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Leeds Terminal, Inc v. Town of Kearny

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


April 18, 2011

LEEDS TERMINAL, INC., PLAINTIFF-APPELLANT,
v.
TOWN OF KEARNY, DEFENDANT-RESPONDENT.
GRAND SLAM REALTY, PLAINTIFF-APPELLANT,
v.
TOWN OF KEARNY, DEFENDANT-RESPONDENT.
BERNARD EPSTEIN, PLAINTIFF-APPELLANT,
v.
TOWN OF KEARNY, DEFENDANT-RESPONDENT.

On appeal from the Tax Court of New Jersey, Docket Nos. 2871-2003, 5620-2004, 5733-2006, 8703-2007, 1830-2007, 5618-2004, 5146-2005, 5147-2005, 5731-2006.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 29, 2011

Before Judges Carchman, Waugh, and St. John.

Plaintiffs Leeds Terminal, Inc., Grand Slam Realty, and Bernard Epstein appeal the Tax Court's order denying their motion to reinstate property-tax appeals dismissed with prejudice for failure to provide discovery.*fn1 We reverse and remand to the Tax Court for further proceedings consistent with this opinion.

The underlying disputes, nine tax appeals for the tax years 2003-2007, involve five parcels of real property located in the Town of Kearny. The Tax Court judge, understandably concerned about the slow pace of discovery in appeals that had been pending for several years, issued a series of case management orders on April 1, 2008. Each order required that all outstanding discovery be supplied within twenty days. The orders also provided that the appeals would be dismissed if the discovery was not provided within twenty days.

On April 21, 2008, plaintiffs served partial discovery responses on Kearny. They were not, however, fully responsive to Kearny's discovery requests. The following day, Kearny informed the judge that plaintiffs' discovery was incomplete. On April 25, 2008, the judge entered an order dismissing the complaints with prejudice.*fn2

In April 2009, plaintiffs moved to vacate the dismissals and reinstate their complaints. At the same time, they provided additional discovery to Kearny. Unsatisfied with the completeness of the additional responses, Kearny opposed reinstatement. However, because the Tax Court had no record of plaintiffs' motion, it was never listed for disposition.

In November 2009, plaintiffs again filed a motion to vacate the dismissals and reinstate plaintiffs' complaints. In April 2010, the judge issued a written opinion denying plaintiffs' motion. Although plaintiffs had argued that the dismissal with prejudice was improper because Kearny had not complied with the two-step process established by Rule 4:23-5, the judge held that Rule 4:23-5 did not apply and that dismissal was appropriate under Rule 4:23-2 because plaintiffs had failed to comply with his case management orders. Although the judge acknowledged that courts must be "loathe to impose the ultimate sanction of dismissal," he concluded that plaintiffs' application had become a "procedural impossibility" because they waited a year before filing a motion to reinstate. This appeal followed.

We reject plaintiffs' initial argument that the underlying orders of dismissal were void ab initio. Even if, as plaintiffs argue, the entry of an order of dismissal with prejudice prior to allowing for an opportunity to cure the discovery default was improper under Rule 4:23-5, the order would not have been void ab initio. In any event, we agree with the Tax Court judge that the procedure was governed by Rule 4:23-2.

That does not end the inquiry, however. Rule 4:23-2 provides a variety of remedies for a party's failure to comply with a discovery order, the most severe of which is dismissal with prejudice. Appropriate sanctions for a breach of discovery rules must be just and reasonable. Conrad v. Robbi, 341 N.J. Super. 424, 441 (App. Div.) (quotation omitted), certif. denied, 170 N.J. 210 (2001). The dismissal of a claim for failure to comply with discovery is the "last and least favorable option." Il Grande v. DiBenedetto, 366 N.J. Super. 597, 624 (App. Div. 2004). Courts are "loathe to impose the ultimate sanction of dismissal." Pressler & Verniero, Current N.J. Court Rules, comment 2 on R. 4:23-2 (2011). "[W]hen the real discovery dispute is not a failure to answer but rather an alleged failure to answer in a 'fully responsive' manner, it is the dismissal with prejudice which is inappropriate unless the answering party has been ordered to answer more fully and fails to do so." Zimmerman v. United Servs. Auto. Ass'n, 260 N.J. Super. 368, 378 (App. Div. 1992).

In this case, after he was informed by Kearny that plaintiffs had provided inadequate discovery, the judge immediately dismissed the tax-appeal complaints with prejudice based on Kearny's assertion of inadequacy. He did so without reviewing the parameters of the missing material or providing an opportunity for plaintiffs to cure their deficiencies. Nevertheless, we are not considering this matter on direct appeal of the resulting orders. Rather than appealing, plaintiffs waited almost a year before providing additional discovery and seeking relief from the orders of dismissal. As a result, we are reviewing the denial of a motion to set aside the dismissal orders rather than those orders themselves.

"A motion under Rule 4:50-1 is addressed to the sound discretion of the trial court, which should be guided by equitable principles in determining whether relief should be granted or denied." Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994). A movant relying on Rule 4:50-1(f) must ordinarily show "that enforcement of the order or judgment would be unjust, oppressive, or inequitable." Piscitelli v. Classic Residence by Hyatt, 408 N.J. Super. 83, 102-03 (App. Div. 2009).

Relief under Rule 4:50-1(f) depends on the "totality of the circumstances." Pressler & Verniero, Current N.J. Court Rules, comment 5.6.1 on R. 4:50-1 (2011) (citing In re Guardianship of J.N.H., 172 N.J. 440, 476 (2002)). Despite the considerable deference owed to the motion judge in a case such as this, Hous. Auth. of Morristown, supra, 135 N.J. at 283; Mancini v. EDS ex rel. N.J. Auto. Full Ins. Underwriting Ass'n, 132 N.J. 330, 334 (1993); Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 4:50-1 (2011), we have concluded that the totality of the circumstances warrants reversal to avoid a potentially inequitable result arising from imposition of the ultimate penalty of dismissal in a discovery dispute.

We are satisfied that our decision will not impose undue prejudice on Kearny, especially because we condition our reversal on plaintiffs' prompt provision of all remaining discovery. In addition, because of the dilatory and, at times, inexplicable conduct of plaintiffs and their counsel, we further condition the reversal on the payment of reasonable counsel fees and costs in connection with the motion to vacate the orders and this appeal. The amount of the award is to be determined by the Tax Court, based upon an affidavit of services to be submitted to the judge and opposing counsel.

In summary, we reverse the orders on appeal, subject to plaintiffs' prompt compliance with an order for completion of discovery and payment of counsel fees and costs, to be issued by the Tax Court following a case management conference.

Reversed and remanded, with directions.


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