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Lefcourt Associates, Ltd v. Converted Organics of Woodbridge


June 27, 2011


On appeal from Superior Court of New Jersey, Chancery Division, Middlesex County, Docket No. C-99-09.

Per curiam.


Argued June 7, 2011

Before Judges Graves, Messano, and Waugh.

Plaintiffs Lefcourt Associates, Ltd., Alliance Shippers, Inc., Direct Shippers Association, Inc., Direct Coast to Coast, LLC, Selective Transportation Corp., and Gotham Distribution Corp. (Lefcourt) appeal the August 27, 2010 order of the General Equity Part, which retroactively transformed the dismissal of Lefcourt's complaint in Docket No. C-99-09 (Lefcourt I) from a dismissal without prejudice to a dismissal with prejudice. We reverse and vacate the August 27 order.

I. We discern the following facts and procedural history from the record on appeal.

In May 2009, Lefcourt filed its five-count complaint in Lefcourt I in Middlesex County. The complaint alleged that the food waste recycling activities conducted by the defendants, including Converted Organics of Woodbridge, LLC, and Converted Organics, Inc. (Converted), constituted (1) private and public nuisances (counts one and two); (2) negligence (count three); (3) continuing trespass (count four); and (4) violation of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20, (count five). The complaint was amended three times to add additional claims and parties.

In January 2010, the General Equity judge set April 19, 2010, as the preemptory trial date. In March 2010, Lefcourt filed a motion to suppress Converted's answer or, in the alternative, to compel discovery. It also sought to file a fourth amended complaint and to adjourn the trial date.

On April 1, 2010, the parties appeared before the judge to place a settlement on the record regarding defendants other than Converted.*fn1 After the settling parties placed the terms of the settlement on the record, they agreed to a stipulation of dismissal to implement the settlement. The dismissal was with prejudice as to some claims and without prejudice as to others.

The judge then heard argument on Lefcourt's motion. Lefcourt's counsel argued that Converted had failed to provide the names of certain hauling companies it had used in connection with its operations. As a consequence, counsel argued that Lefcourt should be permitted to amend the complaint to name those haulers as additional defendants. It also sought to add four new claims. The addition of new parties would, in turn, require adjournment of the trial date. Counsel characterized the haulers as "necessary and indispensable parties." See R. 4:28-1.

The judge denied Lefcourt's motion to amend. He rescheduled the trial date to April 21 to accommodate Lefcourt's counsel's schedule based on personal reasons. Counsel then requested a further adjournment because "the discovery [was] substantially incomplete" and because of an out-of-state seminar he wished to attend. The judge denied any further adjournment, noting that, in February 2010, Lefcourt's counsel had declined his offer of trial dates in May.

Counsel for Converted and Lefcourt subsequently met with the judge in chambers. Nothing was put on the record with respect to the discussion in chambers. On April 12, the judge entered two orders resulting from the events of April 1. The first order denied Lefcourt's motion with respect to discovery, amendment, and adjournment. The second order provided that the parties had settled the litigation and that it was "dismissed without prejudice."

On April 26, Lefcourt's counsel wrote the judge, pointing out that, although there had been settlement between Lefcourt and other defendants, no settlement had occurred between Lefcourt and Converted. Instead, the claims against Converted had been "voluntarily dismissed without prejudice." He requested entry of an order "more accurately describing the disposition of the case."

The judge replied on April 28, explaining that he understood why Lefcourt's counsel had taken issue with the settlement order and requesting that counsel submit a corrected order under the five-day rule, Rule 4:42-1(c). On May 12, Lefcourt's counsel submitted a proposed corrective order addressing only "the claims that were scheduled to be tried" in April.

Converted did not oppose the entry of Lefcourt's proposed order, which provided for a "voluntary dismissal, without prejudice and without fees or costs." The judge signed the order on May 25.

On June 1, Lefcourt served copies of the order on all parties. On the same day, Lefcourt filed a new complaint under Docket No. C-166-10 in the General Equity Part in Bergen County (Lefcourt II). The new complaint named, among others, Converted and five haulers as defendants. The new complaint contained the same claims alleged in Lefcourt I, as well as a new claim seeking to enforce Lefcourt's rights under the New Jersey Environmental Rights Act (Act), N.J.S.A. 2A:35A-1 to -14.

On June 22, 2010, Converted filed a motion to change venue from Bergen to Middlesex County. Lefcourt did not oppose the motion, which was granted on July 9. The matter was assigned Docket No. C-152-10 in Middlesex County.

On July 27, 2010, Converted and other defendants filed a motion to dismiss the complaint in Lefcourt II. Oral argument on the motion was heard on August 27. Converted argued that Lefcourt II should be dismissed pursuant to the principals of equitable estoppel and Rule 4:37-1. According to Converted, Lefcourt had sought the dismissal of Lefcourt I because its request to amend the complaint and adjourn the trial had been denied. Converted argued that such a dismissal without prejudice was improper.

Lefcourt in turn argued that it would be "inequitable" for the judge to revisit the May 25 order in Lefcourt I. When asked whether Lefcourt was "seeking to re-litigate all the allegations [it] made in [Lefcourt I]," counsel responded in the affirmative, adding that Lefcourt was also seeking redress based upon events that occurred after the dismissal of Lefcourt I. When Lefcourt's counsel began to refer to the discussions that took place in chambers on April 1, the judge responded that it would be "best to avoid anything off the record because for any number of reasons."

The judge denied Converted's motion to dismiss Lefcourt II entirely. Instead, he decided to amend the order of dismissal in Lefcourt I retroactively, to make it a dismissal with prejudice.

Here's what I'm doing. I'll sign an order in [Lefcourt I] which converts that dismissal to with prejudice. That cleans up that case. . . . [A]ny settlement survives and that dismissal in [Lefcourt I] is as to all defendants. [Lefcourt I] is over. . . . So, that's the first order I'll sign. Now, I'll sign the second order. The second order will do this. It will give you, [counsel for Lefcourt], 20 days to file an amended complaint. . . . Your amended complaint will limit you to post-trial date allegations which, when you think about it, creates no prejudice to you at all since you've alleged this is an unabated nuisance. And that's the primary reason I'm not granting [Converted's] motion. . . . [I]t really is inequitable to say litigate a case for 10 months and just refile it when you don't get the trial date of your choice. But this case is different. If [Lefcourt] is correct, this is an unabated nuisance [or] a continuing nuisance. . . . That's a trial issue. If I were to dismiss this case and grant the motion, that would effectively allow the defendants . . . to operate as they want in perpetuity. I don't believe that's equitable either.

Having said that, I agree . . . we should not be re-litigating allegations that could have been tried and should have been tried this past April. To the extent this presents a[n] . . . unabated nuisance, I think equity dictates that [Lefcourt] be allowed to proceed. So, I'm giving [Lefcourt's counsel] . . . the 20 days . . . to file an amended complaint.

Following oral argument, the motion judge entered two orders, one amending the May 25 order in Lefcourt I and the other requiring Lefcourt to amend its complaint in Lefcourt II to remove claims for the time periods asserted in Lefcourt I. Lefcourt now appeals the order dismissing Lefcourt I with prejudice.

II. Our ability to determine whether the judge abused his discretion in this case is hampered by the fact that we do not know what took place at the conference in chambers on April 1, 2010. Lefcourt suggests that the judge and opposing counsel understood that it would file a new complaint, raising essentially the same issues, adding the haulers as new parties, and adding a claim under the Act. Converted suggests that, following unfruitful settlement discussions, Lefcourt ultimately decided to abandon its claims rather than go to trial because (1) it was unprepared and (2) Converted was in the process of ceasing operations anyway. Both explanations are plausible, but neither is supported by the record because the judge and counsel did not go back on the record following the conference in chambers to summarize the agreements made during the conference.

It is clear, however, that the order finally entered as a result of the April 1 conference provided for a voluntary dismissal of Lefcourt I without prejudice. Because issue had been joined, such a dismissal could only be effectuated "by leave of court." R. 4:37-1(b). Determinations as to "[w]hether to dismiss with or without prejudice, whether to impose terms, and the crafting of terms that are fair and just in the circumstances, are all matters that lie within the court's sound discretion." Shulas v. Estabrook, 385 N.J. Super. 91, 97 (App. Div. 2006).

Here, the judge granted the "leave" required by the rule when he entered the order of dismissal without prejudice. The only "term" contained in the May 25 order, other than that the dismissal was without prejudice, was that it was also "without fees or costs."

There was no objection by Converted, which could have objected to Lefcourt's proposed order when it was submitted under the "five-day rule." Converted could have argued that the voluntary dismissal should only be permitted with prejudice or at least with prejudice as to events that pre-dated the dismissal. It could have argued that a dismissal without prejudice would leave it "in the probable position of having to defend, at additional expense, another action based upon similar charges at another time." Shulas, supra, 385 N.J. Super. at 97 (describing the "evil aimed" at by the requirements of Rule 4:37-1(b)) (quoting Union Carbide Corp. v. Litton Precision Prods., Inc., 94 N.J. Super. 315, 317 (Ch. Div. 1967)). In addition, Converted could have appealed the May 25 order on those grounds.

In Shulas, we held that "the [motion] judge mistakenly believed plaintiff was entitled to unilaterally dismiss his complaint at [an advanced] stage of the litigation without consequence." Shulas, supra, 385 N.J. Super. at 96. We reasoned that there was "no doubt that [plaintiff] sought dismissal of th[e] action without prejudice so he could proceed on his new complaint without the encumbrances of the discovery end date, defendants' motion for summary judgment, and the impending trial date." Id. at 98. We also observed that "[t]he permission given to plaintiff to pursue a new, identical complaint without consequence also served to minimalize the central purpose of our court rules: the fair and efficient administration of justice." Id. at 102. Had Converted, like the defendant in Shulas, challenged the May 25 order in a timely manner, we would likely reach the same result here. However, because all of the discussions took place off the record, it is not clear whether adverse counsel and the judge knew about and acquiesced in Lefcourt's plan to refile or whether Lefcourt represented that it had decided not to pursue the case without disclosing its intent to refile. Nevertheless, we note that the judge's April 12 order had also provided for a dismissal without prejudice.

The defendant in Shulas objected to the dismissal without prejudice and appealed the order granting it. As already noted, Converted did neither in this case. The failure to appeal is significant because the complaint in Lefcourt II was filed on June 1 and Converted moved to change venue on June 22, both dates within the time during which Converted could have appealed the May 25 order. Consequently, even if Converted was not aware of Lefcourt's intention to refile when the May 25 order was being entered, it certainly was aware of the plan at a time it could have filed an appeal in Lefcourt I.

It is well established that, once a plaintiff obtains a voluntary dismissal without prejudice, "[a]nother action may be instituted and the same facts urged, either alone or in company with others as the basis of a claim for relief." Arena v. Borough of Jamesburg, 309 N.J. Super. 106, 110 (App. Div. 1998) (citation and internal quotation marks omitted). Entry of such a dismissal "leaves the situation as if the action never had been filed." Ibid. (citation and internal quotation marks omitted). See also Czepas v. Schenk, 362 N.J. Super. 216, 228 (App. Div.) ("A dismissal without prejudice means that there has been no adjudication on the merits and that a subsequent complaint alleging the same cause of action will not be barred by reason of its prior dismissal."), certif. denied, 178 N.J. 374 (2003) (emphasis added); Woodward-Clyde Consultants v. Chem. & Pollution Scis., Inc., 105 N.J. 464, 472 (1987) ("A dismissal without prejudice is not an adjudication on the merits and does not bar reinstitution of the same claim in a later action.") (emphasis added).

Having failed to object to or appeal from the order of dismissal without prejudice, Converted sought instead to persuade the judge to treat it as if it had been an order of dismissal with prejudice, even though it was not. In effect, the judge agreed to do so by amending the May 25 order retroactively to provide for a dismissal with prejudice. Although there appear to be valid arguments that an order of dismissal without prejudice should not have been entered in Lefcourt I, we cannot ignore the fact that Lefcourt was allowed to obtain that relief without objection from Converted or the judge. To overlook Converted's acquiescence in the entry of the dismissal without prejudice would be unfair to Lefcourt, especially because we do not know what was discussed during the April 1 conference in chambers. There is no basis in the record for us to conclude that Lefcourt would have chosen to accept a dismissal with prejudice rather than go to trial in April 2010, however unprepared counsel may have been. As a result, we cannot say that Lefcourt has not been unfairly harmed by the retroactive change to a dismissal with prejudice.

In our view, Converted's earlier acquiescence in the entry of the May 25 order undercuts its argument for equitable estoppel. There is no basis in the record to conclude that Converted reasonably relied on the dismissal without prejudice as precluding the filing of another complaint. There is no such representation reflected in the record and, as we have already held, that is simply not the law concerning dismissals without prejudice.

Consequently, we hold that the judge abused his discretion in retroactively amending the May 25 order to transform it from a dismissal without prejudice to a dismissal with prejudice.

The August 27 order is vacated, and the May 25 order is reinstated.

While this appeal was pending, Converted filed a motion to dismiss it on the grounds of mootness. (Motion No. 5005-10). Converted argues that, because Lefcourt's claims for money damages, other than attorneys fees under the Act, have been dismissed on motion in Lefcourt II, the revival of the dismissed claims would not benefit Lefcourt. The motion is opposed by Lefcourt, which argues, in part, that the order dismissing its non-counsel-fee damages claims is interlocutory and subject to change prior to final judgment, and subject to appeal thereafter. We agree, and therefore deny the motion to dismiss.


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