On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-8561-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 21, 2009
Before Judges Lisa and Alvarez.
Audrey Nevitsky appeals from the November 21, 2008 order denying her motion to reinstate her answer (which included a counterclaim) and third-party complaint, and the December 22, 2008 order denying her motion for reconsideration. Nevitsky's pleadings were stricken for failure of her or her attorney to appear at a mandatory civil arbitration. See R. 4:21A-1; R. 4:21A-4(f). Nevitsky argues that the trial judge erred in entering the orders because she made the requisite showings of good cause for failure to appear, and the presence of a meritorious defense as to the claim against her and a meritorious basis for the claims she asserted against other parties. We agree with Nevitsky and reverse.
Nevitsky purchased a home from Décor Homes, Inc. for $1.41 million. The closing was conducted on September 14, 2005. However, Décor Homes had not obtained a certificate of occupancy (CO). Accordingly, Nevitsky could not occupy the home. It was represented to her that the CO would be obtained within about two days. As security, and to provide an incentive to Décor Homes to promptly obtain the CO, $5000 of the settlement proceeds was withheld from Décor Homes and placed in escrow. However, about a three-month delay occurred and a CO was not issued until December 12, 2005.
Nevitsky refused to authorize release of the $5000 to Décor Homes. She contended that the expenses she incurred as a result of the three-month delay greatly exceeded $5000. She contended she incurred expenses for rental and hotel fees, attorney's and engineering fees associated with the need to obtain a variance required for the issuance of a CO, and costs associated with the removal of the paver patio that had been installed.
Décor Homes filed this action against Nevitsky demanding return of the $5000. In its complaint, Décor Homes set forth the closing date, the absence of a CO at that time, the agreement regarding the $5000 escrow, and the three-month delay culminating with the issuance of a CO on December 12, 2005. Nevitsky admitted those allegations. As a result, those facts are established by the pleadings and they are not disputed.
Nevitsky retained counsel different than the attorney who represented her at the closing. She filed an answer and counterclaim against Décor Homes. She also filed a third-party complaint against the attorney who represented her at the closing, the real estate agency and one of its individual agents, and an individual associated with Décor Homes. She made various claims against these parties. We need not describe them in detail. We merely comment that they included a claim of legal malpractice against her prior attorney, and claims against the other parties including breach of contract, misrepresentation, and a consumer fraud act violation.
In due course, all parties adverse to Nevitsky filed responsive pleadings. On October 11, 2006, Nevitsky moved to transfer the case from the Special Civil Part to the Law Division. In support of the motion, it was represented to the court that Nevitsky incurred damages as outlined above, which were in excess of the jurisdictional limit of the Special Civil Part. The motion was not opposed by any party. An order was entered on November 3, 2006 granting the motion, which the court found "meritorious on its face."
Discovery was conducted. The arbitration hearing was first scheduled for November 13, 2007. With the consent of all parties, it was postponed until December 11, 2007, and further postponed until May 6, 2008. On that date, Nevitsky's attorney failed to appear. It was later learned that Nevitsky's attorney had ceased practicing law, closed her office, terminated her telephone and email services, placed her house up for sale, and, it is believed, relocated to Australia. None of this was known to Nevitsky.
No arbitration hearing was held and no arbitration award was rendered. The trial court entered two orders on May 6, 2008, one suppressing Nevitsky's answer (which included a counterclaim against Décor Homes), and the other dismissing her third-party complaint.
Upon learning that her litigation attorney had absconded, Nevitsky hired her present counsel. Unable to contact Nevitsky's prior attorney and to obtain a substitution of attorney, the new attorney filed an appearance of counsel together with a motion to reinstate Nevitsky's answer and third-party complaint. The motion was opposed, and an order was entered on November 21, 2008 denying the motion. The basis for denial was that, in the absence of a substitution of attorney, prior counsel was still the attorney of record and the newly-retained attorney was not authorized to file a motion on Nevitsky's behalf.
The newly-retained counsel moved for reconsideration. In doing so, counsel explained to the court the circumstances of prior counsel absconding. The motion again sought reinstatement of Nevitsky's pleadings, arguing substantively that the negligence of Nevitsky's prior counsel established good cause, that there was no prejudice to any other party, and that a meritorious defense to Décor Homes' claim existed and that Nevitsky's affirmative claims were meritorious. The facts and circumstances relating to the merits of Nevitsky's defense and claims were set forth in a certification of counsel, which included undisputed facts as we have set forth and a recapitulation of the allegations contained in Nevitsky's pleadings. The certification also contained a ...