The opinion of the court was delivered by: Hamill
This is a sales and use tax case in which defendant, Director, Division of Taxation, has moved to dismiss the complaint with prejudice pursuant to R. 4:23-5(a)(2) for failure to answer interrogatories. An order dismissing the complaint without prejudice was entered on December 2, 1994. The 90-day period prescribed by R. 4:23-5(a)(2) elapsed on March 2, 1995. The Director's motion to dismiss with prejudice was filed on March 7, 1995.
Also before the court is plaintiffs' motion to vacate the dismissal without prejudice on the ground that plaintiffs supplied answers to defendant's interrogatories on April 20, 1995.
In support of its motion to dismiss with prejudice, defendant maintains that plaintiffs have not established "exceptional circumstances" within the meaning of R. 4:23-5(a)(2). Defendant further maintains that plaintiffs' answers to 13 of defendant's 27 interrogatories were not "fully responsive" as required by R. 4:23-5(a)(1). Thus, according to defendant, even if its motion to dismiss without prejudice is denied, plaintiffs' motion to vacate the dismissal without prejudice should not be granted.
In response to defendant's motion, plaintiffs assert that they have demonstrated "exceptional circumstances" in that plaintiffs were unable to obtain the documents necessary to answer the interrogatories. Plaintiffs maintain that their accountants had all the required documents and that plaintiffs were unable to obtain the documents until February 1995. Relying on the 1990 Report of the Committee on Civil Practice, 125 N.J.L. Index Page 421 (1990), quoted in Pressler, Current N.J. Court Rules, Comment 3 to R. 4:23-5 (1995), plaintiffs maintain that the "main objective [of the amended rule] is to compel the answers rather than to dismiss the case ...." Relying on Aujero v. Cirelli, 110 N.J. 566, 577 (1988), plaintiffs assert that they have established a factual basis for relaxing R. 4:23-5. According to plaintiffs, these facts include the minimal delay in answering defendant's interrogatories, a lack of fault on plaintiffs' part since the delay was attributable to the failure of their accountants to turn over the needed records, and the absence of prejudice to the defendant in the event R. 4:23-5(a)(2) is relaxed. Finally, plaintiffs maintain that a separate basis for denying defendant's motion is provided by R. 4:50-1 because that rule, which permits relief from a judgment, would be applicable in the event a dismissal with prejudice were entered. Plaintiffs conclude by stating that they have meritorious defenses. In particular, according to plaintiffs, Mrs. Vogelbacher has no liability for the sales tax obligations of Mr. Vogelbacher's sole proprietorship, and the deficiency assessment is excessive.
On October 13, 1993, plaintiffs filed a complaint challenging an assessment of sales and use tax totaling $166,222 plus interest and penalty, which brought the total assessment at that time to $306,773.
On March 3, 1994, defendant served the interrogatories in question. The pretrial conference was initially scheduled for August 15, 1994. As the result of a conference call and at plaintiffs' request, the pretrial conference was adjourned to December 1, 1994, and plaintiffs were directed to answer the defendant's interrogatories by September 26, 1994. On plaintiffs' subsequent motion (which defendant did not oppose), the court further extended the discovery period, requiring plaintiffs to serve answers to the interrogatories by November 15, 1994.
On November 16, 1994, defendant moved to dismiss the complaint for failure to answer interrogatories. Finding that defendant had fully complied with the requirements of R. 4:23-5(a)(1), on December 2, 1994, the court entered an order dismissing the complaint without prejudice. The 90 day period specified in R. 4:23-5(a)(2) expired on March 2, and on March 7, 1995, defendant moved to dismiss the complaint with prejudice.
At plaintiffs' request, the motion to dismiss with prejudice was twice adjourned and ultimately was heard on May 12, 1995. In the meantime, on April 20, 1995, plaintiffs served answers to the interrogatories and on May 1 filed a motion to vacate the prior judgment of dismissal without prejudice.
On the return date, I queried plaintiffs' counsel concerning the absence of the affidavit required by R. 4:23-5(a)(2) stating that his clients had been notified of the pendency of the motion to dismiss with prejudice. Plaintiffs' counsel produced a letter of April 28, 1995 addressed to Mr. Vogelbacher making him aware of the return date on defendant's motion to dismiss with prejudice. Subsequently, plaintiffs' counsel supplied a certification making the same representations and attaching a copy of the April 28, 1995 letter. I concluded that counsel's letter, albeit not precisely in the form prescribed in Appendix II-F of the Court Rules, complied with the requirements of R. 4:23-5(a)(2) because it timely notified Mr. Vogelbacher of the time and place of the dismissal motion and advised him that he could appear and be heard. Counsel's in-court statements appeared to me to satisfy the requirement of an affidavit. Any technical defect in that respect was cured by the subsequent submission of counsel's certification.
In court, plaintiffs' counsel stated that Mr. Vogelbacher's business involves landscaping and lawn maintenance. The Vogelbachers' personal and business accountants, the firm of F.X. Duffy, are located in Philadelphia. According to plaintiffs' counsel, all the records of the business were turned over to and kept by the accountants, and the accountants failed to supply the documents required to answer defendant's interrogatories. Although counsel produced a copy of a letter of March 11, 1994 forwarding a copy of defendant's interrogatories to Mr. and Mrs. Vogelbacher, he was unsure whether he had supplied a copy of the interrogatories to the accountants and did not know whether the Vogelbachers had done so. Nor could he testify to the Vogelbachers' attempts to secure the documents from the accountants. Counsel then requested a continuance of the motion to permit the Vogelbachers to provide testimony.
Being concerned that "exceptional circumstances" within the meaning of R. 4:23-5(a)(2) might yet be shown if the Vogelbachers were to testify and bearing in mind the magnitude of the assessment in the event the complaint were dismissed with prejudice, I adjourned the motion to June 16, 1995.
Mr. Vogelbacher appeared on the adjourned return date. He corroborated counsel's testimony that F.X. Duffy did all the accounting for his business and personal affairs. He stated that the accountants had all the records for the business with the possible exception of invoices and cards on which Mr. Vogelbacher entered amounts received from customers, which he could not locate. He stated that, during the initial administrative phase of the case, he had been represented by Mr. Patrick Duffy of the firm of F.X. Duffy. Subsequently, Mr. Patrick Duffy was killed, and Mr. Robert Todd of the same firm took on the matter. Mr. Vogelbacher could not remember exactly when he had asked Mr. Todd for the documents necessary to answer the State's interrogatories. He did say it was a "number of times". He did recall a meeting in October 1994 with Mr. Todd and plaintiffs' counsel. At that meeting Mr. Todd stated that he would provide the documents.
On a date in February 1995 Mr. Vogelbacher went to the Philadelphia offices of F.X. Duffy and obtained one or more boxes containing the required documents. He delivered them immediately to his counsel. On cross-examination he stated that he believed he had asked for the documents in January 1995. He stated that his counsel had frequently asked him for the documents.
Rule 4:23-5(a)(2) states in pertinent part that, when a motion to dismiss with prejudice is made after 90 days from the date of the order dismissing without prejudice, "the motion shall be granted unless exceptional circumstances are demonstrated." The question in ...