September 9, 2010
CHARLES K. GEYER, PLAINTIFF-APPELLANT,
LOALBO & BASSETTI, EDWARD BASSETTI, DEFENDANTS-RESPONDENTS, AND PROGRESSIVE TITLE AGENCY, INC., AND OLD REPUBLIC NATIONAL TITLE INSURANCE CO., DEFENDANTS.
On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-3195-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted August 31, 2010
Before Judges Payne and Messano.
Plaintiff, Charles K. Geyer, appeals from orders of August 27, 2009 granting the motion of defendants Loalbo & Bassetti and Edward Bassetti (defendants*fn1 ) to bar expert reports and testimony on behalf of plaintiff in his legal malpractice action and denying plaintiff's cross-motion to strike defendants' answer and defenses and to schedule service of expert reports, depositions and a case management conference. Plaintiff also appeals from an October 16, 2009 order dismissing plaintiff's complaint with prejudice for failure to produce a legal malpractice expert's report.
A complaint in the matter was filed on November 27, 2006 --almost three years before the action's dismissal -- alleging legal malpractice on the part of Bassetti, who utilized loan proceeds resulting from a loan refinancing to pay plaintiff, family members, and miscellaneous creditors, rather than applying the money to pay off a prior mortgage loan. As a result, the mortgage creditor instituted a foreclosure action against the residential property subject to the mortgage. Plaintiff did not allege misappropriation of funds on the part of Bassetti. Rather, issue was joined as to whether Bassetti disposed of the loan proceeds pursuant to plaintiff's instructions, and whether Bassetti's conduct constituted a violation of his duty of care.
Until October 16, 2008, plaintiff was represented by counsel other that Ronald Nagle. After the complaint was served, defendants moved for summary judgment and, upon denial of that motion, filed an answer on April 25, 2007. A discovery end date of August 9, 2008 was established. On July 16, 2008, a motion by defendants to extend the discovery end date for 120 days, set a date certain for expert reports, and to compel depositions was filed. It was granted in an order, filed on August 5, 2008, which extended discovery to December 7, 2008, ordered completion of fact witness depositions by September 30, 2008, scheduled service of plaintiff's expert reports by October 21, 2008 and defendants' expert reports by November 11, 2008, and ordered that the depositions of experts be completed by December 7, 2008.
On September 22, 2008, a request by defendants for a thirty-day extension of the schedule and discovery end date was filed to permit depositions to be conducted following receipt from Commerce Bank of the checks written by Bassetti on trust accounts maintained by him for plaintiff. The motion was granted on October 2, 2008, and discovery was extended to January 7, 2009.
A further request for an extension of the period for discovery was made by defendants on December 18, 2008, and was granted on January 13, 2009. In the order of that date, depositions of fact witnesses were to be completed by January 28, 2009, plaintiff was to serve his expert's reports by February 5, 2009, defendants were to serve their reports by March 7, 2009, and the depositions of all experts were to be completed by April 7, 2009.
On January 15, 2009, plaintiff moved to compel production of documents and answers to interrogatories.*fn2 The motion was carried by consent to February 20, 2009 and granted five weeks later on April 2, 2009. The discovery was ordered to be produced within ten days of receipt of the order, which was sent to defense counsel on April 6, 2009. Thereafter, plaintiff agreed to a ten-day extension of time to produce discovery.
In compliance with the court's discovery order and the parties' agreement, on April 27, 2009, defendants' counsel served upon plaintiff relevant attorney trust account checks and ledgers showing zero balances in eleven Geyer accounts.
Nonetheless, on May 22, 2009, plaintiff's counsel wrote to defendants' attorney stating that the April 2, 2009 order required "production of all bank records" and that the "bank ledger/balance statements/monthly statements for the years 2002, 2003 and 2004" were not produced. No response was received.
On May 27, 2009, three months after plaintiff's expert report was ordered to be served and after a trial date of July 13, 2009 had been established, defendants filed a notice of motion to bar expert reports and testimony of behalf of plaintiff. In response, plaintiff filed a cross-motion*fn3 for entry of an order dismissing defendants answer and separate defenses and/or fixing a date for service of expert reports and for a case management conference. In connection with his motion, plaintiff claimed that he had not received account statements or ledger documents as requested in document requests 2 and 3. Those requests were for:
2. All trust account ledgers maintained by Defendants for any person or entity named in number 1 above.
3. All Bank statements generated for the client trust sub accounts referred to in number 2 above.
Plaintiff claimed that the documents were "critical to show the balance that Bassetti had in his trust account at the time of the refinancing issue." This was claimed to be "especially critical as Bassetti represented that he had the full finance amount in his account at the time he was to pay off the prior mortgage." As a consequence of the missing documents, plaintiff alleged that he could not depose Bassetti or have an expert prepare a meaningful report.
In a letter to the court dated June 8, 2009, defense counsel wrote:
Plaintiff's opposition [to defendant's motion] and cross-motion is based on the claim that Mr. Bassetti has failed to provide documentation in response to plaintiff's document requests. Specifically, plaintiff states that document requests no. 2 and 3 have not been provided by Mr. Bassetti. These requests ask for all trust account ledgers maintained by Mr. Bassetti for plaintiff and his family members along with bank statements for the client trust sub accounts. However, by letter dated April 27, 2009 Mr. Bassetti forwarded to plaintiff the relevant ledgers along with the fronts and backs of the corresponding attorney-trust account checks. (See copy of the April 27, 2009 letter attached hereto as Exhibit A).... Accordingly, Mr. Bassetti has complied with plaintiff's request for documents no. 2. Furthermore, there are no trust sub accounts and, therefore, there is nothing to be produced in response to document demand no.
3. Notwithstanding, Mr. Bassetti remains willing to provide additional documentation, assuming he is in possession of or able to obtain such items, if plaintiff should still require additional materials.
The motions were returnable on June 12, 2009 but were not heard at that time.
With the July trial date approaching, a request was made for an adjournment, which was administratively denied. On June 26, 2009, defendants, with the consent of plaintiff, sought a conference to address the trial date, noting that cross motions by the parties remained pending. If defendants' motion were granted, defendants claimed that plaintiff would not be able to proceed to trial; if the motion were denied, defendants would need "sufficient time to explain why it would be greatly prejudicial to Mr. Bassetti to allow plaintiff's claims to proceed without expert testimony." The matter was conferenced by the civil presiding judge on July 13, 2009, at which time the judge agreed to carry the trial to October 19, 2009 to permit the completion of discovery. However, no order was entered.
In an exchange of correspondence that followed, counsel for the parties agreed to produce their clients for deposition, with Bassetti's deposition to occur on September 10 or 11. However, on August 27, 2009, defendants' motion to bar expert reports was granted by a judge who was newly assigned to the Civil Division. Plaintiff's cross-motion was denied. Why the motion remained pending for slightly more than two months is not known. In a statement of reasons accompanying the August 27 order, the judge wrote:
Pursuant to the order of August 5, 2008, expert reports of plaintiff were to be served by 10-21-08. As of this date, plaintiff has not even named a legal malpractice expert and in opposition to defendants' motion asserts that trust account information is needed to produce a report. Defendant replies that information was provided in April 2009. Assuming that information is even necessary for the expert to [?compose] his report, plaintiff has not acted with reasonable [?diligence]. At no time did plaintiff seek to compel the records now stated as critical. No expert has been retained or even named. This complaint was filed on November 27, 2006.
Following receipt of the August 27 order, defendants cancelled Bassetti's deposition and, on September 9, 2009, defendants moved to dismiss plaintiff's complaint. On September 17, 2009, plaintiff filed a cross-motion to stay the pending motion until a motion for leave to appeal had been filed and determined.*fn4 The motion was supported by the certification of attorney Anthony Ambrosio, in which he stated that "[i]n connection with my preparation of a report, it is necessary for me to review the Bassetti trust account and business account records. This includes all monthly statements and account balance statements. It is also necessary for me to review Bassetti's deposition testimony as to the claims against him."
The motion to dismiss was argued on October 16, 2009, just one week prior to the adjourned trial date, and despite the absence of a cross-motion to reopen discovery, the judge permitted argument as though such a motion had been filed, ruling against plaintiff utilizing a "good cause" standard.*fn5 At the motion, plaintiff's counsel again argued that he had not received documents responsive to his document request. However, plaintiff's counsel conceded at the hearing that, following service of defendants' response to plaintiff's document request in April 2009 and his determination that plaintiff's response was inadequate, he did not immediately file a further motion to compel.
Additionally, it was established that the document request was not as expansive as plaintiff's counsel represented it to be, since it asked only for bank statements generated for client trust sub accounts -- accounts that were never opened -- not more generally for bank statements pertaining to defendants' representation of any of the Geyers. When asserting that the additional discovery was nonetheless necessary, plaintiff's counsel argued that, because Geyer money was co-mingled, even if Bassetti had followed his client's instructions with respect to the mortgage loan proceeds, enough money should have remained in the Geyer account to permit a pay-off of the prior mortgage. However, in response to the judge's questioning, counsel was unable to adequately explain why the detailed ledger entries produced by defendants in April did not provide the information that plaintiff sought, and when asked why plaintiff's expert could not have prepared a report based upon defendants' April submission, counsel stated only: "Because we need Bassetti's testimony."
It was further established that, following service of defendants' motion to bar expert reports in May 2009, plaintiff, mindful of the cost, refrained from hiring such an expert in the period prior to the entry of the August 27 order, despite the fact that, by then, the case was approximately two and one-half years old and his expert's report was substantially overdue.
After responding to plaintiff's discovery arguments, defense counsel argued as a matter of law that an expert was required to establish the standard of care on the part of an attorney who received allegedly conflicting instructions from a bank and from the client as to the disposition of funds.
Additionally, counsel argued that an expert was required to address the issue of proximate cause.
At the conclusion of oral argument, the judge granted defendants' motion to dismiss plaintiff's complaint with prejudice. In doing so, the judge noted that the period for discovery, as extended, had ended on April 7, 2009, and at that time, plaintiff had not retained an expert. The judge's order barring submission of an expert report had been filed on August 27, more than four months after the end of discovery, and even then, no expert had been named.
Turning to the case, the judge determined that plaintiff had established that defendants had used plaintiff's funds for purposes other than paying off the prior mortgage loan. The issue was whether defendants' conduct constituted legal malpractice, and resolution of that issue required expert testimony, since the issue could not be determined by application of common experience. Further, although the judge acknowledged plaintiff's desire to delay service of an expert's report until the deposition of Bassetti occurred, relying on our opinion in Tynes v. St. Peter's University Medical Center, 408 N.J. Super. 159 (App. Div.), certif. denied, 200 N.J. 502 (2009), the judge held that was a strategic decision that did not provide a sound basis for deferring the hiring of an expert.
Thus, the judge stated, this was not a case in which plaintiff was claiming at the time the motion to bar was filed that he had an expert and merely needed additional time to serve that expert's report. Plaintiff had no expert in a case that appeared to be rather straightforward, factually.
In conclusion, the judge stated:
It's not proper for the defendant to sit [and] puzzle three years later as to whether there is or is not malpractice. It is the plaintiff's burden to comply with schedules. I recognize there should be some reasonable compassion by the court, as well as by defendant, but I think the time for compassion has long -- long since departed.
I don't think there's a good-faith basis to allow any additional discovery. I will grant the defendant's motion dismissing the complaint because he cannot proceed without an expert.
The facts clearly require an expert opinion, and as [defense counsel] also stated, there's also a necessity for expert opinion as to proximate cause. All we have is an affidavit by Mr. Ambrosio, who is known to me, which simply says I don't have everything I need....
He says, "In connection with my preparation of a report," and his affidavit, by the way, is dated September 17, 2009, even a month after my decision. "In connection with my preparation, it is necessary for me to review the Bassetti trust account and business account records. This includes all monthly statements and account balances. It is necessary for me to review Bassetti's deposition."
Well, as I said, the Appellate Division says no, it's not. And then he goes on to say, "I further understand Bassetti has not produced all of the bank records as required by the April 2, 2009 order." He doesn't even know what bank records are required.
So I'm going to -- I will grant the defendants' application to dismiss the complaint with prejudice. I believe we are past the time when that's not an appropriate thing to do, so the case is ended.
Plaintiff's cross-motion for a stay was denied.
Our review of the record satisfies us that the judge's decision in this matter to deny plaintiff's motion to strike defendant's answer and defenses and to schedule depositions, service of expert reports, and a case management conference and to grant defendants' motion to bar plaintiff's expert's report and testimony did not constitute an abuse of his discretion. Bender v. Adelson, 187 N.J. 411, 428 (2006) (establishing standard of review). Plaintiff does not substantively contest the ruling that his case could not proceed in the absence of an expert's report.
Rule 4:24-1(c) permits an extension of the period for discovery, upon timely motion by a party before the date for arbitration or trial is set, if good cause for the extension is shown. If, as here, a trial date has been set, exceptional circumstances must be demonstrated.
What constitutes exceptional circumstances has not been precisely defined. A trial judge has observed in this context:
Clearly, merely advising the court in conclusory terms that the attorney and the client have hectic schedules does not qualify. Advising the court in factual detail about how and why a schedule has prevented discovery would be a place to start. Failure to provide such detail should always be fatal. [O'Donnell v. Ahmed, 363 N.J. Super. 44, 51 (Law Div. 2003).]
The judge gave as a non-exhaustive list of examples of circumstances that could constitute exceptional circumstances the health problems of the party, the party's attorney, that attorney's partners, or the attorney's family members. Additionally, the judge suggested loss of a crucial witness or a twelfth-hour submission of new information by an adversary that required reasonable investigation might also qualify. Ibid.
The Supreme Court, relying in part upon O'Donnell, has held:
A precise explanation that details the cause of delay and what actions were taken during the elapsed time is a necessary part of proving due diligence as required by... Rule 4:24-1(c) to extend discovery after a trial or arbitration date is set. [Bender v. Adelson, 187 N.J. 411, 429 (2006).]
Judge Walsh has suggested in another trial court opinion that "[f]or purposes of a showing of 'exceptional circumstances,' there generally must be some showing that the circumstances presented were clearly beyond the control of the attorney and the litigant seeking an extension of time." Zadigan v. Cole, 369 N.J. Super. 123, 132 n.8 (Law Div. 2004).
In an opinion by Judge Pressler in Tucci v. Tropicana Casino, 364 N.J. Super. 48 (App. Div. 2003), she found that the trial court erred in barring plaintiff's expert report and later dismissing plaintiff's complaint with prejudice as the result of plaintiff's failure to file an expert report until thirty-nine days after its due date. Id. at 54. In doing so, Judge Pressler found the fact that the expert report had opened up new areas of inquiry by the defendant to be insufficient to warrant the sanction imposed. She held:
[T]he trial court's concern for the additional discovery by defendants that the expert report would require cannot justify the dismissal with prejudice. The May 14 case management order anticipated the necessity for that additional discovery. Hence, the late report simply delayed that supplementary discovery by thirty-nine days. If the thirty-nine-day delay resulted in an inability of the parties to complete the additional discovery in the more than two months remaining prior to the trial date, then the trial date could have been adjourned. It was still sufficiently far off that the court's own schedule could have made that accommodation. We point out that a major concern of the Best Practices rules was the establishment of credible trial dates by the avoidance of last-minute or "eve of trial" adjournments by reason of incomplete discovery. See generally R. 4:36-3. It does not appear that that concern was substantially implicated here. [Id. at 53-54.]
Additionally, Judge Pressler noted that the terminal illness and death of the mother of plaintiffs' attorney during the crucial period of discovery "provided good cause, if not extraordinary circumstances, mandating a reasonable modicum of judicial indulgence." Id. at 54 (citing O'Donnell, supra, 363 N.J. Super. at 51).
In the present matter, plaintiff's counsel claims as his primary excuse the court's "own hand in delaying the production of discovery for over nine months by failing to timely rule on discovery motions." In that regard, we have noted that plaintiff's motion to compel the production of documents, returnable on February 20, 2009, was not decided until five weeks later on April 2, 2009. Additionally, a decision on defendant's motion to bar expert reports and plaintiff's cross-motion to strike defendants' answer or to set a time for service of expert reports was delayed for somewhat more than two months from June 12, 2009 to August 27, 2009. Thus, although the nine month delay that plaintiff claims did not occur, it is clear that a three- to four-month delay took place. We do not condone such a delay.
Nonetheless, we do not find the fact of some delay caused by the court to establish the requisite extraordinary circumstances. We find of greater significance plaintiff's unexplained delay in moving to compel production of documents. In this regard, we lack the detailed certification, required by the Court in Bender, setting forth when plaintiff's document demand was served and counsel's reasons for not moving sooner. Nonetheless, we note that counsel did not seek to compel production of documents deemed crucial to the litigation until 630 days after the commencement of the discovery period and until the end of discovery had already been extended on three occasions. We note further that, although certain discovery was ordered by the court in its intervening discovery period extension orders of August 5, 2008, October 2, 2008 and January 13, 2009, the plaintiff did not seek to compel production of documents in connection with any of those scheduling orders.
We likewise find significant counsel's apparent misapprehension as to the nature of the document demands served by prior counsel on defendants. Whereas plaintiff's counsel continued to insist throughout this litigation that he sought all of Bassetti's trust account records, the document demand did not contain such a request, but only sought "bank statements generated for the client trust sub accounts."
Moreover, Ambrosio, in his certification in support of plaintiff's motion for a stay pending our determination of plaintiff's motion for leave to appeal from the court's August 27, 2009 order, claimed that he required not only Bassetti trust account records, but also business account records, all monthly statements and account balance statements - items that clearly had not been specified in the document demand that had been served.
Of additional significance is the fact that, at the time that the August 27, 2009 order barring expert reports was filed, plaintiff still had not retained an expert. Thus, this case does not resemble Tucci, where an expert had been retained and, although his report had been served late, that report had been received prior to the court's decision to bar its use. Here the noncompliance with court order was far greater, and when pressed, plaintiff's counsel admitted that he had refrained from hiring an expert while defendants' motion to bar was pending because he was unwilling to incur the expense when there was a risk that the expert's report would be barred.
In the circumstances presented, it clearly appeared that, when defendants' motion to dismiss was argued on October 16, 2009, a week before the second scheduled trial date, plaintiff was not in a position to serve an expert's report then or in the immediately foreseeable future. Indeed, if Ambrosio's certification is to be credited, additional discovery would be required before any such report could be prepared. Thus the trial date certainty that was the goal of Best Practices would again be eroded. Our review of the facts of the matter does not disclose the exceptional circumstances that would justify us to thus undercut this goal.
The judgment of the trial court is therefore affirmed.