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Burke-Schaf v. Devine

August 7, 2007


On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, L-1433-04.

Per curiam.


Argued May 9, 2007

Before Judges Lefelt and Sapp-Peterson.

Plaintiff Gloria Burke-Schaf appeals from three orders entered by the Law Division that (1) denied her motion to compel discovery and to extend discovery, (2) granted defendants' summary judgment motion, and (3) denied her cross-motion for summary judgment. We affirm.

The dispute arose out of a complaint plaintiff filed seeking to recover real estate commissions to which plaintiff claimed she was entitled after she sold her insurance broker business to defendants Harry J. Devine, Nicholas San Filippo, and the Harry J. Devine Agency, Inc. (collectively referred to as "defendants"). The purchase agreement for the business provided that plaintiff would retain certain of her commissions for a period of time. Plaintiff claimed that defendants unlawfully withheld those commissions.

Plaintiff filed her complaint against defendants and Steven Haines (Haines), a former employee, on March 29, 2004. Because the fundament of plaintiff's claim sounded in contract, the complaint was designated a Track I case with 150 days of discovery. See R. 4:5A-1; R. 4:24-1. On April 8, 2004, a summons and copy of the complaint were served upon Haines who, as the first defendant served, triggered Rule 4:24-1, which provides that the time period for the completion of discovery commences on the date an answer is filed or ninety days after the first defendant is served, whichever occurs first. Thus, in this case discovery commenced July 6, 2004, and the initial 150 days of discovery was slated to end December 4, 2004.

The record reveals that the parties, prior to commencement of the action, were involved in informal negotiations, and these negotiations continued after the complaint was filed. None of the defendants, however, filed a responsive pleading during the initial discovery period and plaintiff did not move for the entry of default pursuant to Rule 4:43-1. As a result, the complaint was administratively dismissed pursuant to Rule 1:13-7, but restored to the active trial calendar on November 19, 2004, after plaintiff filed a motion to reinstate the complaint. The October 21, 2004 certification of plaintiffs' counsel submitted in support of the motion stated that discovery had been ongoing between the parties and that plaintiffs had retained a forensic accountant to evaluate their claims.

Discovery ended December 4, 2004, and because none of the defendants had filed an answer by that date, no consensual sixty-day extension of discovery could be filed. Moreover, plaintiffs failed to separately move to extend discovery prior to the expiration of discovery. See Rule 4:24-1(c). On December 16, 2004, defendants filed their answer to the complaint.

The court issued a notice for mandatory non-binding arbitration to take place on February 23, 2005. On January 18, 2005, plaintiffs filed a request for entry of default against Haines for failure to file an answer. Thereafter, by letter dated February 10, 2005, defendants' attorney advised plaintiffs' counsel that plaintiffs' accountant never appeared for a scheduled document inspection. A week later, plaintiffs' counsel, on behalf of all parties, requested that the arbitration be adjourned "in order for the parties to engage[] in discovery and review documents from the parties['] experts." The arbitration was adjourned to March 16, 2005.

By letter dated March 11, 2005, defendants' attorney requested a second adjournment of the arbitration because the previous defense attorney had been replaced and plaintiffs had yet to serve the expert report of their accountant showing the purported damages. Plaintiffs consented to this request. On March 14, 2005, the court confirmed that the arbitration had been rescheduled for April 27, 2005.

On March 18, 2005, defendants' attorney sent a letter to plaintiffs' counsel advising that he was concerned that the parties would not be ready to arbitrate, as plaintiffs' accountant was "repeatedly canceling dates to review documents." Counsel's letter specifically noted that the accountant "canceled two dates this week" and requested that plaintiffs' counsel "set a date certain by which [defendants could] expect [plaintiffs'] expert report."

On April 13, 2005, having received no response, defense counsel sent a follow-up letter to plaintiffs' counsel which specifically addressed reports about the accountant's alleged conduct:

My client informs me that the accountants were last at its offices on April 8, 2005, having canceled two dates in March, once on March 14, 2005 and again on March 18, 2005. Yesterday, the accountant called my client and asked for copies of six years of commission statements; I understand arrangements are set to have the statements copied tomorrow. In light of the foregoing, I assume the expert report is not ready to be served any time soon.

As you know, the arbitration is scheduled for April 27, 2005, two weeks from today. . . . Even if you intend to serve your damages report between now and April 27, 2005 we will not have enough time to respond to it or present a rebuttal report in time for the arbitration.

On April 19, 2005, plaintiffs' counsel received a report from their accounting experts advising that they could not provide a written report offering their opinion as to what commissions, if any, were due to plaintiff Burke-Schaf because "Mr. Devine prevented [them] from inspecting many of the documents that [they] needed to complete [their] report." Specifically, the accountants reported that they were unable to "determine and quantify the commissions due to Ms. Burke-Schaf from 1998 through 2004." The report indicated that defendant Devine had impeded the process by "den[ying] access to files that Mr. Devine designated as customers that Ms. Burke-Schaf did not originate[,]" that he had moved the active files of plaintiff to "file cabinets holding the active files that Mr. Devine assert[ed] Ms. Burke-Schaf did not originate[,]" and denied access to the unredacted commission statements the insurance companies had sent to the Devine Agency. The report concluded that plaintiff "did not receive commissions from files that she transferred to the Buyers," and as to those files, the accountants could not "quantify the amounts due to her."

Throughout the time period between February 2004 and April 2004, when defense counsel sent various letters to plaintiff's counsel expressing concerns about the accountant's missed appointments and the absence of an expert report, the record does not reveal that plaintiffs' counsel responded orally or in writing to these concerns. However, when plaintiff's counsel received the report on April 19, 2005, a copy was provided to defense counsel on that same date. Defense counsel, also on that same date, faxed a response in which he stated that the accountants "were rightfully denied access to all files relating to commissions for clients that did not have existing insurance policies or replacement of existing insurance policies and renewal policies at the time of the closing on the sale of the business." Defense counsel stated further that there was "no reason why [plaintiffs'] expert [could not] complete the damages report." The letter also confirmed that the report would be served by April 22, 2005. Plaintiffs did not seek to compel production of the withheld documents. R. 4:24-2.*fn1

On April 27, 2005, the date of the arbitration hearing, plaintiffs' counsel appeared without an expert report that quantified the alleged damages. A no cause was entered against plaintiffs. Plaintiffs filed a notice of demand for trial de novo the following month.

On September 19, 2005, plaintiffs filed a motion to compel production of documents, assess sanctions pursuant to Rule 4:23-1(c), and to extend discovery. In support of the motion, plaintiffs' counsel submitted a certification explaining that the delay in ...

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