Paragon Contractors, Inc. v. Peachtree Condominium Ass'n

Justice LONG

delivered the opinion of the Court.

At issue in this appeal is whether the failure to hold a conference pursuant to Ferreira v. Rancocas Orthopedic Associates, 178 N.J. 144, 836 A.2d 779 (2003), tolls the filing period provided in the Affidavit of Merit statute, N.J.S.A. 2A:53A-26 to -29, and whether the dismissal of the third-party complaint in this matter was justified. The Ferreira conference was created to remind parties of their statutory obligations and thus avoid the dismissal of meritorious claims through inadvertence. It was never intended, nor could it have been, as an overlay on the statute that would effectively extend the legislatively prescribed filing period. Thus, it is not a tolling device.

However, because there is obviously confusion in the ranks over the scheduling of the Ferreira conference and the effect of its omission on the requirements of the Affidavit of Merit statute, we have concluded that relief should be afforded to the parties in the limited circumstances of this case.

I.

The facts are detailed in the decision of the Appellate Division. Paragon Contractors, Inc. v. Peachtree Condo. Ass’n, 406 N.J.Super. 568, 968 A.2d 752 (App.Div.2009). In brief, plaintiff Paragon Contractors, Inc. (Paragon) sued defendant Peachtree Condominium Association (Peachtree) for payment for construction work it performed on Peachtree’s premises. Peachtree answered and counterclaimed for damages for Paragon’s failure to properly complete drainage work at the site. Peachtree also filed a third-party complaint against Key Engineers, Inc. (Key), an entity that was hired to inspect and supervise Paragon’s performance. With its third-party complaint, Peachtree filed a Case Information Statement (CIS), see R. 4:5-l(a) and (b)(1), which identified the matter as a construction case and did not respond to the question: “Is this a professional malpractice case?”

In its answer, Key raised the Affidavit of Merit statute as a separate defense. Further, in its CIS, Key characterized the case as one involving professional malpractice. Nevertheless, because the case originally was filed as a breach of contract action, the matter remained categorized by the civil ease management staff as a construction case and was assigned to that track. As a result, Key’s counsel forwarded a Certification of Good Cause to Change Track Assignment, requesting that the ease be moved from the construction track to the professional liability malpractice track. Peachtree’s counsel acknowledged having received the cover letter, but not the certification.

On January 31, 2008—more than 120 days after Key filed its answer to Peachtree’s third-party complaint and before Peachtree filed an affidavit of merit or a case management conference had been scheduled—Key filed a motion to dismiss the third-party action. The basis for Key’s motion was Peachtree’s failure to provide an affidavit of merit within the time periods defined in N.J.S.A. 2A:53A-27. On February 21, 2008, before the motion hearing but outside the statutory period, Peachtree filed an affidavit of merit. In defense of the late filing, Peachtree argued that the failure to schedule a Ferreira conference tolled the time frames in the Affidavit of Merit statute.¹

The trial judge rejected that argument and dismissed Peach-tree’s third-party complaint and all cross-claims against Key based on the untimeliness of the affidavit. The Appellate Division affirmed, rejecting “Peachtree’s attempt to insulate its counsel’s carelessness through the trial court’s mistake in failing to schedule a case management conference.” Paragon, supra, 406 N.J.Super. at 581, 968 A.2d 752.² We granted certification, 200 N.J. 500, 983 A.2d 1109 (2009), and, for the reasons that follow, now reverse.

II.

The Affidavit of Merit statute, N.J.S.A. 2A:53A-26 to -29, prescribes in relevant part:

In any action for damages for personal injuries, wrongful death or property damage resulting from an alleged act of malpractice or negligence by a licensed person in his profession or occupation, the plaintiff shall, within 60 days following the date of filing of the answer to the complaint by the defendant, provide each defendant with an affidavit of an appropriate licensed person that there exists a reasonable probability that the care, skill or knowledge exercised or exhibited in the treatment, practice or work that is the subject of the complaint, fell outside acceptable professional or occupational standards or treatment practices. The court may grant no more than one additional period, not to exceed 60 days, to file the affidavit pursuant to this section, upon a finding of good cause.

[N.J.S.A. 2A:53A-27.]

The statute applies to all actions for damages based on professional malpractice. Charles A. Manganaro Consulting Eng’rs, Inc. v. Carneys Point Twp. Sewerage Auth., 344 N.J.Super. 343, 347, 781 A.2d 1116 (App.Div.2001) (holding Affidavit of Merit statute applied to defendant’s malpractice counterclaim).

The core purpose underlying the statute is “to require plaintiffs ... to make a threshold showing that their claim is meritorious, in order that meritless lawsuits readily could be identified at an early stage of the litigation.” In re Petition of Hall, 147 N.J. 379, 391, 688 A.2d 81 (1997) (quoted in Alan J. Cornblatt, P.A. v. Barow, 153 N.J. 218, 242, 708 A.2d 401 (1998), modified in part by, Ferreira, supra, 178 N.J. at 154, 836 A.2d 779). Importantly, “there is no legislative interest in barring meritorious claims brought in good faith.” Ferreira, supra, 178 N.J. at 150-51, 836 A.2d 779 (quoting Galik v. Clara Maass Med. Ctr., 167 N.J. 341, 359, 771 A.2d 1141 (2001)). Indeed, “[t]he legislative purpose was not to ‘create a minefield of hyper-technicalities in order to doom innocent litigants possessing meritorious claims.’ ” Id. at 151, 836 A.2d 779 (quoting Mayfield v. Cmty. Med. Assocs., P.A., 335 N.J.Super. 198, 209, 762 A.2d 237 (App. Div.2000)).

Under the statute, an affidavit should be filed within sixty days of the filing of the answer. N.J.S.A. 2A:53A-27. However, if provided within sixty-one to 120 days after the answer is filed, the affidavit will be deemed timely so long as (1) leave to file is sought and (2) good cause is established. Burns v. Belafsky, 166 N.J. 466, 475-77, 766 A.2d 1095 (2001). Attorney inadvertence is considered good cause within that sixty-one to 120-day period. Id. at 478, 766 A.2d 1095.

Neglecting to provide an affidavit of merit after the expiration of 120 days has different consequences and generally requires dismissal with prejudice because the absence of an affidavit of merit strikes at the heart of the cause of action. Cornblatt, supra, 153 N.J. at 247, 708 A.2d 401.

However, we have recognized equitable remedies that “temper the draconian results of an inflexible application of the statute”—extraordinary circumstances and substantial compliance.³ Ferreira, supra, 178 N.J. at 151, 836 A.2d 779. Where extraordinary circumstances are present, a late affidavit will result in dismissal without prejudice. See, e.g., Tischler v. Watts, 177 N.J. 243, 246-47, 827 A.2d 1036 (2003) (dismissing without prejudice where plaintiffs expert wrote deficient affidavit and plaintiffs original attorney failed to discover it in time due to diagnosis of terminal cancer and death).

“Although we have yet to define the full scope of extraordinary circumstances as an equitable remedy for failure to comply with the statute, we do know that attorney inadvertence is not such a circumstance entitling plaintiff to a remedy of dismissal of a complaint without prejudice.” Ferreira, supra, 178 N.J. at 152, 836 A.2d 779 (citing Palanque v. Lambert-Woolley, 168 N.J. 398, 405, 774 A.2d 501 (2001)) (emphasis in original).

Because an attorney’s inadvertence in failing to timely file an affidavit will generally result in dismissal with prejudice, Ferreira, supra, 178 N.J. at 154, 836 A.2d 779, in Ferreira we developed a prophylactic measure to encourage the timely filing of affidavits. Id. at 154-55, 836 A.2d 779. In doing so, we reaffirmed the fundamental purpose of the Affidavit of Merit statute: “to flush out insubstantial and meritless claims that have created a burden on innocent litigants and detracted from the many legitimate claims[.]” Id. at 154, 836 A.2d 779. Thus, we instituted “an accelerated case management conference [to] be held within ninety days of the service of an answer in all malpractice actions.” Ibid. The predictive assumption underlying the conference was that it would “ensure that discovery related issues, such as compliance with the Affidavit of Merit statute, do not become sideshows to the primary purpose of the civil justice system—to shepherd legitimate claims expeditiously to trial[.]” Ibid. At the conference, the parties and the court are to identify any failure to comply with the Affidavit of Merit statute in time to correct it within the statutory time limit:

If an affidavit has been served, defendant will be required to advise the court whether he has any objections to the adequacy of the affidavit. If there is any deficiency in the affidavit, plaintiff will have to the end of the 120-day time period to conform the affidavit to the statutory requirements. If no affidavit has been served, the court will remind the parties of their obligations under the statute and case law.

[Id. at 155, 836 A.2d 779.]

In ruling in Ferreira, we stated:

[t]his case brings to mind the adage that an ounce of prevention is worth a pound of cure. Therefore, going forward, we will require case management conferences in the early stage of malpractice actions to ensure compliance with the discovery process, including the Affidavit of Merit statute, and to remind the parties of the sanctions that will be imposed if they do not fulfill their obligations.

[Id. at 147, 836 A.2d 779.]

Although Ferreira conferences should be held as a matter of course, they may be omitted “when the Affidavit of Merit has been provided by plaintiff and all defendants have waived any objections to its adequacy.” Waiver of Affidavit of Merit Conference, 176 N.J.L.J. 1006 (2004).⁴

III.

At issue here is what effect the failure to hold a Ferreira conference will have on the time limits prescribed in the statute. The answer is none. It is true that we created and mandated the Ferreira conference to “remind the parties of the sanctions that will be imposed if they do not fulfill their obligations.” Ferreira, supra, 178 N.J. at 147, 836 A.2d 779. Our clear purpose was to help attorneys and litigants to avoid the dismissal of meritorious claims.

However, it is equally true that parties are presumed to know the law and are obliged to follow it. See Emanuel v. McNell, 87 N.J.L. 499, 504, 94 A. 616 (E. & A.1915) (“Everyone is presumed to know the law. Ignorance standing alone can never be the basis of a legal right.”) (internal quotation marks and citations omitted); State v. Moran, 408 N.J.Super. 412, 425, 975 A.2d 480 (App.Div.2009) (reiterating legal maxim that “every person is conclusively presumed to know the law, statutory and otherwise” (quoting Graham v. N.J. Real Estate Comm’n, 217 N.J.Super. 130, 138, 524 A.2d 1321 (App.Div.1987))).

Further, our creation of a tickler system to remind attorneys and their clients about critical filing dates plainly cannot trump the statute. In other words, the absence of a Ferreira conference cannot toll the legislatively prescribed time frames.

We note, however, that there apparently has been a lack of unanimity in our courts over that conclusion. Indeed, the Appellate Division is divided over the question of whether the failure to hold a Ferreira conference prevents dismissal with prejudice under the Affidavit of Merit statute. Compare Saunders ex rel. Saunders v. Capital Health Sys., 398 N.J.Super. 500, 510-11, 942 A.2d 142 (App.Div.2008) (permitting plaintiffs lawsuit to proceed to trial because trial judge did not schedule Ferreira conference within ninety days of defendant’s answer and plaintiffs counsel had executed affidavit of merit before filing complaint), with Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J.Super. 510, 542, 983 A.2d 604 (App.Div.2009) (determining that Court’s requirement of Ferreira conference does not “vest[ ] any of the litigants with any additional rights” that would excuse untimely filing of affidavit of merit). We take from that divergence that lawyers also may have been unclear regarding the import of the failure to hold a Ferreira conference and, incorrectly as it turns out, may have assumed that the absence of the conference provided a safe harbor from the Affidavit of Merit statute’s requirements.

That confusion counsels lenience in this case. No doubt, Peach-tree’s counsel was not as assiduous as he could or should have been. Indeed, more attention would have forestalled what occurred here. In the context of this case, however, the confusion we have recognized constitutes an extraordinary circumstance that may have caused counsel to slumber when he should have acted. Because the Affidavit of Merit statute is not intended as a trap for the unwary, we will not permit it to be used in these circumstances to dismiss a claim before its merits have been adjudged.

Nevertheless, lawyers and litigants should understand that, going forward, reliance on the scheduling of a Ferreira conference to avoid the strictures of the Affidavit of Merit statute is entirely unwarranted and will not serve to toll the statutory time frames. Indeed, it is only the confusion over the role of the Ferreira conference—which now has been addressed and clarified—that warrants relief in this ease.

IV.

The judgment of the Appellate Division is reversed. The case is remanded to the trial judge for proceedings consistent with this opinion.

1 Peachtree also argued that it was lulled into inaction by the incorrect track assignment of the case and by misstatements by judiciary employees regarding the Ferreira conference. Like the courts below, we view those contentions as unavailing and do not consider them in reaching our conclusion.

2 The Appellate Division also vacated the trial court's order that dismissed the third-party complaint. The panel remanded "for further consideration of Peach-tree’s common-knowledge argument.” Paragon, supra, 406 N.J.Super, at 585, 968 A.2d 752.

3 A plaintiff's complaint will not be dismissed for a technical violation of the statute if the plaintiff took other actions that substantially complied with the statute's requirements. See, e.g., Fink v. Thompson, 167 N.J. 551, 772 A.2d 386 (2001) (medical malpractice defendant received copy of affidavit which did not specifically name him, but also received plaintiff's detailed expert report of incident, which focused on defendant’s conduct); Galik, supra, 167 N.J. 341, 771 A.2d 1141 (2001) (medical malpractice defendant’s insurance carrier provided with detailed expert report as part of settlement discussions prior to filing of complaint).

4 We note that our concurring colleague's attack on Ferreira comes in a case in which the issue was neither raised, briefed, nor argued by the parties or any other stakeholder here or in the courts below. In that connection, it is well settled that we will decline to consider such an issue for the first time on appeal. DYFS v. M.C., 201 N.J. 328, 990 A.2d 1097 (2010). We note as well that the "anecdotal evidence” in which the concurrence is rooted has no basis whatsoever in this record.