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Eastern Concrete Materials, Inc. v. Colonial Surety Co.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


October 26, 2009

EASTERN CONCRETE MATERIALS, INC., PLAINTIFF-APPELLANT,
v.
COLONIAL SURETY COMPANY, DEFENDANT-RESPONDENT.
EASTERN CONCRETE MATERIALS, INC., PLAINTIFF-APPELLANT,
v.
A. JULIANO & SONS, INC., A JULIANO & SON CONTRACTORS, INC., AND ANTHONY JULIANO, JR., DEFENDANTS, AND COLONIAL SURETY COMPANY, DEFENDANT-RESPONDENT.

On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-3194-08 (A-3186-08T1) and Bergen County, Docket No. L-846-08 (A-4356-08T1).

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 29, 2009

Before Judges Yannotti and Chambers.

In A-4356-08, plaintiff Eastern Concrete Materials, Inc. appeals from an order entered by the Law Division, Bergen County, on August 15, 2008, dismissing its complaint against defendant Colonial Surety Company (Colonial); an order entered on July 18, 2008, denying plaintiff's motion to suppress pursuant to Rule 4:23-5(a); and an order entered on August 29, 2008, denying plaintiff's motion for reconsideration. In A-3186-08, plaintiff appeals from an order entered on January 23, 2009, by the Law Division, Union County, dismissing a complaint filed by plaintiff against Colonial in which plaintiff asserted the same claim that plaintiff asserted against Colonial in the Bergen County case.

We address both appeals in this opinion. For the reasons that follow, in A-4356-08, we reverse the orders under review and remand the matter to the Law Division, Bergen County, for further proceedings. In A-3186-08, we dismiss the appeal as moot.

I.

We briefly summarize the relevant facts and procedural history of these two cases.

A. Plaintiff's Bergen County Action

Plaintiff entered into an agreement with defendant A. Juliano & Sons, Inc. (Juliano) to provide materials for work that Juliano was going to perform for the County of Union (County) at the Peter J. Esposito Park in Clark, New Jersey. Anthony Juliano, Jr. (Anthony) provided plaintiff with a personal guarantee of Juliano's obligations under the agreement.

Plaintiff allegedly furnished the materials for the project and billed Juliano $275,289.98; however, plaintiff was not paid. Consequently, on January 31, 2008, plaintiff filed an action in the Law Division, Bergen County, against Juliano, A. Juliano & Son Contractors, Inc. (AJS) and Anthony seeking the amounts allegedly due, plus interest and certain collection costs.

On March 13, 2008, plaintiff filed an amended complaint, naming Colonial as an additional defendant, seeking recovery of the amounts due from Juliano under the terms of a surety bond that Colonial issued to Juliano for the project. On March 20, 2008, Colonial filed an answer denying liability and asserting a variety of affirmative defenses.

B. Plaintiff's Discovery Requests and Related Motions

On March 26, 2008, plaintiff issued to defendants demands for the production of documents and answers to interrogatories. Plaintiff also provided defendants with notices demanding that certain witnesses be produced for oral depositions, which were scheduled for May 8, 2008. By letter dated April 24, 2008, Colonial's counsel advised that the May 8, 2008 date was "not convenient" because of certain "previously scheduled matters." He asked plaintiff's attorney to reschedule the depositions.

Plaintiff's counsel rescheduled the depositions for June 19, 2008; however, by letters dated June 18, 2008, counsel for the Julianos advised that Anthony would not be available and Colonial's attorney said that his witness had developed "an emergency as a case in Buffalo [was] proceeding to trial."

On June 18, 2008, plaintiff filed a motion to suppress defendants' answers without prejudice pursuant to Rule 4:23-5(a) for failure to provide discovery. Colonial opposed the motion. Colonial also provided a response to plaintiff's demand for the production of documents and interrogatories. In his certification dated July 9, 2008, Colonial's counsel stated that Nunziata was prepared to be deposed on a mutually convenient date.

Plaintiff's attorney submitted a reply certification dated July 14, 2008, in which he stated that Colonial's answers to interrogatories were deficient because Colonial's counsel had provided the answers, rather than an officer or agent for Colonial. Counsel also stated that Colonial's answers were "evasive non-answers" and the Julianos had not responded to the discovery requests. Counsel additionally asserted that he had twice scheduled the depositions but defendants had adjourned the depositions.

On July 18, 2008, the trial court entered an order denying plaintiff's motion. On the order, the court wrote that its decision was based upon "defendants' counsel's answer that all discovery obligations have been complied with and that plaintiff's counsel has not countered these assertions." On July 29, 2008, plaintiff filed a motion for reconsideration of the July 18, 2008 order. Plaintiff's attorney said that it appeared the court had not considered his reply certification. The court entered an order on August 29, 2008, denying plaintiff's motion for reconsideration.

C. Colonial's Motions

On July 16, 2008, Colonial filed a motion for leave to file a third-party complaint against the County and T&M Associates (T&M). The motion was referred to the judge who ruled in plaintiff's discovery motion.

On July 16, 2008, Colonial also filed a motion to transfer venue of the matter to the Law Division, Union County. In support of this motion, Colonial argued, among other things, that its surety bond required that actions arising under the bond be brought in the county in which the project is located. This motion was referred to the Presiding Judge of the Civil Part, Bergen County, as designee of the Assignment Judge. R. 4:3-3(a).

Plaintiff opposed the motion and maintained that the matter had been properly brought in Bergen County because its principal place of business is in that county, the agreement with Juliano had been executed there, and Colonial has a place of business there. Plaintiff additionally maintained that Colonial had waived any objection to venue because it did not file its motion within the time prescribed by Rule 4:3-3(b).

On July 28, 2008, Colonial filed a letter brief, which it said was in further support of its motion to dismiss plaintiff's claim for non-compliance with an express condition of Colonial's payment bond. Colonial had, however, never filed a motion seeking that relief. Furthermore, Colonial filed the letter brief with the judge who was handling the motion for leave to file the third-party complaint, not the Presiding Judge of the Civil Part, who was handling the change-of-venue motion.

By order entered August 1, 2008, the Presiding Judge of the Civil Part denied the motion for a change of venue. In his statement of reasons appended to the order, the judge found that Bergen County was the proper venue for the action and Colonial failed to seek a change of venue within the time prescribed by Rule 4:3-3(b).

On August 15, 2008, the other judge entered an order dismissing plaintiff's complaint against Colonial pursuant to Rule 4:6-2(e) for failure to state a claim upon which relief can be granted. In addition, on August 29, 2008, the judge entered an order granting Colonial's motion for leave to file a third-party complaint against the County and T&M.*fn1

D. Plaintiff's Motion for Leave to Appeal

On September 16, 2008, plaintiff filed a motion for leave to appeal from the orders entered on August 15, 2008, and August 29, 2008, and for reassignment of the matter to another judge. We denied plaintiff's motion by order filed on October 10, 2008.

E. Plaintiff's Union County Action

On September 17, 2008, plaintiff filed a complaint against Colonial in the Law Division, Union County, in which it asserted the same claim it had previously asserted against Colonial in the Bergen County case. In December 2008, Colonial filed a motion to dismiss the complaint. The court granted Colonial's motion by order entered on January 23, 2009. Plaintiff appeals from the court's order.

F. Further Proceedings in the Bergen County Action

On February 3, 2009, Colonial filed a motion to vacate the August 15, 2008 order and for summary judgment.*fn2 By order entered on February 27, 2009, the court denied the motion because the matter was scheduled for trial on March 2, 2009, and the motion had not been brought within the time prescribed by Rule 4:46-1. Thereafter, Colonial filed a motion for reconsideration. The court entered an order on April 3, 2009, denying the motion.

On April 29, 2009, Juliano, AJS and Anthony consented to the entry of a final money judgment in favor of plaintiff, thereby resolving the claims against them in the lawsuit.

Plaintiff's appeal from the orders entered in the Bergen County action followed.

II.

We turn first to plaintiff's challenge to the order entered by the Law Division in Bergen County on August 15, 2008, dismissing plaintiff's complaint against Colonial pursuant to Rule 4:6-2(e) for failure to state a claim upon which relief can be granted.

As we have previously explained, in July 2008, Colonial filed two motions in the trial court: a motion for a change of venue and a motion seeking leave to file a third-party complaint. The Civil Part Presiding Judge denied the change-ofvenue motion. The other judge entered the August 15, 2008 order dismissing plaintiff's complaint for failure to state a claim upon which relief can be granted, and later entered an order permitting Colonial to file a third-party complaint. Suffice it to say, the trial court erred by dismissing plaintiff's complaint because Colonial did not file a motion seeking that relief.

Colonial argues, however, that the trial court's August 15, 2008 order was procedurally proper because Colonial purportedly "modified the relief it sought" when it filed a reply on its motion for a change of venue. We disagree. Under our court rules, a reply brief on a motion is not a proper vehicle for asserting what is, in essence, an entirely different motion. R. 1:6-2(a); R. 1:6-5.

Colonial also argues that the August 15, 2008 order should be affirmed because plaintiff's claim failed as a matter of law. Colonial notes that its surety bond states that actions arising under the bond must be brought in the state's court "in and for the [c]county or other political subdivision of the state in which the project, or any part thereof, is situated, and not elsewhere." Colonial contends that because plaintiff filed its complaint in Bergen County rather than Union County, where the project was located, plaintiff's complaint failed to state a claim upon which relief can be granted.

Plaintiff argues, however, that the venue provision in Colonial's bond is invalid and unenforceable. The surety bond that Colonial provided to Juliano for the Union County park project was required by N.J.S.A. 2A:44-143(a)(1) and the project specifications. According to N.J.S.A. 2A:44-143(a)(1), the bond must be issued in accordance with N.J.S.A. 2A:44-147, which prescribes the form for the bond. The statutorily-prescribed form does not include a provision requiring claimants to bring their actions in the state court for the county in which the work was performed. Plaintiff therefore contends that the venue requirement in Colonial's bond is unenforceable.

In support of this argument, plaintiff relies upon our decision in Gloucester City Bd. of Ed. v. Am. Arbitration Ass'n, 333 N.J. Super. 511 (App. Div. 2000). In that case, the surety issued a performance bond for certain construction work being undertaken for the Gloucester City Board of Education (Board). Id. at 515. The bond provided that the surety's obligation did not arise until the owner declared the contractor in default and "formally terminated" the contractor's right to complete the work. Id. at 516. The bond additionally provided that any action on the bond had to be commenced within six months after the contractor's default, the contractor stopped work or the surety refused to fulfill its obligations under the bond "'whichever occurs first.'" Ibid.

In Gloucester City, we held that the relevant statute imposed "an unqualified obligation upon the surety to guarantee the principal's performance" and the disputed terms in the surety bond impermissibly diminished that obligation. Id. at 527. We explained that: the intent of N.J.S.A. 2A:44-143 and -147 is to require the surety to stand in the shoes of a defaulting principal and to be subject to any claim for which the principal would have been liable. However, if [the surety] were allowed to condition its liability upon the Board satisfying preconditions of suit that could not have been asserted by [the contractor], this would dilute the protection the statutory bond is supposed to provide the Board and the public it serves. Therefore, we conclude that a surety may not condition its obligation under a performance bond issued to comply with the requirements of N.J.S.A. 2A:44-147 by requiring the contracting agency to declare a default and formally terminate the contract or to file a claim within a specified period of time.

This conclusion is reinforced by the fact that N.J.S.A. 2A:44-146 imposes a one-year limitations period on the filing of an action on the required bond for the payment of laborers and suppliers, but the statute does not impose any limitations period on the filing of a claim under a performance bond. The absence of such a limitations provision in the statutory sections governing performance bonds would seem to indicate that the Legislature contemplated that a surety which guarantees a contractor's performance would be subject to suit for the same period of time and under the same conditions as its principal. [Id. at 527-28.]

In our view, the Gloucester City case is distinguishable. Although the bond form prescribed by N.J.S.A. 2A:44-147 does not include a venue provision, such a requirement does not have an impact upon a claimant's ability to enforce the surety's obligations under the bond. The venue condition does not bar the assertion of the claim; it merely prescribes the court and county in which the claim must be brought. Therefore, unlike the disputed bond conditions in Gloucester City, the venue requirement does not impermissibly dilute the surety's obligation to guarantee the principal's performance of the contract.

Although we conclude that the venue provision of Colonial's bond is valid, the filing of a lawsuit in the wrong vicinage does not warrant dismissal of plaintiff's claim against Colonial pursuant to Rule 4:6-2(e). The appropriate remedy is not dismissal of the claim but rather a transfer of venue, provided that the surety files a motion seeking such a transfer within the time prescribed by Rule 4:3-3(b).

In this case, Colonial filed a motion for a change of venue but as the Civil Part Presiding Judge correctly determined, the motion was untimely. We conclude that, under these circumstances, Colonial is foreclosed from requiring plaintiff to bring its claim in Union County.

We accordingly reverse the August 15, 2008 order dismissing plaintiff's claim against Colonial and remand the matter to the Law Division in Bergen County for further proceedings.

III.

We turn to plaintiff's appeal from the order entered by the court in the Bergen County action on July 18, 2008, denying plaintiff's motion to suppress Colonial's answer for failure to provide discovery, and the order entered by the court on August 29, 2008, denying plaintiff's motion for reconsideration of its earlier order.

As stated previously, plaintiff filed a motion to suppress Colonial's answer pursuant to Rule 4:23-5(a) on the grounds that Colonial had not furnished answers to its interrogatories and twice failed to produce its witness to testify at depositions scheduled by plaintiff. Colonial opposed the motion and at the same time provided plaintiff with answers to the interrogatories and document request.

In his reply certification dated July 18, 2008, plaintiff's counsel stated that the interrogatory answers were deficient because Colonial's attorney provided the answers and because the answers were "evasive non-answers." Plaintiff's counsel also stated that Colonial had not provided sufficient justification for canceling the depositions.

Rule 4:17-4(a) provides that interrogatories must be answered "in writing under oath by the party upon whom served, if an individual, or, if a public or private corporation, a partnership or, association, or governmental agency, by an officer or agent who shall furnish all information available to the party." Here, Colonial's attorney provided a certification in which he stated that he had personal knowledge sufficient to answer the interrogatories. Colonial's attorney also stated that his client had authorized him to answer the interrogatories. In ruling on plaintiff's motions, the trial court found no basis to suppress Colonial's pleading but did not specifically address plaintiff's contention that Colonial's attorney is not permitted by Rule 4:17-4(a) to answer the interrogatories.

Plaintiff also asserted that Colonial's answers were "evasive non-answers." We have held that the furnishing of incomplete answers can "not be automatically be considered as a failure to answer under R. 4:23-5." Adedoyin v. Arc of Morris County, 325 N.J. Super. 173, 180 (App. Div. 1999). To justify entry of an order suppressing defendant's answer pursuant to Rule 4:23-5(a), plaintiff must show that the answers "are patently inadequate[.]" Zimmerman v. United Servs. Auto. Ass'n, 260 N.J. Super. 368, 377 (App. Div. 1992). The trial court denied plaintiff's motions but did not determine whether Colonial's answers to the interrogatories were "patently inadequate" as plaintiff appeared to be arguing.

In its motion to suppress, plaintiff further argued that Colonial had improperly failed to produce its witness for the scheduled depositions. In this regard, we note that the failure to produce a party for a deposition does not warrant dismissal of a complaint or suppression of an answer under Rule 4:23-5(a) because such relief is available under that rule only for failure to provide discovery pursuant to Rule 4:17 (written interrogatories), Rule 4:18-1 (production of documents and other information) or Rule 4:19 (physical and mental examinations of persons). Failure by a party, or an officer, director or agent of a party, to appear for his own deposition is addressed by Rule 4:23-4, not Rule 4:23-5(a).

Here, plaintiff never sought relief under Rule 4:23-4, but asserted that, as an alternative to suppression of Colonial's pleading, the court should consider ordering that the deposition take place before the discovery end date. The trial court did not address this contention but stated in its order of August 29, 2008, that the parties could voluntarily agree to engage in discovery after the discovery end date.

Because the trial court did not squarely address the issues raised in plaintiff's motions, we reverse the court's July 18, 2008 and August 29, 2008 orders and remand these issues to the trial court for further consideration. On remand, the trial court should determine whether suppression of Colonial's answer is warranted under Rule 4:23-5(a) because Colonial's attorney answered the interrogatories and/or because Colonial's answers were patently inadequate. The court also should determine whether Colonial's cancellation of the scheduled depositions constitutes a failure to appear pursuant to Rule 4:23-4.

The court may wish to conduct a case management conference in an effort to resolve the dispute concerning the interrogatories and the deposition. In addition, the court should establish a new discovery end date to afford the parties sufficient time to complete discovery, which was curtailed by the erroneous dismissal of plaintiff's claim.

IV.

In A-3186-08, plaintiff appeals from the order entered on January 23, 2009, by the Law Division in Union County dismissing plaintiff's complaint against Colonial because plaintiff's claim had been previously asserted and dismissed in the Bergen County case. In view of our decision to reverse the order of August 15, 2008, entered in Bergen County dismissing plaintiff's claim against Colonial and to remand the matter to that court for further proceedings, plaintiff's appeal from the Union County order is moot.

To summarize our decision: in A-4356-08, the orders entered on August 15, 2008, July 18, 2008, and August 29, 2008, are reversed; and the matter is remanded to the Law Division, Bergen County, for further proceedings in conformity with this opinion. We do not retain jurisdiction. In A-3186-08, the appeal is dismissed.


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