CCM PROPERTIES, LLC VS. THOMAS C. PIEPER (L-1690-16, MONMOUTH COUNTY AND STATEWIDE) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE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-1668-16T3
CCM PROPERTIES, LLC, and
CARLOS GUZMAN,
Plaintiffs-Appellants,
v.
THOMAS C. PIEPER and
ENVIROTACTICS, INC.,
Defendants-Respondents.
______________________________
Argued April 23, 2018 – Decided June 20, 2018
Before Judges Fasciale and Moynihan.
On appeal from Superior Court of New Jersey,
Law Division, Monmouth County, Docket No.
L-1690-16.
David M. Shafkowitz argued the cause for
appellants.
Jason D. Attwood argued the cause for
respondents, Envirotactics, Inc., (Pashman
Stein Walder Hayden, attorneys; Jason D.
Attwood, of counsel and on the brief).
Shaji M. Eapen argued the cause for respondent
Thomas C. Pieper (Morgan Melhuish Abrutyn,
attorneys; Meredith Kaplan Stoma, of counsel;
Shaji M. Eapen, of counsel and on the brief).
PER CURIAM
Plaintiffs appeal from three November 18, 2016 orders
dismissing their attorney malpractice claim against defendant
Thomas C. Pieper (Pieper); dismissing their breach of contract
claim against Envirotactics, Inc. (Enviro); and denying their
motion for leave to amend the complaint. Plaintiffs contend:
POINT I
THE TRIAL COURT ERRED IN ITS APPLICATION OF
NJ RULE 4:6-2(e), GRANTING THE DEFENDANT'S
MOTION TO DISMISS PLAINTIFF[S'] COMPLAINT FOR
FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN
BE GRANTED BY FAILING TO PROVIDE EVERY
REASONABLE INFERENCE TO PLAINTIFF[S].
POINT II
THE TRIAL COURT ERRED IN ITS ANALYSIS OF THE
OPERATIVE DATE FOR CALCULATING THE STATUTE OF
LIMITATIONS.
POINT III
THE TRIAL COURT ERRED IN ITS APPLICATION OF
NJ RULE 4:6-2(e), BY FAILING TO ALLOW
PLAINTIFF[S] TO AMEND [THEIR] COMPLAINT.
Our consideration starts with the trial judge's denial of
plaintiffs' proposed second amended complaint. "Objection to the
filing of an amended complaint on the ground that it fails to
state a cause of action should be determined by the same standard
applicable to a motion to dismiss under [Rule] 4:6-2(e)."
Interchange State Bank v. Rinaldi, 303 N.J. Super. 239, 257 (App.
Div. 1997). Before dismissing a complaint for failure to state a
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claim, the trial judge should "afford[] plaintiffs an opportunity
to amend the complaint to endeavor to conform to the requisites
for [defendant's] responsibility." Muniz v. United Hosps. Med.
Ctr. Presbyterian Hosp., 153 N.J. Super. 79, 81 (App. Div. 1977).
"'Rule 4:9-1 requires that motions for leave to amend be granted
liberally' and that 'the granting of a motion to file an amended
complaint always rests in the court's sound discretion.'" Notte
v. Merchs. Mut. Ins. Co., 185 N.J. 490, 501 (2006) (quoting Kernan
v. One Washington Park Urban Renewal Assocs., 154 N.J. 437, 456-
57 (1998)).
Although a motion for leave to amend is properly denied where
"there is no point to permitting the filing" because "a subsequent
motion to dismiss must be granted," ibid. (quoting Rinaldi, 303
N.J. Super. at 257), that is not the case here. Examining the
second amended complaint "in light of the factual situation
existing at the time" it was filed, Rinaldi, 303 N.J. Super. at
256, we conclude it adequately set forth causes of action against
both defendants and should have been permitted. We thus derive
the facts largely from the allegations in the second amended
complaint, along with the documents referenced therein.
In 2010 plaintiffs retained Pieper to represent them in the
purchase of commercial property, and hired Enviro "to perform a
ground penetrating radar . . . survey" to "confirm the absence
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and/or presence of any historical underground storage tanks at the
site." Enviro identified two underground storage tanks on the
property with respective estimated capacities of approximately 550
and 1000 gallons, and recommended that the tanks "be properly
removed from the site and the soils surrounding the [tanks] be
assessed for evidence of a discharge at the time of removal."
Plaintiffs allege that on May 10, 2010, Pieper represented "that
all issues regarding the purchase of the subject property [were]
resolved," inducing plaintiffs to close on the property that day.
Over three years later, the bank — upon receipt of plaintiffs'
application to refinance the property — ordered a "PHASE I
ENVIRONMENTAL SITE ASSESSMENT," (phase I report) which revealed a
"250,000-gallon aboveground storage tank . . . was formerly
present" on the property, and identified — in addition to the two
previously-discovered underground tanks — a third 275-gallon
underground storage tank. The bank denied plaintiffs' refinance
application. Although the record indicates the report was received
by the bank on August 30, 2013, there is no indication when
plaintiffs were notified their application was denied; or if and
when they received the phase I report. Plaintiffs filed suit on
May 9, 2016 based on revelations learned from the phase I report.
The trial judge found plaintiffs' claims were barred by the
six-year statute of limitations applicable to breach-of-contract
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and attorney-malpractice claims1 because the phase I report put
plaintiffs "on notice that [there was] a tank problem as of March
16, 2010." He also found plaintiffs' negligence claims against
both defendants, subject to a two-year statute of limitations,
N.J.S.A. 2A:14-2(a), were barred.
Plaintiffs contend Pieper "failed to advise . . . that the
[Enviro] report previously received was not a comprehensive
environmental review" and Enviro "failed to identify critical
environmental conditions which would have governed [p]laintiff[s']
decision to proceed" — failures they contend they did not discover
until they attempted to refinance.
"We review a grant of a motion to dismiss a complaint for
failure to state a cause of action de novo, applying the same
standard under Rule 4:6-2(e) that governed the motion court."
Wreden v. Twp. of Lafayette, 436 N.J. Super. 117, 124 (App. Div.
2014). We treat all factual allegations as true and carefully
examine those allegations "to ascertain whether the fundament of
a cause of action may be gleaned even from an obscure statement
of claim."2 Printing Mart-Morristown v. Sharp Elecs. Corp., 116
1
N.J.S.A. 2A:14-1.
2
We find plaintiffs' argument — that the trial judge "essentially
converted" defendants' motion to dismiss "to one for [s]ummary
[j]udgment, which was inappropriate" because the judge made a
5 A-1668-16T3
N.J. 739, 746 (1989) (quoting Di Cristofaro v. Laurel Grove Mem'l
Park, 43 N.J. Super. 244, 252 (App. Div. 1957)). "Nonetheless, .
. . the essential facts supporting plaintiff's cause of action
must be presented in order for the claim to survive; conclusory
allegations are insufficient in that regard[,]" Scheidt v. DRS
Techs., Inc., 424 N.J. Super. 188, 193 (App. Div. 2012), as are
assertions that "essential facts that the court may find lacking
can be dredged up in discovery," Printing Mart, 116 N.J. at 768;
see also Edwards v. Prudential Prop. & Cas. Co., 357 N.J. Super.
196, 202 (App. Div. 2003). "In evaluating motions to dismiss,
courts consider 'allegations in the complaint, exhibits attached
to the complaint, matters of public record, and documents that
form the basis of a claim.'" Banco Popular N. Am. v. Gandi, 184
N.J. 161, 183 (2005) (quoting Lum v. Bank of Am., 361 F.3d 217,
222 n.3 (3d Cir. 2004)).
Although not generally the subject of Rule 4:6-2(e) motions,
as Judge William J. Brennan (later United States Supreme Court
Justice Brennan) recognized, a statute of limitations defense is
"factual determination on [plaintiffs'] business savvy" — to be
meritless. The trial judge's on-the-record statement that
plaintiffs were "not your unsophisticated potential homeowner" was
made in a verbal exchange during argument. The judge did not find
it as a fact and the record does not support that it influenced
his decision.
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properly raised on a motion to dismiss "where it affirmatively
appears on the face of the complaint that the action pleaded is
barred." Feil v. Senisi, 7 N.J. Super. 517, 518 (Law Div. 1950);
see also Prickett v. Allard, 126 N.J. Super. 438, 440 (App. Div.)
(quoting R. 4:6-2(e)), aff'd o.b., 66 N.J. 6 (1974).
New Jersey has adopted the discovery rule to "ameliorate[]
'the often harsh and unjust results [that] flow from a rigid and
automatic adherence to a strict rule of law.'" Grunwald v.
Bronkesh, 131 N.J. 483, 492 (1993) (quoting Lopez v. Swyer, 62
N.J. 267, 273-74 (1973)) (second alteration in original). Where
appropriate, "a cause of action will be held not to accrue until
the injured party discovers, or by an exercise of reasonable
diligence and intelligence should have discovered . . . a basis
for an actionable claim." Lopez, 62 N.J. at 272.
It is not every belated discovery that will
justify an application of the rule lifting the
bar of the limitations statute. The interplay
of the conflicting interests of the competing
parties must be considered. The decision
requires more than a simple factual
determination; it should be made by a judge
and by a judge conscious of the equitable
nature of the issue . . . .
[Id. at 275.]
"In the context of legal counseling, a plaintiff may reasonably
be unaware of the underlying factual basis for a cause of action.
The inability readily to detect the necessary facts underlying a
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malpractice claim is a result of the special nature of the
relationship between the attorney and client." Grunwald, 131 N.J.
at 493-94. The statute of limitations, in a legal malpractice
action, "begins to run only when the client suffers actual damage
and discovers, or through the use of reasonable diligence should
discover, the facts essential to the malpractice claim." Id. at
494.
Plaintiffs' contend that Pieper's alleged malpractice and
breach of contract caused them to be unaware of the "critical
fact[]" that "the report was not a Phase [I]." We note the plain
text of Enviro's written proposal warned plaintiffs that: "[n]o
soil borings, soil sampling or groundwater sampling [would be]
performed"; the survey was "not intended to satisfy any NJDEP[3]
requirements"; the scope of work was limited to "[v]erify[ing]
absence or presence of underground storage tanks"; and the quoted
price did "not include the costs for a soil and/or groundwater
investigation." The Enviro report similarly advised plaintiffs
to remove the underground tanks and test the soil, and noted an
investigation "satisty[ing] NJDEP requirements" may be necessary.
Nonetheless, Pieper's advice – following Enviro's report which
recommended further action – should have been preceded by an
3
New Jersey Department of Environmental Protection.
8 A-1668-16T3
investigation of "potential environmental soil contamination" as
plaintiffs allege in their second amended complaint. Pieper's
alleged misadvice to close title — not discovered until plaintiffs
received the phase I report — suffices to save the malpractice
claim from dismissal.
We agree with the judge that the scope of Enviro's proposed
work was limited to detecting the underground tanks: "They weren't
asked to look for above[-]ground tanks. They weren't asked to do
a historical analysis of the property . . . . They were asked
simply to look for underground tanks. They completed that task
and advised." The dismissal of those causes of action — grounded
in Enviro's alleged failure to detect and advise about above-
ground storage tanks, soil contamination, environmental impact and
prior use of the property — was warranted; plaintiffs clearly did
not contract Enviro for those services.
A liberal reading of the complaint, however — accepting even
"obscure statement[s]" that form "the fundament of a cause of
action," Printing Mart, 116 N.J. at 746 — compels us to reverse
the order dismissing plaintiffs' breach-of-contract claim against
Enviro, which was retained to detect the presence of underground
tanks and detected two — not three — on the property. Plaintiffs
adequately allege, for the purposes of a motion to dismiss, that
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they could not reasonably have known about the third tank until
the phase I report was issued in August 2013.4
We therefore remand the matter to afford plaintiffs an
opportunity to file the second amended complaint and for further
proceedings consistent with the reasons set forth herein.
Affirmed in part, reversed in part, and remanded for further
proceedings. We do not retain jurisdiction.
4
Plaintiffs' negligence claims against both defendants, subject
to a two-year statute of limitations, N.J.S.A. 2A:14-2(a), are
barred regardless of the discovery rule's application. Plaintiffs
filed their complaint on May 9, 2016 – well over two years after
the phase I report was issued in August 2013.
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