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Saratoga at Toms River Condominium Association, Inc. v. Menk Corp.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


May 28, 2009

SARATOGA AT TOMS RIVER CONDOMINIUM ASSOCIATION, INC., PLAINTIFF-APPELLANT,
v.
MENK CORPORATION, INC.; ADELE HOVNANIAN; LOUISE GIOVINAZZO; WRIGHT CONSTRUCTION CO., INC.; BIL-JIM CONSTRUCTION CO.; ALL COUNTY ENTERPRISES, INC.; MATA GENERAL CONSTRUCTION; DOMINGO SIERRA T/A BIRCHWOOD CONSTRUCTION CO.; MARCOS SIDING, INC.; KAZIMIERZ GAWLINKOWSKI SIDING; SAMBOL CONSTRUCTION CORP.; TBS CORP.; R.B. CARPENTRY BUILDERS, INC.; RIGO HERNANDEZ; ANTHONY CARD; HYMAN CONSTRUCTION; ANTONIO TORRES; LUIS GILBERTO LOPEZ-NEGRON; MAX'S CONSTRUCTION COMPANY OF NEW JERSEY; GILES CONSTRUCTION COMPANY; FRED LARSEN; T.A.J. PURPURO CORP.; JAVIER GONZALES; PRO CUT; MEYER & VENTA; GREATER NEW YORK MUTUAL INSURANCE GROUP; HARTFORD INSURANCE COMPANY; MERCER INSURANCE GROUP; FEDERAL INSURANCE COMPANY; WESTPORT INSURANCE COMPANY; AND UNITED STATES LIABILITY INSURANCE COMPANY, DEFENDANTS-RESPONDENTS, AND CHRIS AIKENS; ED DRESWICK; VROM YEGPARIAN; JAMES VALLE; FRED PATERSON; MIKE CARPINO; LITTLE RASCALS CONCRETE CO., INC.; R.W. THOMAS, INC.; GREENSCAPE, INC.; BENITO'S CONSTRUCTION; INDEPENDENT CONSTRUCTION; F.G. CONSTRUCTION; JP SIDING; CH CONSTRUCTION; COB SANANGO CONSTRUCTION CO.; CARFER CONSTRUCTION, INC.,; EAGLE EXCAVATING; GEORGE C. MUELLER; BILL RAPPLEVEA EXCAVATING; TRAP ROCK INDUSTRIES; ANCHOR FRAMING AND BUILDING, INC., MONMOUTH IRRIGATION CORP.; H&H MASON CONTRACTORS; JOSE FUNEZ CONSTRUCTION; JOE CARLOS GALLO; JOHN LUCIANO; PELLA CONSTRUCTION COMPANY; ROBERT GORRELL; AND ARIAS CONSTRUCTION, DEFENDANTS.
MENK CORPORATION AND K. HOVNANIAN INDUSTRIES, INC., DEFENDANTS/THIRD-PARTY PLAINTIFFS-RESPONDENTS,
v.
WRIGHT CONSTRUCTION CO., INC.; GILES CONSTRUCTION CO.; ALL COUNTY ENTERPRISES, INC.; STROBERHADDONFIELD GROUP, INC.; DANIELIAN ASSOCIATES; GEORGE H. HOPPE; O-DONNELL, STANTON, & ASSOCIATES; FRANK H. LEHR & ASSOCIATES; CHRISTIE-WERNER ASSOCIATES, INC.; MEYER & VENTA; EXECUTIVE PROPERTY MANAGEMENT, INC.; ARTHUR EDWARDS, INC.; FRANK CATANZARITE; RON MANCINI; DARREN MISA; STEVE DEL CUERCIO; ELAINE KAMINSKI; TONY FORANO; JOE PALAGONIA; DENNIS GOETTMAN; RUTH ANN MANZI; ED COX; FELICE CARRERO-SCHMIDT; JACK MCLACHLAN; LOUISE GIOVINAZZO; STEVE KISELICK; JOE FORESTIERI; LARRY FALCON; AND BILL BRIDA, THIRD-PARTY DEFENDANTS-RESPONDENTS, AND LITTLE RASCALS CONCRETE CO.; R.W. THOMAS, INC.; GREENSCAPE, INC.; SPRINKLER MASTER; PRIME MANAGEMENT COMPANY, THIRD-PARTY DEFENDANTS.
MICHAEL J. WRIGHT CONSTRUCTION CO., INC., DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT,
v.
R.B. CARPENTRY BUILDERS, INC.; RIGO HERNANDEZ; ANTHONY CARD; HYMAN CONSTRUCTION; ANTONIO TORRES; LUIS GILBERTO LOPEZ-NEGRON; MAX'S CONSTRUCTION COMPANY OF NEW JERSEY; GILES CONSTRUCTION COMPANY; FRED LARSEN; T.A.J. PURPURO CORP; JAVIER GONZALEZ; AND PRO CUT, THIRD-PARTY DEFENDANTS-RESPONDENTS, AND JOSE FUNEZ CONSTRUCTION; JOE CARLOS GALLO; JOHN LUCIANO; PELLA CONSTRUCTION C0MPANY; ROBERT GORRELL; AND ARIAS CONSTRUCTION, THIRD-PARTY DEFENDANTS.
ALL COUNTY ENTERPRISES, INC., DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT,
v.
MATA GENERAL CONSTRUCTION; DOMINGO SIERRA T/A BIRCHWOOD CONSTRUCTION CO.; MARCOS SIDING, INC.; AND KAZIMIERZ GAWLINKOWSKI SIDING, THIRD-PARTY DEFENDANTS-RESPONDENTS, AND BENITO'S CONSTRUCTION; INDEPENDENT CONSTRUCTION; F.G. CONSTRUCTION; JP SIDING; CH CONSTRUCTION; COB SANANGO CONSTRUCTION CO., THIRD-PARTY DEFENDANTS.

On appeal from Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-23-04.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 6, 2009

Before Judges Wefing, Parker and Yannotti.

Plaintiff Saratoga at Toms River Condominium Association, Inc. (Saratoga) appeals from several orders entered on July 9 and 10, 2007 and an order entered on August 2, 2007 dismissing the complaint against defendants. Notwithstanding the number of parties and somewhat convoluted facts, this appeal focuses solely on a discovery issue because the complaint was dismissed with prejudice for plaintiff's failure to timely serve a supplemental expert report. We reverse the order of July 10, 2007 and remand for further proceedings against those defendants. We affirm the July 10, 2007 order dismissing all claims against defendant Strober-Haddonfield Group (Strober). Plaintiff is an association of condominium owners that is suing the developers, contractors and subcontractors for defects in the construction of 376 townhouses in fifty-five buildings.

Plaintiff alleges that as a result of the defective construction, the townhouses have had water leaks, mold and other problems with the buildings' common areas and individual units.

The complaint was originally filed by Hubschman & Roman on December 31, 2003 against Menk Corporation, Inc. (Menk) and a number of contractors. In September 2004, plaintiff substituted Stark & Stark as counsel and that firm added a multitude of additional defendants. Menk then filed a third-party complaint as did All County Enterprises, Inc., adding still more parties. April 28, 2005 was the original end date for discovery. That date was extended to December 1, 2005. A case management order entered on September 27, 2005 directed plaintiff to provide its expert report by January 3, 2006. In December 2005, however, plaintiff sought an extension of time to produce the expert report and was granted an extension to February 13. That date was further extended to April 15, 2006. Plaintiff produced the report on April 13, 2006 and submitted a supplemental expert report on May 31, 2006.

In July 2006, plaintiff sought leave to amend the complaint and that motion was granted on August 4, 2006, allowing plaintiff to file a fourth amended complaint on August 9, 2006. At a September 25, 2006 case management conference, defendants claimed that plaintiff's expert's reports were deficient because the two reports identified certain "categories" of construction defects, rather than specifically identifying and documenting every alleged defect. Plaintiff was then ordered to provide a further supplemental report by December 31, 2006.

In October 2006, however, Stark & Stark moved to withdraw as plaintiff's counsel, claiming that its withdrawal would not delay the case because plaintiff's expert was aware of the December 31, 2006 deadline for filing the supplemental report. Stark & Stark's motion to withdraw was granted on December 14, 2006. Plaintiff then had two weeks to retain new counsel and file the supplemental report. New counsel, Sodini & Spina (Sodini), entered an appearance on January 8, 2007.

On January 25, 2007, Menk, followed by the remaining defendants, moved to dismiss the complaint for plaintiff's failure to serve the supplemental report by December 31, 2006. Sodini opposed the motions and explained its predicament in attempting to obtain the information from Stark & Stark and review the voluminous material in the files. In opposition to the motions, Sodini's Hubert Cutolo certified that Stark & Stark did not cooperate in transferring files and, when it ultimately did -- beyond the deadline for filing the supplemental expert report -- it delivered thirty boxes of material, which could not be timely reviewed by Sodini.

The motions were argued and denied on February 16, 2007. By letter dated February 23, 2007, the court instructed plaintiff to identify the inspections and tests its expert still needed to do and submit an estimate of the time needed to complete the work. Plaintiff did so and provided a detailed explanation and protocol for completion of the supplemental report.

On March 28, 2007, plaintiff was ordered to submit the supplemental expert report by May 30, 2007. For a variety of reasons, largely outside of plaintiff's control, it was unable to comply with that order and on May 31, 2007, the trial court sua sponte entered an order to show cause why the complaint should not be dismissed with prejudice. The order to show cause was returnable July 9, 2007.

On July 9, 2007, the court heard argument and dismissed the complaint with prejudice. Its reasons were set forth in a written decision dated July 10, 2007, which stated:

The procedural history of this particular case can best be described as chaotic and protracted. There have been numerous extensions of discovery, numerous dates within which the [p]laintiff is to provide experts' reports, and a substitution of attorney. It is the failure of the [p]laintiff to respond to several [c]court [o]rders for the production of experts' reports that is the impetus of the [d]efendant's [m]otion to [d]ismiss the [c]omplaint.

Rule 4:23-2(3) provides for various remedies available to the [c]court for failure to comply with discovery orders. A [d]ismissal of the [c]omplaint, with [p]rejudice, is a remedy provided in the [r]ule . . . .

I have also considered and analyzed the recent amendments to our Rules of Civil Practice that had been described as "The Best Practice Rules." The Best Practice Rules lengthen the discovery time afforded to cases based upon their complexity. Secondly, although the Rules still permit extensions to discovery and amendments to interrogatories, they render it substantially more difficult to obtain extensions and amendments once discovery has ended and a trial or arbitration date has been set. The revised rules represent a carefully orchestrated compromise intended to end the general expectations that a case will be reached for trial only after multiple adjournments. B[e]nder v. Adelson, 187 N.J. 411, 426 (2006).

I recognize that the remedy of dismissal of a complaint should be used only sparingly. Zaccardi v. Becker, 88 N.J. 245 (1982). I further recognize that a dismissal with prejudice, is drastic and is generally not to be invoked except in those cases in which the order for discovery goes to the very foundation of the cause of action and whether refusal to comply is deliberate and contumacious. Dismissal, with prejudice, is the ultimate sanction that would only be ordered only when no lesser sanction will suffice to erase the prejudice suffered by a non-delinquent party or when the litigant, rather than the attorney, was at fault. [Id.] at 253.

The remedy of dismissal, however, is also important to deter others who might be tempted to violate the rule, absent such deterrent.

After reviewing the [p]laintiff's request for additional time, I have determined that, in essence, this case needs a "do-over." This "do-over" will, in effect, start the discovery period from day one. It will require that [d]efendants, in totality, prepare expert reports, to exchange those reports, schedule depositions of the experts, as well as to trigger reports to be generated by the sub-contractors in this matter. All this could have been avoided had the [p]laintiff attended to obtaining the appropriate experts at the time of filing the [c]omplaint, or before that. See Tucci v. Tropicana Casino & Resort, Inc., 364 N.J. [Super.] 48 (App. Div. 2003). It is, thus, appropriate for this [c]court to [d]ismiss this particular case, with prejudice, for failure to abide by the [c]court [o]rders concerning discovery matters.

In this appeal, plaintiff argues that the trial court abused its discretion in dismissing the complaint with prejudice. We agree.

"[T]he standard of review for dismissal of a complaint with prejudice for discovery misconduct is whether the trial court abused its discretion, a standard that cautions appellate courts not to interfere unless an injustice appears to have been done." Abtrax Pharms., Inc. v. Elkins-Sinn, Inc., 139 N.J. 499, 517 (1995). Under the standard, we must determine "whether there are good reasons . . . to defer to the particular decision at issue." Flagg v. Essex County Prosecutor, 171 N.J. 561, 571 (2002) (citation omitted).

Rule 4:23-2(b) permits a trial court to dismiss a complaint with prejudice when the plaintiff "fails to obey an order to provide or permit discovery." This "ultimate sanction" should be imposed "only sparingly" where it is clear that the sanctioned party's "refusal to comply is deliberate and contumacious" or the discovery at issue "goes to the very foundation of the cause of action." Abtrax, supra, 139 N.J. at 514 (citations and internal quotations omitted). The "ultimate sanction" should not be applied in the absence of prejudice to the non-delinquent party. Ibid.

As the trial court noted, in order to justify dismissal of a complaint with prejudice for failure to comply with discovery, the plaintiff's non-compliance must be "deliberate and contumacious." Ibid. Defendants claim that plaintiff is not "blameless" because Stark & Stark moved to withdraw as plaintiff's counsel and because plaintiff failed to pay its fees timely. The case law is clear, however, that an attorney's motion to withdraw from representing a client who has not made timely payments of counsel fees is within the discretion of the court. State v. Johnson, 274 N.J. Super. 137, 147 (App. Div. 1994) (citing Jacobs v. Pendel, 98 N.J. Super. 252, 255 (App. Div. 1967)). It is obvious that allowing counsel to withdraw two weeks before the discovery deadline in the numerous-party case would delay delivery of the supplemental report. If the court did not want the matter delayed it should have denied the motion. Ibid.

We have carefully considered the record before us and we find nothing to support a conclusion that plaintiff was deliberate or contumacious in its inability to produce the supplemental report by the required date. Indeed, it appears that counsel and the expert were unable to gather the necessary information to produce the report timely. Those failures cannot be laid at plaintiff's feet, albeit defendants attempt to do so by claiming that plaintiff should have had a completed expert report before filing the complaint. Clearly, there is no rule that requires a plaintiff to have fully prepared a case before filing a complaint. Discovery is an ongoing process during the course of litigation and the multitude of contractors and sub- contractors involved in this project made plaintiff's compliance that much more difficult. Consequently, we find no fault in plaintiff for its failure to meet the discovery deadline.

The alternate requirement for dismissal of a complaint with prejudice for failure to comply with discovery is that the discovery at issue goes to the foundation of the cause of action. Abtrax, supra, 139 N.J. at 514. Clearly, that is the case here. The expert's report is necessary to establish the defects for which plaintiff is seeking redress. It is for that very reason that discovery should be extended to allow the expert to produce the supplemental report.

Defendants claim that they are prejudiced by the delay, essentially because of the statute of repose. N.J.S.A. 2A:14- 1.1. None of the responding defendants, however, have pointed to any specific prejudice that has accrued to any of them as a result of the delay. Under those circumstances, we find that the trial court did, indeed, abuse its discretion in dismissing the complaint with prejudice. Lesser sanctions could have and should have been imposed on plaintiff or plaintiff's attorneys, including former counsel, for failure to comply with the discovery deadlines. Abtrax, supra, 139 N.J. at 514 (citations omitted).

Moreover, there is nothing in the record to support the trial court's finding that plaintiff's request for additional time to produce the supplemental report will amount to a "do- over," of the case. If the trial court closely manages the case at this point in time, it should be able to corral the multitude of parties into a manageable schedule.

Finally, we note that nowhere in the record is it indicated that a trial date had been set. We are mindful of the legitimate goals of the "Best Practices" rules to dispose of cases timely and efficiently. See Pressler, Current N.J. Court Rules, comment 4 on R. 1:1-2. We also recognize the pressures on trial courts to reduce case backlog and increase case clearance. Leitner v. Toms River Regional Schools, 392 N.J. Super. 80, 91 (App. Div. 2007). And we appreciate the defendants' legitimate interest in disposing of the case. The fundamental goal, however, is a fair and just determination following a trial on the merits.

Dismissal with prejudice is the ultimate sanction when no lesser sanction will suffice to erase the prejudice to defendants. Zaccardi, supra, 88 N.J. at 253. No such prejudice has been demonstrated here.

Accordingly, we reverse and remand the order of July 10, 2007. The trial court shall convene the parties for a case management conference and establish what, if any, further investigation or testing must be done by plaintiff's expert to complete his supplemental report and establish a time frame within which that report shall be submitted. The court shall further consider whatever schedule may be necessary for defendants to provide supplemental reports necessary to respond to plaintiff's supplemental report.

Plaintiff is on notice, however, that there shall be no further extensions of discovery, assuming a reasonable period of time is set for submission of the supplemental expert report. The trial court may consider what, if any, monetary sanctions should be imposed upon plaintiff and/or plaintiff's attorneys, including former counsel.

Plaintiff has also appealed from an order entered on July 10, 2007 dismissing the complaint against Strober. The court granted summary judgment dismissing in favor of Strober because there was no genuine issue of material fact that none of the damages pursued by plaintiff could possibly have been caused by Strober. Indeed, it is undisputed that Strober performed no labor in connection with the Saratoga project. Strober's only connection with the project was that it supplied certain materials to be used as components of a firewall assembly. Nowhere in either of plaintiff's two expert reports is there any allegation of any defect in the firewall assembly.

Although plaintiff argues that the complaint against Strober should not have been dismissed because discovery has not been completed, we find that argument unpersuasive. The record fully supports the trial court's grant of summary judgment dismissing the complaint against Strober. The July 10, 2007 order dismissing the claims against Strober is affirmed.

Affirmed in part, reversed in part and remanded for further proceedings.

20090528

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