Richard Catena v. Raytheon Company

NOT FOR PUBLICATION WITHOUT THE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