On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-1370-00.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Cuff, Lisa and Lihotz.
In the mid-1990s, the State of New Jersey determined that the facilities used by Thomas A. Edison College, a college designed specifically to provide higher education to self-directed adults, required renovation, rehabilitation and expansion. The college occupies a series of historic townhouses in close proximity to the State House. An architect was engaged, plans were prepared, bids were sought and contracts were awarded. Work commenced in 1997. The State anticipated the work would require nine months; the project was completed in twenty-four months.
This litigation seeking damages caused by the delay was filed in April 2000 by the contractor awarded contracts to perform excavation, concrete work, and renovation of drywall, plaster, acoustical and window construction. Soon thereafter, it became clear that the architect was the target defendant. Yet, in January 2006, after a brief damages trial, the architect recovered $234,921 pursuant to its contract with the State. It is the only party to the litigation that recovered damages.
In this appeal, we review the order striking the experts proposed by plaintiff Interstate Industrial Corporation (Interstate) and defendant State of New Jersey and the summary judgments entered against them dismissing their affirmative claims.*fn1 The architect filed a cross-appeal that challenges the invocation by the State of the termination for convenience clause of the contract between it and the State. The architect asserts that this action diminished its damages. We commence our discussion with the orders denying the State's motion to extend the discovery end date, granting the architect's motion to strike the State's belatedly submitted expert report, granting the architect's motion to strike plaintiff's proposed expert report, and the summary judgments dismissing the affirmative claims filed by the plaintiff and the State.
On October 17, 1995, the State signed a contract with defendant D.F. Gibson Architects (Gibson or the architect) to furnish "design and construction administration services" for the project. Gibson was to perform design services, including investigation of the site and the condition of the buildings.
It also was retained to provide construction administration services. It is undisputed that Gibson retained third-party defendants Melick-Tully & Associates, Inc. (Melick) and Building Conservation Associates, Inc. (BCA) to investigate soil conditions and the structural integrity of the buildings respectively. A primary issue in the litigation commenced by Interstate was whether the plans prepared by Gibson properly accounted for the sub-soil rock discovered by Melick and the structural integrity weaknesses identified by BCA.
On April 17, 2000, Interstate filed its complaint against the State. It demanded approximately $1.7 million in delay damages incurred during the college project. It alleged that the State improperly created or allowed the delays, denied it reasonable extensions to complete construction, and refused to pay the contract balance. On August 16, 2000, the State filed an answer and third-party complaint against Gibson. The third-party complaint asserted that Gibson breached its contract to provide proper architectural and engineering plans for the project.*fn2 The parties attempted to mediate the dispute in February 2001. When that failed, Interstate was granted permission to file a direct claim against Gibson. The architect filed its answer and counterclaim on July 18, 2001, and also asserted a fourth-party complaint against several firms it had hired as consultants for the project, including Turner Construction Company (Turner), Melick, and Applied Engineering Technology (Applied Engineering). Turner was employed as the construction manager of the project. Gibson also named three individuals: Robert Brehm, the State's Director of Office of Design and Construction, Division of Property Management and Construction; Steven Sutkin, an attorney for the State's Office of Construction; and Patrick Cox, the State representative overseeing the project during most of the delays.
Discovery commenced and originally was set to end in December 2002, but was extended. On August 5, 2003, a case management order directed closure of fact discovery on September 30, 2003. Interstate was directed to serve its expert report by October 31, 2003, the State was directed to serve its report by December 1, 2003, and Gibson was directed to serve its expert report by January 9, 2004. Although it appears that Interstate served its report in March 2003, the State did not serve its expert report in December 2003. The record reveals that fact discovery proceeded after the September 30, 2003 end date. In addition, Gibson filed an amended fourth-party complaint against BCA. Gibson filed a motion to reconsider the August case management order, which was denied in part because "discovery has been taking place in the meantime and is currently ongoing." Thereafter, in November 2003, BCA requested a case management conference to address the discovery end dates. The State joined this request.
In December 2003, the case was assigned briefly to another judge. He recused himself because the Interstate expert was a close friend. The requested case management conference was conducted on February 25, 2004, before Judge Andrew Smithson. The matter was referred to another round of mediation with no adjustment of discovery end dates. At an October 1, 2004 conference after the second attempt at a mediated settlement failed, the judge noted that any adjustment to the discovery schedule would have to be presented to the presiding judge. He also informed all parties that a trial date would soon be scheduled. In fact, two weeks later the parties received a trial notice for February 14, 2005.
On November 18, 2004, the State served its expert reports. Gibson filed a motion to dismiss Interstate's complaint against it and to bar the State's expert reports as untimely. The State filed a cross-motion to extend discovery and for a determination that its reports were timely. The fourth-party defendants filed motions for summary judgment.
On December 20, 2004, Judge Smithson held that the State did not demonstrate good cause to serve its expert reports almost eleven months beyond the date required by the last case management order and struck the reports. He also found that the Interstate expert report was a net opinion.
Once the expert reports submitted by Interstate and the State were barred, Gibson filed motions for summary judgment. The State also filed a motion for summary judgment against Interstate. Judge Smithson denied the State motion to dismiss the breach of contract claims but dismissed the negligence claims. In May 2005, the judge granted the State's motion for reconsideration of the contract claims issue. He concluded that Interstate had produced insufficient evidence for him to find that the State had actual knowledge of the conditions that caused the delays. The judge also granted Gibson's motion for summary judgment against the State. He held that the State claims against the architect required expert support. Having barred the State experts, the State could not carry its burden of proof to support its claims against Gibson.
On appeal, the State asserts that Judge Smithson erred in refusing to extend discovery, barring its experts from testifying and dismissing the State's claims against Gibson. According to the State, the expert reports should not have been barred because they were "critical" to the State's claims, the parties had not acted willfully to mislead, and procedurally the matter was still well before trial. Interstate joins this argument. It requests we remand the matter for further discovery so that it can "submit further expert reports and witnesses" to support its claims.
A. Order Striking State Expert Reports
Judge Smithson provided the following explanation of his decision to strike the State's expert reports. First, while the judge denominated the procedural history "convoluted," he added that it was a case "where the discovery just simply wasn't getting done, for any number of reasons." Instead of "mov[ing] as it should have," the State "dragged its feet time again [sic], and time again." Although the judge also noted that, meanwhile, the other parties "kind of waited and stood back, to see what the State would do, without taking the bull by the horns on their own," he was not "making any critical judgments about that" because it was a tactical decision those other parties were free to make under the circumstances.
Second, although the State had finally filed its expert reports a few weeks before the argument, those reports were filed "much, much too late" and, to permit them at that point "would be to invite just rounds and rounds of further discovery, which would put this case into another time frame."
Thus, based on the "complex commercial" nature of the case, the fact that it had been moved from "track 2" to "track 4" (referring to discovery deadlines in effect under Best Practices), the number of conferences that were held and the overall passage of time, the State's expert reports were not timely served. On balance, therefore, the record simply did not support good cause to extend discovery.
Interstate filed its complaint in April 2000 and the State filed its third-party complaint in August 2000, therefore, the discovery protocol in effect at that time governed the pre-trial proceedings. For cases filed prior to September 5, 2000, discovery extended 150 days from the date of service of the complaint, or as otherwise prescribed by the applicable "differentiated management rule" or court order. R. 4:24-1(d).
The "Best Practices" amendments never expressly applied to this case.*fn3
Pursuant to Rule 4:17-4(a) and (e), parties must identify their experts, and provide timely reports. Under Rule 4:23-5(b), the court may exclude an expert's testimony if his or her report is not timely furnished pursuant to Rule 4:17-4(a). The court applies that sanction in its discretion "subject only to the rule that the sanction visited upon the party must be just and reasonable." Westphal v. Guarino, 163 N.J. Super. 139, 145-46 (App. Div.), aff'd o.b., 78 N.J. 308 (1978). Under Rule 1:1-2, unless otherwise provided "any rule may be relaxed or dispensed with by the court . . . if adherence to it would result in an injustice."
This court has said that factors which "strongly urge" a court not to impose harsh sanctions are the absence of a design to mislead, absence of surprise were the evidence admitted and absence of prejudice resulting from admittance. Id. at 146. We explained that such a policy "accords with the overriding objective of giving the defaulting party his day in court, with due regard, however, to protecting the opposing party from the effects of surprise or other prejudicial factors." Ibid.
(citation omitted). The failure to serve an expert report in timely fashion can result, therefore, in its being barred altogether. See Clark v. Fog Contracting Co., 125 N.J. Super. 159, 162 (App. Div.) (the plaintiff's expert properly barred from testifying when there was no "reasonably available opportunity to permit [the] plaintiff to remedy his default" because the trial had already started and there was no forewarning to the defendant), certif. denied, 64 N.J. 319 (1973). But see Westphal, supra, 163 N.J. Super. at 148 (trial court's bar of two experts whose names were untimely submitted reversed as an abuse of discretion).
In cases where there has been no "fixed" arbitration or trial date set, the court considers whether the movant has established "good cause" for an extension of discovery, a concept that is "flexible and its meaning is not fixed and definite." Leitner v. Toms River Reg'l Sch.. 392 N.J. Super. 80, 87 (App. Div. 2007) (citing Tholander v. Tholander, 34 N.J. Super. 150, 152 (Ch. Div. 1955)). The factors the court should consider include: the reasons for the request; the movant's diligence in pursuing discovery theretofore; the type and nature of the case, including any unique features; any resulting prejudice to the movant if the motion were denied; whether granting the motion is "consistent with the goals and aims" of Best Practices; the case's age and whether an arbitration or trial date has been ...