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Notte v. Merchants Mutual Insurance Co.

January 12, 2006

THERESA NOTTE AND ROBERT PANTANO, PLAINTIFFS-RESPONDENTS,
v.
MERCHANTS MUTUAL INSURANCE COMPANY, A/K/A MERCHANTS MUTUAL GROUP, AND WILLIAM WOLFE, DEFENDANTS-PETITIONERS.



On certification to the Superior Court, Appellate Division.

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

This appeal involves an analysis of the relation back rule and the further implications of that analysis under another rule. The "relation back" rule provides that whenever the claim or defense asserted in the amended pleading arose out of the conduct set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading.

From October 2000 through March 2001, Theresa Notte was employed by Merchants Mutual Insurance Company where she was supervised by William Wolfe. Over the same period, Robert Pantano was employed by Merchants as a supervisor. Notte alleged that after she rejected Wolfe's sexual advances, she was subjected to a hostile work environment, sexual discrimination, and retaliation, in violation of the Law Against Discrimination (LAD) that lead to her constructive discharge from employment on March 28, 2001. Pantano alleged that his employment with Merchants was terminated on March 27, 2001 because he objected to Wolfe's harassment of and retaliation against Notte. Notte's and Pantano's allegations were made in a joint complaint that they filed in January of 2003.

None of Notte's claims are at issue in this appeal. Pantano claimed that his wrongful discharge was in violation of the Conscientious Employee Protection Act (CEPA). Merchants and Wolfe moved for partial summary judgment on the basis that Pantano's CEPA claims were time-barred under CEPA's one-year statute of limitations. Pantano then sought leave to replead his time-barred CEPA claims as separate common law wrongful discharge and LAD claims. At argument before the trial court, Pantano conceded that his CEPA claims were time-barred. The trial court denied Pantano's request for leave to amend his complaint. The Appellate Division reversed but did not address whether the amendment of Pantano's claims would be futile. This Court granted Merchants' and Wolfe's motion for leave to appeal.

HELD: To the extent the panel held both that Pantano's new claims "relate back" to his original complaint and, hence, are not time-barred, and that neither Merchants nor Wolfe is prejudiced thereby, we affirm the judgment of the Appellate Division; we remand to the Appellate Division for a determination of whether amendment of Pantano's claims would be futile on application of the waiver provisions of CEPA.

1. Rule 4:9-3 is clear. Whenever the claim asserted in the amended pleading arose out of the conduct set forth in the original pleading, the amendment relates back to the date of the original pleading. Its application is similarly clear. Where the gist of the action or the basic subject of the controversy remains the same, it should be readily allowed and the doctrine of relation back applied. (p.8)

2. Save for the charging paragraphs in Pantano's new common law wrongful discharge claims and the necessary addition of conclusory allegations in the new LAD claims, Pantano's original complaint and his corrected amended complaint are identical. It is, therefore, clear that the underlying conduct charged is the same in both pleadings and that the gist of the action remains the same. Under these circumstances, the conclusion that Pantano's corrected amended complaint relates back to Pantano's original complaint is compelled. (pp. 8-9)

3. Statutes of limitation, unlike statutes of repose, are not self-executing. The defense that a claim is time-barred must be raised by way of an affirmative defense or it is waived. Until adjudicated time-barred, a claim filed after the expiration of the applicable statute of limitations is nonetheless valid. The fact that Pantano's original claims were filed after the expiration of the applicable statute of limitations is of no legal significance. (pp. 9-10)

4. In this context, the question is whether the new claims, once related back to the original filings, were themselves timely and legally sustainable. That question requires an examination of whether the relation back is futile. (p. 10)

5. Rule 4:9-3 must be read in conjunction with Rule 4:9-1, which requires that, unless amendment is sought while still a matter of right, the amendment of pleadings is allowed only by leave of court. That exercise of discretion requires a two-step process: whether the non-moving party will be prejudiced, and whether granting the amendment would nonetheless be futile. (p.11)

6. The Appellate Division panel concluded that defendants have no cause to complain of the late assertion against them of claims grounded on the same conduct already alleged in the complaint. We agree and similarly hold that no prejudice will inure to Merchants and Wolfe by reason of the amendment sought by Patano. (p. 11)

7. The analysis is not complete until the requested amendment is examined to determine whether it is futile. There is no point to permitting the filing of an amended pleading when a subsequent motion to dismiss must be granted. (p. 12)

8. In the context of a retaliatory discharge akin to Pantano's claims, we previously held that once a CEPA claim is instituted, any rights or claims for retaliatory discharge based on State law or the common law are all waived. We must remand this case to the Appellate Division for a determination of whether, by reason of the waiver provisions of CEPA, Pantano's proposed amendment to his complaint would be futile and, if so, denied. (pp. 13-14)

9. We recognize that the issue appears to have been addressed in a 1997 Appellate Division decision where the plaintiff, like Pantano, originally asserted a time-barred CEPA claim. The Appellate Division held that an employee who is barred from making a CEPA claim has no remedy under the Act and cannot, therefore, be seen to have any options from which to elect. We also recognize differences between that case and this case. Those differences, and their legal effect, are what should be explored by the Appellate Division. (pp. 14-15)

As MODIFIED, the judgment of the Appellate Division is AFFIRMED and the matter is REMANDED to the Appellate Division for further ...


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