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DESIGN MANAGEMENT SERVICES, INC. VS. BROAD-ATLANTIC ASSOCIATES, LLC(DC-8050-15, ESSEX COUNTY AND STATEWIDE) ( 2017 )


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  •                         NOT FOR PUBLICATION WITHOUT THE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-3572-15T1
    DESIGN MANAGEMENT SERVICES,
    INC.,
    Plaintiff-Respondent,
    v.
    BROAD-ATLANTIC ASSOCIATES,
    LLC,
    Defendant-Appellant.
    ___________________________
    Argued April 5, 2017 – Decided October 10, 2017
    Before Judges Fuentes, Simonelli and Gooden
    Brown.
    On appeal from the Superior Court of New
    Jersey, Law Division, Essex County, Docket No.
    DC-8050-15.
    Brian P. Matthews argued the cause for
    appellant (Reed Smith, LLP, attorneys; Mr.
    Matthews, of counsel and on the briefs).
    Fredda Katcoff argued the cause for respondent
    (Rabner Baumgart Ben-Asher & Nirenberg, PC,
    attorneys; Ms. Katcoff, on the brief).
    The opinion of the court was delivered by
    GOODEN BROWN, J.A.D.
    This is a book-account collection case arising out of a
    contract dispute between plaintiff, Design Management Services,
    Inc., and defendant, Broad-Atlantic Associates, LLC.                   Plaintiff
    is a provider of "Leadership in Energy and Environmental Design"
    or LEED consulting services.         Defendant is an owner of commercial
    real   estate.       Defendant    contracted       with   plaintiff    for       LEED
    consulting services in connection with defendant's renovation of
    office space in its property located on Broad Street in Newark.
    On May 27, 2015, plaintiff filed a complaint against defendant
    in the Law Division, Special Civil Part, alleging non-payment of
    three invoices and seeking $8500 in compensatory damages due under
    the    parties'   February     12,   2014    contract,     as     modified     by    a
    subsequent agreement entered on September 17, 2014.                On August 24,
    2015, defendant filed a contesting answer, affirmative defenses
    and counterclaims for damages in excess of $20,000.                          In its
    counterclaims,       defendant    alleged,     among      other    things,       that
    plaintiff breached the agreement by failing to perform its services
    "in    a   timely,   proper,     complete    and    professional      manner        in
    accordance with the terms of the agreement."                Following a bench
    trial, the trial court dismissed defendant's counterclaims and
    awarded judgment to plaintiff in the amount of $8500 plus $1500
    for travel expenses and $3500 for attorney's fees. A memorializing
    order was entered on March 4, 2016.
    2                                     A-3572-15T1
    Defendant appeals from the March 4, 2016 order, asserting
    that the court committed various procedural errors that impeded
    its ability to effectively litigate the matter and pursue its
    counterclaims.   Specifically, defendant asserts the court abused
    its discretion by: (1) failing to transfer the case to the Law
    Division since its counterclaims exceeded the jurisdictional limit
    of the Special Civil Part; (2) accepting plaintiff's belated answer
    to its counterclaims after the start of trial; (3) failing to
    dismiss plaintiff's complaint based on plaintiff's failure to
    provide discovery; and (4) failing to adjourn the trial in the
    interest of justice.   According to defendant, either individually
    or cumulatively, these errors "essentially deprived [defendant]
    of its due process right to be heard 'at a meaningful time and in
    a meaningful manner.'"    Having reviewed the parties' arguments in
    light of the record and applicable legal principles, we affirm.
    Following the filing of the complaint and answer, trial was
    scheduled for November 30, 2015.      In the interim, on October 29,
    2015,   then-counsel     for   defendant   served   plaintiff       with
    interrogatories consisting of twenty-six questions and numerous
    subparts.   On November 3, 2015, plaintiff's counsel returned the
    interrogatories unanswered, explaining they were "nonconforming
    3                             A-3572-15T1
    in the Special Civil Part" under Rule 6:4-3(a) and Rule 6:4-3(f).1
    In response, on November 18, 2015, defense counsel served plaintiff
    with a revised demand for production of documents and a notice to
    produce Michelle Cottrell, plaintiff's President and signatory to
    the contract, for deposition.
    Approximately one week prior to the November 30, 2015 trial
    date, defense counsel's colleague and fellow in-house attorney
    wrote to the court requesting an adjournment of the trial date
    because     defense      counsel   was       hospitalized     for     chemotherapy
    treatment.          Plaintiff's      counsel      had   previously        declined
    defendant's request to consent to an adjournment. When the parties
    appeared on November 30, 2015, the court considered defendant's
    stand-in counsel's request for a "brief adjournment so that someone
    could get up to speed" on the case.            Plaintiff's counsel explained
    that   he   did    not   consent   to    the    adjournment     request   because
    plaintiff's       representatives,      who    were   present    in    court,   had
    already made plans to travel from Florida to New Jersey for the
    trial.    Plaintiff's counsel explained further that he expected one
    1
    Rule 6:4-3(f) limits each party's discovery in Special Civil
    Part to "interrogatories consisting of no more than five questions
    without parts." Such interrogatories shall be served and answered
    within thirty days. See R. 6:4-3(a). "Additional interrogatories
    may be served and enlargements of time to answer may be granted
    only by court order on timely notice of motion for good cause
    shown." R. 6:4-3(f).
    4                                 A-3572-15T1
    of defendant's other in-house attorneys to appear on defendant's
    behalf.   After considering the parties' contentions, the court
    granted   defendant's    request   to      adjourn      the    trial,      provided
    defendant reimbursed plaintiff $1500 for travel expenses.                        The
    court scheduled a peremptory trial date of January 11, 2016, and
    defendant's stand-in counsel confirmed that "[s]omeone [would] be
    available[.]"
    Despite    these   assurances,       on    December      7,   2015,    defense
    counsel wrote to plaintiff's counsel requesting consent to adjourn
    the trial until January 26, 2016, because of his ongoing "medical
    treatment[.]"      Defense    counsel          also    requested     plaintiff's
    counsel's consent to transfer the case to the Law Division, "given
    the complexities and dollar amounts of the counterclaims."                         In
    addition, defense counsel requested plaintiff's counsel's response
    to his revised demand for production of documents and confirmation
    that Cottrell would submit to a deposition.             About one week later,
    on December 15, 2015, defense counsel wrote to the court requesting
    an adjournment of the trial to January 27, 28, or 29, 2016, because
    of his ongoing chemotherapy treatment.                Defense counsel advised
    the court that he was "defendant's only trial counsel[,]" and
    indicated that stand-in counsel was unaware of his treatment
    schedule when she appeared on the adjourned trial date.                          The
    5                                     A-3572-15T1
    December 15, 2015 letter to the court did not mention outstanding
    discovery or a potential transfer motion.
    Thereafter,     on    December    29,     2015,    defense   counsel       sent
    plaintiff's counsel an e-mail stating that plaintiff had failed
    to respond to his revised notice to produce, failed to provide the
    name of plaintiff's representative who appeared in court with
    Cottrell on November 30, 2015, and refused to consent to an
    adjournment of the trial date.              Defense counsel advised further
    that "[a]n order to show cause [would] be filed to address all of
    the discovery issues, the travel fee 'award' as well as defendant's
    request for the transfer of this matter to the Law Division."                      On
    January 6, 2016, in another attempt to adjourn the trial, another
    in-house attorney wrote to the court reiterating that defense
    counsel was the company's "only trial attorney" and would be
    unavailable for trial on January 11, 2016, because he was still
    undergoing treatment for lymphoma.            On January 8, 2016, three days
    before the peremptory trial date, the law firm, Reed Smith LLP,
    filed a Notice of Appearance as co-counsel of record for defendant,
    and represented defendant in all subsequent proceedings.                Failing
    to settle the matter through mandatory mediation on January 11,
    2016, the parties appeared for trial the following day.
    At   the    start    of   trial   on    January    12,   2016,   the     court
    considered      several   oral   applications      by    defendant.          First,
    6                                   A-3572-15T1
    defendant sought leave to file a motion in the Law Division to
    transfer     the   case    since      its    counterclaims    exceeded     the
    jurisdictional limit of the Special Civil Part.              Defense counsel
    conceded that the motion was "extremely late" but explained, "Reed
    Smith was just brought into th[e] case" and "was unable to prepare
    a motion to transfer" by the scheduled trial date. When questioned
    by the court about the lateness of the application, defense counsel
    responded,
    It is my understanding that prior counsel is
    extremely sick and that is part of the reason
    why . . . . [P]rior counsel did attempt to
    file an order to show cause which included the
    relief of transferring the motion . . . .
    [F]rom my records it was delivered to the
    clerk in the [L]aw [D]ivision but it was never
    entered on the docket.     We found this out
    yesterday. I have a copy of that motion and
    a receipt from [New Jersey] Lawyer Service
    that it was received by the clerk. I don't
    know why it wasn't entered, but it was . . .
    not entered.
    The court denied defendant's motion to transfer the case.
    Next, defendant contended that, notwithstanding the fact that
    prior   counsel    took   no   action   to   obtain   a   default   judgment,
    plaintiff    neither   filed    nor   served   an   answer   to   defendant's
    counterclaims.      Plaintiff disputed defendant's assertion.             When
    questioned by the court, plaintiff's counsel stated,
    [I]t was answered. . . . I have a copy here
    . . . . I know early on when we filed this
    complaint, back in May, there was a lot of
    7                             A-3572-15T1
    back and forth with service, not service. I
    got like a dozen or so little coupons, you
    know, your complaint is going to be dismissed
    because they haven't been served, but they
    were served, I even have the answer. . . . I
    have a copy here. It was a standard answer
    to   a  counterclaim,   basically  tying   to
    everything, holding them to their proofs.
    The court allowed "the answer to the counterclaim to be deemed
    filed."   The answer was dated September 25, 2015, which was within
    thirty-five days of defendant's August 24, 2015 answer.
    Next, the court considered defendant's application to dismiss
    the complaint as a sanction for outstanding discovery or, in the
    alternative, grant a short adjournment.        Defendant acknowledged
    the motion was untimely, but argued:
    [Plaintiff's   counsel]   was   served   with
    discovery back in October in the form of
    interrogatories and document requests. It was
    never responded to. In fact, counsel wrote a
    letter to prior counsel for defendant and
    stated that he would not answer discovery.
    To the extent that counsel wants to
    present any evidence today that I have [not]
    seen that was reasonably calculated to be
    heard by this discovery request[,] I don’t
    understand how that can be admitted into
    evidence. We would have no objection to the
    invoices and the contracts which were attached
    to the complaint being admitted into evidence,
    but . . . any other documentation . . . has
    not been received by my client in discovery.
    Plaintiff's    counsel   objected   to   defendant's   application,
    asserting that the discovery requests were "exorbitant for the
    8                             A-3572-15T1
    [L]aw [D]ivision never mind a small claims court matter" and
    nothing more than an attempt "to create an undue hardship on
    [plaintiff.]"      The court rejected defendant's application, but
    indicated that to avoid any prejudice to defendant, it would
    entertain defense counsel's objection to any documents "offered
    into   evidence"   that   defendant       had   not   "received   .   .     .    in
    discovery."    The court also denied defendant's alternative request
    for an adjournment of the trial, explaining that the issues should
    have been raised when the parties appeared on November 30, 2015,
    "not now."
    After deciding defendant's motions, a bench trial commenced,
    at the conclusion of which the court found in favor of plaintiff.
    The court determined that "defendant failed to pay as required
    under the terms of the contract[,]" and "therefore the plaintiff
    was relieved of any further performance[.]"                 The court also
    dismissed the counterclaims, finding "no breach by the plaintiff"
    and "no damages to the defendant[.]"            In its oral decision, the
    court noted:
    One of the issues that was presented at
    the outset was the failure of the plaintiff
    to provide discovery to the defendant. And a
    motion was made at the beginning of the case
    on   that  issue   either   to  dismiss   the
    plaintiff's case or to adjourn the case to
    allow for discovery or such other remedy such
    as not allowing the evidence to be admissible
    during the course of trial. And what I said
    9                                   A-3572-15T1
    at that time was that the motion needed to be
    made at some time prior to the time of trial.
    Having listened to the testimony and seen
    the evidence, I find that the lack of
    discovery would not affect the outcome of the
    case . . . . [T]here were no documents that
    were admitted into evidence that were not
    provided to the defendant or were not in the
    defendant's possession.
    The court entered judgment for plaintiff in the amount of $8500
    "subject to revision to include counsel fees" and $1500 "for the
    agreed upon travel expenses[.]"         An Amended Order of Judgment
    After Trial was entered on March 4, 2016, incorporating $3500 for
    counsel fees.   This appeal followed.
    Defendant's appeal is limited to challenging the court's case
    management   orders.   We    review    these   decisions   deferentially,
    subject to an abuse of discretion standard.        See State in Interest
    of A.B., 
    219 N.J. 542
    , 554 (2014) (reviewing discovery orders
    under an abuse of discretion standard); State v. Miller, 
    216 N.J. 40
    , 65 (2013), cert. denied, ____ U.S. ____ , 
    134 S. Ct. 1329
    , 
    188 L. Ed. 2d 339
     (2014) (noting that adjournment requests "implicate[]
    a trial court's authority to control its own calendar and is
    reviewed under a deferential standard").           Abuse of discretion
    "arises when a decision is 'made without a rational explanation,
    inexplicably departed from established policies, or rested on an
    impermissible basis.'"      Flagg v. Essex Cty. Prosecutor, 
    171 N.J. 10
                                  A-3572-15T1
    561,   571   (2002)   (quoting   Achacoso-Sanchez   v.   Immigration    &
    Naturalization Serv., 
    779 F. 2d 1260
    , 1265 (7th Cir. 1985)). Here,
    we discern no abuse of discretion in the court's decisions.
    The court rule pertaining to a transfer motion provides:
    A defendant filing a counterclaim in excess
    of the Special Civil Part monetary limit may
    apply for removal of the action to the Law
    Division by (1) filing and serving in the
    Special Civil Part the counterclaim together
    with an affidavit or that of an authorized
    agent stating that the affiant believes that
    the amount of such claim, when established by
    proof,   will    exceed  the  sum   or   value
    constituting the monetary limit of the Special
    Civil Part and that it is filed in good faith
    and not for the purpose of delay; and (2)
    filing in the Law Division and serving a
    motion for transfer. The Law Division shall
    order the transfer if it finds that there is
    reasonable    cause   to  believe   that   the
    counterclaim is founded on fact and that it
    has reasonable chance for success upon the
    trial thereof.
    [R. 6:4-1(c).]
    While the decision to transfer is routinely granted, we have
    cautioned that "[a]pplications made on the eve of trial . . . that
    are designed to delay, are always subject to the scrutiny of the
    motion judge and ultimately, to the exercise of discretion in
    determining the application to transfer."     Splash of Tile v. Moss,
    
    357 N.J. Super. 143
    , 152 (App. Div.), certif. denied, 
    176 N.J. 430
    (2003).
    11                           A-3572-15T1
    Here, defendant's transfer motion was procedurally defective
    and untimely.     Further, an Order to Show Cause, even if filed as
    represented by defense counsel, is not the appropriate vehicle for
    a transfer motion.        Therefore, the court properly denied the
    application.     In any event, defendant was not prejudiced by the
    court's      denial    because    the        court      considered    defendant's
    counterclaims substantively, but deemed waived any damages that
    exceeded the jurisdictional limit of the Special Civil Part as
    permitted under Rule 6:1-2(c).           Moreover, the court's finding of
    no cause for action on the counterclaims obviated one of the
    prerequisites for the Law Division to grant such a motion.
    Defendant also argues that the court erred in accepting
    plaintiff's untimely answer to its counterclaims after the start
    of   trial   without   evidence   that       it   was    filed   or   served    upon
    defendant.     A responsive pleading to a Special Civil Part action
    must be filed within thirty-five days of completion of service.
    R. 6:3-1.     However, Rule 1:1-2(a) provides for the relaxation of
    any rule "if adherence to it would result in an injustice."                    Here,
    we discern no abuse of discretion in the court's decision to allow
    plaintiff to file its answer to the counterclaims out of time.
    Moreover, given defendant's failure to move earlier for the entry
    of a default judgment, defendant was not prejudiced thereby.                     See
    R. 6:6-2; R. 6:6-3.
    12                                A-3572-15T1
    Next, defendant maintains plaintiff's "deliberate refusal to
    respond to discovery greatly prejudiced [its] ability to pursue
    its counterclaim and defend against [plaintiff's] allegations."
    Defendant contends plaintiff's failure to respond to discovery
    should have resulted in the dismissal of plaintiff's complaint,
    R. 4:23-5(a)(1) and R. 6:4-6, the imposition of sanctions, R. 6:4-
    6, or an adjournment of the trial date.     See R. 6:4-7(b).       We
    disagree.
    Under Rule 6:4-4, "[n]o depositions are permitted in Special
    Civil Part actions except by order of the court, granted for good
    cause shown and on such terms as the court directs, on motion with
    notice to the other parties in the actions."    Under Rule 6:4-5,
    absent an order granting a motion to extend the time, discovery
    "shall be completed as to each defendant within [ninety] days of
    the date of service of that defendant's answer . . . ."   Defendant
    made no motion to depose Cottrell and made no motion to compel or
    extend the time for discovery within ninety days of the filing of
    its August 24, 2015 answer.   Therefore, defendant's request for
    discovery was out of time.
    Further, as the court noted, defendant suffered no prejudice
    because all documents admitted into evidence were either provided
    to defendant or already in defendant's possession.   Dismissal of
    a complaint with prejudice is only appropriate "in those cases in
    13                           A-3572-15T1
    which the order for discovery goes to the very foundation of the
    cause of action, or where the refusal to comply is deliberate and
    contumacious" and "when no lesser sanction will suffice to erase
    the prejudice suffered by the non-delinquent party . . . ." Abtrax
    Pharms., Inc. v. Elkins-Sinn, Inc., 
    139 N.J. 499
    , 514 (1995)
    (quoting Lang v. Morgan's Home Equip. Corp., 
    6 N.J. 333
    , 339 (1951)
    and Zaccardi v. Becker, 
    88 N.J. 245
    , 253 (1982)).      "If a lesser
    sanction than dismissal suffices to erase the prejudice to the
    non-delinquent   party,   dismissal   of   the   complaint    is    not
    appropriate and constitutes an abuse of discretion."     Georgis v.
    Scarpa, 
    226 N.J. Super. 244
    , 251 (App. Div. 1988).
    Finally, we discern no abuse of discretion in the court's
    denial of defendant's request for another adjournment.       Given the
    severity of its first attorney's illness, defendant should have
    proactively arranged for alternate counsel well in advance of the
    January 11, 2016 peremptory trial date.
    Affirmed.
    14                             A-3572-15T1