September 6, 2012
RYAN KERR AND ROBIN KERR, HIS WIFE, PLAINTIFFS-APPELLANTS,
BERT TRANSMISSIONS, A FOREIGN CORPORATION,
AND SPICER DRIVESHAFT, INC., A FOREIGN CORPORATION, DANA CORPORATION, A FOREIGN CORPORATION, AND BUDD OLSEN SPEED SUPPLIES, INC., A NEW JERSEY CORPORATION, DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, Docket No. L-0395-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 2, 2012
Before Judges Axelrad and Sapp-Peterson.
Plaintiffs, Ryan and Robin Kerr, appeal from the May 17, 2011 trial court order denying their motion for relief from the court's March 16, 2011 order dismissing their complaint with prejudice after they failed, once again, to comply with a discovery order. We affirm.
In April 2004, Ryan Kerr was injured while driving a racing car. Plaintiffs contend the driveshaft in the car failed, becoming disconnected at one end. The disconnected end continued to rotate, broke through the metal shield between the driver and the engine area of the car, and came into contact with plaintiff's right leg, from which he sustained serious injuries. On August 8, 2005, plaintiffs filed a complaint against Bert Transmissions (Bert), which sold or manufactured part of the driveshaft assembly; Spicer Driveshaft, Inc. (Spicer) and Dana Corporation (Dana), also manufacturers of part of the driveshaft assembly; and Budd Olsen Speed Supply, Inc. (Olsen), manufacturer of the metal shield. The case was assigned to Track 3, which provides 450 days of discovery, running from either the date the first answer is filed or ninety days after service on the first defendant, whichever comes first. R. 4:24-1(a). Prior to the complaint being filed, plaintiffs' counsel invited defendants to inspect and photograph the vehicle and its parts. Experts retained on behalf of Bert, Dana and Spicer conducted the inspection.
Dana and Spicer filed a joint answer in October 2005. Olsen was served on December 30, but did not answer the complaint, as the company had gone out of business and had no insurance coverage.
On February 25, 2006, the court administratively dismissed the complaint against Bert, without prejudice, for lack of prosecution, pursuant to Rule 1:13-7. On March 8, 2006, plaintiffs filed a motion to vacate the dismissal and reinstate the complaint. In support of this application, plaintiffs' counsel submitted a certification stating that because Bert was a Canadian corporation, service of the pleadings had been arranged through a subpoena service, but the process would take approximately four months and counsel was presently awaiting receipt of the return of service.
On March 9, Dana notified the court that it and its subsidiary, Spicer, commenced bankruptcy proceedings under Chapter 11 of the United States Code, 11 U.S.C.A § 1101, and enclosed an order from the Bankruptcy Court staying all proceedings against the debtors. On March 15, the court entered an order staying the matter with regard to Dana but noted on the order that "[t]his case shall proceed as to the remaining defendants." Plaintiffs' counsel claimed to have received no notice of this order. As for plaintiffs' reinstatement motion, it remained unopposed, and on March 31, the court entered an order reinstating plaintiffs' complaint against Bert, concluding plaintiffs had established good cause for the relief sought.
On June 3, the court issued a notice to plaintiffs advising that their claim against Bert and Olsen would be dismissed on August 2, unless action required under Rules 1:13-7 (service) or 4:43-2 (default) was taken. On July 27, plaintiffs' counsel submitted a certification indicating that service had been effectuated upon Bert and requested that the court "either deny the [m]otion and/or to vacate any order of [d]ismissal." Plaintiffs' counsel also requested that the court enter default against Olsen, as no answer had been filed, although the company had been served six months earlier.
On August 4, the court dismissed plaintiffs' complaint for lack of prosecution, pursuant to Rule 1:13-7, but only as to Olsen. Thus, plaintiffs' complaint against Bert remained viable. On August 18, the court entered an order admitting Bert's trial counsel pro hac vice. On September 15, the court vacated its previous order dismissing the case for lack of prosecution as to Olsen and permitted plaintiffs to enter default out of time against Olsen. On October 3, Bert filed an answer. Interrogatories and other discovery demands were served simultaneously on plaintiffs.
The record reflects the passage of almost four years without any further proceedings initiated before the court by either party. Then, on March 23, 2010, plaintiffs filed a motion to restore the case against Bert. In the accompanying certification, plaintiffs' counsel asserted that he had no notice of the March 13, 2006 order of dismissal and that until October 2009, he was unaware the bankruptcy stay had been lifted. Counsel conceded he "should have moved immediately to restore the matter[.]" However, he argued that Bert had not been prejudiced because it had an opportunity to observe the circumstances of the accident prior to the litigation being instituted and defendant had not sought to lift the bankruptcy stay and proceed with the state court action.
Bert filed a certification opposing plaintiffs' motion on April 6, asserting that it was not involved in any bankruptcy proceeding and there was, therefore, no bar to plaintiffs' continued prosecution against it. Bert noted that plaintiffs failed to respond to the interrogatories and discovery demands which it had served along with its answer and argued that it had been prejudiced by the passage of time because witnesses may have become unavailable, their memories may have become vague, and the metal components may have deteriorated to a point that may preclude meaningful examination by an expert. In a preliminary decision dated May 13, the trial court granted plaintiffs' motion to restore the case against Bert. The court stated: "Clearly, . . . plaintiff[s] should have taken action in this case and did not[,]" but also noted, albeit mistakenly,*fn1
that "even after dismissal," Bert acted to protect its interests by retaining counsel and filing an answer. The court found that "[a]s the result of this tortured history, and in the interest of justice," the matter should be reinstated.
On May 26, the court issued a case management order which provided that plaintiffs were to respond to Bert's interrogatories by July 1, 2010, and were to serve interrogatories upon Bert on the same date. The court directed Bert to respond to plaintiffs' interrogatories within thirty days thereafter. All expert reports were due by December 1, 2010, and all experts were to be deposed by January 11, 2011.
On August 16, rather than making a motion to compel discovery under Rule 4:23-1 or to dismiss plaintiffs' complaint under Rule 4:23-5, Bert filed a motion to vacate the May 26, 2010 order reinstating the complaint. In the accompanying certification, defense counsel asserted that plaintiffs failed to respond to Bert's discovery demands by the July 1 deadline and, as of the date of the certification, August 16, defense counsel had not received any correspondence from plaintiffs' counsel responding to Bert's discovery demands or propounding any discovery upon Bert. As he did in opposing reinstatement of plaintiffs' complaint several months earlier, defense counsel asserted his clients had been prejudiced by the passage of time.
Plaintiffs' counsel responded by letter dated September 9, urging the court to deny Bert's motion, noting that while he understood Bert's frustration, the answers to the interrogatories were in draft phase and defense counsel should be receiving them "in the next day or so . . . and prior to the return date of the motion." Plaintiffs' counsel offered the following explanation for the delay in complying with the court's case management order:
To the extent that I had been slow in answering interrogatories, they have been in draft stage for sometime [sic]. I have had an extremely busy calendar throughout the [s]ummer, with many trials, my father has been hospitalized on several occasions and I just returned from vacation at the end of August.
Additionally, prior to the return date of the motion, plaintiffs' counsel wrote to the court advising that plaintiffs had answered Form A Interrogatories, Form Product Liability Interrogatories, twenty-three special interrogatories, and had complied with Bert's request for the production of documents.
By order dated September 21, the court entered a case management order revising the discovery schedule and sanctioning plaintiffs' counsel by awarding Bert $1934.90 in counsel fees. Under the revised order, Bert's answers to plaintiffs' interrogatories were now due October 15, 2010, plaintiffs' expert reports were due by November 1, 2010, and all expert depositions were to be concluded by April 15, 2011. The order also warned plaintiffs that "if the plaintiff[s] violate any provision of this case management order, plaintiff[s'] case is subject to dismissal with prejudice."
On October 19, twelve days before the deadline for production of plaintiffs' expert report, plaintiffs' counsel wrote to the court explaining why plaintiffs would be unable to meet the November 1 deadline for the production of expert reports:
I am writing with regard to the above-referenced matter to raise an issue concerning the production of plaintiff[s'] expert reports.
When this motion was originally before the [c]court[,] the original [s]cheduling [o]rder entered on May 26, 2010 required plaintiff[s] to supply all expert reports by December 1, 2010.
When defendant filed a motion as a result of plaintiff[s'] failure to timely provide answers to interrogatories during a conference call, the [c]court moved forward plaintiff[s'] date for production o[f] expert reports to November 1, 2010.
Plaintiff[s] originally retained two experts, a mechanical engineer with an expertise in racecars named Wayne Denham and a [m]etallurgial [e]ngineer named Dennis Deegan. They were both retained through an organization known as ARCCA, Inc., which specializes in motor vehicle and automotive engineering.
Originally, both experts provided reports sometime ago[.] [H]owever[,] Mr. Deegan was having some health issues that [were] affecting his work.
Originally he had discussed with us that he would be able to give us an opinion on product defect, but in the most recent conversation I have had with ARCCA through Wayne Denham, the automotive engineer, it appears that he will not be able to provide that opinion.
As a result, I will have to obtain a mechanical or metallurgical engineer in addition to the experts who were retained long ago. As such, I do not believe it would be possible to have all expert reports by the November 1st deadline that was set in the most recent [o]rder dated September 21, 2010. I am hopeful to have all experts' reports by the beginning of December as was originally contemplated in the [c]court's initial [s]cheduling [o]rder. An inspection by plaintiff[s'] new expert is scheduled for October 21, 2010.
I have provided several expert reports, including the report of Dennis Deegan, [m]etallurgical [e]ngineer, Wayne Denham, the [a]utomotive [e]ngineer and the report of Dr. Ford, plaintiff[s'] medical expert. However, plaintiff[s] still require one additional expert. Plaintiff[s] request the [c]court to grant an additional month for production of this new report.
The next day, the court conducted a telephone conference. At its conclusion, the court denied plaintiffs' request for the thirty-day extension.
On February 7, 2011, having not received plaintiffs' expert report, Bert filed a motion to dismiss plaintiffs' complaint with prejudice. Defense counsel certified that plaintiffs' counsel contacted him after the November 1 deadline, explained his inability to procure an expert report, and asked defense counsel "to 'give him some time'" so as to work out a voluntary withdrawal of the claim with his client, to which defense counsel consented. Plaintiffs, however, did not voluntarily withdraw their claims against Bert. Bert urged that dismissal with prejudice was warranted, given plaintiffs' "complete failure to prosecute after several 'bites at the apple' and more than seven years since the event."
On March 16, the court granted Bert's motion, which was marked unopposed. No written decision or statement of reasons was provided. Nor does the order reflect that an oral statement of reasons was placed on the record.
On April 19, plaintiffs filed a motion to vacate the court's March 16, 2011 order and to extend discovery. In a certification in support of plaintiffs' motion, plaintiffs' counsel stated that Bert's motion was unopposed because his secretary was advised by a court clerk that the motion had not been filed and would not be heard. A certification from plaintiffs' counsel's secretary confirming a conversation with a court clerk was included in the moving papers.
In addition, counsel's certification explained that the delay in submitting the expert report was not due to any failure on the part of his clients or himself, but was occasioned by the engineering complexities of the issues involved and the fact that shortly before the discovery deadline, his experts advised that it would cost an additional $100,000 in testing before they could render an opinion on the remaining issues of product defect and causation, forcing counsel to find another expert, Steve Becker of Robson Engineering. Although Becker was able to produce a report before the discovery deadline, counsel advised the court that Becker's report failed peer review and the expert decided not to sign off on it. Counsel stated further that Becker continued researching the issue on his own and "[c]ompletely out of the blue and unexpectedly in the beginning of this year, Mr. Becker contacted [counsel] and advised [counsel] that he now felt that he could likely provide an opinion based upon scientific and engineering principles." Finally, counsel stated that he had already submitted two expert reports concerning the engineering issues in the case.
Defense counsel submitted a certification in opposition to the motion stating that plaintiffs' counsel had done "nothing for four (4) years," and after being given a second chance by the court, continued to disregard judicially-imposed discovery deadlines. He accused plaintiffs' counsel of committing perjury in connection with certain contentions. Moreover, he stated that it strains the credulity of the [c]court when [plaintiffs' counsel] certifies that his new "expert" could not sign the report in November to state that the parts in question [were] defective, yet without any contact (or payment?) from [plaintiff's counsel] suddenly produces a signed report at the same time as the case is being dismissed.
Defense counsel urged that his client was entitled to finality.
In a written statement of reasons dated May 17, 2011, accompanying the court's order, Judge Harrington denied plaintiffs' motion. The judge determined plaintiffs were not entitled to relief under either subsection (a) or subsection (f) of Rule 4:50-1. As to subsection (a), he noted that "[p]laintiff[s] [were] given every opportunity to pursue this litigation over a period of many years. . . . [M]any orders [have been] entered in this matter. Each time, however,
[p]laintiff[s'] counsel has failed to comply." The judge also noted that Bert "appropriately" disputed plaintiffs' counsel's contention that counsel's inability to complete discovery was due to matters outside of his control. As such, he found that plaintiffs' position did not satisfy any of the standards under Rule 4:50-1(a).
Judge Harrington also found that plaintiffs presented no exceptional circumstances warranting relief under Rule 4:50-1(f). He observed that "much of this case's 'tortured history' is due to the fact that [p]laintiff[s] [have] failed to diligently pursue this litigation." He agreed with Bert that "in the seven years since [p]laintiff's auto racing accident, memories and physical evidence have unquestionably deteriorated, all to the prejudice of the [d]efendant." He denied plaintiffs' motion and the present appeal followed.
On appeal, plaintiffs contend Judge Harrington abused his discretion when he denied plaintiffs' motion pursuant to Rule 4:50-1(f) because (1) the court found the discovery delays prejudiced Bert without Bert presenting any reliable evidence to support this finding, (2) the general passage of time is, by itself, insufficient to establish that Bert has been prejudiced by the discovery delays, and (3) plaintiffs demonstrated exceptional circumstances warranting the relief sought.
An application to set aside an order pursuant to Rule 4:50-1(a) or (f) is addressed to the motion judge's sound discretion, which discretion should be guided by equitable principles. Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994). On appeal, we will not disturb the exercise of that judicial discretion unless the moving party demonstrates that the denial of the motion represents a clear abuse of discretion. Ibid. To constitute a clear abuse of judicial discretion, "the judicial action must have been clearly unreasonable in the light of the accompanying and surrounding circumstances . . . [and] a mere difference in judicial opinion concerning the feasibility, expediency or pragmatical propriety of the ruling is [not] synonymous with abuse of judicial discretion." Smith v. Smith, 17 N.J. Super. 128, 133 (App. Div. 1951), certif. denied, 9 N.J. 178 (1952).
Subsection (a) of Rule 4:50-1 provides that a court may relieve a party from a final order for "mistake, inadvertence, surprise, or excusable neglect" while under subsection (f) relief may be granted for "any other reason justifying relief from the operation of the judgment or order." Relief under subsection (f), however, is available only when "truly exceptional circumstances are present." Hous. Auth., supra, 135 N.J. at 286. "The movant must demonstrate the circumstances are exceptional and enforcement of the judgment or order would be unjust, oppressive or inequitable." Johnson v. Johnson, 320 N.J. Super. 371, 378 (App. Div. 1999).
In determining whether a party should be relieved from an order, courts must balance "the strong interests in the finality of litigation and judicial economy with the equitable notion that justice should be done in every case." Jansson v. Fairleigh Dickinson Univ., 198 N.J. Super. 190, 193 (App. Div. 1985). Where the order involves a procedural violation, additional considerations are implicated, namely, "'[t]he defendant's right to have the plaintiff comply with procedural rules[, which] conflicts with the plaintiff's right to an adjudication of the controversy on the merits.'" Abtrax Pharms. v. Elkins-Sinn, 139 N.J. 499, 513 (1995) (quoting Zaccardi v. Becker, 88 N.J. 245, 252 (1982)). In all cases, however, "'justice is the polestar and our procedures must ever be moulded and applied with that in mind.'" Jansson, supra, 198 N.J. Super. at 195 (quoting N.J. Highway Auth. v. Renner, 18 N.J. 485, 495 (1955)).
In denying plaintiffs' motion for relief from judgment, Judge Harrington, in his written statement of reasons, stated: As to [Rule] 4:50-1(a), the [p]laintiff[s were] given every opportunity to pursue this litigation over a period of many years. The court has always been mindful of the [p]laintiff[s'] right to a trial on the merits, which is reflected by the many orders entered in this matter. Each time, however, [p]laintiff[s'] counsel has failed to comply. When the parties appeared on this matter on September 21, 2010, this court sanctioned [p]laintiff[s'] counsel by awarding attorneys fees, and clearly and in no unmistakable terms advised him that his failure to make timely discovery would no longer be tolerated. Yet again, [p]laintiff[s'] counsel has moved for another extension of discovery in addition to his motion to vacate the dismissal. Counsel claims that his inability to comply with discovery deadlines was due to matters outside of his control. That argument was disputed by the [d]efendant, who appropriately maintains that [p]laintiff[s have] had more than adequate time and opportunity to properly address the issues in [their] case. Therefore, I find the
[p]laintiff[s'] position does not satisfy any of the standards under [Rule] 4:50-1(a).
Furthermore, I fail to find that this motion should be granted due to exceptional circumstances. In [p]laintiff[s'] motion, [they] now claim that extraordinary circumstances have prevented [them] from complying with the court's discovery order, and refer to the "tortured history of this case." However, it is clear that much of this case's "tortured history" is due to the fact that [p]laintiff[s have] failed to diligently pursue this litigation.
The [d]efendant has justifiably maintained that in the seven years since [p]laintiff's auto racing accident, memories and physical evidence have unquestionably deteriorated, all to the prejudice of the [d]efendant. The history of this case has demonstrated that the court has been extraordinarily sympathetic to the [p]laintiff[s], and has extended every possible courtesy to [p]laintiff[s'] counsel. Nonetheless, the court must balance the [p]laintiff[s'] right to a trial on the merits with the [d]efendant's right to a resolution of these issues. In determining whether enforcement of this order would be unjust, oppressive, or inequitable, see Lawson Mardon Wheaton [v. Smith], 160 N.J [383,] 404-07, the court must consider the positions of both parties. Given the history of this case, granting this application would constitute a gross injustice to the [d]efendant. Therefore, [p]laintiff[s'] motion is denied.
It is clear from the record, the court afforded plaintiffs' counsel repeated indulgences during the course of the litigation prior to the dismissal of the complaint in 2011. As such, we are in complete agreement that relief under subsection (a), excusable neglect, was not warranted. Excusable neglect is defined as excusable carelessness "attributable to an honest mistake that is compatible with due diligence or reasonable prudence." Mancini v. EDS, 132 N.J. 330, 335 (1990). There is absolutely nothing in this "tortured" record that indicates plaintiffs' counsel exercised due diligence or reasonable prudence throughout this litigation.
Nor do we find any circumstances in this record that can be characterized as exceptional, warranting relief under subsection (f). As referenced earlier, relief under subsection (f) is reserved for "truly exceptional circumstances." Hous. Auth., supra, 135 N.J. 286. Thus, for example, in Parker v. Marcus, 281 N.J. Super. 589, 595 (App. Div. 1995), certif. denied, 143 N.J. 324 (1996), we found exceptional circumstances based upon the plaintiff's attorney's malpractice in the handling of the plaintiff's case and the fact that the plaintiff likely had no remedy against the attorney who had since become disbarred. Ibid. We also observed that plaintiff "made every effort to keep in contact with his attorney during the pendency of his case and was assured that the matter had not been scheduled for trial because of a calendar backlog." Id. at 594.
In Jansson, we identified a number of factors courts should consider in determining whether exceptional circumstances exist warranting relief from judgment: (1) the extent of the delay in seeking relief from the judgment or order, (2) the underlying reason or cause for the discovery delays, (3) the fault or blamelessness of the moving party, and (4) the prejudice, if any, the party opposing the motion would suffer in the event relief is granted. 198 N.J. Super. at 195.
The reasons expressed by plaintiffs' counsel for the delay in obtaining the requisite expert report were belied by the record. For example, as early as 2005 and 2006, plaintiffs' counsel obtained preliminary expert reports and was aware that additional reports were needed. Yet, there is no explanation as to why the additional reports were not obtained then. The delay certainly could not have been attributed to plaintiffs' counsel's belief that the matter had been stayed because of the pending bankruptcy or because of the court's March 15, 2006 order imposing the bankruptcy stay. Apart from the fact that the order expressly stated the proceedings would continue as to defendants other than Dana, plaintiffs' counsel claims to have not received the order. Therefore, the delay in obtaining the additional expert report cannot be attributed to a stay about which plaintiffs' counsel was purportedly unaware.
Additionally, proceedings continued after the entry of this order. Notably, in response to a motion to dismiss for lack of prosecution returnable August 2, 2006, plaintiffs' counsel submitted a certification dated July 27, advising the court that Bert had been properly served and requesting that the court not dismiss the action as to Bert. Further, plaintiffs' counsel obtained a second expert report in late 2006 and knew that this expert report would not suffice. As noted before, there is no explanation as to why nothing was done thereafter to obtain an additional expert report.
Plaintiffs' argument before the trial court and during oral argument before this court focused upon the absence of any proffered evidence of prejudice to Bert, beyond the passage of time, that would result from reinstatement of the complaint. We are well aware that the mere passage of time is, by itself, insufficient to bar relief from judgment where warranted. See Parker, supra, 281 N.J. Super. at 595 (recognizing that defendant was prejudiced by the passage of time, but nonetheless reinstating complaint seven years after accident where prior dismissal was not occasioned by the plaintiff's own dereliction but that of the attorney, who told the plaintiff the matter had not yet been scheduled when, in reality, it was dismissed). Parker, however, involved a case where liability was not in dispute. Ibid. The plaintiff in Parker was a passenger and "entirely without fault as to the cause of the accident." Ibid. There is nothing in this record to suggest that Ryan Kerr, who was operating the racing car, was totally without fault in causing the accident. Moreover, plaintiffs have sued a number of defendants, all of whom plaintiffs claim manufactured part of the failed driveshaft. Liability was, therefore, contested. Finally, the Parker court noted that the plaintiff's attorney had become disbarred and was uninsured, leaving the plaintiff "without any viable remedy." Ibid. Plaintiffs' counsel here is still a member of the bar and plaintiffs are therefore not without a remedy.
The United States Supreme Court has held that "[s]urely if a criminal defendant may be convicted because he did not have the presence of mind to repudiate his attorney's conduct in the course of a trial, a civil plaintiff may be deprived of his claim if he failed to see to it that his lawyer acted with dispatch in the prosecution of his lawsuit." Link v. Wabash R. Co., 370 U.S. 626, 634 n.10, 82 S. Ct. 1386, 1390 n.10, 8 L. Ed. 2d 734, 740 n.10 (1962); see also Baumann v. Marinaro, 95 N.J. 380, 397 (1984) (discussing the holding in Link that clients are often bound by their counsel's inaction). The Link Court went on to find that "keeping this suit alive merely because plaintiff should not be penalized for the omissions of his own attorney would be visiting the sins of plaintiff's lawyer upon the defendant." Ibid.
In short, we are satisfied, on this record, Judge Harrington's decision denying relief from judgment to plaintiffs was not a clear abuse of his discretion. Rather, his decision was grounded in reason, supported by substantial credible evidence in the record, and reflects an appropriate balancing of the need for finality in litigation with plaintiffs' right to an adjudication on the merits. See Abtrax Pharms., supra, 139 N.J. at 499 (reviewing dismissal of complaint under abuse of discretion standard). We discern no basis to disturb his well-reasoned determination.