A.D. VS. EXCELLENT TRANSPORT CO-OP, LLC (L-2625-13, PASSAIC COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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