BANKRUPTCY STAY TOLLS STATUTE OF LIMITATIONS

June 19, 2020
As reflected in these Alerts, we have been making efforts to keep everyone updated on case developments during this pandemic. We hope this has presented you with at least a bit of respite during the changed world of COVID quarantine and gradual re-openings. We previously briefly alerted you to the case we discuss below ; but felt the case warranted highlighting and further discussion. So, for your reading pleasure, we refocus your attention to the recent New Jersey Appellate Division decision regarding the potential effect of a bankruptcy on the statute of limitations.


The Appellate Division in Carmella C. Minelli, et al. v. Harrah’s Resort Atlantic City, et al, (docket no.: A-4431-18T1), 2020 N.J.Super. Lexis 56,  N.J.Super. (App. Div. 2020) , which was approved for publication on May 19, 2020, clarified the effect of a petition for bankruptcy on New Jersey’s 2 year statute of limitations as codified under N.J.S.A. §2A:2-14, for the filing of personal injury claims against the bankruptcy petitioner. The Appellate Division reversed the trial court’s dismissal and reinstated plaintiffs’ case despite the complaint being filed after the 2 year statute of limitations expired. The Court ruled that the automatic stay due to the bankruptcy filing within the 2 year period of the Statute of Limitations had the effect of tolling the statute pursuant to 11 USC §108(c)(2) which specifically tolls any filings for 30 days after the notice of the termination of the automatic stay, therefore plaintiffs’ institution of the law suit after the expiration of the two years was rendered timely as the stay was not lifted until after the expiration of the statute of limitations. The Court distinguished  Nativo v. Grand Union Co ., 315 N.J.Super. , 185, 188 (App. Div. 1998), which was relied upon by the Trial Court, because the plaintiff in that case received notice of the stay relief 42 days before the statute of limitations expired, therefore was not entitled to tolling and her complaint was dismissed with prejudice as it was filed 7 days after the expiration of the statute of limitations.

If you have any question regarding this decision or it’s effect please do not hesitate to contact Hardin Kundla McKeon & Poletto at www.hkmpp.com
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