February 15, 2008
GENEVIEVE FAGER AND PAUL R. FAGER, HER HUSBAND, PLAINTIFFS-APPELLANTS/ CROSS-RESPONDENTS,
CHRISTOPHER O. OKECHUKWU, M.D., AND NEWTON MEMORIAL HOSPITAL, DEFENDANTS-RESPONDENTS/CROSS-APPELLANTS.
On appeal from the Superior Court of New Jersey, Law Division, Sussex County, Docket No. L-0030-01.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 9, 2008
Before Judges Wefing, R. B. Coleman and Lyons.
Plaintiffs Genevieve and Paul Fager, and their counsel, Paul Abramo, appeal from the Law Division's orders dated April 29 and May 19, 2005, imposing monetary sanctions upon plaintiffs' counsel for failure to produce an expert report in the time frame required by the court's case management orders. They also appeal from the orders dated June 23 and July 11, 2006, which imposed additional monetary sanctions upon plaintiffs' counsel and dismissed the complaint without prejudice based upon counsel's failure to comply with the May 19, 2005, sanction orders.
Defendants Christopher Okechukwu, M.D. (Okechukwu) and Newton Memorial Hospital (Newton Memorial) cross-appeal from the Law Division's April 29, 2005, order to the extent the court denied their motions for summary judgment and dismissal of the complaint with prejudice and granted plaintiffs' cross-motion for an extension of discovery. We affirm in part, reverse in part, and remand for proceedings consistent with our opinion.
The following factual and procedural history is relevant to our consideration of the issues advanced on appeal. On January 25, 2001, plaintiffs filed a complaint against Newton Memorial and Okechukwu, alleging medical malpractice and loss of consortium. Plaintiffs alleged that Okechukwu deviated from the standard of care by failing to diagnose Genevieve Fager's skin cancer during an emergency room visit on March 10, 1996, and that Newton Memorial was liable for Okechukwu's negligence under the doctrine of respondeat superior.
Both Newton Memorial and Okechukwu filed answers denying liability and asserting cross-claims against one another.
The original discovery end-date was July 11, 2002. However, between 2002 and 2004, there were five orders extending discovery. First, by order dated July 1, 2002, the court extended discovery by two months, to September 9, 2002. Second, by order dated July 29, 2002, the court extended discovery by six months, to March 10, 2003, with plaintiffs' expert reports due by November 30, 2002. Third, by order dated March 3, 2003, the court extended discovery by another eight months, to November 30, 2003, with plaintiffs' expert reports due by May 15, 2003. Fourth, by order dated August 15, 2003, the court extended discovery by another six months, to May 15, 2004, with plaintiffs' expert reports due by October 31, 2003. Fifth, by order dated January 26, 2004, the court extended discovery for another seven months, to December 31, 2004, with plaintiffs' expert reports due by May 15, 2004.
In February 2001, just one month after the complaint was filed, Okechukwu served written discovery requests. Four months later, in June 2001, when plaintiffs still had not responded, Okechukwu filed a motion to compel. He ultimately withdrew that motion, however, based upon a representation from plaintiffs' counsel that the discovery responses were forthcoming. Okechukwu filed a second motion to compel in September 2001, after the discovery responses were not served in accordance with counsel's representation. However, he withdrew that motion after plaintiffs served their responses on October 18, 2001.
Plaintiffs' failure to serve expert reports also resulted in motion practice. For example, in June 2002, with the original discovery end-date approaching in July, Okechukwu moved for summary judgment based upon the lack of an expert report substantiating plaintiffs' claims. However, that motion was denied, and plaintiffs' cross-motion to extend discovery, which Okechukwu did not oppose, was granted.
In addition, in January 2003, after Okechukwu's deposition had been completed, Okechukwu moved to dismiss the complaint based upon plaintiffs' failure to respond to defendant's notice to produce. The record does not reflect a disposition of that motion, but it reflects a consent order dated March 3, 2003, extending discovery.
In July 2004, when plaintiffs had not produced their expert report by the deadline of May 15, 2004, Okechukwu's counsel wrote to plaintiffs' counsel and questioned the status of the report. He received no response to his correspondence. Accordingly, in July 2004, both Newton Memorial and Okechukwu moved for summary judgment, seeking dismissal of the complaint with prejudice based upon plaintiffs' failure to substantiate their malpractice claims with an expert opinion.
In September 2004, plaintiffs filed opposition to defendants' motions and a cross-motion to extend the time for serving their experts' reports. In his certification dated September 1, 2004, plaintiffs' counsel identified plaintiffs' expert as Dr. Reed Oxman (Oxman), a teaching physician at the Medical College of Pennsylvania. Counsel stated that he had "received oral reports" from Oxman on the issues of liability and damages, and had "advanced substantial sums of money" to Oxman to prepare an expert report. However, Oxman was out of the country on a summer sabbatical, and he could not complete his report until the end of September 2004. In addition, counsel certified that he had consulted with and was in the process of engaging an expert dermatologist and/or oncologist on the issue of damages. Finally, counsel certified that he had been unable to attend to the engagement of such experts until mid-May 2004, after the reports were to have been served on May 15, 2004, due to "his attendance to various conflicting professional and personal matters," including a wrongful death action pending in federal court in which he served as counsel, and the death of a member of his immediate family.
Defendants opposed plaintiffs' cross-motion, and argument was heard on September 10, 2004. At that time, the trial court reserved on all pending motions and cross-motions. The court later explained that it refrained from entering an order in September 2004 based upon plaintiffs' counsel's representation at oral argument that his expert report would be served no later than October 15, 2004.
In any event, no order was entered on the motions until April 2005. During the period between September 2004 and April 2005, no discovery was taken and, most significantly, plaintiffs' counsel did not produce an expert report as promised, nor did he communicate with opposing counsel or the court regarding the difficulties he was experiencing with his expert.
After the September 2004 hearing date, by computer-generated notice dated October 23, 2004, the court advised counsel that discovery would end on December 30, 2004, and that if no motion were made to extend discovery, the case would be scheduled for arbitration or trial.
Thereafter, in November 2004, Okechukwu filed a motion to extend discovery. Counsel explained that he made this motion for the sole purpose of protecting his client's interests. He asserts the motion was made as a defensive maneuver because the discovery deadline was approaching in December 2004, there was no expert report received from plaintiffs' counsel, and there had been no resolution of defendants' motions for summary judgment.
Plaintiffs consented to Okechukwu's request for a discovery extension. However, Newton Memorial did not. By letters dated December 13, 2004, and January 18, 2005, Newton Memorial inquired about the status of its motion for summary judgment, and it expressed opposition to Okechukwu's request for an extension of discovery, should summary judgment be denied.
By computer-generated order dated January 24, 2005, the court advised the parties that trial was scheduled for March 28, 2005. However, the parties were subsequently advised that the trial date had been adjourned, and a case management conference was scheduled for April 2005.
By case management order dated April 11, 2005, the trial court allowed plaintiffs to file an expedited motion to extend discovery, with a return date of April 29, 2005.
Plaintiffs filed the motion allowed by the court, requesting an extension of discovery to December 30, 2005, with plaintiffs' expert reports to be served no later than June 30, 2005. Plaintiffs' counsel explained that yet another discovery extension was necessary because in the fall of 2004 he had experienced difficulty with his former expert, Oxman, which resulted in the termination of that relationship in December 2004. Four months later, in April 2005, he had retained Drs. Marc Borenstein and Allan Halpern, and these experts had committed to generating their expert reports by June 30, 2005.
Okechukwu opposed plaintiffs' motion. He cited: misrepresentations plaintiffs' counsel had made to the court regarding the status of expert discovery; both court-imposed and self-imposed discovery deadlines that plaintiffs' counsel had missed; plaintiffs' counsel's failure to communicate with opposing counsel regarding the alleged difficulties he experienced with his expert; and the harm suffered by Okechukwu due to the ongoing pendency of this medical malpractice litigation.
On April 29, 2005, the trial court heard argument regarding the pending motions. At that time, the court advised counsel of its inclination to grant plaintiffs' request for an extension of discovery, albeit "with the utmost reluctance," and only on the condition that the new schedule will not be deviated from under any circumstance. . . . And I want [plaintiffs' counsel] to communicate this to his client loud and clear, that if this schedule is not adhered to . . . that the time lines will not be expanded, they will not be relaxed on the plaintiffs' side, notice I said on the plaintiffs' side, for any reason short of a major, major calamity which would have to be impressive in dimension.
In addition, I will, as a condition of granting that relief, and again, this is what I'm contemplating doing, is directing that the plaintiff[s] be responsible for counsel fees and costs incurred by the defendants on these motions and conferences that have occurred. Any motions filed, court appearances involved and conferences that have taken place between May 15, 2004, through today, April 29, 2005.
It further suggested that plaintiffs would have sixty days to pay any counsel fees ordered, and, if they did not pay those fees, the complaint would be subject to dismissal.
The court found that this proposal, which would constitute a "significant sanction," was justified by plaintiffs' counsel's failure to communicate with opposing counsel regarding the problems he was experiencing with his expert, and plaintiffs' counsel's failure to file for an extension of discovery in April or May 2004, when he knew there was a problem and he would not be able to comply with the case management order.
After stating this proposed disposition of the pending motions, the court heard from plaintiffs' counsel, who argued against the imposition of monetary sanctions. Counsel stated this his clients were "dirt poor," and the sanctions the court was considering "would be a devastating blow." The court responded that it would take that issue into account. At the conclusion of the hearing, the court entered an oral decision consistent with its proposed disposition of the motions.
Thereafter, by case management order dated April 29, 2005, the trial court extended the overall discovery end-date to December 30, 2005, with plaintiffs' expert reports to be served no later than June 30, 2005. In paragraph seven of the order, it ruled that: "The time frames set forth above as to Plaintiff's discovery obligations shall not be relaxed, expanded or extended." In paragraph eight of the order, the trial court ruled that:
Counsel for defendants may . . . submit Certifications as to Counsel fees and costs and reasonable and documented costs incurred by any party . . . between May 15, 2004 and April 29, 2005, (May 15, 2004 being the deadline for Plaintiff[s] to serve expert reports), . . . which the Court shall consider as a consequence of the Plaintiffs' failure to timely serve expert report(s) by May 15, 2004 and the Plaintiffs' failure to promptly advise the Court and Counsel for defendants as to now-reported problems with her medical expert (Dr. Oxman), and the failure of plaintiff[s] to file a motion for extension of discovery on a timely basis prior to May 15, 2004. Any Order of this Court directing Plaintiff[s] to pay Counsel fees and costs, and documented costs of parties Defendant, (if any), shall be complied with within 60 days, or the Plaintiffs' Complaint shall be subject to dismissal with prejudice on motion.
Finally, in paragraph nine of the order, the court ruled that, if plaintiffs did not serve expert reports by the deadline of June 30, 2005, defendants would have leave of the court to refile their motions for summary judgment seeking dismissal of the complaint, and "as to any Plaintiff's expert whose report is not served by June 30, 2005, that expert's testimony shall be barred at the time of trial."
Defendants filed certifications as to counsel fees and costs they had incurred as a result of plaintiffs' failure to timely serve expert reports by May 15, 2004. In their correspondence to the court, they requested that the sanctions be imposed upon plaintiffs' counsel, however, rather than the individual plaintiffs, since it was counsel's conduct that had resulted in the excessive delays and extra costs. Defendants agreed to waive the sanctions if the court were inclined to impose them against the individual plaintiffs.
Plaintiffs' counsel submitted written opposition to defendants' submissions, requesting that the court defer entry of a sanctions order pending plaintiffs' motion for reconsideration. Newton Memorial opposed that request.
Thereafter, by separate orders dated May 19, 2005, the court ordered plaintiffs' counsel to pay $2250 to counsel for Newton Memorial, and $2250 to counsel for Okechukwu. The trial court further ordered that no portion of those amounts shall be billed to or otherwise passed on to plaintiffs. Moreover, the fees and costs were to be paid within sixty days of the orders, and if not so paid, the complaint would be subject to dismissal.
In June 2005, plaintiffs and their counsel filed a motion for reconsideration of the sanctions imposed under the April 29 and May 19, 2005, orders. Alternatively, they sought a stay of the sanctions pending disposition of their interlocutory appeal therefrom. Plaintiffs' counsel argued that the sanctions constituted an abuse of discretion and should be vacated in their entirety or reduced in amount because: (1) both the April 29 and May 19, 2005, sanctions orders were procedurally flawed because they were issued sua sponte by the court, without a motion for monetary sanctions having been made by opposing counsel, and without prior notice or a hearing on the question of whether monetary sanctions were warranted; (2) the May 19, 2005, orders were procedurally flawed because, without notice or a hearing, they substantially revised the April 29, 2005, order by imposing the sanctions against plaintiffs' counsel rather than the individual plaintiffs; (3) the sanctions orders were supported by inadequate, incomplete, or incorrect findings of fact under Rule 1:7-4(a); and (4) the sanctions orders were not supported by the governing law. Plaintiffs' counsel also provided the court with additional information regarding the problems he had experienced with the original expert, Oxman, showing that Oxman had sent bizarre communications to him and made unreasonable demands for money. Plaintiffs' counsel further stated that he had produced expert reports to defense counsel on June 24, 2005, in compliance with the most recent court-imposed deadline.
Defendants opposed plaintiffs' motion, arguing that the sanctions were both procedurally and substantively proper. They admitted that they had not sought monetary sanctions against plaintiffs' counsel. However, they had sought a greater punishment for plaintiffs' discovery violation, namely, dismissal of the complaint, and the court had acted within its discretion to impose a less severe sanction.
The trial court heard oral argument on July 22, 2005. Thereafter, by order dated August 23, 2005, with an attached ten-page statement of reasons, it denied plaintiffs' motion for reconsideration, but stayed implementation of the May 19, 2005, orders pending final disposition of plaintiffs' appeal therefrom.
In its statement of reasons, the trial court explained that the original discovery end-date in this case had been July 11, 2002. Five extensions had been granted, extending discovery: first, to September 9, 2002; second, to March 10, 2003; third, to November 30, 2003; fourth, to May 15, 2004; and fifth, to December 31, 2004. Each discovery extension had entailed an extension of time for plaintiffs to serve expert reports, with the fifth discovery extension order requiring that plaintiffs serve their expert reports by May 15, 2004. However, notwithstanding these generous extensions, plaintiffs did not serve their expert reports by May 15, 2004, nor did they file a motion, prior to that date, seeking an extension of time to do so. Only after defendants moved for summary judgment in July 2004, did plaintiffs file a cross-motion, in September 2004, for another extension of discovery.
At oral argument on the cross-motions, plaintiffs' counsel represented to the court that between January and September 2004, he experienced serious personal problems that interfered with his ability to comply with the May 15, 2004, deadline.
However, prior to oral argument, he had not communicated such problems to opposing counsel or the court. Moreover, from plaintiffs' motion papers, it was clear that plaintiffs' counsel had not retained an expert until August 18, 2004, approximately three months beyond the due date for the service of expert reports and one month after Newton Memorial had filed for summary judgment.
Still further, at oral argument, plaintiffs' counsel had represented that plaintiffs' expert's report would be produced by October 15, 2004. However, it was not, and plaintiffs' counsel did not alert either opposing counsel or the court that he was unable to meet that deadline. Not until April 2005 did plaintiffs' counsel advise the court and opposing counsel that plaintiffs had severed their relationship with their prior expert, Oxman, and retained new experts. Ultimately, plaintiffs did not serve their expert reports until June 2005.
Based upon this procedural history, the court concluded:
The plain fact is, in this case, that plaintiffs' failure to serve their experts reports until June 2005 has seriously set back the time frame for completion of discovery in this case, and the trial date to be assigned in this case. Counsel may well have encountered serious personal problems in the spring and summer of 2004; counsel may well have had problems with Dr. Oxman that may have been beyond his and the plaintiffs' control, but counsel's lack of communication and lack of candor to counsel and the Court are cause for concern.
Defendants' counsel filed motions and hearings on those motions occurred, which followed directly as a result of plaintiffs' failure to serve expert reports by May 15, 2004 -- at least the fourth time that deadline had been extended. . . . The motions filed and heard between July 2004 and April 2005 are a direct consequence of the failure of plaintiffs' to serve their expert reports on time, i.e., by May 15, 2004. And, as noted above, it is disturbing to now learn that Dr. Oxman was not even retained as plaintiffs' expert until mid-August 2004.
Accordingly, the trial court found that the imposition of sanctions on plaintiffs' counsel, in the amount of $4500 ($2250 to counsel for Newton Memorial, and $2250 to counsel for Okechukwu) was appropriate. The amounts were supported by certifications filed by defense counsel, which were unchallenged by plaintiffs as to their reasonableness, and were justified by plaintiffs' counsel's actions or inactions during the course of discovery. In this regard, the court stated:
It is with great hesitation, and only after careful consideration of the record in this case, that the Court will consider imposing the sanction of counsel fees on the party's counsel. In this case, there is no basis to conclude that any responsibility for these delays is due to any act or neglect by the plaintiffs themselves. No one argues that the plaintiffs are to blame, or that defense counsel somehow contributed to create the delays that occurred. Rather, these delays occurred because plaintiffs' counsel delayed in retaining an expert, well after the May 15, 2004, deadline to produce expert reports, and failed to seek an extension before the deadline expired. Plaintiffs' counsel argues that the Court is in error because the motion to extend the time to file experts' reports was filed on September 2, 2004, well before the then-December 30, 2004, discovery end date. This argument misses the point. If it were common or acceptable practice to file motions to extend discovery deadlines, in case management orders, after those deadlines have passed (and in this case the plaintiffs' motion was filed fourteen weeks late), it would convert "best practices" in civil cases into a wasteful exercise; to allow the practice advocated by plaintiffs' counsel would render discovery end dates meaningless. As this case demonstrates, the consequences are rather clear and quite serious; the discovery end date has been shifted yet again, from December 30, 2004, to December 30, 2005, a full year of yet additional delay, occasioned not by the plaintiffs, the defendants or by defense counsel. As indicated by the Court on the record on July 22, 2005, however, especially egregious was the failure of plaintiffs' counsel to alert the Court and defense counsel to his difficulties with Dr. Oxman, which were surfacing by mid-October 2004, with no word from counsel as to status until April 2005.
In sum, common sense and basic principles of fairness compel a finding that the reasonable fees for legal services and costs incurred by the defendants' counsel be paid. That reasoning resulted in the Order of May 19, 2005, and that reasoning, frankly, is further buttressed by plaintiffs' motion and submissions requesting reconsideration.
Concurrent with the motion for reconsideration filed before the trial court, plaintiffs and their counsel filed an appeal from the Law Division's April 29 and May 19, 2005, orders. Okechukwu moved to dismiss the appeal as interlocutory, and plaintiffs and their counsel opposed that motion.
By order dated September 12, 2005, we granted Okechukwu's motion and dismissed the appeal as interlocutory. Plaintiffs and their counsel filed a motion for reconsideration or, alternatively, for leave to appeal nunc pro tunc. However, we denied that motion by order dated October 19, 2005.
Plaintiffs and their counsel then filed a petition for certification, which the Supreme Court dismissed by order dated February 14, 2006. Undeterred, plaintiffs and their counsel filed motions for leave to appeal and for reconsideration. However, the Supreme Court denied those motions by order dated May 9, 2006.
In March 2006, after the Supreme Court had issued its first order dismissing plaintiffs' petition for certification, Newton Memorial filed a motion in the Law Division to dismiss the complaint with prejudice, and for costs, based upon plaintiffs' counsel's failure to comply with the May 19, 2005, sanctions orders. Plaintiffs responded with a cross-motion to amend the April 29 and May 19, 2005, orders. By order entered March 17, 2006, a different Law Division judge denied both motions.
After the completion of all appellate proceedings, defendants filed motions to enforce the sanctions orders through dismissal of the complaint without prejudice, and to recover their costs in filing these motions. Plaintiffs and their counsel responded with a cross-motion for reconsideration of the orders imposing sanctions, or, in the alternative, for certification of finality of those orders under Rule 4:42-2, and for a continuation of the stay of the sanctions.
Oral argument was heard on June 23, 2006. At the conclusion of the hearing, the court issued an oral opinion granting defendants' motions and denying plaintiffs' cross-motion.
Thereafter, by orders dated June 23, 2006, and July 11, 2006, the trial court dismissed the complaint without prejudice as to Newton Memorial and Okechukwu, respectively, due to plaintiffs' counsel's failure to comply with the court's May 19, 2005, sanctions orders, and denied plaintiffs' cross-motions. The court further ordered that:
[C]counsel for plaintiff shall, within 7 days of receipt of this Order, file and serve an Affidavit reciting that his client has been served with a copy of this Order and that he has explained to her in layman's terms that her complaint will not be reinstated until counsel has complied with [the prior judge's] 5/19/05 Order. Upon reinstatement, said reinstatement shall be nunc pro tunc to date of this Order so as to be seamless and not create S/L [statute of limitation] issue.*fn1
Still further, the court ordered that, if payment pursuant to the May 19, 2005, orders were not received within thirty days, plaintiffs' counsel would "personally be ordered to pay a fine of $100.00 per day until there is compliance with the aforesaid . . . Order[s]." And, finally, the court ordered plaintiffs' counsel to pay $300 to counsel for Newton Memorial, and $300 to counsel for Okechukwu, representing the costs of counsels' filing the motions to dismiss.
On July 31, 2006, plaintiffs and their attorney filed a notice of appeal from: (1) paragraph eight of the April 29, 2005, order, authorizing the imposition of monetary sanctions against plaintiffs; (2) the orders dated May 19, 2005, imposing monetary sanctions against plaintiffs' counsel; and (3) the orders dated June 23, 2006, and July 11, 2006, dismissing the complaint without prejudice and imposing additional monetary sanctions against plaintiffs' counsel.*fn2
By letter dated August 1, 2006, the court which entered the April 29, 2005, order filed a statement pursuant to Rule 2:5-1(b), enclosing a copy of its August 23, 2005, order and its statement of reasons.
On August 15 and 24, 2006, respectively, Newton Memorial and Okechukwu filed notices of cross-appeal. Both defendants cross-appeal from that part of the April 29, 2005, interlocutory order that granted plaintiffs' motion to extend discovery and denied defendants' motions for summary judgment and a dismissal of the complaint with prejudice.
By order dated January 17, 2007, we granted plaintiffs' motion for a stay of the Law Division's sanctions orders contingent upon plaintiffs' counsel posting a bond or cash deposit in the amount of $2550.
Plaintiffs make a number of arguments as to why the sanctions orders should be reversed as an abuse of the trial court's discretion. First, plaintiffs complain that the sanctions were procedurally improper because they were imposed sua sponte by the court, without a prior request for monetary sanctions having been made by the parties pursuant to Rule 1:10-3, without defendants ever having made a motion to compel plaintiffs' expert reports under Rule 4:23-1, and without prior notice that the court was considering such sanctions. Second, and similarly, plaintiffs argue that the May 19, 2005, orders were procedurally improper to the extent that the court, without a motion by defendants, and without notice or a hearing, altered the April 29, 2005, orders and imposed the monetary sanctions on plaintiffs' counsel rather than plaintiffs.
Third, plaintiffs argue that the April 29 and May 19, 2005, sanctions orders were issued without appropriate findings of fact and conclusions of law, as required under Rule 1:7-4. In this regard, plaintiffs argue that: (a) there were valid reasons why plaintiffs' expert reports could not be produced by the deadline of May 15, 2004, namely, plaintiffs' counsel's trial schedule and a death in his immediate family; (b) plaintiffs' counsel's failure to communicate with opposing counsel or the court regarding the difficulties he was experiencing with his expert did not constitute a basis for imposing monetary sanctions because there was no requirement for such communication in any court rule or in any case management order issued by the court; and (c) although plaintiffs did not move to extend discovery prior to the May 15, 2004, deadline for the production of expert reports, plaintiffs made a timely motion to extend discovery prior to the discovery end date of December 30, 2004.
Fourth, plaintiffs argue that the sanctions imposed under the April 29 and May 19, 2005, orders were excessive in amount to the extent they covered costs incurred between May 15, 2004, and April 29, 2005. According to plaintiffs, the time frame for the sanctions should have been limited to between July 20, 2004 (the date of defendants' summary judgment motions) and September 10, 2004 (the date of plaintiffs' cross-motion to extend discovery), because costs incurred after that date were the fault of the court, which delayed entry of an order on the parties' cross-motions until April 2005.
Fifth, plaintiffs argue that the monetary sanctions imposed upon plaintiffs' counsel under the June 23 and July 11, 2006, orders, amounting to $200 per day for each day counsel continued to not pay the $4500 in sanctions imposed under the May 19, 2005, order, were excessive and draconian. They were not based upon any findings of fact under Rule 1:7-4, they were not correlated with any expenses incurred by defendants or their counsel, and they were inappropriately intended to force plaintiffs' counsel to forego appellate review of the sanctions orders.
Sixth, plaintiffs argue that the June 23 and July 11, 2006, orders were inappropriate to the extent they dismissed the complaint and therefore imposed a sanction upon the innocent plaintiffs as a result of their counsel's transgressions. Plaintiffs argue that the court had valid options, short of dismissing the complaint, that it should have used. For example, plaintiffs argue that, rather than dismiss the complaint, the trial court should have continued its stay of the April 29 and May 19, 2005, sanctions orders and certified those orders as final and appealable under Rule 4:42-2, to allow for immediate appellate review of the sanctions while allowing the case to proceed.
Before addressing the substance of plaintiffs' appeal, it is necessary to address their procedural arguments. First, plaintiffs argue that: (1) we should reinstate their earlier appeal, retroactive to the July 2005 filing date, because that appeal was inappropriately dismissed as interlocutory, or, in the alternative, we should retroactively grant them leave to appeal, effective as of the July 2005 filing date; and (2) we should grant them summary disposition on their earlier appeal.
These arguments do not warrant significant discussion. The sanctions orders were clearly interlocutory and could not be considered without leave to appeal being granted. See, e.g., Sparwick Contr., Inc. v. Tomasco Corp., 335 N.J. Super. 73, 74 (App. Div. 2000) (noting that appeal from trial court's order directing arbitration to proceed in New Jersey and declining to award sanctions was interlocutory, with leave to appeal having been granted); Pontidis v. Shavelli, 296 N.J. Super. 420, 421 (App. Div. 1997) (noting that appeal from sanctions orders was interlocutory, with leave to appeal having been granted).
Plaintiffs are not harmed by our considering only the present appeal, and not the prior appeal, because the present appeal only duplicates and expounds upon the arguments made in the prior appeal. Also, plaintiffs are not harmed by our plenary consideration of the issues because the arguments raised in their appeal cannot be resolved on summary disposition. Still further, plaintiffs do not require reinstatement of the prior appeal nunc pro tunc in order to avoid payment of the original sanctions, ordered by the Law Division in May 2005, or the additional sanctions ordered by the Law Division in June and July 2006, because those sanctions have been stayed pending appeal.
Plaintiffs also argue that they are entitled to a stay of the sanctions orders pending final disposition of this appeal. However, there is no need for us to consider that argument because the sanctions have been stayed. The Law Division stayed its sanctions pending the outcome of the earlier appellate proceedings, and we have stayed the sanctions pending resolution of the present appeal.
Finally, plaintiffs argue that the Law Division erred by failing to certify the April 29, 2005, and May 19, 2005, orders as final judgments under Rule 4:42-2. However, plaintiffs do not appeal from the Law Division's August 23, 2005, order, in which the court denied plaintiffs' motion for such certification. Therefore, that issue is not properly before this court. See 1266 Apartment Corp. v. New Horizon Deli, Inc., 368 N.J. Super. 456, 459 (App. Div. 2004); Pressler, Current N.J. Court Rules, comment 6.1 on R. 2:5-1 (2008). And, in any event, certification would not have been appropriate since we strongly disapprove of "piecemeal adjudication of controversies." Haelig v. Mayor & Council of Bound Brook, 105 N.J. Super. 7, 11 (App. Div. 1969).
Turning to the merits of the appeal, we review the imposition of sanctions for discovery misconduct to determine whether the trial court abused its discretion. Abtrax Pharms., Inc. v. Elkins-Sinn, Inc., 139 N.J. 499, 517 (1995); In re Commitment of G.D., 358 N.J. Super. 310, 315 (App. Div. 2003); Conrad v. Robbi, 341 N.J. Super. 424, 441 (App. Div.), certif. denied, 170 N.J. 210 (2001). This standard "cautions appellate courts not to interfere unless an injustice appears to have been done." Abtrax, supra, 139 N.J. at 517. The court should not disturb a sanctions order that is supported by substantial credible evidence in the record. Id. at 520.
In this case, in their various sanctions orders, the trial courts did not specifically identify the legal bases under which they were imposing sanctions. It is clear, however, that the sanctions were imposed: (1) for discovery violations, including the failure to produce an expert report and the failure to comply with the court's case management order; and (2) for failure to comply with the sanctions orders.
As such, several Court Rules are applicable. For example, Rule 4:23-2(b) permits sanctions for discovery violations. The rule provides that, if a party or an "authorized agent of a party . . . fails to obey an order to provide or permit discovery, . . . the court in which the action is pending may make such orders in regard to the failure as are just." R. 4:23-2(b). The permissible sanctions for such violation include:
(1) An order that the matters regarding which the order was made or any other designated fact shall be taken to be established for the purposes of the action in accordance with the claim of the party obtaining the order;
(2) An order refusing to allow the disobedient party to support or oppose designated claims or defenses, or prohibiting the introduction of designated matters in evidence;
(3) An order striking out pleadings or parts thereof, or staying further proceedings until the order is obeyed, or dismissing the action or proceeding or any part thereof with or without prejudice, or rendering a judgment by default against the disobedient party;
(4) In lieu of any of the foregoing orders or in addition thereto, an order treating as a contempt of court the failure to obey any orders.
In lieu of any of the foregoing orders or in addition thereto, the court shall require the party failing to obey the order to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the court finds that the failure was substantially justified or that other circumstances make an award of expenses unjust.
See also Rule 4:23-1 (stating that in granting a motion to compel discovery, court "shall, after opportunity for hearing," require party whose conduct necessitated motion to pay moving party's reasonable expenses incurred in obtaining order, including attorney's fees, unless court finds that opposition to motion was substantially justified or that other circumstances make award of expenses unjust).
Under Rule 4:23-5(a)(1) and (c), the court may dismiss a complaint without prejudice for the failure to comply with specified discovery demands if: (1) the delinquent party has not made a timely motion for a discovery extension; and (2) the moving party has made a previous motion to compel. Thereafter, a dismissal with prejudice is permissible if, within ninety days of the dismissal without prejudice, the delinquent party has not filed a motion to vacate. R. 4:23-5(a)(2). In terms of expert reports in particular, under Rule 4:23-5(b), "[t]he court at trial may exclude the testimony of a treating physician or of any other expert whose report is not furnished pursuant to R. 4:17-4(a) to the party demanding the same."
More generally, the Court Rules also provide that sanctions may be imposed for violation of a court order, such as a case management order governing discovery. Under Rule 1:10-3, a party may make a motion in aid of litigant's rights, seeking enforcement of a previously entered court order. On such motion, "[t]he court in its discretion may make an allowance for counsel fees to be paid by any party to the action to a party accorded relief under this rule."
Finally, a trial court's right to impose sanctions is not limited to the provisions of the Court Rules. Trial courts also have inherent power to impose appropriate sanctions for the failure to make discovery. Abtrax, supra, 139 N.J. at 513. The only requirement is that the sanctions imposed be "'just and reasonable under the circumstances.'" Ibid. (quoting Calabrese v. Trenton State Coll., 162 N.J. Super. 145, 151-52 (App. Div. 1978), aff'd, 82 N.J. 321 (1980)). Accord Il Grande v. DiBenedetto, 366 N.J. Super. 597, 621-22 (App. Div. 2004).
In terms of the procedure followed in imposing sanctions, the Court Rules mandate certain procedures, including evidentiary hearings, for contempt-of-court adjudications. See R. 1:10-1; R. 1:10-2; Wolfe, supra, 334 N.J. Super. at 635-36. However, the Supreme Court has held that an evidentiary or adjudicatory hearing is not mandatory before a trial court imposes sanctions, for example, for a discovery violation. Abtrax, supra, 139 N.J. at 518-20. An evidentiary hearing will be necessary for such violations "where the record before the trial court has not provided an adequate basis for a fully informed determination of the underlying issue, or where an evidentiary hearing would be helpful for a determination of the issue." Id. at 519 (internal citations omitted). However, an evidentiary hearing may not be necessary where the trial court issuing the sanction presided over the matter for an extensive period of time and had the benefit of extensive discovery and briefing, including detailed certifications regarding the case's history. Id. at 519-20.
In terms of the actual sanction imposed, a trial court's choice of sanction must be fair and reasonable under the circumstances presented. Id. at 513; McCalla v. Harnischfeger Corp., 215 N.J. Super. 160, 171 (App. Div.), certif. denied, 108 N.J. 219 (1987). Moreover, in all cases, the court should be cognizant of the principle that the "'sins of the advocate should not be visited on the blameless litigant.'" Kosmowski v. Atl. City Med. Ctr., 175 N.J. 568, 574 (2003) (quoting Aujero v. Cirelli, 110 N.J. 566, 573 (1988)); Rabboh v. Lamattina, 312 N.J. Super. 487, 491 (App. Div. 1998), certif. denied, 160 N.J. 88 (1999). In this regard, "[a] court has the inherent power in appropriate circumstances, to sanction an attorney, rather than the client, particularly when the attorney's improper conduct has resulted in additional costs to the adverse party or the judicial system." Pontidis, supra, 296 N.J. Super. at 424.
Monetary sanctions may be imposed against counsel who acted with mere carelessness or negligence. They are not limited to instances of an attorney's bad faith. Oliviero v. Porter Hayden Co., 241 N.J. Super. 381, 385 (App. Div. 1990). Such sanctions must be supported by findings of fact, however, and, in general, they "are limited to orders requiring reimbursement of the fees and expenses of a party. See, e.g., R. 1:10-3; R. 4:10-3; R. 4:23-1(c); R. 4:23-2(b)) . . . ." Wolfe, supra, 334 N.J. Super. at 636-37; Oliviero, supra, 241 N.J. Super. at 387-88, 390. Punitive monetary sanctions, having no relation to the opposing parties' fees and expenses or the court's resources, cannot be imposed without following the appropriate contempt of court proceedings under R. 1:10-1 or 1:10-2. Wolfe, supra, 334 N.J. Super. at 636; In re Duane, Morris & Heckscher LLP, 315 N.J. Super. 304, 311-17 (App. Div. 1998); Ridley v. Dennison, 298 N.J. Super. 373, 381-82 (App. Div. 1997); Canino v. D.R.C. Co., 212 N.J. Super. 620, 622-24 (App. Div. 1986).
The ultimate sanction, which is a dismissal of the complaint with prejudice, has the effect of not only punishing the offending party but also deterring others who might engage in similar conduct. Abtrax, supra, 139 N.J. at 514-15, 518. Such a drastic measure should be used sparingly. It should not be invoked unless: the refusal to comply with a discovery order was deliberate and contumacious; the litigant rather than the attorney was at fault; and considering the range of sanctions available, no lesser sanction would suffice to eliminate the prejudice to the non-delinquent party. Id. at 513. Accord Kosmowski, supra, 175 N.J. at 574-75; Zaccardi v. Becker, 88 N.J. 245, 252-53 (1982); Wolfe, supra, 334 N.J. Super. at 638-39; Rabboh, supra, 312 N.J. Super. at 492-93; Johnson v. Mountainside Hosp., 199 N.J. Super. 114, 119-20 (App. Div. 1985).
Plaintiffs argue that the sanctions imposed under the April 29 and May 19, 2005, orders should be vacated because the sanctions were ordered without prior notice or an opportunity to be heard. Specifically, defendants had not made a motion for monetary sanctions, nor had the court advised counsel, before the April 29, 2005, hearing date, that it was considering the imposition of monetary sanctions.
We reject this argument. Based upon the law outlined above, the trial court was under no obligation to hold an evidentiary hearing before issuing sanctions. In any event, plaintiffs and their counsel received due process, including both notice and an opportunity to be heard. Plaintiffs were on notice that defendants had filed motions seeking the ultimate sanction of a dismissal of the complaint with prejudice. Still further, plaintiffs were given a full and fair opportunity to contest defendants' motions, and the court's proposed sanctions, at the hearing on April 29, 2005, in submissions to the court prior to entry of the May 19, 2005, orders, and on their motion for reconsideration, which was heard in August 2005. Thus, we perceive no procedural impropriety warranting a reversal.
Plaintiffs' counsel also claims there to be a procedural impropriety in the May 19, 2005, orders, because they imposed the sanctions upon plaintiffs' counsel, whereas the April 29, 2005, orders indicated that the sanctions would be imposed upon the individual plaintiffs. Again, however, plaintiffs and their counsel were given both notice and an opportunity to be heard on this issue. Specifically, in their submissions to the court, between the April 29, 2005, hearing and the May 19, 2005, orders, defendants requested that any sanctions awarded be imposed upon plaintiffs' counsel, rather than the blameless plaintiffs. Plaintiffs and their counsel chose not to respond to these submissions in a substantive manner, instead asking only that the court defer entry of an order pending their motion for reconsideration. On their motion for reconsideration, however, plaintiffs raised this issue, and it was considered by the court.
Moreover, under the Court Rules and governing case law, the Law Division acted appropriately in imposing the sanctions upon plaintiffs' counsel rather than plaintiffs. Indeed, neither plaintiffs nor their counsel have ever argued otherwise. Although plaintiffs' counsel disputes the significance of his misdeeds, it is undisputed that it was plaintiffs' counsel who failed to engage the expert witness in a timely manner so that a report could be produced in accordance with the case management order, and it was plaintiffs' counsel who misled both the court and opposing counsel by promising production of the report by a date certain, missing that deadline, and failing to engage in candid conversations with opposing counsel and the court regarding the problems he was experiencing with his expert.
See, e.g., Kosmowski, supra, 175 N.J. at 574-76 (trial judge was "[u]nderstandably . . . upset with plaintiffs' counsel for his lack of candor," justifying consideration of range of available sanctions that could be imposed on counsel). All of these transgressions resulted in out-of-pocket costs to defendants, particularly in the form of attorneys' fees and court costs incurred in filing necessary motions.
Plaintiffs and their counsel also complain that the sanctions were imposed without the issuance of appropriate findings of fact and conclusions of law. See Rule 1:6-2(f) (findings of fact and conclusions of law explaining disposition of interlocutory motion). See also Rule 1:7-4(a) (findings of fact and conclusions of law explaining disposition of motions by written orders appealable as of right). We reject this argument as well. The record reflects that the judge adequately supported his sanctions orders as required under the Court Rules, issuing an oral opinion on April 29, 2005, written orders on April 29, May 19, and August 23, 2005, and a ten-page written opinion on August 23, 2005.
Finally, plaintiffs and their counsel complain that the sanctions imposed under the May 19, 2005, orders, $2250 each to counsel for Newton Memorial and Okechukwu, for a total of $4500, is excessive. Again, we reject this argument, because the record reflects that monetary sanctions are reasonable in amount.
Therefore, on the record presented, the April 29 and May 19, 2005, sanctions orders are affirmed, as no abuse of discretion has been shown. The sanctions were imposed with all necessary due process afforded to plaintiffs and their counsel. The sanctions were reasonable in amount and not punitive, as they were directly tied to defendants' actual legal fees and expenses. And, the sanctions were supported by the evidentiary record and by the findings of fact and conclusions of law made by the court. The court's frustration with plaintiffs' counsel is more than understandable and justified by the record. It appears that, at least since May 19, 2005, counsel has placed his own personal interest in avoiding payment of the reasonable and justifiable monetary sanctions above the interests of his clients in seeing this seven-year-old case move forward.
Turning to the June 23 and July 11, 2006, sanctions orders, plaintiffs and their counsel first argue that the orders should be reversed because they were issued without adequate findings of fact and conclusions of law. We reject this argument. The record reflects that, at the June 23, 2006, hearing, the court placed on the record a detailed oral opinion supporting its decision.
Plaintiffs and their counsel also contest the amount of the monetary sanctions imposed. The $600 in court costs ($300 per defendant) were valid sanctions, as they were compensatory in nature, compensating defendants for their reasonable expenses in filing the motions to dismiss, which were necessitated by plaintiffs' counsel's recalcitrance and failure to comply with the May 19, 2005, sanctions orders.
However, the order imposing a "fine" of $200 per day ($100 per day for each defendant) against plaintiffs' counsel until he complied with the previous sanctions orders, was procedurally improperly entered. The fine, which presumably is payable to the court, was punitive in nature and unrelated to any fees or expenses incurred by defendants. To impose such a fine, the court was obligated to follow the procedures necessary for a contempt of court proceeding. However, it did not do so. R. 1:10-1; R. 1:10-2; Wolfe, supra, 334 N.J. Super. at 635-36; In re Duane, Morris & Heckscher LLP, supra, 315 N.J. Super. at 311-17; Ridley, supra, 298 N.J. Super. at 381-82; Canino, supra, 212 N.J. Super. at 622-24.
Finally, plaintiffs argue that the Law Division erred by dismissing the complaint without prejudice. We agree with this point. This was an unduly harsh sanction as it deprived plaintiffs of their day in court based solely upon the misdeeds of their counsel. See Kosmowski, supra, 175 N.J. at 574.
In this case, it appears plaintiffs were entirely innocent. They were not responsible for the delays in producing an expert report, nor were they responsible for their counsel's failure to engage in frank discussions with opposing counsel or the court. Compare Glass v. Suburban Restoration Co., 317 N.J. Super. 574, 579-83 (App. Div. 1998) (affirming dismissal of complaint for failure to produce expert report that was caused by party's own conduct, including not authorizing attorney to hire expert), with Cunningham v. Rummel, 223 N.J. Super. 15, 20 (App. Div. 1988) (reversing dismissal of complaint for failure to appear for deposition caused by counsel's inability to attend).
Moreover, by the time dismissal was ordered, the underlying discovery issue had been resolved. Plaintiffs' expert reports had been produced, albeit significantly out of time. Dismissal was ordered solely as a punishment for plaintiffs' counsel's refusal to pay the sanctions. However, the individual plaintiffs were not responsible for their attorney's misbehavior.
Defendants cross-appeal from the April 29, 2005, order to the extent the Law Division denied their motions for summary judgment, seeking a dismissal of the complaint with prejudice, and instead granted plaintiffs' cross-motion for an extension of discovery. We reject these cross-appeals.
Plaintiffs contend that the cross-appeals should be rejected as untimely because they were not filed within forty-five days of the April 29, 2005, order, and because defendants did not file a motion for leave to appeal nunc pro tunc. Plaintiffs further argue that, as a procedural matter, defendants may not seek a dismissal of the complaint with prejudice.
Plaintiffs are incorrect on both points. In terms of timeliness, the April 29, 2005, order was interlocutory. As such, it only became appealable as of right after the entry of final judgment on July 11, 2006. See R. 2:3-4; Butler v. Bonner & Barnewall, Inc., 56 N.J. 567, 573 n.2 (1970); Bloom v. Clara Maass Med. Ctr., 295 N.J. Super. 594, 606 n.2 (App. Div. 1996); Daly v. High Bridge Teachers' Ass'n, 242 N.J. Super. 12, 15 (App. Div.), certif. denied, 122 N.J. 356 (1990).
Newton Memorial's cross-appeal was filed on August 15, 2006, thirty-five days after the entry of final judgment, and within fifteen days of plaintiff's notice of appeal filed on July 31, 2006. As such, Newton Memorial's cross-appeal is timely under both Rule 2:4-1(a), which provides that appeals must be filed within forty-five days of the entry of final judgment, and Rule 2:4-2(a), which provides that cross-appeals must be filed within fifteen days after service of the notice of appeal.
Okechukwu's cross-appeal was filed on August 24, 2006, forty-four days after the entry of final judgment. It is timely if considered an appeal from the final judgment under Rule 2:4-1(a). However, it would be untimely as a cross-appeal under Rule 2:4-2(a), because it was not filed within fifteen days of service of the notice of appeal. Under the circumstances presented, however, where Okechukwu's cross-appeal is virtually identical to that of Newton Memorial and is arguably only nine days out of time, we may exercise our discretion to consider the cross-appeal timely pursuant to Rule 2:4-4(c) ("The appellate court may extend the time fixed by R. 2:4-2(a) (cross appeals and appeals by respondents as of right) . . . for such period as it deems reasonable").
Through their cross-appeals, defendants may seek a dismissal of the complaint with prejudice. "Ordinarily, [the Appellate Division] would not reach a cross-appeal from an interlocutory order where the cross-appellant has ultimately prevailed with the entry of a final judgment in its favor." Tannock v. N.J. Bell Tel. Co., 223 N.J. Super. 1, 8 (App. Div. 1988).
Here, the final judgment resulted in a dismissal of the complaint without prejudice. This judgment is favorable to defendants. However, in their earlier motions, defendants had sought a dismissal with prejudice, which was denied. As such, in the final judgment, defendants did not fully prevail. They were aggrieved by the final judgment to the extent it did not dismiss the complaint with prejudice, and therefore they may seek that relief through their cross-appeals.
Defendants argue that, under the Court Rules and the circumstances presented in this case, the Law Division erred by extending the time for discovery and not dismissing the case. Instead, the court should have granted their motions for summary judgment and dismissed the complaint with prejudice for plaintiffs' failure to sustain their claims with an expert report because, in the typical malpractice case, such as this one, the standard of care and deviation must be established through expert testimony. See Sanzari v. Rosenfeld, 34 N.J. 128, 134-35 (1961); Crespo v. McCartin, 244 N.J. Super. 413, 423 (App. Div. 1990); Parker v. Goldstein, 78 N.J. Super. 472, 479-80 (App. Div.), certif. denied, 40 N.J. 225 (1963); see also R. 4:23-2(b)(3) (permitting dismissal of action, with or without prejudice, if party "fails to obey an order to provide or permit discovery"); Abtrax, supra, 139 N.J. at 520-22 (affirming dismissal of complaint for party's deliberate and contumacious disregard of discovery orders); Glass, supra, 317 N.J. Super. at 579-83 (affirming dismissal of complaint for party's failure to timely comply with orders mandating production of expert report).
The court's review is deferential and "limited to a determination of whether the trial court mistakenly exercised its discretion in denying plaintiff's motion for an extension of the discovery period under R. 4:24-1(c)." Huszar v. Greate Bay Hotel & Casino, Inc., 375 N.J. Super. 463, 471-72 (App. Div.), certif. granted, remanded, 185 N.J. 290 (2005). See also Bender v. Adelson, 187 N.J. 411, 428 (2006).
While we are disturbed that no order was entered following the argument in September 2004 until April 2005, we see no abuse of discretion in the court denying summary judgment in its April 29, 2005, order and extending discovery. It is evident that the trial court was concerned that plaintiffs would be deprived of a trial on the merits due solely to the misdeeds of their counsel. The court, in an exercise of discretion, set firm discovery dates and appropriately sanctioned plaintiffs' counsel, which sanctions compensated defendants for their costs and expenses. Consequently, while we share defense counsel's frustration and consternation that this matter has not proceeded to trial after seven years from the filing of the complaint and twelve years from the alleged incident, we do not find an abuse of discretion on the trial court's part in entering the April 29, 2005, order.
We affirm the April 29 and May 19, 2005, orders to the extent they imposed $4500 in aggregate monetary sanctions against plaintiffs' counsel. We affirm the June 23 and July 11, 2006, orders to the extent they imposed $600 in monetary sanctions against plaintiffs' counsel. We reverse the June 23 and July 11, 2006, orders to the extent they imposed a "fine" of $200 per day upon plaintiffs' counsel and to the extent they dismissed the complaint. We remand the matter to the Law Division for trial and the scheduling of a case management conference as soon as possible. The conference should be held on the record with all counsel present, as well as the individual plaintiffs.*fn3 At the case management conference, a preemptory trial date shall be set. In addition, the court shall set a deadline for payment of the sanctions by plaintiffs' counsel, not later than thirty days from the date of the conference. If counsel fails to timely pay the sanctions, the court may then consider instituting an appropriate proceeding under Rule 1:10-2. Finally, we affirm the court's April 29, 2004, order granting an extension of time for discovery and denying defendants' motion for summary judgment.
Affirmed in part, reversed in part, and remanded.