HERIBERTO CABALLERO-GONZALEZ v. HARCO NATIONAL INSURANCE COMPANY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

HERIBERTO CABALLERO-GONZALEZ,

Plaintiff-Appellant,

v.

HARCO NATIONAL INSURANCE COMPANY,

ADMINISTRATOR FOR STATE NATIONAL

INSURANCE COMPANY,

Defendant-Respondent.

_________________________________________

June 9, 2016

Argued February 2, 2016 Decided

Before Judges Hoffman and Leone.

On appeal from the Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-846-13.

Dennis G. Polizzi argued the cause for appellant (Pitts & Polizzi, LLP, attorneys; Mr. Polizzi, of counsel and on the brief).

Gregory S. Pennington argued the cause for respondent (White Fleischner & Fino, LLP, attorneys; Mr. Pennington and John J. Megjugorac, on the brief).

PER CURIAM

Plaintiff Heriberto Caballero-Gonzalez appeals the November 6, 2014 order dismissing his complaint with prejudice. Because Rule 4:23-5(a) was misapplied here, we vacate and remand.

I.

Plaintiff was a bus driver for Genesis Bus Lines LLC. Defendant Harco National Insurance Company was the administrator for State National Insurance Company, which issued an insurance policy to Genesis. Plaintiff filed a complaint alleging that he sustained injuries in a motor vehicle accident on or about May 10, 2009, that he submitted to defendant a claim for uninsured motorist (UM) coverage, and that defendant should be ordered to hold a UM arbitration hearing.

Defendant filed a motion to dismiss because plaintiff failed to appear for an Examination Under Oath (EUO), and failed to provide written discovery, specifically a response to defendant's document requests. On February 28, 2014, a motion judge granted defendant's motion to dismiss plaintiff's complaint without prejudice under Rule 4:23-5(a)(1).

On April 23, 2014, plaintiff filed a motion to vacate the order of dismissal and restore the case to the active calendar. Plaintiff's counsel certified that plaintiff had now responded to all written discovery requests, and that he was attempting to reschedule the EUO. Plaintiff averred that defendant would not reschedule the EUO until plaintiff filed the motion to vacate. Subsequently, the EUO was rescheduled to May 29, and the court postponed the motion until June 6. Plaintiff's EUO was conducted on May 29, but the trial court never decided the motion to vacate the dismissal.

On or about August 11, 2014, defendant filed another motion to dismiss plaintiff's complaint without prejudice under Rule 4:23-5(a)(1). Defendant's counsel certified that, at the EUO, plaintiff testified he owned and had the title for an operational but unregistered and uninsured 1993 Cadillac at the time of the accident. Counsel further certified that defendant had requested a copy of the title, and that plaintiff had failed to produce the title. On September 22, the trial court ruled that "[t]his matter can't be dismissed without prejudice again" because it had already been dismissed without prejudice.

On or about September 29, 2014, defendant filed a motion to dismiss plaintiff's complaint with prejudice under Rule 4:23-5(a)(2). Defendant's counsel certified that plaintiff had still not produced the title. In opposition to the motion, plaintiff's counsel certified that plaintiff had attended the EUO, and that plaintiff's counsel had responded to the request for title with a letter stating that the title was no longer in plaintiff's possession, custody, or control. On November 5, plaintiff filed a second motion to vacate the February 28 dismissal.

On November 6, 2014, the trial court granted defendant's September 29 motion to dismiss with prejudice. On November 19, plaintiff filed a motion to reconsider the November 6 order.

On November 21, 2014, the trial court denied the November 5 motion to vacate. On January 9, 2015, the court denied the November 19 motion for reconsideration. Plaintiff then filed a timely appeal of the November 6 order.

II.

"[T]he standard of review for dismissal of a complaint with prejudice for discovery misconduct is whether the trial court abused its discretion." Abtrax Pharm. v. Elkins-Sinn, Inc., 139 N.J. 499, 517 (1995). Here, we conclude "it was an abuse of discretion to enter the order of dismissal with prejudice." A & M Farm & Garden Ctr. v. Am. Sprinkler Mech. L.L.C., 423 N.J. Super. 528, 532 (App. Div. 2012).

"Pursuant to Rule 4:23-5, there is a two-step process[.]" St. James AME Dev. Corp. v. City of Jersey City, 403 N.J. Super. 480, 484 (App. Div. 2008); see also In re Delventhal, 124 N.J. 266, 277 n.2 (1991); Pressler & Verniero, Current N.J. Court Rules, comment 1.1 on R. 4:23-5 (2016) (quoting 1990 Report on the Committee on Civil Practice). The first step is dismissal without prejudice under Rule 4:23-5(a)(1)

If a demand for discovery pursuant to R. 4:17, R. 4:18, or R. 4:19 is not complied with . . . , the party entitled to discovery may . . . move, on notice, for an order dismissing or suppressing the pleading of the delinquent party. The motion shall be supported by an affidavit reciting the facts of the delinquent party's default and stating that the moving party is not in default in any discovery obligations owed to the delinquent party. Unless good cause for other relief is shown, the court shall enter an order of dismissal or suppression without prejudice. . . .

[R. 4:23-5(a)(1) (emphasis added).]

A party can attempt to prevent dismissal with prejudice by filing a motion to vacate the dismissal without prejudice

The delinquent party may move on notice for vacation of the dismissal or suppression order at any time before the entry of an order of dismissal or suppression with prejudice. The motion shall be supported by affidavit reciting that the discovery asserted to have been withheld has been fully and responsively provided . . . .

[Ibid. (emphasis added).]

The second step is dismissal with prejudice under Rule 4:23-5(a)(2)

If an order of dismissal or suppression without prejudice has been entered pursuant to paragraph (a)(1) of this rule and not thereafter vacated, the party entitled to the discovery may, after the expiration of 60 days from the date of the order, move on notice for an order of dismissal or suppression with prejudice. . . . The motion to dismiss or suppress with prejudice shall be granted unless a motion to vacate the previously entered order of dismissal or suppression without prejudice has been filed by the delinquent party and either the demanded and fully responsive discovery has been provided or exceptional circumstances are demonstrated.

[Ibid. (emphasis added).]

Thus, the language of Rule 4:23-5(a) provides the following sequence: "a demand for discovery . . . is not complied with"; "the party entitled to discovery" may move for dismissal without prejudice "reciting the facts of the delinquent party's default" to produce the discovery; the delinquent party may file a motion to vacate "reciting that the discovery asserted to have been withheld has been fully and responsively provided"; if the delinquent party fails to file such a motion and "the demanded and fully responsive discovery has [not] been provided," then "the party entitled to the discovery" may move for dismissal with prejudice. R. 4:23-5(a)(1), (2).

Therefore, Rule 4:23-5(a)'s language requires that "the discovery" whose continued withholding is the basis of the motion to dismiss with prejudice must be the same "discovery asserted to have been withheld" in the order of dismissal without prejudice. Ibid.

That was not the situation here. The motion judge granted the first motion to dismiss without prejudice (the first-step order) based on plaintiff's failure to answer written discovery and attend the EUO. The trial court granted the motion to dismiss with prejudice (the second-step order) based on plaintiff's failure to provide the title to the Cadillac. Thus, the second-step order concerned the non-production of different discovery than the first-step order.

Prior to that second-step order, plaintiff had satisfied the discovery demands supporting the first-step order by answering the written discovery and attending the EUO. "Accordingly, the production of fully responsive answers by the time of the return date, even without exceptional circumstances, precludes dismissing the complaint with prejudice." St. James AME Dev. Corp., supra, 403 N.J. Super. at 485.

Moreover, a "party cannot obtain a dismissal with prejudice under [R. 4:23-5(a)(2)] unless an earlier dismissal without prejudice was entered under R. 4:23-5(a)(1)." Colonial Specialty Foods, Inc. v. Cty. of Cape May, 317 N.J. Super. 207, 210 (App. Div. 1999). Because no first-step order dismissing without prejudice had ever been entered based on plaintiff's failure to produce the title to the Cadillac, it was improper to enter a second-step order on that basis.

Thus, because of this mismatch between the first-step order and the second-step order, the dismissal with prejudice failed to comply with Rule 4:23-5(a). "That Rule 4:23-5 contemplates technical compliance with its two-step process, at least by the moving party, is confirmed in the very language of the rule." Sullivan v. Coverings & Installation, Inc., 403 N.J. Super. 86, 95 (App. Div. 2008). We have "insisted on strict compliance with the procedural requisites of R. 4:23-5(a)(2), recognizing the potential impact upon a litigant of a dismissal with prejudice for failure to meet discovery obligations." Universal Folding Box Co., Inc. v. Hoboken City, 351 N.J. Super. 227, 233 (App. Div.), certif. denied, 174 N.J. 545 (2002).

Here, the mismatched first-step order and second-step order resulted from a series of missteps by all concerned, beginning with plaintiff's failure to respond to written discovery and appear at the EUO. After plaintiff provided a response to the requested discovery and agreed to appear, defendant allegedly refused to reschedule the EUO until after plaintiff filed a motion to vacate the dismissal. See St. James AME Dev. Corp., supra, 403 N.J. Super. at 485 (Rule 4:23-5(a) is intended "to eliminate the conduct of some attorneys for the moving party, who refuse to accept answers to interrogatories" to prevent a motion to vacate from being granted). As a result, the motion to vacate the dismissal was listed before plaintiff could attend the EUO, causing the trial court to postpone the motion and then fail to decide it.

Defendant's second motion to dismiss without prejudice due to plaintiff's failure to produce the title brought to the attention of the trial court the lack of decision on plaintiff's original motion to vacate the dismissal without prejudice. A belated decision on that motion to vacate should have been made at that time. Had the motion to vacate been granted, the court could then have ruled on defendant's motion to dismiss without prejudice based on non-production of the title. Instead, the court dismissed that motion to dismiss, preventing the issuance of a first-step order regarding the title.

Defendant nonetheless proceeded to the second step, filing a motion to dismiss with prejudice for non-production of the title. Plaintiff's attorney failed to appear on the return date as required.1 The trial court decided the motion on the papers, apparently unaware of plaintiff's last-minute filing of the second motion to vacate dismissal. These missteps may explain, but cannot excuse, the entry of a dismissal with prejudice here.

Defendant notes that plaintiff's second motion to vacate dismissal without prejudice was filed on November 5, eight months after the first-step order. However, plaintiff had filed his first motion to vacate on April 23, within the ninety-day grace period under Rule 4:23-5(a)(1). Defendant also complains that plaintiff filed the second motion to vacate the day before the return date of the motion to dismiss with prejudice. However, "the rule expressly permits a plaintiff, whose complaint has been dismissed without prejudice under section (a)(1), to seek restoration of the complaint at any time prior to its dismissal with prejudice." Sullivan, supra, 403 N.J. Super. at 96. Thus, defendant cannot use these timing concerns to bar plaintiff from challenging the mismatch between the first-step order and second-step order.

On its order dismissing plaintiff's complaint with prejudice, the trial court wrote: "This matter simply has been neglected too long. It appears obvious the plaintiff is not interested in proceeding with this matter." In denying plaintiff's November 5 motion to vacate the dismissal without prejudice, the court wrote: "Case has been neglected for far too long."2

The trial court's frustration with the delays in this case is understandable. Plaintiff's offer on May 30 to supply the title, and the resulting motion practice until the November 6 order, obviously delayed resolution of the case. Moreover, plaintiff initially failed to answer written discovery and appear at the EUO. However, plaintiff subsequently supplied that discovery, and thus showed an interest in proceeding with this matter. That interest was further manifested by plaintiff's subsequent motions and responses, including the October 23 letter from plaintiff's counsel stating that plaintiff did not have the title.3

In any event, delay, neglect, and lack of interest alone cannot justify a dismissal with prejudice under Rule 4:23-5(a), absent a failure to produce the discovery listed in the first-step order. "[I]t must be remembered that the main purpose of Rule 4:23-5 is to compel discovery, not to dismiss pleadings." Clark v. Pomponio, 397 N.J. Super. 630, 645 (App. Div.), certif. denied, 195 N.J. 420 (2008); accord Pressler & Verniero, supra, comment 1.1 on R. 4:23-5 (quoting 1990 Report on the Committee on Civil Practice). "The purpose of the rule, with its two-tiered structure, is 'to elicit answers rather than to punish the offender by the loss of his cause of action or defense.'" Universal Folding Box Co., supra, 351 N.J. Super. at 233 (quoting Zimmerman v. United Servs. Auto. Ass'n, 260 N.J. Super. 368, 374 (App. Div. 1992)). "[I]t is a tenet of our jurisdiction that resolution of disputes on the merits are to be encouraged rather than resolution by default for failure to comply with procedural requirements." St. James AME Dev. Corp., supra, 403 N.J. Super. at 484.

Accordingly, we vacate the trial court's November 6, 2014 order dismissing plaintiff's complaint with prejudice, and remand for further proceedings. Based on the parties' agreement that plaintiff has answered the written discovery and appeared for the EUO, the trial court should promptly grant plaintiff's still-pending motion to vacate the February 28, 2014 order dismissing plaintiff's complaint without prejudice. If plaintiff fails to produce the title to the Cadillac promptly after remand, defendant may file a motion to dismiss without prejudice. Plaintiff must respond to that motion with an affidavit showing that counsel gave notice to the client as required by Rule 4:23-5(a)(1). To avoid further delay, plaintiff must also provide an affidavit stating that the title "has been fully or responsively provided," ibid., or an affidavit from plaintiff himself explaining why he cannot provide the title.

"[U]nder R. 4:23-5(a)(1), the focus of the motion judge must be on whether good cause is present for relief other than a dismissal without prejudice for failure to answer." Adedoyin v. Arc of Morris Cty. Chapter, Inc., 325 N.J. Super. 173, 181 (App. Div. 1999). "[T]he motion judge must determine whether the answers are within the realm of a bona fide dispute." Ibid. "If there is a bona fide dispute . . . , then it is error to dismiss the complaint." Ibid.; see also Zimmerman, supra, 260 N.J. Super. at 378. The court may have a hearing if necessary. See R. 1:6-6. If the court grants dismissal without prejudice, the parties must follow the procedures and supply the affidavits required for subsequent motions under Rule 4:23-5(a).

Vacated and remanded. We do not retain jurisdiction.

1 This and other requirements of Rule 4:23-5(a) were not met here. "Rule 4:23-5 imposes certain obligations upon the attorney for the delinquent party that are explicitly designed to ensure that a party whose pleadings are subject to dismissal is aware of the delinquency and of the consequences of failing to cure such deficiency." A & M Farm & Garden Ctr., supra, 423 N.J. Super. at 534. The attorney is required to notify the client of the dismissal without prejudice and then of the motion to dismiss with prejudice, to explain the consequences of failing to comply with discovery, and to appear on the return date of the motion to dismiss with prejudice. Id. at 534-35 (citing R. 4:23-5(a)(1), (2)). We have emphasized that a trial "court must take some action to obtain compliance with the requirements of the rule before entering an order of dismissal or suppression with prejudice." Id. at 536-39; see R. 4:23-5(a)(3).

2 The court also wrote: "This matter was dismissed with prejudice on 11/6/14. That order should have been attached to this motion but was not." However, the motion was filed on November 5, before the November 6 order dismissing with prejudice.

3 Defendant is correct that the unsworn letter from plaintiff's counsel, referenced in counsel's certifications, was inadequate proof that plaintiff did not have access to the title. Motions must be decided based on "affidavits made on personal knowledge, setting forth only facts which are admissible in evidence to which the affiant is competent to testify." R. 1:6-6. "[A]ffidavits by attorneys of facts not based on their personal knowledge but related to them by and within the primary knowledge of their clients constitute objectionable hearsay." Mazur v. Crane's Mill Nursing Home, 441 N.J. Super. 168, 179-80 (App. Div. 2015) (quoting Pressler & Verniero, Current N.J. Court Rules, comment on R. 1:6-6 (2015)). This inadequate proof from plaintiff is not dispositive here, because of the absence of a first-step order regarding the title. However, adequate proof should be supplied on remand.