DESIGN MANAGEMENT SERVICES, INC. VS. BROAD-ATLANTIC ASSOCIATES, LLC(DC-8050-15, ESSEX 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NOT FOR PUBLICATION WITHOUT THE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-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.
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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
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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
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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,
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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
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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
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[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
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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.
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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
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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.
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