NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4116-14T4
A.D.,
Plaintiff-Respondent,
v.
EXCELLENT TRANSPORT CO-OP,
L.L.C., a New Jersey Limited
Liability Company,
Defendant-Appellant,
and
PRESTIGE TAXI, INC., a New
Jersey Corporation and
EDWIN LOPEZ,
Defendants.
________________________________________________
Submitted February 28, 2017 – Decided June 21, 2017
Before Judges Messano, Espinosa and Suter.
On appeal from the Superior Court of New
Jersey, Law Division, Passaic County, Docket
No. L-2625-13.
Lawrence H. Kleiner, L.L.C., attorneys for
appellant (Mr. Kleiner, of counsel and on the
briefs).
DiFrancesco, Bateman, Kunzman, Davis, Lehrer
& Flaum, P.C., attorneys for respondent
(Nicholas F. Pompelio, on the brief).
PER CURIAM
At virtually every step of this litigation, the attorneys for
the parties failed to adhere to the practice and procedure
governing civil actions contained in Part IV of our Court Rules.
Unfortunately, the court also neglected its obligation to enforce
those rules properly to "secure a just determination." R. 1:1-
2(a). The result was a default judgment in favor of plaintiff for
$350,000, even though, on the record before us, plaintiff's theory
of defendant's liability appears tenuous. We are therefore
constrained to reverse.
I.
We describe the procedural history at length because it is
the crux of this appeal.
Plaintiff A.D. filed her complaint against defendant,
Excellent Transport Co-op, L.L.C., and Edwin Lopez on July 2,
2013.1 Plaintiff alleged that on July 4, 2011, she engaged the
services of defendant by hiring a taxi driven by Lopez. Plaintiff
1
Given the nature of plaintiff's claims, we use initials to
maintain her privacy. The complaint included a third defendant,
Prestige Taxi, Inc. (Prestige), and other fictitiously-named
defendants. The record is unclear as to whether plaintiff ever
served Prestige, however, any discussion regarding Prestige is
unnecessary to resolve the issues raised on appeal.
2 A-4116-14T4
claimed that when she arrived home, Lopez left the cab and
"accompanied her inside her residence," where he physically and
sexually assaulted her. Plaintiff's complaint included counts for
assault and battery against Lopez, and "respondeat superior,"
negligent hiring and retention, and failure to supervise against
defendant.2
Neither defendant nor Lopez answered. Plaintiff moved for
entry of default against defendant, and the court scheduled a
proof hearing. One week before the hearing, on March 14, 2014,
the court entered a consent order, vacating defendant's default
and permitting it to file an answer, which defendant did the same
day. Defendant asserted that Lopez was not an employee, and it
"exercised no control over him." Defendant's pleading also
asserted a third-party complaint seeking declaratory judgment
against its liability insurer. Plaintiff served interrogatories
and a notice to produce upon defendant on March 28.
With discovery scheduled to end on September 5, 2014,
plaintiff moved to suppress defendant's pleading for failure to
answer her discovery demands. On July 30, the court entered an
order suppressing defendant's pleading without prejudice pursuant
to Rule 4:23-5(a)(1) (the July order). After the discovery end
2
Lopez was apparently convicted of an unspecified criminal offense
and remained incarcerated during much of the litigation.
3 A-4116-14T4
date passed, the court scheduled mandatory arbitration pursuant
to Rule 4:21A for October 31, 2014.
Plaintiff filed a motion to suppress defendant's pleading
with prejudice pursuant to Rule 4:23-5(a)(2), returnable on
October 24, 2014. On October 15, the court entered an order
denying plaintiff's motion to suppress Lopez's pleading without
prejudice for failing to answer discovery.3 The order reminded
the parties of the October 31 arbitration date.
On October 23, 2014, defendant forwarded plaintiff its
answers to interrogatories and response to the notice to produce.
On the same day, defense counsel wrote the judge. He requested a
two-week adjournment of plaintiff's motion, explaining that he had
now supplied discovery, and his inability to contact his client's
principal for one month caused the delay. Defense counsel
indicated that plaintiff's counsel had not responded to "several
messages," but he expressed hope that plaintiff would withdraw the
motion, thereby permitting defendant to file a motion to vacate
the July order and reinstate its pleading.
3
Nothing in the record indicates Lopez ever filed a responsive
pleading. The judge properly denied plaintiff's motion pursuant
to Rule 4:24-2, which provides that except for good cause, "motions
to . . . impose or enforce sanctions for failure to provide
discovery must be made returnable prior to the expiration of the
discovery period."
4 A-4116-14T4
Plaintiff's counsel responded by letter dated October 24.
Citing defendant's prior default and delays in providing
discovery, counsel would not withdraw the motion to suppress with
prejudice. What transpired next is somewhat confusing because the
record does not include the motions and supporting certifications
filed by the parties, and much of defendant's unsworn and
uncertified assertions are made only in its brief. Nonetheless,
both sides agree as to the relevant events that followed.
Defendant claims its counsel contacted the court and was
advised that plaintiff's motion to suppress defendant's pleading
with prejudice was not on the October 24 calendar, and the court
would hear the motion in the future. However, the court considered
plaintiff's motion on October 24, 2014, as scheduled and granted
the motion (the October 2014 order). The judge handwrote on the
order: "Defendant's attorney has violated R. 4:23[-](5)(a)."
Plaintiff's counsel did not serve the order upon defense counsel
until November 19, 2014, advising he had just received the order
himself. The delay in receipt of the order is unexplained by the
record.
Without knowledge of the October 2014 order, defendant filed
opposition to plaintiff's motion and a cross-motion to reinstate
its pleading on October 31. See R. 4:23-5(a)(1) and (2).
Defendant then failed to appear at the October 31, 2014
5 A-4116-14T4
arbitration. The arbitrator noted plaintiff's claims of
"vicarious liability and negligent hiring[,]
retention/supervision," and awarded plaintiff $350,000, dividing
liability equally between defendant and Lopez. The court entered
an order the same day, striking defendant's pleading and ordering
that defendant "shall be deemed to have waived the right to demand
a trial de novo" for failing to appear. R. 4:21A-4(f).
Plaintiff moved to confirm the arbitration award on December
3. Defendant filed opposition and apparently cross-moved for an
order vacating the October order and deeming defendant's request
for a de novo trial, allegedly filed on November 19, to be timely.
The judge entered two orders on January 12, 2015 (the January
2015 orders). One order denied defendant's cross-motion because
"[t]here [was] no evidence of a de novo being filed in the court's
file." The second order confirmed the arbitration award and
entered judgment for $350,000 in favor of plaintiff against
defendant and Lopez "jointly and severely (sic)." The judge
handwrote on the order: "Defendants['] continued failure to
provide discovery, to restore their answer, to appear at
arbitration and to timely file a motion or even de novo is
inexcusable."
This appeal ensued.
6 A-4116-14T4
II.
Defendant's notice of appeal (the NOA) seeks review of the
October 2014 order, suppressing its pleading with prejudice, and
the January 2015 orders. The NOA and case information statement,
however, do not mention the October 31, 2014 order that the court
entered immediately upon defendant's failure to appear at
arbitration. Significantly, that order deemed defendant's absence
to be a waiver of the right to demand trial de novo.
It is well settled that only those orders designated in the
NOA are subject to appeal. 1266 Apartment Corp. v. New Horizon
Deli, Inc., 368 N.J. Super. 456, 459 (App. Div. 2004). However,
Rule 4:21A-4(f) permits the non-appearing party to seek relief
upon a showing of good cause.4 For the reasons that follow, we
conclude defendant established good cause for relief, based upon
the earlier, erroneous entry of the October 2014 order suppressing
its pleading with prejudice. Defendant's motion to vacate the
October 2014 order, denied in one of the January 2015 orders,
4
At the time of the arbitration in this case, the Rule provided
the court would serve each party, including the non-appearing
party, with copies of the award. R. 4:21A-5 (2014). The Rule
permitted the non-appearing party to seek relief "only on a showing
of good cause and on such terms as the court may deem appropriate."
R. 4:21A-4(f) (2014). Under the Rule then in effect, "there [was]
no time frame for seeking relief under subsection (f)." SWH
Funding Corp. v. Walden Printing Co., 399 N.J. Super. 1, 11 (App.
Div. 2008).
7 A-4116-14T4
therefore should have been granted. The result is that defendant's
failure to include the October 31, 2014 order in its NOA presents
no hurdle to providing appropriate relief.
"[T]he standard of review for dismissal of a complaint with
prejudice for discovery misconduct is whether the trial court
abused its discretion, a standard that cautions appellate courts
not to interfere unless an injustice appears to have been done."
Abtrax Pharms., Inc. v. Elkins-Sinn, Inc., 139 N.J. 499, 517
(1995). "We generally defer to a trial court's disposition of
discovery matters unless the court has abused its discretion or
its determination is based on a mistaken understanding of the
applicable law." Rivers v. LSC P'ship, 378 N.J. Super. 68, 80
(App. Div.) (citing Payton v. N.J. Tpk. Auth., 148 N.J. 524, 559
(1997)), certif. denied, 185 N.J. 296 (2005).
The case law decided under various iterations of Rule 4:23-5
(the Rule) has sounded a consistent theme, namely that "meticulous
attention" to our Court Rules is required before suppressing a
party's pleadings with prejudice. See Zimmerman v. United Servs.
Auto. Ass'n, 260 N.J. Super. 368, 376-77 (App. Div. 1992).
"Pursuant to [the Rule], there is a two-step process for dismissing
a complaint for failure to answer interrogatories." St. James AME
Dev. Corp. v. City of Jersey City, 403 N.J. Super. 480, 484 (App.
Div. 2008). "It is well-established that the main objective of
8 A-4116-14T4
the two-tier sanction process in [the Rule] is to compel discovery
responses rather than to dismiss the case." A&M Farm & Garden
Ctr. v. Am. Sprinkler Mech., L.L.C., 423 N.J. Super. 528, 534
(App. Div. 2012).
After a pleading is dismissed or suppressed without prejudice
pursuant to subsection (a)(1) of the Rule,
the party entitled to the discovery may, after
the expiration of 60 days from the date of the
order, move . . . for an order of dismissal
or suppression with prejudice. The attorney
for the delinquent party shall, not later than
7 days prior to the return date of the motion,
file and serve an affidavit reciting that the
client was previously served as required by
subparagraph (a)(1) and has been served with
an additional notification in the form
prescribed by Appendix II-B, of the pendency
of the motion to dismiss or suppress with
prejudice. In lieu thereof, the attorney for
the delinquent party may certify that despite
diligent inquiry, which shall be detailed in
the affidavit, the client's whereabouts have
not been able to be determined and such
service on the client was therefore not made
. . . . Appearance on the return date of the
motion shall be mandatory for the attorney for
the delinquent party or the delinquent pro se
party. The moving party need not appear but
may be required to do so by the court. The
motion to dismiss or suppress with prejudice
shall be granted unless a motion to vacate the
previously entered order of dismissal or
suppression without prejudice has been filed
by the delinquent party and either the
demanded and fully responsive discovery has
been provided or exceptional circumstances are
demonstrated.
[Rule 4:23-5(a)(2) (emphasis added).]
9 A-4116-14T4
When served with a motion to dismiss or suppress with prejudice,
the delinquent party's counsel must do two things: file an
affidavit indicating the client was notified of the motion's
consequences in accordance with the form prescribed, or otherwise
certify the client's whereabouts are unknown; and appear on the
motion date. "Each of these requirements performs the valuable
function of establishing a record for the benefit of court and
counsel that a party has had requisite notice." A&M Farm & Garden
Ctr., supra, 423 N.J. Super. at 535.
The Rule imposes the following affirmative obligation upon
the judge:
If the attorney for the delinquent party fails
to timely serve the client with the original
order of dismissal or suppression without
prejudice, fails to file and serve the
affidavit and the notifications required by
this rule, or fails to appear on the return
date of the motion to dismiss or suppress with
prejudice, the court shall, unless exceptional
circumstances are demonstrated, proceed by
order to show cause or take such other
appropriate action as may be necessary to
obtain compliance with the requirements of
this rule.
[R. 4:23-5(a)(3).]
"The requirement that the court take 'appropriate action as may
be necessary to obtain compliance' calls upon the court to exercise
its inherent authority to make certain its decision to terminate
10 A-4116-14T4
the litigation is an informed one." A&M Farm & Garden Ctr., supra,
423 N.J. Super. at 537-38.
We do not condone defendant's actions in this case. It failed
to supply any discovery until the day before the return date of
plaintiff's motion to suppress with prejudice. Defendant also
failed to comply with the Rule, in that it never moved to vacate
the order of suppression without prejudice prior to the return
date. R. 4:23-5(a)(2).
However, defense counsel supplied discovery before the return
date and sought an adjournment based upon an alleged inability to
contact his client.5 He further claimed he was advised when
requested an adjournment that the motion was not on the court's
calendar.
Importantly, the record fails to reveal the court performed
its obligations under the Rule, and, in this case, that made a
significant difference. First, there would have been no confusion
about whether the motion was under consideration or was adjourned
had the court made defense counsel appear on October 24, 2014 as
the Rule requires. The court would have had the benefit of
5
We do not resolve whether defendant supplied "fully responsive
discovery." R. 4:23-5(a)(2). Even if it did not, a bona fide
dispute over the adequacy of discovery responses must be resolved
before the court may dispose of a motion to dismiss with prejudice
or restore a pleading. St. James AME Dev. Corp., supra, 403 N.J.
Super. at 485-86.
11 A-4116-14T4
considering defense counsel's excuse for the tardy discovery and
the imposition of sanctions short of suppression with prejudice.
Instead, the court entered the October 2014 order, which was not
served on plaintiff's counsel until nearly one month later. In
the interim, the arbitration took place.
Defendant argues it was improper to conduct the arbitration
since its pleading was suppressed in July and had not been restored
by the arbitration date. While our Court Rules do not specifically
address these circumstances, Rule 4:21A-4(f) provides in relevant
part, "[a]n appearance on behalf of each party is required at the
arbitration hearing[,]" thereby implying defendant's obligation
to appear, even if its pleading has been suppressed. See also R.
4:21A-9 (detailing specific procedures regarding notice to
defaulting parties and the effect of their non-appearance at
arbitration). Moreover, defendant was in the process of trying
to have the motion to suppress with prejudice adjourned precisely
so it could move to restore its answer. If for no reason other
than well-founded caution, defendant should have appeared at the
arbitration.
It is at this point that plaintiff's failure to abide by our
Court Rules led to an unjust result. In accordance with Rule
4:21A-6(b)(3), plaintiff timely-moved to confirm the arbitration
award. As noted, the judge granted plaintiff's request in one of
12 A-4116-14T4
the January 2015 orders, which entered judgment in plaintiff's
favor against defendant and Lopez jointly and severally for the
amount awarded by the arbitrator. This was procedurally improper.
Rule 4:21A-9(d) provides: "If a party who has obtained an
arbitration award against the defaulting party moves for
confirmation of the arbitration award and entry of judgment
pursuant to R. 4:21A-6(b)(3), that party shall comply with the
provisions of R. 4:43-2 and R. 1:5-7 and shall provide sufficient
proof of compliance to the court." In this case, Lopez apparently
was in default, and defendant was effectively in default because
its answer had been suppressed with prejudice. However, plaintiff
failed to comply with Rule 4:43-2.
Rule 4:43-2(b) requires the court to conduct a proof hearing
when "it is necessary to take an account or to determine the amount
of damages or to establish the truth of any allegation." This was
such a case.
Moreover, "[e]ven though a defendant who has defaulted has
relinquished the right to present affirmative proofs in the matter,
the right to challenge a plaintiff's showings in a proof hearing
by way of cross-examination and argument should not ordinarily be
precluded." Chakravarti v. Pegasus Consulting Grp., Inc., 393
N.J. Super. 203, 210-11 (App. Div. 2007). At the proof hearing,
a plaintiff may be required to prove her theory of liability. See,
13 A-4116-14T4
e.g., Newman v. Isuzu Motors Am., Inc., 367 N.J. Super. 141, 145-
46 (App. Div. 2004) (holding it was an abuse of discretion for the
court not to require the plaintiff to demonstrate grounds for
relief under respondeat superior liability or other "novel"
theories of recovery).
On the meager record before us, understandably lacking
because of defendant's dilatory discovery production, nothing
rebuts defendant's assertion that Lopez was not its employee, nor
is there any evidence supporting plaintiff's claim that defendant
was independently negligent in the hiring, retention or
supervision of Lopez. At the least, defendant had the right under
our Court Rules to contest plaintiff's theory of liability and
quantum of damages, even though it failed to appear at the
arbitration.
Plaintiff's counsel never sought to comply with Rule 4:43-2;
he simply moved to confirm the arbitration award and enter
judgment. The court mistakenly granted this relief. We conclude
it was error to enter the January 2015 order for judgment.
Instead, the court should have considered the adequacy of
defendant's discovery responses, and if sufficient, granted
defendant's cross-motion to vacate the October 2014 order or taken
other appropriate action. See, e.g., Adedoyin v. Arc of Morris
Cnty. Chapter, Inc., 325 N.J. Super. 173, 182 (App. Div. 1999)
14 A-4116-14T4
(obligating the judge to resolve a dispute regarding the adequacy
of the discovery responses). For the following reasons, the court
also should have restored the matter to the trial calendar.
As we said in SWH Funding,
[d]espite our unequivocal disapproval of
defense counsel's conduct, we are loath to
visit the sins of the lawyer upon the innocent
client. We are also mindful of the well-
established public policy disfavoring final
dispositions based solely on procedural
irregularities. We thus conclude that defense
counsel's conduct, although not arising to
excusable neglect, constitutes "good cause"
within the meaning of R. 4:21A-4(f),
warranting giving his client[] the opportunity
to have [its] defenses rise or fall on the
merits of [its] case.
[399 N.J. Super. at 14 (citations omitted).]
We also noted that a party seeking to set aside a default
arbitration award must additionally "make[] a 'good faith
assertion of a meritorious defense' to the plaintiff's claims."
Id. at 11-12 (quoting Del. Valley Wholesale Florist v. Addalia,
349 N.J. Super. 228, 232 (App. Div. 2002)). For the reasons
already explained, defendant asserted a meritorious defense. We
therefore reverse the January 2015 order denying defendant's
cross-motion and reinstate defendant's pleading.
We remand the matter for further proceedings consistent with
this opinion, including, the court's consideration of appropriate
"litigation expenses and attorney's fees incurred [by plaintiff]
15 A-4116-14T4
for services directly related to [defendant's] non-appearance" at
arbitration. R. 4:21A-4(f). We leave further conduct of the
litigation to the sound discretion of the trial court.
Reversed and remanded.
16 A-4116-14T4