On appeal from the Superior Court, Law Division, Essex County.
Morton I. Greenberg, R. S. Cohen and Gruccio. The opinion of the court was delivered by Morton I. Greenberg, P.J.A.D.
This matter comes on before this court on interlocutory appeal on leave granted from an order denying defendant-third-party plaintiff Murray Hyman's motion seeking an order vacating an order dismissing his third-party complaint against third-party defendants Leonard Litwin and James D. Demetrakis. An understanding of the matter requires a full recitation of the procedural history of the case.
This action was started on February 20, 1984 when plaintiff Fidelity Union Bank filed a complaint against Hyman, the thrust of which was that Hyman, a certified public accountant, had prepared financial statements exaggerating the net worth of Martin B. Swarzman thereby causing Fidelity Union to lend substantial sums to Swarzman which could not be collected. Hyman filed an answer and third-party complaint denying liability to plaintiff and seeking indemnification from Swarzman. On November 30, 1984 Hyman filed an amended third-party complaint joining Litwin and Demetrakis as third-party defendants and a counterclaim against Fidelity Union alleging that Litwin, Demetrakis and Fidelity Union were liable for damages to him because of conduct at least partially related to the transactions described in the Fidelity Union's complaint.*fn1 On
January 25, 1985 and March 6, 1985 Litwin and Demetrakis respectively filed answers to the third-party complaint.
Prior to the dismissal of the third-party complaint there were efforts at discovery with which, according to Litwin and Demetrakis, Hyman would not completely cooperate. As an example of the problems, on March 7, 1985 Hyman's attorney at a deposition directed him not to answer certain questions. Because of these difficulties a consent order was entered on August 22, 1985 allowing Litwin to inspect and copy certain of Hyman's records. Further, on Fidelity Union's motion, on November 1, 1985 Hyman was ordered to appear for depositions, to supply answers to interrogatories and to produce documents.
On October 30, 1985, an indictment was returned against Hyman and Swarzman by a United States grand jury in New Jersey charging them with violations of various federal criminal statutes relating in part to their dealings with Fidelity Union. Subsequently, Hyman moved for a stay of all proceedings in this civil case pending resolution of the criminal matter but this motion was denied by an order of December 6, 1985. Hyman was directed by the order of December 6, 1985 to comply with the order of November 1, 1985 not later than December 20, 1985. Hyman moved for leave to appeal from the order of December 6, 1985 but we denied this motion on December 23, 1985.
On January 2, 1986 Hyman appeared for depositions but he refused to answer numerous questions as he invoked his Fifth Amendment privilege not to incriminate himself. Consequently Litwin moved to dismiss the third-party complaint against him. In response, Hyman filed a cross-motion again seeking, inter alia, a stay of this case pending resolution of the criminal case. At the hearing on these motions on February 14, 1986, Demetrakis joined in Litwin's application for dismissal. After oral argument, the judge dismissed Hyman's third-party complaint against Litwin and Demetrakis. Further, he limited Hyman's
defense to Fidelity Union's complaint by excluding from it any matters into which Fidelity Union inquired but which Hyman would not answer on Fifth Amendment grounds. The judge dismissed Hyman's counterclaim against Fidelity Union but provided that Hyman could move to reinstate it if he waived his Fifth Amendment privileges.*fn2 Clearly the inclusion of this provision for reinstatement in the order dismissing the counterclaim and its omission in the order dismissing the third-party complaint showed that the latter order was to have a finality absent from the former. Hyman's motion for a stay was denied. The order dismissing the third-party complaint as to Litwin and Demetrakis was entered February 25, 1986.
On March 6, 1986, Hyman, having resolved the criminal matter by a guilty plea to some aspect of the indictment, in a letter to the attorneys for Fidelity Union personally stated: "Please be advised that I hereby agree to waive my right to invoke the Fifth Amendment privilege against self-incrimination in this matter. I understand that this waiver extends to all facts, circumstances and issues involved in this lawsuit." Copies of this letter were sent to Litwin and Demetrakis.*fn3 On March 21, 1986 Hyman served and filed a motion seeking an order vacating the order of February 25, 1986 dismissing his third-party complaint against Litwin and Demetrakis. His attorney's certification attached to the motion recited that Hyman had waived his Fifth Amendment privileges and was ...