STEWART TITLE GUARANTY COMPANY VS. ALL-PRO TITLE GROUP, LLC (L-2517-15, MORRIS 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NOT FOR PUBLICATION WITHOUT THE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-1936-17T1
STEWART TITLE GUARANTY
COMPANY,
Plaintiff-Appellant,
v.
ALL-PRO TITLE GROUP, LLC,
Defendant-Respondent,
and
ALL-PRO TITLE GROUP, LLC,
Third-Party Plaintiff,
v.
ACTION TITLE RESEARCH,
Third-Party Defendant.
Argued November 13, 2018 – Decided November 29, 2018
Before Judges Fasciale and Gooden Brown.
On appeal from Superior Court of New Jersey, Law
Division, Morris County, Docket No. L-2517-15.
Brian M. English argued the cause for appellant
(Tompkins, McGuire, Wachenfeld, & Barry, LLP,
attorneys; Andrew P. Zacharda and Brian M. English,
of counsel and on the briefs).
John P. Campbell argued the cause for respondent
(Schenck, Price, Smith & King, LLP, atttorneys; John
P. Campbell, on the brief).
PER CURIAM
In this malpractice case involving generally accepted standards of title
agents, plaintiff Stewart Title Guaranty Company (Stewart) appeals from a
November 9, 2017 order granting summary judgment to defendant All-Pro Title
Group, LLC (All-Pro), and a December 14, 2017 order denying reconsideration.
The primary focus of this appeal – like the reconsideration motion – pertains to
the judge's denial of a brief extension of discovery to give Stewart an
opportunity to serve an expert report once it learned that its original expert
developed a conflict after All-Pro filed a third-party complaint. We reverse.
Stewart filed its complaint against All-Pro alleging that All-Pro "deviated
from commonly accepted practices of a title agent," and that "[a] reasonably
prudent title agent would not have failed to disclose the [p]rior [m]ortgage in its
[c]ommitment, and would not have permitted the Provident Mortgage to close
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without satisfying the [p]rior [m]ortgage." All-Pro filed its answer to the
complaint, and filed a third-party complaint against Action Title Research
(ATR) alleging that ATR negligently performed a search upon which All -Pro
relied to issue the title commitment. Stewart served an affidavit of merit
(AOM), authored by John A. Cannito, Esq., and All-Pro consented to its
adequacy.
After mediation failed, the parties engaged in discovery. The parties
failed to produce discovery by an original discovery end date (DED) of April
21, 2016, so they consented to a sixty-day extension until June 20, 2017. On
that date, All-Pro produced its written discovery and filed a motion to dismiss
the complaint because Stewart had not yet fully responded to All-Pro's discovery
demands. On July 21, 2017, the judge denied All-Pro's motion and entered an
order extending the DED to September 30, 2017. Although there was no
scheduled trial or arbitration date, the judge indicated in the order that there
would be no further DED extensions without a showing of exceptional
circumstances, rather than for good cause.1
1
The order violated Rule 4:24-1(c) because it did not "describe the discovery
to be completed [and] set forth proposed dates for completion." Instead, the
order invited counsel to request a case management conference.
A-1936-17T1
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All-Pro moved for summary judgment arguing that Stewart failed to
produce an expert report. The motion was originally returnable on November
10, 2017, but the judge moved that date to November 3, 2017.2 The judge then
notified the parties that Stewart should file its opposition to All-Pro's motion by
November 1, 2017, and that the new return date would be November 9, 2017.
Stewart filed its opposition timely – arguing an expert was unnecessary – but
alternatively asked for a short discovery extension to serve an expert report
(there was no scheduled trial or arbitration date). The judge denied that request
and, without an expert report from Stewart, granted summary judgment to All -
Pro.
On November 29, 2017, Stewart served an expert report on All-Pro and,
on the same day, filed a motion for reconsideration. The expert opined that All-
Pro negligently searched the mortgage records and issued the title insurance
policy without disclosing the prior mortgage. The motion focused on the judge's
previous refusal to extend discovery, rather than the judge's conclusion that an
expert was required. 3 Stewart's counsel indicated that he did not serve the expert
2
This was before any trial or arbitration date had been scheduled.
3
To the extent that Stewart argues an expert was unnecessary, we conclude that
such an argument is without sufficient merit to warrant attention in a written
decision. R. 2:11-3(e)(1)(E).
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report sooner because he had learned from Mr. Cannito that All-Pro's third-party
complaint against ATR conflicted him out of the case. He also candidly
explained to the judge that he inadvertently did not diary the September 30, 2017
DED.
In his certification in support of Stewart's reconsideration motion, counsel
emphasized that the judge erred by denying his request for a short extension of
discovery. Counsel argued that at the time he had made his written request to
extend discovery (November 1, 2017), the standard for granting an extension of
discovery was good cause, not exceptional circumstances, because there was no
scheduled trial or arbitration date. Nevertheless, All-Pro maintained primarily
(rather than arguing substantive prejudice) that the July 21, 2017 order imposed
the higher exceptional circumstances standard, which it argued Stewart did not
satisfy.
The judge did not conduct oral argument. Instead, he denied Stewart's
motion for reconsideration and attached a statement of reasons to the order. The
judge acknowledged that Stewart had requested a discovery extension, as part
of its opposition to All-Pro's summary judgment motion, but the judge found
that Stewart did so without "adequately address[ing] and argu[ing] the issue."
As a result, the judge precluded Stewart from doing so on reconsideration. The
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judge declined to adjudicate whether Stewart had shown good cause or
exceptional circumstances for the short adjournment, whether the service of
Stewart's expert report had prejudiced All-Pro, or whether there were less severe
sanctions for the late service of the report – other than granting summary
judgment to All-Pro and dismissing Stewart's complaint with prejudice. The
statement of reasons also did not mention that by the filing date of the
reconsideration motion, Stewart had served the report.
On appeal, Stewart argues that the judge abused his discretion by denying
reconsideration. Stewart reiterates that it served the expert report late because
counsel learned about Mr. Cannito's conflict and counsel's failure to diary the
September 30, 2017 DED. Stewart contends that these reasons established good
cause and exceptional circumstances for a short extension of discovery. It
emphasizes that there is no prejudice, courts employ a strong preference for
adjudication on the merits, and that less severe sanctions are available other than
granting summary judgment to All-Pro and dismissing the complaint with
prejudice.
A motion for reconsideration is committed to the sound discretion of the
court, which should be "exercised in the interest of justice." Cummings v. Bahr,
295 N.J. Super. 374, 384 (App. Div. 1996) (quoting D'Atria v. D'Atria, 242 N.J.
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Super. 392, 401 (Ch. Div. 1990)). Reconsideration is appropriate only when a
court has rendered a decision "based upon a palpably incorrect or irrational
basis," or failed to consider or "appreciate the significance of probative,
competent evidence." Ibid. (quoting D'Atria, 242 N.J. Super. at 401). We
review the denial of a motion for reconsideration to determine whether the judge
abused his discretionary authority. Id. at 389. We "may only disturb the
decision below if [we] find[] error which is 'clearly capable of producing an
unjust result.'" Casino Reinvestment Dev. Auth. v. Teller, 384 N.J. Super. 408,
413 (App. Div. 2006) (quoting R. 2:10-2).
Contrary to the statement of reasons, Stewart argued – alternatively in
opposition to All-Pro's summary judgment motion – that the court should have
granted a short extension of discovery to allow for service of an expert report.
Stewart's counsel raised the subject in writing (before any trial or arbitration
date had been set) and at oral argument on the return date of the summary
judgment motion. Counsel told the judge that Mr. Cannito was no longer
available due to the conflict, and that he could serve an expert report from a
different individual within a week. Counsel explained that the DED had expired
but the conflict made it impossible to use Mr. Cannito. All-Pro's counsel
objected based on the July 21, 2017 order, and contended that it would be
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prejudiced by going "through [the] entire summary judgment process [again]."
Stewart's counsel responded by saying that such prejudice was outweighed by
the ultimate sanction of a dismissal of the complaint with prejudice. At oral
argument on the summary judgment motion, the judge reviewed some of the
discovery extensions and concluded that Stewart should have served an expert
report "a long, long time ago." Although he did not say whether he denied the
discovery extension using a good cause or exceptional circumstances standard,
the judge refused to give Stewart's counsel one more week to serve an expert
report.
A judge's discretion on reconsideration should be "exercised in the interest
of justice." That is especially important here because Stewart had served the
expert report at the time it filed its reconsideration motion. Although the judge
refused on reconsideration to adjudicate whether he erred by denying an
extension of discovery – solely because he felt Stewart did not previously
thoroughly argue the issue – the summary judgment transcript arguably shows
otherwise. At oral argument on the summary judgment motion, counsel and the
judge dealt with Mr. Cannito's conflict, All-Pro's purported prejudice, and the
previous DED extensions, including the July 21, 2017 order in which the judge
had imposed the higher exceptional circumstances standard for further
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extensions. We conclude that the judge's refusal to hear Stewart's arguments on
reconsideration, and consider the motion on the merits, constituted an abuse of
discretion, especially because the judge did not exercise his discretion "in the
interest of justice."
The judge was obligated to apply the "good cause" standard at the time
Stewart had requested, in writing, an extension of discovery. In Tynes ex rel.
Harris v. St. Peter's University Medical Center, 408 N.J. Super. 159, 168 (App.
Div. 2009), we held that under Rule 4:24-1(c) "[t]he 'good cause' standard
applies [like here] to motions to extend discovery unless an arbitration or trial
date is fixed." We noted that "good cause" is a "flexible term" without a fixed
or definite meaning, id. at 169, and set forth the following factors to consider
when evaluating whether good cause exists:
(1) the movant's reasons for the requested extension of
discovery;
(2) the movant's diligence in earlier pursuing discovery;
(3) the type and nature of the case, including any unique
factual issues which may give rise to discovery
problems;
(4) any prejudice which would inure to the individual
movant if an extension is denied;
(5) whether granting the application would be
consistent with the goals and aims of "Best Practices";
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(6) the age of the case and whether an arbitration date
or trial date has been established;
(7) the type and extent of discovery that remains to be
completed;
(8) any prejudice which may inure to the non-moving
party if an extension is granted; and
(9) what motions have been heard and decided by the
court to date.
[Id. at 169-70 (quoting Leitner v. Toms River Reg'l
Schs., 392 N.J. Super. 80, 87-88 (App. Div. 2007)).]
See also Bldg. Materials Corp. of Am. v. Allstate Ins. Co., 424 N.J. Super. 448,
479-81 (App. Div. 2012) (applying the "good cause" standard).
Stewart satisfied the good cause standard. It requested a brief extension
because of the conflict. It exhibited diligence by serving the AOM at the outset
of the case. It acknowledged an expert was necessary by focusing solely on
discovery in its reconsideration motion. All-Pro's prejudice (as counsel
explained at oral argument on its summary judgment motion) was limited to the
expense of renewing the dispositive motion. And Stewart would suffer
prejudice by a judge granting summary judgment without an adjudication on the
merits. There existed less severe sanctions other than granting summary
judgment to All-Pro and dismissing the complaint with prejudice, which All-Pro
can pursue on remand.
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At oral argument before us, All-Pro's counsel argued that the clerk's office
had issued a trial notice (which would have been the first trial date) in the early
hours of November 9, 2017. The consequence of that issuance is that the
exceptional circumstances standard for further extensions arguably applied as of
the return date on All-Pro's summary judgment motion. Even if that were the
case, we conclude that Stewart met that standard too, and that precluding Stewart
from arguing on reconsideration – even using the exceptional circumstances
standard – constituted an abuse of discretion. We reach that conclusion
especially emphasizing that a judge's discretion on reconsideration should be
"exercised in the interest of justice." And here, justice cried out for the
extension. As Stewart's counsel stated to us, the judge could easily have
addressed any potential monetary prejudice to All-Pro (that is, the only prejudice
mentioned by All-Pro's counsel on the summary judgment return date) by
awarding fees to All-Pro.
"[E]xceptional circumstances generally denote something unusual or
remarkable." Bldg. Materials Corp., 424 N.J. Super. at 479. The moving party
must demonstrate counsel's diligence in pursuing discovery, establish the
essential nature of the discovery sought, explain counsel's failure to request an
extension within the original time period, and show that the circumstances
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presented were clearly beyond counsel's control. Rivers v. LSC P'ship, 378 N.J.
Super. 68, 79 (App. Div. 2005). "[W]here the 'delay rests squarely on plaintiff's
counsel's failure to retain an expert and pursue discovery in a timely ma nner,'
and the [above] factors are not present, there are no exceptional circumstances
to warrant an extension." Ibid. (quoting Huszar v. Greate Bay Hotel & Casino,
375 N.J. Super. 463, 474 (App. Div. 2005)).
Here, Stewart's counsel acted diligently by serving the AOM early on,
without objection. Both parties pursued discovery, although All-Pro served its
discovery responses on the last day of the extended DED, and simultaneously
moved to dismiss the complaint for failure to produce discovery. Stewart's
counsel established the essential nature for the service of an expert report, and
showed that Mr. Cannito's conflict was clearly beyond counsel's control. Under
the totality of these circumstances, and in the interests of justice, we conclude
the short adjournment was warranted.
Reversed and remanded for further proceedings. We leave to the
discretion of the judge the details of managing the balance of expert discovery,
the re-scheduling dispositive motions if warranted, and the scheduling of a trial
date. We do not retain jurisdiction.
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