A Capehart Scatchard Blog

Claim Based on Breach of Installment Contract Found to Accrue as of Date of Missed Payment

In a dispute against the executor of an estate, the two beneficiaries under the decedent’s will (Mark and Michael Balk) sued the executor (Mark Roseman) for breach of fiduciary duty and sought to remove him as executor. Ultimately, the parties reached an agreement, in which the executor Roseman agreed to execute a promissory note in the amount of $800,000. The terms of the note required an initial payment and then installment payments over a 24 month period. In the case of In re Estate of Balk, 2016 N.J. Super. LEXIS 70 (App. Div. 2016), the beneficiaries sued Roseman when he failed to make all of the installment payments due. In Balk, the issue was whether the beneficiaries’ claim was barred by the statute of limitations.

The settlement agreement was executed on June 4, 2007. It provided for an initial installment of $10,000 within 60 days of signing, $40,000 on December 3, 2007, $80,000 on June 3, 2008, $100,000 on December 3, 2008, and the balance over 24 months. Failure to pay the initial or any subsequent payment entitled the Estate to a judgment for the unpaid balance.

Between August 2007 and January 2009, Roseman paid $37,047 towards the payments due. However, he failed to pay the initial sum and the installment payments required by the note in full. It was not until June 2, 2014 that Michael Balk sued Roseman to enforce the settlement agreement and enter a judgment against him.

Roseman argued that the claim was barred by the 6 year statute of limitations. The trial judge found, however, that the installment contract approach applied in determining the accrual date of the Estate’s claims. Under this approach, the judge found that the Estate was entitled to collect on each of the installment payments that was due and owed by Roseman on and after June 3, 2008.

Roseman argued on appeal that the judge erred in applying the installment contract approach and that the Estate’s claim accrued when the initial payment was missed. Hence, he contended that the claim failed under the 6 year statute of limitations. The Appellate Division rejected these arguments and upheld the trial court’s decision.

Under the installment contract approach, claims accrue with each subsequent installment. As each payment is missed, a new statute of limitations starts to run and a new cause of action arises from the date of each payment missed. Unless there is a repudiation of the entire contract, a plaintiff may sue for each breach only as it occurs.

Here Roseman did not contend that there was a repudiation in this matter. Rather, he argued that his failure to make the first installment payment constituted a total breach under the agreement, preventing the application of the installment contract approach.

The Appellate Division found that the failure to make the first payment did not constitute a breach of the entire contract. A missed payment is insufficient to constitute a total breach of an installment contract unless accompanied by an anticipatory repudiation indicating a failure to perform the future obligations set forth in the installment contract.

While Roseman did breach his obligation to pay the first installment in 2007, there was no repudiation or total breach of the promissory note. There was no indication that he would not fulfill his future obligations. In fact, he did pay $37,000 to the Estate over the next several years.

Thus, the Appellate Division found that the trial court judge correctly applied the statute of limitations under the installment contract method, as there was no repudiation or total breach of the promissory note. Roseman’s conduct in paying monies over the next several years belied any argument that he did not intend to honor the agreement.

Accordingly, the Appellate Division ruled that the Estate was entitled to all payments which were due for the 6 years prior to the filing of the motion to enforce on June 2, 2014. The Estate would be entitled to collect on each of the installment payments due and owing by Roseman on or after June 3, 2008.

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About the Author

About the Author:

Ms. Ramos is an Executive Committee Member and Co-Chair of the Litigation Department at Capehart Scatchard, P.A. located in Mount Laurel, New Jersey. She is an experienced litigator with over 25 years experience handling diverse matters. Practice areas include tort defense, business litigation, estate litigation, tort claims and civil rights defense, construction litigation, insurance coverage, employment litigation, shareholder disputes, and general litigation.

For the years 2020 and 2021, Ms. Ramos was selected for inclusion in The Best Lawyers in America© in the practice area of Litigation - Insurance. The attorneys on this list are selected based upon the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice area. A complete description of The Best Lawyers in America© methodology can be viewed via their website at: https://www.bestlawyers.com/methodology.

In 2021, Capehart Scatchard and Ms. Ramos received the “Best Law Firm” ranking in the area of Litigation – Insurance (Metro, Tier 3) published by U.S. News & World Report and Best Lawyers®. Law firms included on the list are recognized for professional excellence with consistently impressive ratings from clients and peers. To be eligible for a ranking, a firm must have at least one attorney who has been included in the current edition of Best Lawyers in America, which recognizes the top five percent of practicing lawyers in the United States. Betsy Ramos (Litigation – Insurance) was recognized for this prestigious award in the 2021 edition. For a description of the “Best Law Firm” selection methodology please visit: https://bestlawfirms.usnews.com/methodology.aspx.

“Best Law Firms” is published by Best Lawyers in partnership with U.S. News & World Report. For a description of the selection methodology please visit: https://bestlawfirms.usnews.com/methodology.aspx.

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