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Ryan Kerr and Robin Kerr, His Wife v. Bert Transmissions

September 6, 2012


On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, Docket No. L-0395-05.

Per curiam.


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 ...

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