May 24, 2011
JACK TROCKI DEVELOPMENT CO., LLC, PLAINTIFF-RESPONDENT,
CITY OF NORTHFIELD, DEFENDANT-RESPONDENT/ CROSS-APPELLANT, AND MATTHEW F. DORAN, P.E. AND DORAN ENGINEERING, P.A., DEFENDANTS-APPELLANTS/CROSS-RESPONDENTS, AND RYAN HOMES, INC.; NVR, INC., A VIRGINIA CORPORATION DOING BUSINESS AS RYAN HOMES;
WILLIAMS ASPHALT MATERIALS; WILLIAMS PAVING & EXCAVATING; SUN NATIONAL BANK; AND BURTON ESTATES HOMEOWNERS ASSOCIATION, AN UNINCORPORATED ASSOCIATION, JOINTLY, SEVERALLY AND IN THE ALTERNATIVE, DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-453-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 2, 2011
Before Judges Sabatino and Alvarez.
Defendants Matthew F. Doran, P.E. ("Doran"), and Doran Engineering, P.A. ("Doran Engineering") (collectively, "the engineering defendants"), and co-defendant, the City of Northfield ("the City"), appeal the trial court's respective orders dismissing the complaint of plaintiff, Jack Trocki Development Co., LLC, "without prejudice," and declining on reconsideration, as defendants had requested, to make those dismissals "with prejudice." The City also appeals a separate generic order of the trial court that had the apparent effect of dismissing all pending claims, including its affirmative claims against plaintiff.
For the reasons that follow, we vacate the orders dismissing plaintiff's complaint against the City and the engineering defendants without prejudice, and remand for further proceedings. On remand, the parties shall develop the record more fully with respect to the timing and accrual of plaintiff's alleged damages. The trial court thereafter should re-examine the timeliness of plaintiff's claims under the Tort Claims Act, N.J.S.A. 59:1-1 to 12-3 (the "TCA"). Additionally, we vacate the generic order insofar as it may be read to dismiss the City's counterclaim, and remand for additional proceedings to adjudicate that reinstated counterclaim.
The limited record before us contains the following pertinent factual allegations and procedural history.
Plaintiff is a real estate developer. Prior to the present dispute, plaintiff owned property in the City on Burton Avenue. Plaintiff obtained approval from the City*fn1 to subdivide the property, on certain conditions, into thirty-eight residential lots, and to construct single-family homes on those lots. The project became known as "Burton Estates."
As part of the conditions of subdivision approval, plaintiff was required by the City to post a performance guarantee ("the bond") and a cash deposit. Plaintiff posted the bond through a letter of credit issued by the Sun National Bank and also made the required cash deposit. In addition, the City required plaintiff to make certain physical improvements, including street paving, curb work, landscaping, basins, sewers, and water lines. Plaintiff also had to satisfy the requirements for the project in accordance with engineering specifications issued by Doran in his capacity as the municipality's engineer.
The development project then went forward. Plaintiff transferred title to all but two of the thirty-eight lots to NVR, Inc. ("NVR"), a Virginia corporation doing business in New Jersey as "Ryan Homes." Ryan Homes built homes on thirty-six of the lots. Meanwhile, the bond and the cash deposit were reduced in part as the project progressed, although substantial balances remained outstanding.
According to its complaint, plaintiff completed the improvements required for the project and Doran, on behalf of the City, accepted as satisfactory all of the improvements as they were installed. Thereafter, in March 2007, plaintiff requested the City to release the balance remaining on the bond and also to return the remaining funds deposited in escrow.
The City declined to release the bond or return the remaining cash deposit to plaintiff, apparently because it was dissatisfied with certain aspects of the subdivision improvements and it wanted additional work performed. As reflected in its counterclaim, the City contended that "certain improvements, mainly but not limited to road improvements, within the Burton Estates development were not constructed in accordance with the [subdivision] approvals and/or standards and specifications[.]" The City consequently demanded that plaintiff redo the improvements or otherwise rectify the perceived deficiencies.
Plaintiff rejected the City's demand that it perform additional work on the project. According to plaintiff's submissions, during the course of the project, the City and Doran had allowed Ryan Homes and the Burton Estates Homeowners Association ("the homeowners' association") to change the driveways in the development by raising the homes' elevations, and also to build larger homes with more impervious coverage. Those permitted deviations from the original plans for the project, according to plaintiff, caused a change in the slopes, leading to drainage issues that required the repair of basins and other on-site work. Plaintiff further alleged that the increase in impervious surface violated the CAFRA permit that had been issued by the State for the development.
The City and the engineering defendants disagreed with plaintiff's contention that the additional remedial work required in the development had been prompted by any negligent or improper acts on their part. The City insisted that plaintiff correct the problems, and declined to release the remaining amounts on the bond and the cash deposit. In particular, after standing water was observed along a gutter line, Doran sent plaintiff a letter on November 28, 2006,*fn2 which apparently recommended that plaintiff obtain an as-built survey of the entire development before proceeding with additional work. Doran also sent plaintiff a preliminary punch list on April 2, 2007,*fn3 identifying various items that allegedly needed to be corrected before there would be any further reduction of the bond.
During the course of the parties' interactions about these disputed issues before the filing of the complaint, plaintiff sent a letter to the City's attorney on August 9, 2007. Doran was copied on the letter in his capacity as municipal engineer, as was the City's administrator. The letter, in its entirety, reads as follows:
May this letter serve as a formal request that a conflict engineer and attorney be designated to resolve the remaining Burton Estates issues. The bonded site has been plagued with egregious oversights by the City of Northfield for the duration of this project.
Site plans have been changed for the entire project without the permission of the land owner (Jack Trocki Development) and without planning board approval. There is no documentation in the building department that the site plan changes were ever approved and Doran Engineering still provided verbal authorization. The revised plan that was approved by the city engineer is in violation of the CAFRA permit that exists on the site.
We demand a conflict attorney and engineer due to these enumerated problems and others including the unlawful holding of the entire project bond. Jack [Trocki] Development expects full reimbursement for damages. If these items are not resolved
Jack Trocki Development will be submitting a formal complaint to the New Jersey Office of Attorney General, Division of Consumer Affairs and State Board of Engineers and Land Surveyors. [Emphasis added.]
The dispute apparently persisted, with the City and Doran, on the one hand, insisting that plaintiff undertake additional or remedial work, while plaintiff, on the other hand, failed to remedy the issues to the City's satisfaction. In the fall of 2007, the City, through Doran, retained a surveyor to determine the as-built elevations of the sidewalks, curbs, driveways, and asphalt on the project. According to the City, the surveyor's work confirmed that the as-built elevations did not conform to the approved plans for the project. The City advised plaintiff of these findings, but plaintiff again declined to take action.
The ongoing dispute prompted the City to issue a letter on December 1, 2009 to Sun National Bank calling the performance bond. Plaintiff attempted to enjoin the bank from disbursing the bond funds to the City, by filing an order to show cause and a verified complaint in the Chancery Division on December 16, 2009. The Chancery Division declined to issue an injunction, and transferred the case to the Law Division. In the meantime, the City presumably obtained access to the funds that had been posted on the bond as well as the balance of plaintiff's cash deposit.*fn4
Plaintiff's verified complaint named as defendants the City, Doran, Doran Engineering, Ryan Homes, NVR, Sun National Bank, and the homeowners' association. The complaint also included claims against the asphalt supplier and paving subcontractor on the project, Williams Asphalt Materials, also identified as Williams Paving and Excavating (collectively, "Williams"). Subsequently, plaintiff entered into a stipulation with the bank, dismissing the claims against it with prejudice.*fn5
Plaintiff's complaint consisted of five counts, some aspects of which are not germane to the present appeal. We focus in particular upon plaintiff's contentions with respect to its alleged damages, because those contentions are most pertinent to the issues before us.
In the First Count, plaintiff alleged that its bond was being called without justification. If, as was then anticipated, the bond were called, plaintiff asserted that it would suffer direct and indirect harm, as follows:
In the event the Bond is called, Plaintiff herein will suffer irreparable harm in that the calling of said Bond will prevent Plaintiff from obtaining bonds in the future or will cause premiums to be so high that they will be impossible to obtain. Plaintiff is in the business of real estate development and building and without the ability to obtain bonds will be prohibited from furthering its business.
Plaintiff requested that the bond be released and also that the escrow funds on deposit with the bank be returned to it.
In the Second Count, the complaint essentially asserted that the City, the engineering defendants, and other defendants had improperly caused the plans and specifications for the project to be changed without plaintiff's permission, and that those changes led to drainage issues and other problems with the site. Based on the improper changes, paragraph eight of the Second Count then alleged:
As a result, Plaintiff has been required to expend divers sums of money to correct the said changes that were improperly and illegally made and will suffer other damages in the future. [Emphasis added.]
The Third Count of the complaint, which was solely directed at Williams, essentially contended that Williams had performed the paving work on the project in a negligent and sub-standard manner, thereby causing water to pool in the paving area. It further alleged that Williams had been placed on notice by plaintiff and by the engineering defendants to correct the paving deficiencies, and that Williams failed to do so. Paragraph seven of this count then asserted, with regard to damages:
As a result, Plaintiff herein has been caused to expend divers sums of money to treat and correct the problem, including engineering fees, paving fees, and other damages. [Emphasis added.]
In the Fourth Count, the complaint alleged that the City had demanded that plaintiff "correct some of the improvements to the lots and streets and the entire property that arose as a result of the [allegedly-improper] approval of the new plans." Those alterations included "changes in the lip between the paving and the driveway by raising the elevations on the site and to insure on final paving a one-inch [curb] reveal and a minimum of one-half inch." Plaintiff alleged that the City then notified it that the curb reveals needed to be even greater, i.e., an inch and one-half. These changes, according to plaintiff, were negligently authorized by the engineering defendants. The Fourth Count further claimed that the engineering defendants should not have allowed Ryan Homes to begin construction on the homes prior to the transfer of title from plaintiff.
The Fourth Count asserted damages resulting from these allegedly wrongful actions and inactions in two paragraphs, i.e., four and six. The last sentence of paragraph four asserted:
As a result of all of the actions set forth in this Count and above, Doran Engineering was negligent, engaged in improper activity by allowing a change in the plans, and has and will require the Plaintiff to expend divers sums of money to correct the situation if required to do so, and the change in reveal caused the drainage issue in certain areas and the road profile was dramatically altered. [Emphasis added.]
Paragraph six, similarly, asserted:
The action taken by Doran and Doran Engineering and the City of Northfield has caused the Plaintiff to expend divers sums of money and will in the future cause the Plaintiff to expend divers sums of money to correct the situations that exist. [Emphasis added.]
The fifth and final count of the complaint alleged that the City engaged in selective enforcement of its curbing and street requirements, improperly singling out plaintiff to make repairs while not requiring other developments in the City with similar puddling and curbing issues to make equivalent repairs. The Fifth Count further alleged that the homeowners' association acted at times without plaintiff's involvement, despite the fact that plaintiff continues to own two lots in the development. The homeowners' association's conduct, according to paragraph nine of the Fifth Count, "has been to the detriment of the Plaintiff and has caused Plaintiff to expend and in the future expend monies if required to make said repairs." (Emphasis added).
After the complaint was served, the City and the engineering defendants each moved to dismiss the respective claims asserted against them, with prejudice. They invoked the procedural protections of the TCA, the City because it is a public entity and the engineering defendants because their actions were undertaken in their capacity as municipal engineers.*fn6 In particular, the moving defendants contended that plaintiff's lawsuit against them was procedurally barred under N.J.S.A. 59:8-8 and -9, because: (1) plaintiff failed to serve a tort claims notice upon them within ninety days of the accrual of its cause of action; and (2) plaintiff had not filed suit within two years of the accrual of its claims.
In opposing defendants' motion, plaintiff argued that its causes of action against the City and the engineering defendants had not "accrued" until the bond was called in December 2009. Plaintiff further noted that it had served tort claims notices upon the City and the engineering defendants on February 24, 2010, less than ninety days after its bond was called.
Plaintiff also emphasized that its complaint was filed within two years after the bond was called.
Following the parties' motion submissions, the trial court first issued a generic dispositional order on March 25, 2010, stating that the case had been dismissed. That order, which is on a court-generated form containing numerous boxes, checks off a box next to the following abbreviated code: "Settled not sched. for Trial, Arb., other CDR/Friendly Hrg. Not Comp."*fn7
Because the case was not, in fact, settled, the City and the engineering defendants continued to pursue their summary judgment motions, which were returnable April 16, 2010.
Ultimately, the trial court granted summary judgment on the papers. It issued two companion orders on April 23, 2010, marking up forms of order that had been prepared by defendants' respective counsel. The orders dismissed plaintiff's complaint as to the City and as to the engineering defendants. However, the court struck the "with prejudice" language from defendants' proposed forms of order, and instead substituted the phrase "for failure to comply with the New Jersey Tort Claims Act." The court did not, at that time, issue a statement of reasons pursuant to Rule 1:7-4 explaining why it had granted the motions on their merits, or why it had qualified the dismissal of plaintiff's claims as a dismissal "without prejudice."
Defendants then moved for reconsideration. They argued that the trial court should not have qualified the dismissal of the complaint against them as a dismissal "without prejudice," thereby leaving the door open for plaintiff to file a new complaint against them. They asserted that the procedural defects of the complaint under the TCA are dispositive and conclusive, and that the court consequently erred in denying them a dismissal of plaintiff's claims with prejudice.
The trial judge denied reconsideration, in an order dated August 20, 2010. He set forth his reasons for doing so in a companion seven-page memorandum of decision. The judge rejected defendants' argument that the Court Rules require the dismissal orders in this case to be denominated as "with prejudice" rather than "without prejudice." Noting the judiciary's general policy to entertain viable complaints with liberality, see Rule 4:6-2(e), the judge concluded that it would be "unfairly biased and an abuse of discretion for this [c]court to decide to foreclose all of [p]laintiff's possible causes of action in a singular motion just because [d]efendants are afraid that [p]laintiff may have a viable cause of action in the future." The written decision did not comment upon the substance of the issues raised under the TCA concerning accrual and damages.
The engineering defendants and the City now appeal. They each argue that plaintiff's claims against them should be conclusively extinguished for failure to serve timely tort claims notices within ninety days, and also for failing to file suit within two years of the accrual of those claims. The City additionally contends that it should be allowed to proceed with its counterclaim, notwithstanding the broad terms of the March 23, 2010 order that could be read to remove the case entirely from the trial court's docket. The City also provisionally requests that, if this court declines to require plaintiff's claims to be dismissed with prejudice for non-compliance with N.J.S.A. 59:8-8 and -9, then we should exercise original jurisdiction and dismiss plaintiff's claims on the merits, citing various TCA immunities and defenses.
Plaintiff responds that the trial court did not err in permitting it an opportunity to re-file a new complaint against the City and the engineering defendants. Plaintiff contends that its causes of action against those defendants did not accrue until after the City called the bond in December 2009, and that, thereafter, timely tort claims notices were indeed served. In particular, plaintiff asserts that its August 9, 2007 letter to the City should not be read to signify that any cause of action had accrued by that point. To the contrary, plaintiff contends in its appellate brief that, prior to December 1, 2009 when the bond was called, it had "sustained no damage and was not called upon to do anything."
Plaintiff is therefore satisfied with a dismissal of its original complaint, without prejudice, intimating that it plans to file a new complaint before December 2011, within the two-year TCA statute of limitations. Plaintiff has not filed any cross-appeal. None of the other parties have participated in the appeal.
We begin with an examination of this court's appellate jurisdiction over this matter. Conceivably, the April 2010 and August 2010 orders appealed from, which only dismissed plaintiff's complaint "without prejudice," might be regarded as non-final orders that do not conclusively dispose of all issues as to all parties. See R. 2:2-3(a)(1) (authorizing appeals "from final judgments"). The relationship between the March 25, 2010 dismissal order, which seemingly dismisses the case in its entirety, and the ensuing orders in April 2010 and August 2010 solely dismissing the claims against the City and the engineering defendants is murky. In particular, we cannot tell if the court's ensuing orders in April 2010 and August 2010 supersede the March 2010 order as to the claims against the other defendants, i.e., Ryan Homes, NVR, Williams, and the homeowners' association, or what came of the claims against those other defendants.
We are mindful that Rule 2:2-3 has been amended to specify that "[a]n order granting or denying a motion to extend the time to file a notice of tort claim pursuant to N.J.S.A. 59:8-9, whether entered in the cause or by a separate action . . . shall also be deemed a final judgment of the court for appeal purposes." R. 2:2-3(a); see also Moon v. Warren Haven Nursing Home, 182 N.J. 507, 516-18 (2005) (authorizing such appellate review before the Rule was amended). That amendment to Rule 2:2-3(a) does not literally apply here, because plaintiff did not move to extend the time to file tort claims notices, as it took the position that its claims had not accrued until December 2009. Nevertheless, the policies in the TCA that underlie the expeditious resolution of claims asserted against public entities and their agents militate in favor of accepting this appeal in its interlocutory posture, despite the literal absence of a qualified, final, and appealable order. We therefore grant the City and the engineering defendants leave to appeal, nunc pro tunc, there being good cause to do so, and given the manifest absence of prejudice. See R. 2:4-4(b)(2); N.J. Mfrs. Ins. Co. v. Prestige Health, 406 N.J. Super. 354, 358-59 (App. Div.), certif. denied, 199 N.J. 543 (2009).
We now turn to the pivotal question of whether, in fact, plaintiff's claims against the City and the engineering defendants had accrued more than ninety days before plaintiff served tort claims notices in February 2010.
The operative statutory provisions governing this issue are N.J.S.A. 59:8-8 and N.J.S.A. 59:8-9. The former provision prescribes, in relevant part, that:
A claim relating to a cause of action for death or for injury or damage to person or to property shall be presented as provided in this chapter not later than the ninetieth day after accrual of the cause of action. After the expiration of six months from the date notice of claim is received, the claimant may file suit in an appropriate court of law. The claimant shall be forever barred from recovering against a public entity or public employee if:
a. He failed to file his claim with the public entity within 90 days of accrual of his claim except as otherwise provided in section 59:8-9; or
b. Two years have elapsed since the accrual of the claim. [N.J.S.A. 59:8-8 (emphasis added).]
The companion provision, N.J.S.A. 59:8-9, offers an avenue for relief for a plaintiff that fails to file a timely TCA notice within the prescribed ninety-day period. It allows such a plaintiff to file a motion to extend the ninety-day period up to a year after the accrual of the claim. Although plaintiff in this case did not avail itself of the option, this so-called "savings" provision in N.J.S.A. 59:8-9 reinforces the importance of the concept of "accrual" and also the need for a plaintiff to file suit under the TCA within two years of such accrual:
A claimant who fails to file notice of his claim within 90 days as provided in section 59:8-8 of this act, may, in the discretion of a judge of the Superior Court, be permitted to file such notice at any time within one year after the accrual of his claim provided that the public entity or the public employee has not been substantially prejudiced thereby. Application to the court for permission to file a late notice of claim shall be made upon motion supported by affidavits based upon personal knowledge of the affiant showing sufficient reasons constituting extraordinary circumstances for his failure to file notice of claim within the period of time prescribed by section 59:8-8 of this act or to file a motion seeking leave to file a late notice of claim within a reasonable time thereafter; provided that in no event may any suit against a public entity or a public employee arising under this act be filed later than two years from the time of the accrual of the claim. [N.J.S.A. 59:8-9 (emphasis added).]*fn8
In N.J.S.A. 59:8-1, the TCA clarifies that, for purposes of the statute's notice and filing limitations, "[a]ccrual shall mean the date on which the claim accrued and shall not be affected by the notice provisions contained herein." The Task Force Comment accompanying the TCA notes that accrual "shall be defined in accordance with existing law in the private sector." Harry A. Margolis & Robert Novack, Claims Against Public Entities, 1972 Task Force Comment to N.J.S.A. 59:8-1 (Gann 2011).
"Ordinarily, a cause of action accrues when any wrongful act or omission resulting in any injury, however slight, for which the law provides a remedy, occurs." Beauchamp v. Amedio, 164 N.J. 111, 116 (2000). In Beauchamp, a case arising out of personal injuries caused by a collision with a New Jersey Transit bus, the Court determined that plaintiff's cause of action against the public entity accrued on the date of the accident itself. Id. at 119. The Court noted that it was "not contested that [the plaintiff] was injured at that time." Ibid. In fact, the plaintiff obtained treatment from a chiropractor approximately two weeks after the accident. Id. at 114. Although the prognosis for the plaintiff's injuries worsened over time, as diagnostic tests later showed them to be permanent, the Court found that her claims had accrued on the date of the collision, for it was immediately clear to the plaintiff that she had been injured. Id. at 119.
On the other hand, the Court recognized in Beauchamp that "if a person does not know that he or she has been injured at all, the cause of action will not accrue." Id. at 122. "Until the existence of an injury (or, knowledge of the fact that a third party has caused it) is ascertained, the discovery rule will toll accrual." Ibid. "However, once an injury is known, even a minor one, the ninety day notice is triggered." Ibid. (emphasis added). "Worsening of that injury does not extend the time [to serve a notice] or otherwise alter the party's obligation." Ibid.; see also Maher v. Cnty. of Mercer, 384 N.J. Super. 182, 186 (App. Div. 2006).
The fundamental difficulty with the present case is that the record is unclear as to exactly when plaintiff began to sustain "injury" as a result of the negligence and other allegedly-wrongful conduct on the part of the City and the engineering defendants. The August 9, 2007 letter from plaintiff to the City is ambiguous in this regard, and it is reasonably open to differing interpretations. The letter alludes to various "issues" that plaintiff then sought "to resolve," suggesting that the parties' disagreements concerning the site improvements were ongoing, and that plaintiff's potential claims were still inchoate. Although the letter goes on to state that plaintiff "expects full reimbursement for damages," it is unclear whether such damages had already been incurred or, alternatively, were at that time only prospective in nature.
Plaintiff's complaint similarly provides mixed signals as to when any damages occurred. As we have noted, certain passages in the complaint allude, without specification, to "divers sums of money" that plaintiff was allegedly caused to expend. In other passages, plaintiff complains about monies that he will be required to expend in the future. At oral argument before us, plaintiff's counsel disavowed any financial injury occurring before the bond was called in December 2009, and, in particular, waived any theoretical claim that plaintiff was damaged in his business prior to December 2009 because some of his money had been tied up in the bond and in the cash deposit.
The trial court's written opinion does not address these critical timing issues relating to accrual. We are reluctant to resolve them conclusively on this appeal, particularly given its interlocutory nature, without a proper development of the record. In particular, the exact timing and nature of plaintiff's damages must be explored before a meaningful and final adjudication of the accrual issue can be attained.
The engineering defendants argue that if, as plaintiff contends on appeal, it did not suffer an actual, realized injury until the bond was called by the City, they should nonetheless be dismissed from the action. They assert that they were not responsible for the City's decision to call the bond, which was allegedly made more than two years after the engineers were no longer involved in the project. Because that discrete issue has not been decided, we decline to resolve it here in the first instance, and instead remand the issue for consideration by the trial court. The trial court should also consider whether the City's cross-claims against the engineering defendants remain viable. See Nieder v. Royal Indemn. Ins. Co., 62 N.J. 229, 234 (1973).
In sum, given the shortcomings of the current record and the ambiguities of the pleadings and the parties' submissions, we cannot decide at this juncture whether the trial court erred in dismissing the complaint "without prejudice" as to these three defendants. Consequently, we vacate the dismissal orders of April 2010, and remand for the further development of the record, after which time the trial court shall re-examine the merits of defendants' motions for summary judgment in light of the amplified proofs. Although we are mindful that plaintiff has not cross-appealed, it is preferable that the trial court engage in a more definitive analysis of the timeliness issues, which we anticipate would generate either a dismissal with prejudice as to some or all of the defendants under the TCA or, alternatively, an order denying summary judgment should the court find that the tort claims in question did not accrue until December 2009 when the bond was called.
Lastly, we set aside the March 26, 2010 order, insofar as it might be construed to dismiss the City's counterclaims. Notably, plaintiff has not opposed the reinstatement of those counterclaims on appeal. We suspect that the March 26, 2010 order was issued as the result of a clerical error or some other misunderstanding, as the lawsuit obviously has not "settled." That order is consequently vacated with respect to the City's counterclaim and plaintiff's claims against the instant defendants.*fn9
For these reasons, the respective orders dated March 26, April 23, and August 20, 2010, appealed from are vacated. The matter is remanded for further proceedings and for the renewed consideration of the relevant legal issues, consistent with this opinion. Jurisdiction is not retained.*fn10