HI-TECH STEEL ERECTORS, INC. v. TLC DRYWALL CONSTRUCTION
Annotate this CaseNOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2531-07T1
HI-TECH STEEL ERECTORS, INC.,
a New Jersey Corporation,
Plaintiff-Appellant,
v.
TLC DRYWALL CONSTRUCTION,
Defendant,
and
XL SPECIALTY INSURANCE
COMPANY and XL INSURANCE
COMPANY,
Defendants-Respondents.
___________________________________
January 5, 2010
Submitted December 9, 2009 - Decided
Before Judges Sabatino, Lyons, and J. N.
Harris
On appeal from the Superior Court of New
Jersey, Law Division, Essex County, Docket
No. L-7233-06.
Neal H. Flaster, L.L.C., attorneys for
appellant (Neal H. Flaster and Scott J.
Goldstein, on the briefs).
Tesser & Cohen, attorneys for respondents
(Stephen Paul Winkles, on the brief).
PER CURIAM
This appeal arises out of unpaid work performed by
plaintiff Hi-Tech Steel Erectors, Inc. ("Hi-Tech"), on the
construction of a police station. Plaintiff filed suit against
two sureties that had issued bonds for the project. The Law
Division dismissed plaintiff's complaint for failure to comply
with the requirements of the Public Works Bond Act, N.J.S.A.
2A:44-143 to -147 (the "Bond Act"). The court also denied
plaintiff's late request to amend its complaint to name the
project's general contractor as a defendant in the surety
action, and to reinstate another subcontractor as a defendant.
Reconsideration was denied.
Plaintiff now appeals the trial court's various orders
denying it relief. We affirm.
I.
These are the pertinent facts, and the relevant procedural
events. On March 30, 2004, the City of East Orange entered into
a contract with a general contractor, Imperial Construction
Group, Inc. ("Imperial"), to build a new police station. On
that same day, defendants XL Specialty Insurance Company and XL
Insurance Company ("the Sureties") issued both a performance
bond and a payment bond for the project in the amount of
$11,615,314, for which they were listed as the "Surety."
Imperial was the "Contractor" named on the bonds and the City of
A-2531-07T1
2
East Orange was identified as the "Owner" and named as obligee
for the bonds.
The payment bond allowed claimants who had not been paid by
Imperial within ninety days of completion of work on the project
to "sue on this bond for the use of such claimant, prosecute the
suit to final judgment for each sum or sums as may be justly due
claimant, and have execution thereon." Such claimants were
defined in the bond as "one having a direct contract, with a
subcontractor for labor, material, or both, used or reasonably
required for use in the performance of the contract . . . [.]"
However, suit under the bond was prohibited unless certain
criteria were met by the claimant. Specifically, any such
lawsuit was required to be brought in a "court of competent
jurisdiction in and for the county or other political
subdivision of the state in which the project, or any part
thereof, is situated, or in the United States District Court for
the district in which the project, or any part thereof, is
situated[.]" Such an action was also required to be brought
prior to:
the expiration of one (1) year following the
date on which Contractor ceased work on said
contract, it being understood, however, that
if any limitation embodied in this bond is
prohibited by law controlling the
construction hereof, such limitation shall
be deemed to be amended so as to be equal to
A-2531-07T1
3
the minimum period of limitation permitted
by such law.
[(Emphasis added).]
Moreover, the payment bond prohibited suit by a claimant against
the Surety:
Unless claimant, other than one having a
direct contract with the Contractor, shall
have given written notice to any of the
following: the Contractor, the Owner or the
Surety above named, within ninety (90) days
after such claimant did or performed the
last of the work or labor, or furnished the
last of the materials for which said claim
is name[d], stating with substantial
accuracy the amount claimed and the name of
the party to whom the materials were
furnished, or for whom the work or labor was
done or performed.
[(Emphasis added).]
In May 2004, Imperial entered into a subcontract with
defendant TLC Drywall ("TLC") to provide various types of
construction and carpentry work on the project, in return for
payment of $928,000. TLC's work was to include "[e]xterior
soffits framing and sheathing" and "[i]nterior soffits[.]"
Under its agreement with Imperial, TLC was permitted to
subcontract out its work, with the understanding that it "shall
not subcontract any portion of the labor or materials involved
in the work under this Subcontract without first obtaining
written approval of its prospective subcontractor or supplier by
the Contractor."
A-2531-07T1
4
Five months after Imperial's subcontract with TLC was
executed, on October 22, 2004, Imperial entered into a
subcontract with plaintiff ("the Imperial/Hi-Tech contract") to
perform other steel work on the project.1 Plaintiff alleges that
it commenced work on the project immediately.
According to plaintiff, in January 2005 its site
supervisor, Pat Cianicullo, was approached by a representative
from Imperial at the project site. The representative, Joseph
Richardi, a supervisor for Imperial, allegedly "requested
[plaintiff's] assistance in constructing a steel soffit for the
[project]." Richardi explained to Cianicullo that TLC "did not
have the expertise to construct and install the soffit and [that
he] wanted [p]laintiff to do the job but bill TLC Drywall for
payment." According to Cianicullo, Richardi further stated that
"[p]laintiff would be paid when Imperial was paid by East
Orange, through [TLC]."
On January 15, 2005, plaintiff and TLC entered into a
written contract for the soffit work to be performed by
1
Although it is described in plaintiff's amended complaint as a
written contract, the agreement between Hi-Tech and Imperial
apparently was not presented to the trial court, and it is not
part of the record before us.
A-2531-07T1
5
plaintiff instead of TLC ("the TLC/Hi-Tech Contract").2 Pursuant
to that agreement, plaintiff completed this particular soffit
work on February 5, 2005. However, plaintiff continued its other
work on the site under its subcontract with Imperial.
In November 2005, after TLC had failed to pay plaintiff the
$26,200 that plaintiff claimed was due under the TLC/Hi-Tech
Contract, plaintiff filed a notice of an unpaid balance and an
asserted right to file a construction lien on the property.
According to plaintiff, it continued to work on the project
until its performance under the Imperial/Hi-Tech Contract was
completed on January 10, 2006.
Still not paid for the soffit work that it performed in
lieu of TLC, plaintiff filed the instant civil action in the Law
Division on August 30, 2006. Plaintiff named as defendants the
two sureties, XL Specialty Insurance and XL Insurance Company,
and also named TLC. This initial complaint alleged damages
caused by TLC for breach of contract, breach of promise to pay,
quantum meruit, and detrimental reliance. The complaint also
alleged that plaintiff was "an intended Third-Party beneficiary
of the Surety Agreement ("Bond") entered into by [d]efendants .
. . [.]" The complaint further alleged that "[d]espite demand
2
This agreement also evidently was not supplied to the trial
court, and it is not part of the record before us.
A-2531-07T1
6
having been made by [plaintiff] for payment for services
rendered at the [s]ubject [p]remises, payment had not been made
in accordance with the terms of the [b]ond by said [Surety]
[d]efendants." Pursuant to Rule 4:5-1, plaintiff's counsel
certified that this complaint was "not the subject matter of any
other action pending in any court[.]"
The Sureties answered the complaint on November 17, 2006,
denying the allegations. Their common answer also asserted
seventeen separate affirmative defenses. Among those defenses
were: (1) that the "[p]laintiff's complaint fail[ed] to state a
cause of action against [the Sureties] upon which relief can be
granted"; (2) that "[p]laintiff's claims are barred by the terms
of the bonds issued by [the Sureties]"; and (3) that
"[p]laintiff['s] claims are barred because [p]laintiff failed to
comply with the terms of the payment and performance bonds or
In his Rule 4:5-1
with the Bond Act under New Jersey [l]aw."
certification, the Sureties' counsel asserted that there were
two other related cases then active in the Law Division in Essex
County, including "Hi-Tech Steel Erectors v. Imperial
Construction Group, Inc., Docket No.: ESX-L-7154-06."3
3
At oral argument on the first motion in this case, plaintiff's
counsel represented that if the court "allows [plaintiff] to
continue the cause of action, plaintiff would move to
consolidate this case with the other cases." A docket search as
(continued)
A-2531-07T1
7
Plaintiff contends that it served TLC in November 2006 by
private process server at TLC's primary place of business in New
York. However, proof of that alleged service was not timely
filed by plaintiff with the Essex County Sheriff's Office.
Consequently, on January 12, 2007, the trial court sent a notice
to plaintiff's counsel advising that its "complaint would be
dismissed for lack of prosecution in 60 days unless one of the
actions required by Rule 1:13-7 were taken." Plaintiff
apparently took none of those required steps within sixty days,
and its complaint against TLC was thus administratively
dismissed by the court under Rule 1:13-7 for lack of prosecution
on March 17, 2007.
Thereafter, the Sureties filed a motion to dismiss
plaintiff's complaint. In support of their motion, the Sureties
relied upon a certification by Richard Briggs, a principal of
Imperial. Briggs certified that "[p]rior to February 5, 2005,
Imperial never received any notice from [p]laintiff that it was
(continued)
of the time of this opinion reflects that the defendants named
in L-7154-06 were Imperial, XL Specialty Insurance Company, XL
Insurance Company, and an unrelated metal fabrication company.
The docket reflects that case was ultimately settled as to
Imperial and the Sureties, and default was entered against the
metal fabricator. The terms of the settlement are not
disclosed. We have no docket information concerning the third
related action alluded to by counsel.
A-2531-07T1
8
performing work for TLC on the [p]roject as a beneficiary under
the bond."
Plaintiff filed a cross-motion, seeking to amend its
complaint against the Sureties and also for leave to add
Imperial as a defendant. Plaintiff noted that no trial date was
scheduled, that the discovery period had not yet expired and
that the Sureties' counsel had consented to a sixty-day
extension of discovery pursuant to Rule 4:24-1(c). Given that
the original discovery period was initially set to expire on
September 13, the sixty-day consensual extension would move the
discovery end date to November 13, 2007.
Plaintiff's proposed amended complaint would add Imperial
as a co-defendant on the breach of contract, quantum meruit, and
detrimental reliance claims. The amended complaint also would
add common-law claims of constructive trust and unjust
enrichment against TLC and Imperial. Plaintiff further sought
to have a constructive trust imposed under N.J.S.A. 2A:44-148
against Imperial.
The trial judge heard oral argument on these initial
motions on September 20, 2007. At that oral argument, counsel
and the judge both referred to the Sureties' motion as one for
summary judgment under Rule 4:46-1 rather than as a motion to
A-2531-07T1
9
dismiss, given the references to matters outside of the
pleadings, including certifications from Briggs and Cianicullo.
After considering these arguments, the trial judge granted
summary judgment to the Sureties, dismissing the claims against
them under the payment bond. In her oral ruling, the judge
cited plaintiff's non-compliance with the notice requirements of
N.J.S.A. 2A:44-145. Specifically, the judge noted:
[A]t this point in time everybody knows what
the bond law [N.J.S.A. 2A:44-145] requires
and does not require, so the explicit
requirement that the notice be given should
have even greater effect and the Court
stated in Dial [Block Co., Inc. v. Mastro
Masonry Contractors,
374 N.J. Super. 13
(App. Div. 2004), certif. denied,
183 N.J.
215 (2005)], "[T]he requirements to provide
notice under the [B]ond [A]ct are not
harsh[.] [A]ll a person seeking to become a
beneficiary under the payment bond need do
is give written notice of that intent to the
contractor before starting work." [Dial
Block Co., Inc., supra, 374 N.J. Super. at
24.]
Plaintiff failed to do so, consequently
plaintiff has no claim to the -- bond under
the [B]ond [A]ct. For those reasons
defendant[s'] motion for summary judgment is
granted.
With respect to plaintiff's cross-motion to amend the
complaint, the judge faulted plaintiff for not joining Imperial
as a defendant at the outset of the lawsuit. The judge was then
under the misimpression, fortified by a mistaken representation
at oral argument by plaintiff's counsel, that TLC had defaulted
A-2531-07T1
10
in this action and thus the claims against TLC were simply
waiting a future default judgment. As a result, the judge found
that:
at this point in time [the surety defendants
are] dismissed [and] that TLC Drywall is in
default. The [c]ourt does not believe that
it is -- [worth the] resources to now amend
a complaint in a case that's basically over.
So rather than ruling on the futility issue
the [c]ourt is simply going to deny the
motion on judicial economy issues and
require that if Hi-Tech now wishes to bring
a cause of action against Imperial it do so
separately.
[(Emphasis added).]
The judge entered a corresponding written order that same
day, dismissing the complaint against the Sureties and denying
plaintiff's cross-motion for leave to amend the complaint.
Nineteen days later, on October 9, 2007, plaintiff filed
the first of two successive motions for reconsideration.
Plaintiff asked the court to reconsider the denial of leave to
amend the complaint to include Imperial. In his certification
supporting that request, plaintiff's counsel advised the court
that "[t]he present status of the case is that a Notice of
Motion to Reinstate the Complaint and enter Default against co-
defendant TLC Drywall Construction, Inc. must be filed because
the complaint against this defendant [TLC] was dismissed for
1:13-7 and/or R[ule]
lack of prosecution pursuant to R[ule]
A-2531-07T1
11
4:43-2." Fearing that entire controversy issues might arise if
it tried to sue Imperial in a new action, plaintiff further
requested the court to enter an order specifically reserving its
ability to bring such a future action against Imperial for the
unpaid soffit work at issue in this case.
Ten days later, plaintiff filed a motion to reinstate its
complaint and to enter default against TLC.
Then, on December 5, 2007, seventy-five days after the
court's original order was entered, plaintiff filed a second
motion for reconsideration. That motion asked the court to
reconsider its summary judgment order entered on September 20,
2007 against plaintiff in favor of the Sureties. In support of
that request, plaintiff mainly relied on decisions from two
federal Courts of Appeals denying summary judgment to a Surety
in allegedly-similar circumstances under the Miller Act, 40
U.S.C. §§ 3131-34, the federal analogue to the New Jersey Public
Works Bond Act, N.J.S.A. 2A:44-143 to -147.
On January 3, 2008, the trial judge heard oral argument on
all three of plaintiff's pending motions. Despite the lateness
of plaintiff's second motion for reconsideration, the court
agreed to consider it on its merits.
The judge denied all three of plaintiff's applications.
With respect to plaintiff's arguments concerning the Bond Act,
A-2531-07T1
12
the judge noted that she did not "see anything to disturb [her]
decision that a previous direct contractual relationship [with
a] general contractor absolved plaintiff of the notice
requirement of the Bond Act on a contract where the plaintiff
does not have a direct contractual relationship with the general
contractor." The judge also rejected plaintiff's contention
that the court had improperly treated the surety defendants'
motion as one for summary judgment. Even considering the
matters presented outside of the pleadings in a light most
favorable to plaintiff, the judge continued to find that
plaintiff's claims under the bond had "no legal basis" and that
there were no disputed facts. The judge also found inapposite
plaintiff's citation to the two federal cases under the Miller
Act because that statute had no notice requirement similar to
the one set forth in N.J.S.A. 2A:44-145. Consequently, the
judge denied reconsideration of the dismissal of the Sureties.
The judge also denied plaintiff's motion to reinstate the
complaint against TLC because plaintiff had not established good
cause to do so. The judge noted that the moving papers were
silent as to the reason why plaintiff did not file timely proof
of service upon TLC in response to the court's warning notice
under Rule 1:13-7. In this regard, the judge highlighted that
plaintiff had waited for seven months from March 17, 2007, when
A-2531-07T1
13
the court's notice of dismissal was issued, to move to reinstate
TLC. The judge found the delay particularly troublesome, given
that plaintiff had filed more than one motion on other issues in
the case during the intervening period, and given that plaintiff
had misinformed the court as to the status of TLC during oral
argument on September 20, 2007. The judge also noted that the
court "has absolutely no competent evidence before it to
indicate that TLC was ever served." Consequently, the judge
denied plaintiff's motion to reinstate the complaint against
TLC.
Third and finally, as to plaintiff's motion for
reconsideration of the denial of leave to amend the complaint to
add Imperial, the judge found that "the standards for
reconsideration are neither addressed nor met." As to
plaintiff's concerns about forfeiting such a claim under entire
controversy principles, the judge observed that "one of the
goals of the entire controversy doctrine is judicial economy,
which would not be served here by granting leave to amend to
name a new party." The judge declined to enter an order
specifically reserving plaintiff's ability to sue Imperial in a
future lawsuit. Instead, the judge left issues of the potential
applicability of the entire controversy doctrine for disposition
in such a future action, where Imperial would have the ability
A-2531-07T1
14
to assert its interests and show how it might have been
prejudiced by the repetitive litigation.
The judge entered two companion orders on January 4, 2008
memorializing these decisions.
II.
Plaintiff now appeals the trial court's initial order of
September 9, 2007, and its subsequent orders on January 4, 2008.
Plaintiff asserts that, in denying it relief from the Sureties,
the trial judge misapplied the statutory notice standards under
the Bond Act. Plaintiff argues that, by virtue of its separate
subcontracting agreement with Imperial, it functioned as a so-
called "first-tier" subcontractor on the instant soffit work,
rather than as a "second-tier" subcontractor working for another
subcontractor, TLC. As an alleged first-tier contractor,
plaintiff argues that it was not required under the Bond Act to
give formal notice to Imperial of its completion of the soffit
work. Plaintiff also claims that the judge misapplied the
general standards for summary judgment and was too quick to
dismiss its claims against the Sureties.
Plaintiff further argues that the trial judge misapplied
her discretion in denying amendment of the complaint to include
Imperial, in denying reconsideration of that ruling, and in
denying the motion to reinstate the complaint against TLC.
A-2531-07T1
15
Having fully considered plaintiff's contentions on appeal,
we affirm all of the orders appealed from, substantially for the
reasons expressed by Judge Rachel N. Davidson in her oral
rulings of September 9, 2007 and January 4, 2008. We add
several observations on the discrete issues warranting comment.
First, we concur with the trial judge that plaintiff
manifestly failed to comply with the procedural requirements of
the Bond Act, and with the express terms of the payment bond
itself.
With respect to notice, the Bond Act specifically requires
that "[a]ny person who may be a beneficiary of the payment bond,
as defined in this article, and who does not have a direct
contract with the contractor furnishing the bond . . . shall,
prior to commencing any work, provide written notice to the
contractor by certified mail or otherwise . . . that said person
N.J.S.A. 2A:44-145 (emphasis
is a beneficiary of the bond."
added). Additionally, the payment bond in this case plainly
states that unless the claimant under the bond has a "direct
contract with the Contractor", the claimant "shall have given
written notice to [either] the Contractor, the Owner or the
Surety . . . within ninety (90) days after such claimant did or
performed the last of the work or labor, or furnished the last
of the materials[.]" The notice must state "with substantial
A-2531-07T1
16
accuracy the amount claimed and the name of the party to whom
the materials were furnished, or for whom the work or labor was
done or performed." The record is clear that such written
notices were not supplied by plaintiff here concerning the
soffit work it performed for which it seeks payment under the
bond.
The judge correctly ruled that plaintiff was not exempt
from these notice requirements. The Bond Act establishes two
tiers of subcontractors who are potential beneficiaries: first-
tier subcontractors having direct contracts with the general
contractor for the work in question, and second-tier contractors
lacking a direct contract with the general contractor pertaining
to the subject work. The legislative purpose of the notice
provision, which was added to Section 145 by amendment in 1996,
"was to clearly define the risk assumed by the surety issuing
Velez v. Wilkerson Elec. Srvcs., Inc., 351 N.J.
the bond."
Super. 2, 10 (App. Div. 2002). The notice mechanism
communicates that risk by "identify[ing] potential claimants and
beneficiaries in a uniform and organized fashion." Ibid.
(quoting Laborers Local Union #779 Pension, Welfare, & Annuity
Funds v. Am. Cas. Co. of Reading, Pa.,
339 N.J. Super. 345, 352
(Law Div. 2000)).
A-2531-07T1
17
We have previously instructed that the requirement of a
"direct contract" that makes a party a first-tier subcontractor
under the statute "must mean more than just any contract.
Otherwise, the term 'direct' would have no meaning." Dial Block
Co., Inc., supra,
374 N.J. Super. at 23. In Dial Block, the
general contractor, a subcontractor, and a supplier on the
project were all parties to what was described as a joint-check
agreement. Id. at 16. Under that agreement, the general
contractor would provide checks in the names of both the
subcontractor and the supplier, so as to make payment for
materials by the subcontractor easier. Ibid. The joint-check
agreement was subject to a limit of $125,000, thereby protecting
the general contractor from larger exposures. Id. at 17. After
the supplies delivered to the subcontractor had well exceeded
that limit and the subcontractor had ceased to pay for them, the
supplier contacted the general contractor, requesting that the
limit be raised on the agreement and that the joint checks
Id. at 18. When the general contractor
continue to be issued.
refused, the supplier sued on the bond that had been issued
under the Bond Act. Id. at 19.
We held in those circumstances in Dial Block that the
"direct contract" for providing materials for the construction
project was between the supplier and the subcontractor, not
A-2531-07T1
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between the supplier and the general contractor. Id. at 23.
Consequently, no "direct contract" was created between the
supplier and the general contractor within the meaning of
N.J.S.A. 2A:44-145. Ibid. The supplier was thus a second-tier
subcontractor (or sub-subcontractor) obligated to comply with
the statute's notice requirements. We rejected the supplier's
argument that joint-check agreement functionally satisfied the
notice requirements of the Bond Act. Id. at 24.
Here, the trial judge correctly applied the principles of
the Bond Act and the related case law, including Dial Block.
The soffit work in question was undertaken by plaintiff pursuant
to a contract between plaintiff and TLC. Imperial, the general
contractor, was not a party to that agreement. The fact that
plaintiff was performing other work on the site under a
separate direct contract with Imperial as a first-tier
subcontractor is irrelevant.
In addition, the alleged oral discussions between
Imperial's representative and plaintiff's representative that
led to plaintiff entering its agreement with TLC do not change
the analysis. Those alleged oral communications, even if we
accept them as true----viewing the record most favorably to
plaintiff, see Brill v. Guardian Life Ins. Co. of Am.,
142 N.J.
520, 540 (1995)----do not satisfy the statute's mandate for the
A-2531-07T1
19
formality of written notice. Without a direct contract, there
is no genuine issue of material fact that plaintiff was a
"second-tier" subcontractor for purposes of the Bond Act.4
We also note that the soffit work in question was completed
by plaintiff on February 5, 2005, and plaintiff did not file
suit against the Sureties until more than a year later in August
2006. That timing violates the one-year time limitation set
forth in both the payment bond here and also N.J.S.A. 2A:44-145,
which specifies that suit under the Bond must be filed "in no
event later than one year from the last date upon which such
beneficiary shall have performed actual work or delivered
materials to the project." We recognize that plaintiff did not
complete its other work on the site, under its separate contract
with Imperial, until January 2006. Even so, plaintiff cannot
4
We do not read Onorato Construction, Inc. v. Eastman
Construction Co.,
312 N.J. Super. 565 (App. Div. 1998), a case
relied upon by plaintiff to support its claims of a direct
contractual relationship, as applicable to this case. In
Onorato, a sub-subcontractor sued a general contractor for
nonpayment of funds owed to the sub-subcontractor by a
subcontractor. Significantly, the lawsuit was not brought under
the Bond Act. Id. at 567. Additionally, the general contractor
had been notified by the subcontractor of the amounts owed to
the sub-subcontractors, and the general contractor had allegedly
agreed to the pay that sum. Id. at 567-68. The present
scenario, where no such notice is involved, is completely
distinguishable.
A-2531-07T1
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bootstrap the later date of completion of its other work to
justify its violation of the one-year limitations period.
For all of these reasons, summary judgment in favor of the
Sureties was appropriately granted. We also discern no
reversible error in how the judge applied the summary judgment
standards, once it became clear to her that the analysis
involved delving into matters beyond the bare face of the
pleadings.
Further, we detect no misapplication of discretion by the
trial judge in declining to restore TLC as a defendant.
Plaintiff never supplied the court with documented proof that
TLC was actually served with process, and has still not supplied
such proof of service in the record on this appeal. See R. 4:4-
7. Absent such proof, the judge had no obligation to restore
TLC to party status, and the judge did not misapply her
discretion here in concluding that plaintiff had not shown good
See R. 1:13-7(a); Weber v. Mayan
cause for such reinstatement.
Palace Hotel & Resorts,
397 N.J. Super. 257, 264 (App. Div.
2007) (applying the "good cause" standard for reinstatement of a
Rule 1:13-7 dismissal).5
5
We do not consider the trial court's orders as foreclosing
potential relief to plaintiff under Rule 4:50-1 if service is
achieved and proven, or as precluding a separate new action
against TLC filed within the applicable statute of limitations.
A-2531-07T1
21
Likewise, the judge did not clearly misapply her discretion
by rejecting plaintiff's request to amend the complaint
See Franklin Med.
belatedly to name Imperial as a defendant.
Assocs. v. Newark Pub. Sch.,
362 N.J. Super. 494, 504 (App. Div.
2003) (noting that a trial judge's discretionary ruling "will
not be disturbed on appeal, unless it constitutes a 'clear abuse
28 N.J. 20, 26
of discretion'")(quoting Salitan v. Magnus,
(1958)). Although, as a general matter, leave to amend a
pleading is freely granted in the interests of justice, see Rule
4:9-1, "the granting of a motion to file an amended complaint
always rests in the court's sound discretion." Kernan v. One
Washington Park Urban Renewal Assocs.,
154 N.J. 437, 457 (1998).
"'[C]ourts are free to refuse leave to amend when the newly
asserted claim is not sustainable as a matter of law.'" Notte v.
Merchants Mut. Ins. Co.,
185 N.J. 490, 501 (2006) (quoting
Interchange State Bank v. Rinaldi,
303 N.J. Super. 239, 256-57
(App. Div. 1997)). "'[T]here is no point to permitting the
filing of an amended pleading when a subsequent motion to
dismiss must be granted.'" Ibid. (quoting Interchange State
Bank, supra,
303 N.J. Super. at 257). In addition, even where
the merits of the claim are at least marginal, it is not an
abuse of discretion to deny leave to add such a claim when it is
Stuchin v. Kasirer, 237 N.J.
likely to prolong the litigation.
A-2531-07T1
22 Super. 604, 609 (App. Div.), certif. denied,
121 N.J. 660
(1990); see also Pressler, Current N.J. Court Rules, comment
2.2.1 to R. 4:9-1 (noting that a motion to amend is properly
denied "where its merits are marginal, its substance generally
irrelevant to the main claim, and allowing the amendment would
unduly protract the litigation").
The trial judge acted within her discretion in declining to
add Imperial as a party to this case at the eleventh hour, for
at least two reasons. First, plaintiff had already sued
Imperial in another Law Division complaint for other work that
it had performed on the police station project. Although we do
not resolve the issue here, Imperial could plausibly argue that,
under entire controversy principles, plaintiff should have added
the instant claims to that other lawsuit. See R. 4:30A,
Prevratil v. Mohr,
145 N.J. 180, 190 (1996). Second, the judge
rightly was concerned about judicial efficiency and economy.
With the Sureties dismissed from the case and TLC not appearing
in the action as a viable party, for all practical purposes
there was no lawsuit left. Adding Imperial would only "unduly
protract" an otherwise-moribund litigation. See Pressler,
supra, comment 2.2.1 to R. 4:9-1.
Finally, the judge did not misapply her discretion in
declining plaintiff's request for a judicial reservation of
A-2531-07T1
23
claims against Imperial. Such a reservation, if it had been
granted, would insulate plaintiff from a defense of entire
controversy asserted by Imperial in a future action. DiIorio v.
Structural Stone & Brick Co., Inc.,
368 N.J. Super. 134, 139
(App. Div. 2004). However, Imperial might wish to argue that
plaintiff inexcusably delayed in asserting its full claims
against Imperial in the prior action and that Imperial was
substantially prejudiced by that delay. See R. 4:30A; Hobart
Bros. Co. v. Nat'l Union Fire Ins. Co.,
354 N.J. Super. 229, 242
(App. Div.), certif. denied,
175 N.J. 170 (2002). The trial
judge rightly exercised caution in not foreclosing that
potential argument of prejudice by a party that was not even
before her.
The orders appealed from are affirmed in all respects.
A-2531-07T1
24
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