defendants moved for summary judgment on the fraud and CFA

claims on the ground that they were brought more than six years

after they accrued, and thus were time-barred under N.J.S.A.

2A:14-1.       Catena cross-moved for summary judgment.                  On January

16,    2009,      the   court     granted     defendants'      motion    and    denied

Catena's motion.           In a brief oral decision, the judge determined

that   Catena's         fraud   claims     accrued   in    June   1998,    when       he

executed the MOA.           The judge rejected Catena's claim that he did

                                            10                                 A-4636-13T4
not discover the fraud until 2007, noting that Catena first

asserted his fraud claim in 2005.

       Catena appeals from the summary judgment dismissal of his

fraud claims, arguing that, under the discovery rule, the claims

did not accrue until December 2007, when he took Andersen's

deposition.      Wells    Fargo      argues   that       the   limitations     period

began to run no later than June 1998, when Catena signed the

MOA,   acknowledging      the   presence      of    contamination.        Andersen

contends it began no later than December 22, 1998, when DEP

required remediation.

                                        II.

                                         A.

       We review a grant of summary judgment de novo, applying the

same standard as the trial court.               Henry v. N.J. Dep't of Human

Servs., 204 N.J. 320, 330 (2010).               Whether a cause of action is

barred by a statute of limitations is a question of law, also

reviewed de novo.         Estate of Hainthaler v. Zurich Commercial

Ins., 387 N.J. Super. 318, 325 (App. Div.), certif. denied, 188
N.J. 577 (2006).        The application of the discovery rule is for

the court, not a jury, to decide.               Lopez v. Swyer, 62 N.J. 267,

274-75 (1973).

       Catena   was   required    to    bring      his    fraud   and   CFA    claims

within   six    years    of   when     they   accrued.         N.J.S.A.   2A:14-1;

                                         11                                   A-4636-13T4
D'Angelo v. Miller Yacht Sales, 261 N.J. Super. 683, 688 (App.

Div. 1993).       The sole issue before us is when these claims

accrued.

      To determine when Catena's fraud claims accrued, we apply

the   discovery    rule,    which     delays      the     commencement       of    the

limitations period in appropriate cases.                      Under the rule, a

claim does not accrue until the plaintiff "discovers, or by an

exercise of reasonable diligence and intelligence should have

discovered that he may have a basis for an actionable claim."

Lopez, supra, 62 N.J. at 272.               The party seeking the rule's

benefit bears the burden to establish it applies.                 Id. at 276.

      Long before the discovery rule was applied to negligence

claims,    Fernandi   v.   Strully,    35 N.J. 434   (1961),    courts     of

equity held that, in fraud cases, the limitations period does

not   commence    until    the   fraud      was     discovered,         or   through

reasonable diligence should have been discovered.                   See Partrick

v. Groves, 115 N.J. Eq. 208, 211 (E. & A. 1934); Giehrach v.

Rupp, 112 N.J. Eq. 296, 302-03 (E. & A. 1933); Lincoln v. Judd,

49 N.J. Eq. 387 (Ch. 1892).            The application of the discovery

rule to fraud claims has also received general acceptance in our

modern court system.       See SASCO 1997 NI, LLC v. Zudkewich, 166
N.J. 579, 590-92 (2001) (applying discovery rule to fraudulent

transfer claim under version of the Uniform Fraudulent Transfers

                                       12                                    A-4636-13T4
Act then in effect); Belmont Condo. Ass'n v. Geibel, 432 N.J.

Super.    52,    83    (App.       Div.)   (applying      discovery        rule   to     CFA

claim), certif. denied, 216 N.J. 366 (2013); Simpson v. Widger,

311 N.J. Super. 379, 391 (App. Div. 1998) (applying discovery

rule to fraud); Dreier Co. v. Unitronix Corp., 218 N.J. Super.
260, 274 (App. Div. 1986) (applying discovery rule to common law

fraud claim); Fed. Ins. Co. v. Hausler, 108 N.J. Super. 421, 426

(App.     Div.      1970)    (applying          discovery      rule     to     fraudulent

concealment claim).            Lopez, supra, the seminal case for the

statement of the rule, recognized its applicability to fraud

claims. 62 N.J. at 275 n.2.

     The discovery rule is "essentially a rule of equity."                               Id.

at   273.        While      statutes       of     limitations       "are     designed     to

stimulate    litigants        to    pursue      their   actions       diligently,"       the

discovery rule mitigates "the unfairness of barring claims of

unknowing parties."          Mancuso v. Neckles, 163 N.J. 26, 29 (2000).

The discovery rule is designed "to avoid harsh results that

otherwise would flow from mechanical application of a statute of

limitations."         Vispisiano v. Ashland Chem. Co., 107 N.J. 416,

426 (1987).

     In     fraud     cases,   the     discovery        rule   is     justified     by   an

additional consideration not present in negligence cases: the

victim's lack of awareness of the fraud is the wrongdoer's very

                                             13                                   A-4636-13T4
object.    The rule thus prevents the defendant from benefiting

from his own deceit.            As the United States Supreme Court has

explained,    "something       different        [is]   needed    in   the   case    of

fraud,    where    a    defendant's    deceptive       conduct     may   prevent     a

plaintiff from even knowing that he or she has been defrauded.

Otherwise, 'the law which was designed to prevent fraud' could

become 'the means by which it is made successful and secure.'"

Merck & Co. v. Reynolds, 559 U.S. 633, 644, 130 S. Ct. 1784,

1793-94,   176    L.    Ed.    2d   582,    594   (2010)   (quoting      Bailey     v.

Glover, 88 U.S. (21 Wall.) 342, 349, 22 L. Ed. 2d 636, 639

(1875)).     A defendant should "not be permitted to take advantage

of his own wrong" where it was "his fraudulent conduct" that was

"responsible      for   [the   plaintiff's]        delay   in    prosecuting"      his

claims.    Partrick, supra, 115 N.J. Eq. at 211.

    In general, the date of discovery is when the plaintiff

learns or reasonably should learn "the existence of that state

of facts which may equate in law with a cause of action."                       Burd

v. N.J. Tel. Co., 76 N.J. 284, 291 (1978).                      This determination

is highly fact-sensitive, and will "vary from case to case, and

. . . from type of case to type of case."                       Vispisiano, supra,

107 N.J. at 434.

    Yet the discovery rule does not toll the statute until the

plaintiff has "legal certainty" of an actionable claim, Lapka v.

                                           14                               A-4636-13T4
Porter Hayden Co., 162 N.J. 545, 555-56 (2000), or until the

full    extent    of     the    damage      becomes    apparent,        Russo    Farms    v.

Vineland Bd. of Educ., 144 N.J. 84, 115 (1996).                                 The claim

accrues once the plaintiff "is aware of facts that would alert a

reasonable person to the possibility of an actionable claim."

Lapka,   supra,     162    N.J.       at    555-56.        Mere   suspicion      that    the

plaintiff has a claim, however, is not enough.                                 Vispisiano,

supra, 107 N.J. at 434.               Thus, the plaintiff's knowledge "must

be   evaluated     in     light    of      the     requirements     of   the     cause   of

action" he asserts.             Enertron Indus., Inc. v. Mack, 242 N.J.

Super. 83, 91 (App. Div. 1990).

       Beginning        with    the     elements       of    common      law    fraud,     a

plaintiff        must      prove           that      the     defendant          materially

misrepresented a presently existing or past fact; the defendant

knew or believed it was false, intending that the plaintiff

would    rely      on     the     misrepresentation;              and    the     plaintiff

reasonably relied on the misrepresentation and suffered damage

as a result.        Gennari v. Weichert Co. Realtors, 148 N.J. 582,

610 (1997).       In the real estate context, misrepresentation may

consist of intentional nondisclosure of a material defect not

observable by the buyer.              State Dep't of Envir. Prot. v. Ventron

Corp., 94 N.J. 473, 503-04 (1983); Weintraub v. Krobatsch, 64
N.J. 445, 455 (1974).             Likewise, the "unlawful practice" element

                                              15                                  A-4636-13T4
of a CFA violation encompasses a knowing concealment or omission

of    material    fact    with    the    intent        that    others     rely      on   it.

N.J.S.A. 56:8-2; see also Gonzalez v. Wilshire Credit Corp., 207
N.J. 557, 576 (2011) (CFA violation consists of (1) an unlawful

practice, (2) an ascertainable loss, and (3) a causal nexus

between the unlawful conduct and ascertainable loss).

       The date of discovery, therefore, is when the fraud was or

reasonably should have been discovered.                        In Belmont, supra, a

condominium       association      brought        a     CFA     claim     premised       on

misrepresentations by the general contractor, after the building

was severely damaged from water leaks. 432 N.J. Super. at 60,

62-63.       We   held    that    the    claim        did    not    accrue     until     the

plaintiff     "had      reason    to    believe       that     it   had    suffered       an

ascertainable loss," which we found was the point at which "the

true nature and extent of the water infiltration problem first

became evident . . . ."            Id. at 83.          In other words, the claim

did    not    accrue      until    the    plaintiff           was    aware     of    facts

establishing an essential element of its claim.

       Because     the    wrongdoer's      mental           state   is    an   essential

element      of   the    claim,   discovery       does        not   occur      until     the

plaintiff is aware of facts indicating the wrongdoer knew his

statement was false, and intended the other party to rely on its

falsity.      See Merck, supra, 559 U.S. at 649, 130 S. Ct. at 1796,

                                          16                                     A-4636-13T4
176 L. Ed. 2d at 597 (stating that it would "frustrate the very

purpose     of    the    discovery          rule"       if   the       limitations      period

commenced "regardless of whether a plaintiff had discovered any

facts    suggesting      scienter.").              In    determining        what      facts     a

plaintiff knew or should have known, we will not assume the

plaintiff's        knowledge      of        information           available      in     public

records.     Giehrach, supra, 112 N.J. Eq. at 303 (declining to

impute     knowledge      of     facts        that       "might        easily    have       been

ascertained from the public records").                       Proof of industry custom

is not determinative of what inquiry a reasonable person would

make to discover the fraud, but it is relevant to the discovery

rule analysis.         SASCO 1997 NI, supra, 166 N.J. at 590-91.

    In applying the discovery rule, we will not require a level

of circumspection that is unreasonable under the circumstances.

The Supreme Court stated that "it would be inequitable for a

physician        who    has    given        [assurances           of    progress       towards

recovery] to claim that a patient, in relying upon them and not

suspecting their falsity or inaccuracy, failed to exercise the

'reasonable        diligence      and        intelligence'             required        by    the

discovery    rule."           Lynch    v.    Rubacky,        85 N.J. 65,    75    (1981)

(applying discovery rule to medical malpractice claim) (quoting

Lopez, supra, 62 N.J. at 274).                       That is consistent with the

general principle in fraud cases, that "[o]ne who engages in

                                              17                                       A-4636-13T4
fraud . . . may not urge that one's victim should have been more

circumspect or astute."            Jewish Ctr. of Sussex Cty. v. Whale, 86
N.J. 619, 626 n.1 (1981) (rejecting argument that fraud victim's

reliance on misrepresentation was unreasonable).                    The same trust

that a wrongdoer exploits to perpetrate a fraud in the first

place may delay the victim's eventual discovery of the fraud.

       We   are   persuaded    by     New    York    decisions      applying    their

discovery rule to fraud claims.                  The New York Court of Appeals

has held that "knowledge of the fraudulent act is required and

mere   suspicion      will   not    constitute      a   sufficient    substitute."

Erbe   v.   Lincoln    Rochester      Tr.    Co.,    144 N.E.2d 78,   81   (N.Y.

1957); see also Sargiss v. Magarelli, 909 N.E.2d 573, 576 (N.Y.

2009); Axelrod v. CBS Publications, 185 N.J. Super. 359, 367

(App. Div. 1982) (citing Erbe, supra, 144 N.E.2d at 81).                             A

plaintiff is deemed to have discovered the fraud when he has

"knowledge of facts from which the alleged [fraud] might be

reasonably inferred."         Erbe, supra, 144 N.E.2d at 81; see also

Sargiss, supra, 909 N.E.2d at 576; Koch v. Christie's Int'l PLC,

699 F.3d 141, 155 (2d Cir. 2012) (plaintiff "could reasonably

have inferred the fraud" from knowledge that there was "a high

probability" the wine he purchased "was in fact counterfeit").1

1
  New York law also recognizes a form of "inquiry notice," which
triggers the limitations period if the plaintiff knows facts
                                                     (continued)

                                            18                              A-4636-13T4
                                   B.

     Applying these principles, we conclude the trial court was

mistaken in finding that Catena's claims accrued in June 1998,

when he executed the MOA.

     When Catena first became aware of the contamination and the

need to remediate in 1998, he had no reason to suspect fraud,

nor had he discovered facts supporting the elements of a fraud

claim.2    His discovery of contamination was not at odds with any

prior     representation   by   Andersen   or   FFB.   No   one    had

affirmatively represented to Catena in 1988 that the property

(continued)
which would lead a reasonable person to inquire into possible
fraud, but fails to pursue an investigation.   Koch, supra, 699
F.3d at 155-56 (internal quotation marks and citation omitted).
Our Court has not adopted this adjunct to the discovery rule in
New Jersey.
2
  Wells Fargo misplaces reliance on cases applying the discovery
rule to strict liability environmental claims and other
environmental torts.    In environmental torts generally, the
claim accrues when the plaintiff is aware of contamination and
that it was the fault of another. See, e.g. Hatco Corp. v. W.R.
Grace & Co., 801 F. Supp. 1309, 1323-24 (D.N.J. 1992) (strict
liability claim accrued when plaintiff was put on notice of
contamination); but see SC Holdings, Inc. v. A.A.A. Realty Co.,
935 F. Supp. 1354, 1368 (D.N.J. 1996) (rejecting argument that
"the point at which plaintiff should know of another party's
fault [is] the first instance in which the NJDEP or EPA finds
the existence of contamination").      A fraud claim, however,
requires proof of a knowing and intentional misrepresentation or
concealment of material fact.       Catena's knowledge of the
contamination (even assuming he knew it was another's fault)
does not constitute knowledge "of that state of facts which may
equate in law with a cause of action" for fraud.    Burd, supra,
76 N.J. at 291.

                                   19                        A-4636-13T4
was not contaminated.                 The 1987 Affidavit contained no                      such

representation, since Andersen omitted the crucial fact that he

had excavated and replaced contaminated soil.                          The discovery of

contamination        in       1998     did       not       directly     contradict           any

representation         that    Andersen         or   FFB    made,     such    that     Catena

should       immediately      have     suspected        fraud.          See    Antelis        v.

Freeman, 799 F. Supp. 2d 854, 862 (N.D. Ill. 2011) (securities

fraud    claim      did     not   accrue        in     2005    where     there       was     "no

indication that Plaintiff had any reason to even suspect fraud"

until one of the wrongdoers declared bankruptcy in April 2010);

Belmont, supra, 432 N.J. Super. at 83 (CFA claim did not accrue

until the plaintiff "had reason to believe" it had suffered

ascertainable loss).

       Nor    did   the     presence       of   contaminants         reasonably       suggest

that    Andersen       or   FFB      had   withheld        information        from    Catena.

Since the 1987 Affidavit only pertained to the activities of

occupants since 1984, it was plausible that Andersen had no

knowledge of the activities of pre-1984 occupants.                             It was also

plausible,      from      Catena's     perspective,           that    Andersen       would    be

unaware of contamination caused by his own tenants, since his

1987 Affidavit stated only that, "on information and belief,"

none of his tenants discharged hazardous wastes on the property.

Indeed, given that Catena's own environmental assessment in 1989

                                                20                                    A-4636-13T4
failed to uncover contamination, it was reasonable to presume

that Andersen and FFB were unaware of it.                            The fact that PSI's

May 1998 report stated the contamination was likely caused by

"airplane       related     industries"         also        suggested        that     none    of

Andersen's tenants were the cause, since none of them fell into

that category.          See Mancuso, supra, 163 N.J. at 37 (stating that

patient     was    entitled       to     rely      on       competent        expert       advice

regarding cause of injuries).

      Given       Andersen's           qualified            representations,              Catena

reasonably could have assumed that Andersen and FFB were unaware

of the contamination when they entered into the sale contract in

June 1988.        See CSAM Capital, Inc. v. Lauder, 885 N.Y.S.2d 473,

478-79    (App.      Div.     2009)       (significant             loss      in     value     of

investments did not put investors on notice of fraud where,

under    the    circumstances,         they    "reasonably           could    have     assumed

that their losses were not necessarily the product of fraud.").

Because he had no reason to suspect fraud in June or December of

1998, Catena was unaware of facts suggesting a cause of action

for   fraud.       Therefore,      he    lacked         a    basis    to   plead      a    well-

grounded claim.         It follows that his claims had not yet accrued.

See White v. Mattera, 175 N.J. 158, 164 (2003) (stating that a

claim    does     not    accrue    until        "the        date   when      the    right     to

                                              21                                      A-4636-13T4
institute and maintain a suit first arose.") (internal quotation

marks and citation omitted).

    Therefore, we must determine at what point Catena, through

the exercise of reasonable diligence, should have discovered the

alleged fraud.    Partrick, supra, 115 N.J. Eq. at 211.            If he can

demonstrate that reasonable diligence would not have revealed

the fraud before August 1999 in the case against Andersen, and

May 2002 in the case against Wells Fargo, his claims will not be

time-barred.    We are satisfied that Catena has met this burden.

    As a preliminary point, we will not impute knowledge of a

fraud to a plaintiff who "could not have discovered the fraud

through the exercise of reasonable diligence."                CSAM Capital,

supra,   885   N.Y.S.2d   at   479.        In   assessing   what   reasonable

diligence would reveal, we will not impute knowledge of facts

constituting fraud if a plaintiff had no "access to the relevant

information even if he had endeavored to seek it out."               Antelis,

supra, 799 F. Supp. 2d at 861.         "[T]he time at which a plaintiff

should discover the facts that constitute the violation cannot

take place before the plaintiff is able to discover such facts."

Ibid. (citing Merck, supra, 559 U.S. at 651, 130 S. Ct. at 1797,

176 L. Ed. 2d at 598).

    Although Catena may have inferred fraud had he known about

the 1987 cleanup, he had no access to information that would

                                      22                             A-4636-13T4
have revealed that fact, since neither Andersen, FFB nor EWMA

reported the cleanup to DEP.           Thus, no search of public records

would have led to discovery of the cleanup.                       Further, their

concealment of the partial cleanup was so effective that none of

the numerous environmental assessments commissioned by Catena

discovered    evidence        that    eighty     to   100    cubic    yards      of

contaminated soil had been removed and replaced with clean fill.

      It   follows     that    reasonable       diligence    would     not    have

uncovered facts suggesting fraud until Catena filed suit and had

the   right   to     compulsory      discovery.       It    was    only   through

discovery that Catena obtained the EWMA reports, which revealed

that Andersen and FFB knew about the contamination, performed a

cleanup, and withheld that information.                There is no evidence

that a more diligent pre-suit investigation would have led to

discovery of the EWMA reports or other evidence of the 1987

cleanup.

      Catena's delay in implementing the MOA does not change the

fact that reasonable diligence would not have uncovered evidence

of fraud before he filed suit.                 The question is not whether

Catena should have been more diligent in his clean-up efforts,

but rather whether "greater diligence . . . would have uncovered

the cause of action any sooner."               Vichi v. Koninklijke Philips

Elecs., N.V., 85 A.3d 725, 798 (Del. Ch. 2014) (tolling the

                                        23                                A-4636-13T4
statute    on    fraud    claim     premised      on    undisclosed    price-fixing

cartel where plaintiff was "blamelessly ignorant" of that fact).

We cannot say that it would have, since, even by the early

2000s, Catena still had no reason to suspect fraud.                         The mere

presence of contamination was not directly at odds with any

representations made to Catena before he purchased the property,

and there was no indication in his consultants' reports that

contaminated soil had previously been excavated and replaced,

which may have led him to suspect that Andersen or FFB withheld

information from him.

    Lastly,       we    reject     Wells      Fargo's    argument    that   Catena's

delay in asserting the fraud claim resulted in prejudice such

that the claim should be dismissed on equitable grounds.                           The

discovery rule accounts for the fact that a victim's belated

discovery of fraud directly results from the wrongdoer's deceit.

To give the wrongdoer the benefit of that late discovery would

convert "the law which was designed to prevent fraud" into the

"means    by    which    it   is   made    successful     and    secure."      Merck,

supra, 559 U.S. at 644, 130 S. Ct. at 1793-94, 176 L. Ed. 2d at

594 (internal quotation marks and citation omitted).                          To the

extent defendants must cope with the loss of documents or fading

witness    memories,      that     is   the     consequence     of   Andersen's    and

FFB's calculated silence, not Catena's unreasonable delay.                          In

                                           24                                A-4636-13T4
any   event,      defendants   are   not     "peculiarly   or   unusually

prejudiced," Lopez, supra, 62 N.J. at 276, as Catena, who bears

the burden of proof, must also cope with the loss of evidence.

      In sum, Catena discovered or through reasonable diligence

could have discovered the facts giving rise to the fraud claims

no earlier than May 21, 2002.             Therefore, his claims against

Andersen and Wells Fargo, which were filed less than six years

after this date, were not time-barred.

      Reversed.    We do not retain jurisdiction.

                                     25                          A-4636-13T4