December 5, 2011
FOUAD ABOUCHOKR, PLAINTIFF-APPELLANT,
SLAVCO CONSTRUCTION CO., SLAVCO MADZAROV, AGAPI FOOD INC., AND GEORGE ALAFIAN, DEFENDANTS-RESPONDENTS,
AND JOSEPH MARCOS, DEFENDANT.
On appeal from the Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-0899-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 27, 2011
Before Judges Messano and Yannotti.
Plaintiff Faroud Abouchokr appeals from the Law Division's order of August 27, 2010, which denied his motion to reinstate his complaint; denied leave to amend the complaint; and denied an extension of discovery. We have considered the arguments raised in light of the record and applicable legal standards. We reverse.
The procedural history is convoluted. Plaintiff was allegedly injured on February 27, 2006, while employed by defendant Agapi Foods Incorporated (Agapi). At the time, Agapi was renovating premises at 152 Getty Avenue, Clifton. Plaintiff retained Marvin S. Davidson, Esq., to represent him with respect his workers' compensation petition and his third-party negligence suit.
In a complaint filed February 26, 2008, plaintiff alleged that defendant Slavco Madzarov (Madzarov), and his corporation, Slavco Construction Company (Slavco, and collectively, the Slavco defendants), owned the property and were constructing a "freezer wall." Plaintiff further claimed that "Jerry," an employee of Slavco whose last name was unknown, negligently drove a forklift causing the wall to collapse on plaintiff and seriously injure him. Plaintiff further alleged that defendants Joseph Marcos and George Alafian, owners of Agapi, rented the premises from Slavco and Madzarov and were negligent in failing to maintain a safe workplace. In the third count of the complaint, citing uncertainty as to the actual ownership of 152 Getty Avenue, plaintiff alleged that fictitious XYZ Corporation, the owner of the premises, was negligent.
Only Marcos filed an answer to the complaint. On September 13, 2008, plaintiff's complaint was dismissed as to the remaining defendants for lack of prosecution pursuant to Rule 1:13-7(a). Arbitration was scheduled as to Marcos for May 8, 2009. However, neither plaintiff nor Davidson appeared, and, as a result, the action was dismissed without prejudice. The order provided that reinstatement of the complaint be conditioned upon the payment of a $250 sanction fee and a showing of good cause.
Plaintiff moved to reinstate the complaint to the active trial list. The motion was granted on July 2, 2009, contingent upon the payment of the $250 sanction fee. A new arbitration date was set for June 18, 2010. The complaint, however, was not reinstated until April 2010, when Davidson paid the sanction fee.
Through counsel, Agapi, Marcos and Alafian (the Agapi defendants) attempted to file an answer.*fn1 The answer was returned to defense counsel on April 27, 2010, with a form letter advising that a formal motion was required. On April 29, 2010, the Agapi defendants moved to permit the filing of an answer out of time; extend the discovery end date; and adjourn the arbitration.
The judge entered two orders.*fn2 Handwritten notes on the first order denying any discovery extension, dated May 19, 2010, provided that "[n]o exceptional circumstances [were] demonstrated [as to] why this matter was handled in such a tortured manner." The second order, dated May 28, 2010, denied the Agapi defendants' request to file an answer out of time. In handwritten notes on that order, the judge listed the events we have already described regarding dismissal of the complaint, its reinstatement and Davidson's failure to pay the sanction fee. The judge concluded: "This case has been woefully neglected and good cause has not been shown why this matter should be restored. Discovery ended over [one] year ago and no discovery has taken place."
On May 28, plaintiff's current counsel, Ronald M. Gutwirth, filed a substitution of attorney which Davidson executed as the "[w]ithdrawing [a]attorney." The substitution was filed on June 17, 2010. The next day Davidson, Gutwirth and counsel for the Agapi defendants appeared before the judge seeking an adjournment of the arbitration. The request was denied and the arbitration proceeded as to Marcos only, who was found not liable based upon, in part, the workers' compensation exclusivity bar. See N.J.S.A. 34:15-8.
On August 6, 2010, plaintiff moved: 1) to reinstate his complaint as to Slavco, Madzarov, Agapi, and Alafian; 2) to amend the complaint to include 164 Getty Ave LLC (the LLC) as a defendant; 3) for reconsideration of the May 19 and May 28 orders; and 4) to permit substitution of counsel.*fn3 He requested oral argument.
In support of the motion, Gutwirth certified that Davidson had advised him that "all defendants were served and had filed answers." However, Gutwirth's own review of the file indicated that it was unlikely that Slavco, Madzarov, or Agapi were ever served with summonses and complaints by the Passaic County sheriff.
Nevertheless, Davidson's file included a July 15, 2008 letter from Susana P. Cruz, Esq., acknowledging receipt of the summons and complaint on behalf of Slavco and Madzarov, and transmission of the documents to their insurer, Selective Insurance Company. Cruz's letter also indicated that the LLC, not Slavco or Madzarov, was the actual owner of the property where the accident occurred. Davidson's file also included an earlier letter from Cruz, dated May 9, 2008, in which she enclosed a copy of the lease between Agapi and the LLC. Armed with this information, Gutwirth conducted corporate searches that revealed the LLC owned the property, and Madzarov was Slavco's registered agent for service at 164 Getty Avenue. On June 29, 2010, Gutwirth effectuated service upon Slavco and Madzarov. One month later, he served responsive interrogatory answers and narrative medical reports.
Gutwirth further certified that between April 2008 and July 2010, he had represented Davidson in numerous ethics proceedings in various forums, including the Supreme Court. Attached to the certification was the full decision of the Disciplinary Review Board (DRB) that detailed ethical violations committed by Davidson in his representation of several clients between 2003 and 2007, and prior disciplinary actions against him. See In re Davidson, 139 N.J. 232 (1995); In re Davidson, 182 N.J. 587 (2002); In re Davidson, 199 N.J. 37 (2009). The certification also attached the Court's order suspending Davidson for six months as a result of the DRB's decision. See In re Davidson, 202 N.J. 530 (2010).*fn4
On July 30, 2010, counsel for the Slavco defendants had forwarded Gutwirth a consent order permitting defendants to file an answer out of time; Gutwirth executed and returned the consent order, but it could not be filed because the complaint had not yet been reinstated.
Gutwirth also attached a copy of the proposed amended complaint. He certified that the LLC and Agapi were additional insureds under the Selective policy issued to Slavco. Gutwirth noted that plaintiff had already been noticed for depositions on August 30 and sought a modest extension of discovery following reinstatement.
Plaintiff's certification in support of the motion indicated that he maintained monthly contact with Davidson regarding the progress of his case. Davidson never advised that the complaint had been dismissed for lack of prosecution, that it had been dismissed against Marcos because of a failure to appear at arbitration, or that Davidson was the subject of numerous ethical complaints and, shortly after filing the complaint in 2008, continued to practice while appealing an interim three-month suspension.
Plaintiff attached two letters written by Davidson in February and March 2010. The first, to Quick Cash Inc., sought a $10,000 loan for plaintiff's "[t]hird [p]arty [c]ase." Davidson claimed the loan was "needed for rent and other expenses." The second letter, to Peachtree Pre-Settlement Funding, LLC, misrepresented the status of the litigation and advised that "[p]laintiff needs $10,000." Davidson had not discussed either request with plaintiff. In April 2010, Davidson advised plaintiff to seek other counsel because of the pending disciplinary actions.
Plaintiff's motion was unopposed. Without oral argument, the judge entered an order on August 27 denying the motion in its entirety. Hand-written notes provided: "Application is denied. This matter has had a tortured history. This was neglected for an extended period of time. Plaintiff was given opportunities to restore this matter but failed to avail [himself] of the opportunities given."*fn5 This appeal ensued.*fn6
"We review the trial court's decision on the reinstatement motion for abuse of discretion." Weber v. Mayan Palace Hotel & Resorts, 397 N.J. Super. 257, 262 (App. Div. 2007) (citing Ghandi v. Cespedes, 390 N.J. Super. 193, 196 (App. Div. 2007). "Rule 1:13-7(a) is an administrative rule 'designed to clear the docket of cases that cannot, for various reasons, be prosecuted to completion.'" Ghandi, supra, 390 N.J. Super. at 196 (quoting Mason v. Nabisco Brands, Inc., 233 N.J. Super. 263, 267 (App. Div. 1989)).
Prior to September 1, 2008, a plaintiff seeking restoration of an administratively-dismissed complaint was only required to demonstrate good cause. Pressler & Verniero, Current N.J. Court Rules, comment 1.1 on R. 1:13-7 (2010); see Baskett v. Cheung, 422 N.J. Super. 377, 384 (App. Div. 2011). Thus, our prior precedent addressed the issue of restoration through application of that standard. See, e.g., Weber, supra, 397 N.J. Super. at 262-63; Ghandi, supra, 390 N.J. Super. at 196-97.
However, the Rule has since adopted a differentiated restoration process that depends upon whether the case is single- or multi-defendant. Pressler & Verniero, supra, comment 1.1 on R. 1:13-7 (2012). In multi-defendant cases, where at least one defendant has been served, the case may be restored within 60 days of dismissal by consent order, within 90 days of dismissal upon motion demonstrating good cause, and, thereafter, only upon motion demonstrating "exceptional circumstances." Ibid. The stricter standard was intended to address the "different management problem" inherent in multi-defendant litigation, since "the case likely will have proceeded and discovery undertaken before the unserved defendant is brought in." Ibid.
Plaintiff argues that he demonstrated exceptional circumstances so as to warrant restoration of his complaint. While recognizing the nearly two-year hiatus between dismissal and his motion to restore, plaintiff contends that he was personally misled regarding Davidson's "gross neglect" and his pending disciplinary actions. He further argues that defendants cannot establish prejudice since the Agapi defendants attempted to file an answer but were stymied, first because the case had not been restored, and second, because the judge denied their motion. Similarly, the Slavco defendants acknowledged receipt of the summons and complaint and their counsel forwarded copies to their insurer in 2008 before the complaint was dismissed in the first instance.
We have construed the term "exceptional circumstances" as used elsewhere in Part IV of our Court Rules. In considering the term's use in the discovery extension rule, Rule 4:24-1, we likened exceptional circumstances to "'extraordinary circumstances.'" Rivers v. LSC P'ship, 378 N.J. Super. 68, 78 (App. Div.) (citing Vitti v. Brown, 359 N.J. Super. 40, 50 (Law Div. 2003)), certif. denied, 185 N.J. 296 (2005). We had earlier defined extraordinary circumstances as those that "'"in common parlance, denote something unusual or remarkable."'" Ibid. (quoting Vitti, supra, 359 N.J. Super. at 50, in turn quoting Flagg v. Twp. of Hazlet, 321 N.J. Super. 256, 260 (App. Div. 1999)). In general, in the discovery setting, delays caused by counsel's failure to diligently prosecute the case do not present exceptional circumstances. Rivers, supra, 378 N.J. Super. at 79-82; see also Huszar v. Greate Bay Hotel & Casino, Inc., 375 N.J. Super. 463, 474 (App. Div.) (finding no exceptional circumstances where "the delay rests squarely on plaintiff's counsel's failure to retain an expert and pursue discovery in a timely manner"), certif. granted and summarily remanded, 185 N.J. 290 (2005).
However, in this case, for a variety of reasons, we conclude plaintiff presented exceptional circumstances warranting restoration of his complaint. First, Davidson's conduct cannot be characterized as "'mere carelessness' or 'lack of proper diligence.'" See Hartsfield v. Fantini, 149 N.J. 611, 618 (1997) (concluding such conduct did not present extraordinary circumstances justifying an untimely request for reinstatement after arbitration pursuant to R. 4:21A) (quoting In re T., 95 N.J. Super. 228, 235 (App. Div. 1967)). The motion record reveals that as he dealt with the swirling mass of ethical violations that ultimately resulted in his suspension, Davidson misled plaintiff, who made diligent inquiry, about the status of the case. Without plaintiff's permission, Davidson attempted to obtain funds by pledging monies from the anticipated recovery, while at the same time misrepresenting to those funding sources that the case was being diligently prosecuted. Even when the extent of Davidson's ethical breaches with other clients was revealed, he represented to Gutwirth that defendants in this case had been served with process, when in fact they had not. Gutwirth moved expeditiously to rectify the effects of Davidson's abandonment of his client. See Parker v. Marcus, 281 N.J. Super. 589, 594-95 (App. Div. 1995) (where we restored the plaintiff's complaint, previously dismissed because of his attorney's failure to appear for an arbitration, finding "[t]he dismissal and its devastating effect . . . rests squarely on the shoulders of [the plaintiff's] prior attorney, whose dereliction is unquestioned"). In short, Davidson's conduct was egregious.
Secondly, defendants did not oppose the motion to reinstate the complaint. Indeed, the Agapi defendants had moved to file an answer out of time but their motion was denied. And, the Slavco defendants forwarded a consent order which plaintiff's counsel executed permitting their filing of an answer out of time. See Ghandi, supra, 390 N.J. Super. at 197 (noting defendants' lack of objection to reinstatement and readiness to file an answer as factors in considering the court's exercise of discretion under the good cause standard).*fn7
Thirdly, defendants have not claimed, nor could they, prejudice. All of them have been aware of plaintiff's lawsuit since shortly after it was filed in 2008. See Jansson v. Fairleigh Dickinson Univ., 198 N.J. Super. 190, 196 (App. Div. 1985) (noting in the context of restoration after dismissal for a discovery violation that "in the absence of demonstrable prejudice to the other party it is neither necessary nor proper to visit the sins of the attorney upon his blameless client").
Lastly, the rationale for the stricter "exceptional circumstances" showing did not exist in this case. Although Marcos had answered and the case was proceeding against him, no discovery had taken place. Indeed, as noted, the Agapi defendants, including Marcos, attempted to file an answer but their request was denied. The "different management problem" posed by multi-defendant litigation did not exist. Pressler & Verniero, supra, comment 1.1 on R. 1:13-7.
While we completely appreciate the motion judge's frustration with the "tortured" progress of the litigation, we conclude that denial of the motion to restore the administratively-dismissed complaint was a mistaken exercise of discretion. Under the unique facts presented, plaintiff demonstrated exceptional circumstances warranting restoration.
We also conclude that plaintiff should be permitted to file an amended complaint adding the LLC as a defendant. A motion to amend a pleading should be liberally granted in the exercise of the court's sound discretion. Notte v. Merchs. Mut. Ins. Co., 185 N.J. 490, 501 (2006) (quotation and citation omitted) (citing R. 4:9-1). "Th[e] exercise of [such] discretion requires a two-step [analysis]: whether the non-moving party w[ould] be prejudiced[;] and whether the amendment would . . . be futile" -- that is, whether the claim as amended would nevertheless fail, thus making amendment a useless endeavor. Ibid.
Of course, plaintiff first sought to add the LLC as a defendant after the two-year statute of limitations expired. See N.J.S.A. 2A:14-2. He argues, nonetheless, that the amendment is permitted by Rule 4:9-3 or Rule 4:26-4. Because the judge denied restoration, he understandably did not consider the merits of plaintiff's request to amend the complaint.
While we permit the amendment of the complaint, we do so without prejudice to the LLC's right to seek dismissal pursuant to the statute of limitations. In short, we express no opinion about whether plaintiff is entitled to the "'relation back' doctrine" expressed in Rule 4:9-3. See Prime Accounting Dep't v. Twp. of Carney's Point, 421 N.J. Super. 199, 210 (App. Div. 2011) (explaining the Rule and its proper use). Nor do we consider whether plaintiff is entitled to the benefit of the fictitious party rule, Rule 4:26-4, which requires that a plaintiff act diligently both in "ascertaining" the true identity of the fictitious party prior to filing the complaint, and "amending the complaint to correctly identify" the defendant after learning its true identity. Claypotch v. Heller, Inc., 360 N.J. Super. 472, 479-80 (App. Div. 2003).
Lastly, we leave consideration of the necessary discovery and the appropriate time for completion of same to the sound discretion of the trial judge.
Reversed and remanded. We do not retain jurisdiction.