I.K.M., INC. VS. LAW OFFICE OF JOHN D. KOSYLO (L-1724-14, GLOUCESTER COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE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-5072-17T2
I.K.M., INC.,
Plaintiff-Appellant,
v.
LAW OFFICE OF
JOHN D. KOSYLO,
Defendant-Respondent.
_____________________________
Submitted September 25, 2019 – Decided October 18, 2019
Before Judges Gooden Brown and Mawla.
On appeal from the Superior Court of New Jersey,
Law Division, Gloucester County, Docket No. L-
1724-14.
Peter A. Ouda, attorney for appellant.
Gregory Charles Dibsie, attorney for respondent.
PER CURIAM
Plaintiff I.K.M., Inc. appeals from a May 25, 2018 Law Division order,
denying its motion to vacate an order dismissing its legal malpractice complaint
against its former attorney, defendant John D. Kosylo. We affirm.
We glean these facts from the record. In September 2012, Kosylo filed a
breach of contract complaint on plaintiff's behalf against plaintiff's landlord, 825
Realty, LLC, and plaintiff's sub-lessee, OzSa, LLC, in relation to an October 8,
2008 sub-lease of lease agreement entered into by all three parties. On
September 12, 2013, the complaint was dismissed on an unopposed summary
judgment motion.
Although plaintiff's corporate charter had been revoked since November
16, 2012, and plaintiff therefore lacked standing to pursue the claim, the specific
reason for granting the summary judgment motion is unclear in the record. The
moving papers submitted in support of the motion relied on plaintiff's revoked
corporate charter as well as plaintiff's execution of a December 2009 assignment
of lease and assumption agreement. The assignment and assumption agreement
terminated the lease between plaintiff and its landlord in favor of its sub-lessee,
which agreed to assume all of plaintiff's obligations for the remaining lease term.
Although the parties refer to both grounds, the record does not include the court's
reasoning in granting the summary judgment motion.
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In June 2014, Kosylo attempted to have the breach of contract complaint
reinstated by moving for reconsideration on the ground that neither he nor
plaintiff had been served with the summary judgment motion. However, the
motion for reconsideration was denied.1 Thereafter, on December 1, 2014,
plaintiff filed a malpractice complaint against Kosylo, alleging he "deviat[ed]
from accepted standards of practice" by failing "to communicate to his client the
status of the [underlying] matter[,]" and failing to oppose the summary judgment
motion, resulting in the "irretrievabl[e]" loss of plaintiff's claims. Kosylo filed
a contesting answer with affirmative defenses, and later moved for summary
judgment on the eve of trial.
In his statement of material facts, see R. 4:46-2(a), which was unsupported
by any certification, Kosylo asserted that he had filed the breach of contract
complaint on plaintiff's behalf unaware that in December 2009, an assignment
of lease and assumption agreement had been executed by Dennis and Kathy
Ravas, plaintiff's principals. The effect of the December 2009 agreement was
to effectively sign over any and all rights plaintiff possessed under the lease and
sub-lease agreement to OzSa, LLC. According to Kosylo, in a subsequent
1
Neither the moving papers nor the order denying the motion for
reconsideration was included in the record.
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meeting with the Ravases and Peter Sideris, Kathy Ravas's brother, the Ravases
acknowledged executing the agreement on plaintiff's behalf. 2 Thereafter, upon
contacting the Ethics Board for advice, Kosylo moved for reconsideration based
on improper service as it would have been an "ethical violation" for him to deny
that plaintiff executed the agreement. Additionally, Kosylo indicated plaintiff's
corporate charter remained suspended.
In opposition, plaintiff asserted that had the summary judgment motion
been opposed, it would have been denied because the agreement relied upon to
grant the motion was a forgery. In support, plaintiff submitted a certification
prepared by Kathy Ravas, averring that the purported agreement was never
signed by her or her husband, and neither ever admitted signing the agreement
to Kosylo. According to Kathy, 3 Kosylo never advised them about the summary
judgment or reconsideration motions so that they could "have advised [the] court
of the fraud that had taken place[,]" and Kosylo never told them "he could[ not]
ethically handle the case" so that they could "have gone to another attorney."
2
Kosylo submitted a certification dated January 16, 2017, prepared by Sideris
in which he admitted being present in a meeting with the Ravases and Kosylo
during which the Ravases "both acknowledged that the signatures were genuine
and that they had signed the document."
3
Hereafter, we refer to the Ravases by their first names to avoid any confusion
created by their common surname and intend no disrespect by this informality.
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Kathy also certified that an application for reinstatement of plaintiff's corporate
charter was pending as of December 1, 2016. Additionally, plaintiff's attorney
submitted a supporting certification, asserting that "no expert testimony" was
"required in th[e] case" because the allegations were "so basic" and plaintiff
intended to prove its allegations based on common knowledge. Counsel averred,
however, that "[p]laintiff should be allowed to use [an expert] if they decide to"
at trial because he was never served with "a demand for an expert[.]"
Following oral argument, on January 20, 2017, three days before the
scheduled trial date, the motion judge granted the summary judgment motion
and dismissed plaintiff's complaint without prejudice. In an oral decision, the
judge explained "[t]here[] [was] no dispute" plaintiff was still "not a recognized
corporation . . . in the State of New Jersey[,]" and therefore lacked standing to
pursue the claim. According to the judge, although an application was pending,
as a corporation, "in order to sue and be sued in the State . . . , you have to be
properly recognized, active and otherwise compliant with the laws of the State."
The judge noted, however, that in the event the corporate charter and the
complaint were reinstated, then "an expert would be required if th[e] matter were
tried" based on Kosylo relying on "his communications with the ethics
committee" as his defense.
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Over fourteen months later, on April 6, 2018, plaintiff moved to vacate
the dismissal of the complaint, and restore the matter to the active trial list, with
ninety days to complete discovery. In support, Dennis certified that the
corporate charter was reinstated, effective June 30, 2017, and a business
registration certificate was issued on November 6, 2017. Kosylo opposed the
application and cross-moved to dismiss the complaint with prejudice. In
support, Kosylo essentially certified to the representations contained in the
statement of undisputed material facts previously submitted in support of his
original motion for summary judgment.
Following oral argument, on May 25, 2018, the judge denied plaintiff's
motion, and granted Kosylo's cross-motion, thereby dismissing plaintiff's
complaint with prejudice. In an oral opinion, memorialized in written
statements of reasons accompanying the orders, the judge explained that "the
essence of the . . . motion to vacate the prior order dismissing [the complaint
without prejudice was] governed by [Rule] 4:50-1 which [was] not addressed or
briefed in [p]laintiff's moving papers." In addition, according to the judge,
"[t]he doctrine of laches" also applied. Applying these principles, the judge
concluded that plaintiff's delay in reinstating its corporate charter "well after the
litigation began" was inexcusable.
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The judge stated:
There is no explanation as to why the ministerial
procedure involved in reinstating the [p]laintiff's
corporate charter was not done more timely or why . . .
[p]laintiff waited for [fourteen] months to seek to set
aside the dismissal. The process involves the
completion of a one[-]page form which is filed with the
Secretary of State. However, the reinstatement was not
completed until June 30, 2017. Nonetheless[,] . . .
[p]laintiff apparently did nothing to revive the
complaint until filing the present motion . . . . In the
very limited certifications filed with the court, nothing
is stated to explain this serious delay.
The judge concluded "there was no diligence[,]" or "sense of urgency[,]" and to
restore plaintiff's complaint "without any basis in law" would be "unfair and
unjust."
The judge continued:
Additionally, although . . . [p]laintiff supplied an
Affidavit of Merit, an expert report has not been
supplied. An expert report is needed in a malpractice
action. If the [j]udgment is vacated and . . . [p]laintiff's
case is reopened, . . . [p]laintiff will not be able to prove
exceptional circumstances that will warrant a reopening
of discovery. Trial has been scheduled twice in this
case, thus . . . [p]laintiff had ample time to conduct
discovery and was afforded a careful preparation
process.
See R. 4:24-1(c) (allowing "[n]o extension of the discovery period . . . after a[]
. . . trial date is fixed, unless exceptional circumstances are shown.").
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According to the judge, "the most telling conduct" was plaintiff's "pattern"
of ignoring "[c]ourt [o]rders" and deadlines. The judge determined that
plaintiff's conduct "caus[ed] a waste of judicial resources," and was "harmful"
to defendant. In that regard, the judge noted:
Defendant hasn't articulated and hasn't complained with
a specific basis of prejudice.
However, . . . more than a year, has been . . .
wasted by . . . [p]laintiff in reinstating the action.
And that time has caused memories to continue
to become stale, witnesses' availab[ility] is questioned
and there is, no doubt, a diminution in the ability of
. . . [d]efendant, to . . . obtain the attention that they
need in the case because those factors have interrupted
the fresh flow of evidence.
On appeal, plaintiff argues the judge erred in denying its motion to
reinstate the complaint and extend discovery because there was "no time limit"
set for moving to restore once the corporate charter was reinstated. Plaintiff
argues further that the judge erred in dismissing its complaint with prejudice
because it was relying on the common knowledge doctrine, which did not
require expert testimony. We agree with the judge that plaintiff's delay was
inexcusable. Because we affirm on that basis, we need not address plaintiff's
remaining arguments.
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Under Rule 4:50-1(a), "upon such terms as are just, the court may relieve
a party . . . from a[n] . . . order" for "excusable neglect[.]" "Carelessness may
be excusable when attributable to an honest mistake that is compatible with due
diligence or reasonable prudence." Mancini v. EDS ex rel. N.J. Auto. Full Ins.
Underwriting Ass'n, 132 N.J. 330, 335 (1993). A motion to vacate an order
under Rule 4:50-1(a) "shall be made . . . not more than one year after the . . .
order . . . was entered . . . ." R. 4:50-2. "The [r]ule is 'designed to reconcile the
strong interests in finality . . . and judicial efficiency with the equitable notion
that courts should have authority to avoid an unjust result in any given case.'"
N.J. Auto, 132 N.J. at 334 (quoting Baumann v. Marinaro, 96 N.J. 380, 392
(1984)). However, "[c]ourts should use Rule 4:50-1 sparingly," limited to
"exceptional situations . . . in which, were it not applied, a grave injustice would
occur." Hous. Auth. of Morristown v. Little, 135 N.J. 274, 289 (1994).
A "trial court's determination under the rule warrants substantial
deference, and should not be reversed unless it results in a clear abuse of
discretion." US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012). An
abuse of discretion "arises when a decision is 'made without a rational
explanation, inexplicably departed from established policies, or rested on an
impermissible basis.'" Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123-24
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(2007) (quoting Flagg v. Essex Cty. Prosecutor, 171 N.J. 561, 571 (2002)).
Further, "[t]he party seeking relief bears the burden of proving that events have
occurred subsequent to the entry of [an order] that, absent the relief requested,
will result in 'extreme' and 'unexpected' hardship." Hous. Auth. of Morristown,
135 N.J. at 285-86 (quoting Mayberry v. Maroney, 558 F.2d 1159, 1163 (3d Cir.
1977)).
Here, plaintiff failed to meet its burden. As the judge pointed out,
plaintiff's motion was untimely because it was filed more than one year after the
order was entered, and plaintiff failed to even articulate excusable neglect or
demonstrate due diligence or reasonable prudence to warrant relief from the
order. Thus, we discern no abuse of discretion, clear or otherwise, to warrant
intervention.
Likewise, we agree with the judge that plaintiff's motion to vacate the
dismissal was barred by the doctrine of laches. "That doctrine is invoked to
deny a party enforcement of a known right when the party engages in an
inexcusable and unexplained delay in exercising that right to the prejudice of
the other party." Knorr v. Smeal, 178 N.J. 169, 180-81 (2003) (citing In re
Kietur, 332 N.J. Super. 18, 28 (App. Div. 2000)). "Laches may only be enforced
when the delaying party had sufficient opportunity to assert the right in the
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proper forum and the prejudiced party acted in good faith believing that the right
had been abandoned." Id. at 181 (citing Dorchester Manor v. Borough of New
Milford, 287 N.J. Super. 163, 172 (Law Div. 1994), aff'd, 287 N.J. Super. 114
(App. Div. 1996)).
While "[t]he time constraints for the application of laches 'are not fixed
but are characteristically flexible[,]'" ibid. (quoting Lavin v. Bd. of Educ., 90
N.J. 145, 151 (1982)), "[t]he key factors to be considered in deciding whether
to apply the doctrine are the length of the delay, the reasons for the delay, and
the 'changing conditions of either or both parties during the delay.'" Ibid.
(quoting Lavin, 90 N.J. at 152). "The core equitable concern in applying laches
is whether a party has been harmed by the delay." Ibid. (citing Lavin, 90 N.J.
at 152-53). "[W]hether laches should be applied depends upon the facts of the
particular case and is a matter within the sound discretion of the trial court."
Mancini v. Twp. of Teaneck, 179 N.J. 425, 436 (2004) (quoting Garrett v. Gen.
Motors Corp., 844 F.2d 559, 562 (8th Cir. 1988)).
Given these principles, we again agree with the judge that plaintiff's
unreasonable delay, for which it offered no plausible justification, was
inexcusable and Kosylo was harmed by the delay. Thus, by application of the
doctrine of laches, plaintiff forfeited his right to pursue the complaint, and we
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discern no abuse of discretion in the judge's decision to dismiss the complaint
with prejudice.
Affirmed.
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