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Petro Steel & Ironworks, Inc. v. Hobart Builders


December 11, 2007


On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Bergen County, L-1599-05.

Per curiam.


Argued: October 9, 2007

Before Judges Collester, C.S. Fisher and C.L. Miniman.

Third-party defendant Superior Powder Coating, Inc. (SPCI), appeals from an August 3, 2006, order dismissing this action without prejudice to institution of an action against it and co-defendant Ever-Nu Metal Products, Inc. (Ever-Nu), by defendant Hobart Builders, LLC (Hobart), free of the constraints of the entire controversy doctrine. Because two trial judges failed to rule on several motions Hobart filed seeking to bring direct claims against Ever-Nu and SPCI, all of which ought to have been granted, we affirm.

The facts are relatively straightforward. The Sea Dunes Condominium Association, which was not a party to this action, hired Hobart, a general contractor, to install a powder-coated aluminum staircase at the Sea Dunes Condominium in Long Branch.

Hobart entered into a subcontract with plaintiff Petro Steel & Ironworks, Inc. (Petro), to build, powder coat and install the stairs for $52,549. Petro fabricated the metal parts for the staircase and in October 2003 Petro hired SPCI and Ever-Nu to add the powder coating.

The powder coating was made of ground paint particles that SPCI and Ever-Nu applied to the metal parts and then melted to the aluminum in order to give it a more durable finish. Petro delivered the aluminum parts to SPCI and Ever-Nu and Petro picked them up after the coating was completed. Petro then installed the staircase at Sea Dunes. Hobart, as the general contractor, had no direct contact with SPCI and Ever-Nu.

Not long after installation of the staircase, the powder coating started to peel, leaving the metal exposed and corroding. When the staircase failed the final inspection, Hobart became responsible for repairing it. Accordingly, Hobart did not make final payment to Petro.

Petro then filed a book-account complaint against Hobart on June 25, 2004, in the Special Civil Part seeking payment of the $7,750.15 outstanding balance. Seven months later Hobart served an answer and counterclaim on January 20, 2005, alleging breaches of contract and warranty by Petro based on alleged substandard construction.*fn1 Hobart certified that the amount it claimed exceeded the jurisdictional limit of the Special Civil Part and obtained a transfer of the case to the Law Division. Before this answer was filed, the Law Division clerk on March 30, 2005, scheduled trial for June 9, 2005.

In its belated answer to the counterclaim dated April 2, 2005, Petro asserted third-party claims to the counterclaim pursuant to R. 4:8-2 seeking contribution and indemnification from SPCI and Ever-Nu.*fn2 Of course, the addition of these third-party defendants should have automatically extended the time for discovery by sixty days pursuant to R. 4:24-1(b), but the record on appeal does not indicate whether the time for discovery was extended at this time. On May 5 and May 17, 2005, SPCI and Ever-Nu, respectively, answered the third-party complaint and asserted cross-claims against Hobart and each other seeking contribution and indemnification.

Once again the record is silent respecting the events, if any, occurring on the June 9, 2005, trial date. However, on July 1, 2005, Petro's attorney prepared a motion returnable on July 22, 2007, seeking to be relieved as counsel. In the meantime, on July 9, 2005, the Law Division clerk issued a notice that discovery would expire on September 15, 2005. The motion to be relieved was granted on August 8, 2005, and the motion judge required Petro to obtain new counsel within thirty days or face dismissal. SPCI then requested that discovery be extended another sixty days to November 14, 2005, which was approved by all parties. Although Hobart had not filed any cross-claims against SPCI or Ever-Nu, it did serve Petro, SPCI and Ever-Nu with interrogatories and document requests. No discovery was provided in response to those requests.

Petro did not obtain new counsel by September 7, 2005, as ordered and on September 26, 2005, SPCI filed a motion to dismiss Petro's claims against SPCI with prejudice. Hobart then filed a cross-motion on October 13, 2005, to dismiss Petro's claims against it, enter judgment in favor of Hobart and permit it to assert direct claims against SPCI and Ever-Nu for breach of contract, breach of the covenant of good faith and fair dealing, breach of warranty and negligence. Both motions were returnable on October 21, 2005, three weeks prior to the end of discovery.

On October 17, 2005, SPCI opposed Hobart's motion, contending that the June 9, 2005, trial date precluded any discovery extensions absent exceptional circumstances despite the fact that SPCI had secured an extension of discovery through November 14, 2005. SPCI also argued that Hobart was not the intended beneficiary of its contract with Petro and, as a result, Hobart could not sue SPCI. On October 19, 2005, SPCI filed a protective motion returnable on November 4, 2005, to extend discovery for 120 days to March 4, 2006, in the event its motion to dismiss was denied.

On October 25, 2005, at argument on the motions initially returnable on October 21, 2005, counsel for Ever-Nu revealed that Petro had filed a bankruptcy petition. The motion judge then stated that portions of her August 8, 2006, order were automatically stayed by the bankruptcy. Although the motion judge obviously could no longer dismiss the claims by or against Petro, she dismissed the entire case without prejudice to reinstatement after ninety days if all issues were not resolved in the bankruptcy court. She did not rule on Hobart's request for leave to file direct claims against SPCI and Ever-Nu. The record does not indicate that the motion judge entered an order embodying her rulings from the bench. However, because she dismissed the action, no judge ruled on the pending motion to extend discovery to March 4, 2006.

On October 28, 2005, another judge entered an Order of Disposition on Account of Bankruptcy Proceeding. The order dismissed all claims by or against Petro and required the parties with claims against Petro to file a formal application in the bankruptcy court within thirty days for relief from the automatic stay and required an application to reinstate within sixty days of the conclusion of the bankruptcy proceeding.*fn3 The order did not affect any other claims between the parties because it specifically provided "PLEASE NOTE: This order does not in any way affect and/or stay proceedings in this caption as between any other party to the case."

The deadline for moving in bankruptcy court for relief from the automatic stay was extended to December 12, 2005, by order of yet a third judge on November 15, 2005, the day after discovery in this matter ended. No application for relief from the bankruptcy stay was ever filed and this action remained in limbo because no judge ever ruled on Hobart's motion to file direct claims against SPCI and Ever-Nu or SPCI's motion to extend discovery 120 days. Without rulings on those motions, Hobart had no claims to prosecute and, thus, no discovery to take.

On March 9, 2006, Hobart filed a substitution of attorney and again moved to amend its counterclaim to assert direct claims against SPCI and Ever-Nu. Ever-Nu opposed Hobart's motion by letter on March 16, 2006. Then, on April 12, 2006, Hobart moved to reinstate its earlier motion to dismiss Petro's claims, enter judgment in its favor and allow it to amend its answer to assert claims against SPCI and Ever-Nu. SPCI objected that Hobart's motion was untimely, that Petro was an indispensable party and that the proposed claims were without merit.

Rather than rule on the pending motions, yet a fourth judge attempted to mediate the dispute, but the parties failed to reach an agreement. After hearing argument on the parties' motions, the fourth judge issued an order on August 3, 2006, concluding that the parties did not file timely claims against Petro in bankruptcy court and, as a result, he dismissed the entire case. He also denied Hobart's motion to file direct claims against SPCI and Ever-Nu, dismissing them without prejudice. Nevertheless, the judge specifically ruled that the entire controversy doctrine would not preclude Hobart from filing a direct action against SPCI and Ever-Nu. SPCI appealed the August 3, 2006, order as well as parts of the October 28, 2005, and November 15, 2005, orders.

SPCI raises three issues on appeal. First, it urges that Hobart violated our Rules of Court by not timely moving to file claims against SPCI and Ever-Nu. Specifically, SPCI argues that the fourth judge, who entered the August 3, 2006, order, should have barred Hobart from filing a direct action because Hobart had missed two deadlines. It argues that when Hobart tried to raise a claim against SPCI on October 13, 2005, which was after the June 9, 2005, trial date, it was too late to seek relief because R. 4:17-7 requires all amendments to answers to interrogatories to "be served not later than 20 days prior to the end of the discovery period." SPCI also argues that Hobart failed to submit its claims against Petro in bankruptcy court before the deadline, which should also have barred Hobart's claims against SPCI.

Second, SPCI contends that Hobart's claims lack merit because SPCI owed no duty to Hobart. Specifically, SPCI argues that the court should have barred Hobart's negligence claim because Hobart seeks only economic damages. It also argues that Hobart's breach of contract claim should have been barred because SPCI had no contract with Hobart nor was Hobart an intended third-party beneficiary of SPCI's contract with Petro.

Additionally, SPCI urges that Hobart's claim for breach of an implied warranty should have been barred because there was no contract between SPCI and Hobart.

Third, SPCI asserts that Hobart's motions should have been denied because Petro is an indispensable party. SPCI suggests that, by failing to adopt this reason for denying Hobart's motion, the judge effectively ruled that Petro was not an indispensable party.

Hobart did not violate the Rules of Court by moving on October 12, 2005, to amend its answer to bring direct claims against SPCI and Ever-Nu. The June 9, 2005, trial date was made premature by Petro's April 2, 2005, answer to Hobart's counterclaim, which joined SPCI and Ever-Nu. Once discovery was reopened, all of the parties were free to avail themselves of the full panoply of the Rules of Court. Here, Hobart's motion was returnable before the end of discovery as extended by request of SPCI. Additionally, the alleged failure to seek timely relief from the bankruptcy court is irrelevant because Hobart was not required to bring its claims against SPCI and Ever-Nu by the terms of the October 28, 2005, order which specifically provided that it did not affect claims among the remaining parties.

Furthermore, a motion to amend pleadings is governed by R. 4:9-1, not R. 4:17-7, which governs amendments to interrogatory answers. Such a motion is committed to the sound discretion of the trial judge. Du-Wel Products, Inc. v. U.S. Fire Ins. Co., 236 N.J. Super. 349, 364 (App. Div. 1989), certif. denied, 121 N.J. 617 (1990). When a court denies a party's motion to amend its pleadings, no error will be found at the behest of the moving party when the order denying the motion does not have a "preclusive effect." Ibid. Concomitantly, an opposing party who has been successful in securing the denial of a motion to amend, albeit without prejudice, has not been harmed by the denial and thus may not appeal the final order. Ellison v. Evergreen Cemetery, 266 N.J. Super. 74, 78 (App. Div. 1993); Calabro v. Campbell Soup Co., 244 N.J. Super. 149, 169 (App. Div. 1990), aff'd o.b., 126 N.J. 278 (1991).

Unless and until a new action is filed, SPCI has not been aggrieved by the order dismissing the matter without prejudice because the dismissal was in its favor. All of the defenses available to an amended pleading can be raised by SPCI to a newly filed action.*fn4 We also note that SPCI has raised no specific challenge to the propriety of exempting a newly filed action from the scope of the entire controversy doctrine and, thus, we need not consider this issue on appeal. See Pressler, Current N.J. Court Rules, comment 2 on R. 2:6-2 (2007). There being no order or judgment addressing the merits of Hobart's claims, we may not address them on appeal. Do-Wop Corp. v. City of Rahway, 168 N.J. 191, 199 (2001).


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