FOUR SPIN WASH, LLC v. LAUNDRY KING OF WEST ORANGE INC.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

FOUR SPIN WASH, LLC,

A New Jersey Limited

Liability Company,

Plaintiff-Appellant,

v.

LAUNDRY KING OF WEST ORANGE,

INC. and SANTE FE CORPORATION,

both Corporations of the

State of New Jersey,

Defendants-Respondents.

_______________________________

July 3, 2014

Before Judges Lihotz and Hoffman.

On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. C-65-09.

Ben J. Slavitt argued the cause for appellant (Slavitt & Cowan, P.C., attorneys; Mr. Slavitt, of counsel; Jeffery Zajac, on the briefs).

Daniel K. Newman argued the cause for respondents.

PER CURIAM

Plaintiff Four Spin Wash, LLC appeals from a July 1, 2013 Chancery Division order, denying its motion to reinstate its complaint. The motion judge concluded plaintiff's application was untimely. Plaintiff also appeals from an August 16, 2013 order denying its subsequent motion for reconsideration.

Following our review, we conclude the orders must be reversed and the matter remanded for further consideration of whether defendants The Laundry King of West Orange, Inc. (Laundry King) and Sante Fe Corporation (Sante Fe) demonstrated actual prejudice resulting from the passage of time. Absent proof of substantial prejudice, the complaint must be reinstated.

These facts are found in the motion record. In 2004, plaintiff purchased the assets of Laundry King's business, including equipment, leasehold improvements and goodwill. It also executed a twenty-year lease for the Main Street, West Orange commercial realty, formerly occupied by Laundry King, from Sante Fe. Thereafter, plaintiff discovered a rear storage area on the first floor covered in mold. Further investigation revealed four feet of stagnant water in a crawlspace beneath the first floor.

Defendants retained two engineers who inspected the premises, Richard Alaimo, P.E., and James R. Brown, P.E., whose reports, although not identical, suggested plaintiff's negligent maintenance resulted in the flooding. Plaintiff's expert also accessed the crawlspace and rendered an opinion identifying defendants' pre-sale lapses as the cause of the standing water and mold accumulation. Unable to resolve the impasse, plaintiff sent defendants a letter surrendering the premises and terminating the lease. As of April 2007, plaintiff ceased payment of rent.

Litigation ensued, including a complaint by Sante Fe against its insurance company for coverage and against plaintiff for damages, plaintiff's third-party complaint against Laundry King, along with counterclaims and cross-claims in these respective actions. A March 3, 2008 order dismissed all matters without prejudice, subject to filing new actions.

Thereafter, the parties agreed, through counsel, to appoint Alvin Weiss as a mediator. The agreement also provided that if Weiss was unable to effectuate a resolution, he would be appointed to conduct binding arbitration. When Weiss' conflict check was completed, he forwarded a mediation agreement and retainer request to the parties on November 6, 2008. Although plaintiff completed the documents, defendants did not. Consequently, plaintiff filed a complaint in the Chancery Division on February 19, 2009, seeking to enforce the agreement for mediation followed by arbitration or, alternatively, to rescind the contract of sale and lease, and related relief. Defendants disputed they had agreed to an alternate forum to address the claims, answered plaintiff's complaint and filed a ten-count counterclaim.

Three weeks prior to the February 22, 2010 trial date, the parties prepared a consent order dismissing plaintiff's complaint and defendants' counterclaims without prejudice because of an "inability to prosecute," resulting when Laundry King's principal suffered a debilitating infirmity, preventing him from appearing for deposition and trial. The judge interlineated language in the order which permitted either party to seek reinstatement "as soon as the matter [wa]s capable of being tried and concluded." Further, the entry of the order was not to "delay completion of the deposition testimony of Paul J. Vento [one of defendants' principals] and Adam Slavitt [plaintiff's principal]," suggesting discovery was to be concluded despite the dismissal of the complaint.

Defendants' principals were deposed on May 4, 2011, and Slavitt was deposed on November 11, 2011. Document discovery was pursued. Plaintiff's counsel sent a letter on March 15, 2013, suggesting telephone calls to defense counsel went unanswered. By letter dated March 19, 2013, plaintiff's counsel wrote defense counsel informing him of plaintiff's intent to seek reinstatement. The letter included a list of trial exhibits and advised:

I would like to move this matter back to the trial list by advising [the judge] to schedule a trial date. I don't want to do that unless you have adequate time to prepare and accordingly would appreciate if you would call me when you return from vacation so that I can request an appropriate length of time from [the judge] for both of us.

Defendants' counsel related he would be on vacation for the month of March. Upon his return, he did not respond to the request for the matter to be restored to the trial calendar. Plaintiff wrote to the court on May 7, 2013 seeking reinstatement and assignment of a trial date. The court advised a motion was necessary.

Plaintiff moved to reinstate its complaint on May 16, 2013. Counsel included his certification an outline of various events that caused the delay in finalizing the matter, including the need for Laundry King's principal to recover from his condition and the completion of discovery. He also related illnesses, accidents, and surgeries suffered by plaintiff's counsel and Slavitt's wife had occurred.1

Defendants opposed the motion. Defense counsel's certification merely attached several unpublished opinions addressing reinstatement of complaints. During argument, defendants objected to reinstatement, arguing restoration was not contingent on being trial ready, and plaintiff should have requested to resume the litigation upon the completion of its principal's deposition. Defendants emphasized the six-year passage of time since the crawlspace flooded and the experts performed their inspections. Although not in his certification, defendants' counsel noted one of its two experts had changed employment and his former employer offered no contact information. Counsel did not specify which expert he was referencing or provide additional details of this contention.

Following argument, the judge denied plaintiff's request to reinstate the action, despite recognizing "perhaps, I should have used some tighter language. Perhaps, I needed to put in some parameters of time" in the order of dismissal. She determined the complaint was dismissed for "failure to prosecute" and reinstatement should have been sought once Laundry King's principal's health was restored, notwithstanding other outstanding discovery. Further, the judge referenced the change in employment of defendants' expert and suggested "we'll be dealing with logistical issues that we shouldn't have had to deal with."

In opposing plaintiff's motion for reconsideration, defendants for the first time identified the expert whom they could not locate. Defendants' counsel set forth his efforts to locate Brown, whom he believed had moved to Pennsylvania. Plaintiff requested the opportunity to locate Brown, holding the motion for thirty days. The judge declined this offer and also denied plaintiff's motion for reconsideration. This appeal ensued.

"Our review of an order denying reinstatement of a complaint dismissed for lack of prosecution proceeds under an abuse of discretion standard." Baskett v. Cheung, 422 N.J. Super.377, 382 (App. Div. 2011). This court "will decline[] to interfere with [such] matter of discretion unless it appears that an injustice has been done." St. James AME Dev. Corp. v. City of Jersey City, 403 N.J. Super. 480, 484 (App. Div. 2008) (alteration in original) (citations and internal quotations omitted). In our review, we are not bound by the Chancery Division's legal conclusions or its "'interpretation of the law and the legal consequences that flow from established facts . . . .'" Alfano v. BDO Seidman, LLP., 393 N.J. Super.560, 573 (App. Div. 2007) (quoting Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J.366, 378 (1995)).

On appeal, plaintiff argues the judge's application of the provisions of Rule 1:13-7, was erroneous and the unambiguous terms of the order mandated reinstatement was to be sought when the matter was ready to be listed for trial. Alternatively, plaintiff asserts the trial judge abused her discretion in denying reinstatement under Rule 1:13-7, as plaintiff demonstrated good cause for reinstatement and defendants suffered no demonstrated prejudice from the delay. Accordingly, plaintiff urges it should be granted the opportunity to present its claims.

Initially, we reject defendants' disingenuous suggestion to view plaintiff's request for restoration in light of the date of dismissal. The case was not dismissed for plaintiff's lack of effort. Indeed, it was Laundry King's inability to proceed to trial that was graciously accommodated by its adversary.

Next, we also reject defendants' interpretation of the language of the dismissal order as requiring reinstatement once Laundry King's principal was deposed. Plaintiff's counsel advanced a reasonable interpretation of the February 9, 2010 order, believing completion of discovery was required, so that upon reinstatement a trial date could be assigned. The judge herself admitted the imprecision of the language she had added to the February 9, 2010 order, reinforcing the existence of plaintiff's understanding of the need to complete discovery.

Considering the order's language, we do not interpret the phrase "as soon as the matter [wa]s capable of being tried" as equivalent to upon completion of a single deposition. Further, when reading the order "as a whole in a fair and common sense manner[,]" Manahawkin Convalescent v. O'Neil, 217 N.J. 99, 118 (2014) (citation and internal quotation marks omitted), "without artificial emphasis on one section, with a consequent disregard for others[,]" Borough of Princeton v. Bd. of Chosen Freeholders of Cnty. of Mercer, 333 N.J. Super. 310, 325 (App. Div. 2000), affirming and remanding judgment, 169 N.J. 135 (2001), we conclude reinstatement was not prompted merely by the recovery of defendants' principal. Rather, this language along with the additional direction provided in the subsequent paragraphs of the order regarding the continuation of discovery, informs the conditions for reinstatement.2

We also agree with plaintiff that Rule 1:13-7 does not govern reinstatement of this matter. There is no doubt the February 9, 2010 order was not an administrative dismissal. The motion judge erroneously characterized dismissal as entered "for failure to prosecute" plaintiff's case. See R. 1:13-7 (governing administrative dismissal for failure to prosecute a claim and reinstatement of a complaint so dismissed). As noted, dismissal was not prompted by plaintiff.

Nevertheless, we agree a reviewing court considering a motion to reinstate a dismissed complaint shall consider the facts and circumstances surrounding dismissal, whether good cause for the delay is demonstrated and whether defendants would be prejudiced by reinstatement. "'Good cause is an amorphous term, that is, it is difficult of precise delineation. Its application requires the exercise of sound discretion in light of the facts and circumstances of the particular case considered in the context of the purposes of the Court Rule being applied.'" Baskett, supra, 422 N.J. Super.at 384 (quoting Ghandi v. Cespedes, 390 N.J. Super. 193, 196 (App. Div. 2007)).

As we noted in Ghandi, "the right to reinstatement is ordinarily routinely and freely granted when plaintiff has cured the problem that led to the dismissal even if the application is made many months later." Ghandi, supra, 390 N.J. Super. at 196 (citations and internal quotation marks omitted). "'[A]bsent a finding of fault by the plaintiff and prejudice to the defendant, a motion to restore under the rule should be viewed with great liberality.'" Baskett, supra, 422 N.J. Super.at 384 (quoting Ghandi, supra, 390 N.J. Super.at 197).

It bears repeating the court's fundamental concern is to prevent injustice, particularly when a party faces the ultimate sanction of dismissal with prejudice. The importance of the policy "favoring the disposition of cases on their merits" cannot be overstated. Midland Funding LLC v. Albern, 433 N.J. Super. 494, 496 (App. Div. 2013).

We appreciate the desirability of the prompt disposal of cases. Courts should not forget, however, that they merely provide a disinterested forum for the just resolution of disputes. Ordinarily, the swift movement of cases serves the parties' interests, but the shepherding function we serve is abused by unnecessarily closing the courtroom doors to a litigant whose only sin is to retain a lawyer who delays in filing an answer during settlement negotiations. Eagerness to move cases must defer to our paramount duty to administer justice in the individual case.

[Audubon Volunteer Fire Co. No. 1 v. Church Constr. Co., 206 N.J. Super. 405, 406 (App. Div. 1986).]

See also Ghandi, supra, 390 N.J. Super. at 198.

Further, absent evidence of prejudice to a defendant, when a plaintiff is viewed as "essentially blameless, the courthouse doors should not be locked and sealed to prevent [its] claims from being resolved in the judicial forum." Baskett, supra, 422 N.J. Super. at 385. See also Jansson v. Farleigh Dickinson Univ., 198 N.J. Super. 190, 194 (App. Div. 1985) ("[W]e believe that the sins or faults of an errant attorney should not be visited upon his [or her] client absent demonstrable prejudice to the other party.").

Here, in denying reinstatement, the motion judge did not determine defendants suffered real prejudice occasioned by the delay. Frankly, defendants' prejudice argument was not advanced in responsive pleadings objecting to reinstatement, but only mentioned generally as a possibility during oral argument. The claim of prejudice, developed over time, was most clearly articulated in response to plaintiff's motion for reconsideration; however, even then it was deficient.

Accepting the facts advanced during reconsideration, at best, defendants showed Brown, one of the two experts it engaged, left his former employer and was perhaps living in Pennsylvania. There is no specificity supporting defendants' claim that Brown was unavailable for trial. In fact, no evidence is presented that defendant took the basic step of checking with the Division of Consumer Affairs, which maintains a list of licensed engineers, published on the Agency's website. See N.J.S.A. 45:8-27 to -35 (regulating and licensing engineers and land surveyors).

As a matter of public policy, all professional engineers, as defined in N.J.S.A. 45:8-28(a), must be licensed to practice in New Jersey. Hyland v. Ponzio, 159 N.J. Super. 233, 237 (App. Div. 1978). See also N.J.S.A. 45:8-27. The State Board of Professional Engineers and Land Surveyors, see N.J.S.A. 45:8-30, maintains a "record of . . . all applicants for license, showing for each the date of application, name, age, education and other qualifications, place of business and place of residence,[.]" N.J.S.A. 45:8-34. Additionally, "[a] public register showing the names and places of business and residences of all licensed professional engineers . . . shall be prepared . . . during the month of June of each year." Ibid. Certainly, this would be the first step taken when attempting to locate Brown. However, defendants never mentioned such a search was attempted.3

Moreover, plaintiff offered to locate Brown, at its own expense, an offer the motion judge found "a little strange[.]" Plaintiff's request should not have been so easily turned aside, understanding plaintiff faced the dismissal of its case because the expert was believed to be unavailable. Alternatively, plaintiff could have been responsible for the reasonable costs incurred by defendants in locating Brown. These considerations should precede a dismissal with prejudice.

We next assess defendants' arguments accepted by the trial judge centered on prejudice caused by the passage of time. The judge found the experts' observations and the facts "[v]ery stale" as there are "facts in this case that go back 10 years. And the inspections were, like, around 2007." She remarked, "recollections change. Memory fades. That's what all the cases talk about when . . . you speak of prejudice from delay[,]" and stated:

I don't know whether Mr. Brown is alive. I don't know whether he's still an engineer. I don't even know if he's in the state. That poses serious problems. Worst case scenario, if he could not be located then that means that defendant would have to get an expert, who could come in and adopt, essentially, Mr. Brown's report. Because I doubt that he could do it from scratch now. Six years later, you can't reconstruct the physical condition that existed then.

Other than the established passage of time, this analysis lacks sufficient factual support in this record. The judge did not mention that defendants had more than one engineering expert.4 Further, there is no evidence that: (1) Brown is unavailable, defendants showed only that Brown's former employer had no contact information and they failed to find him at an engineering firm in Pennsylvania; (2) defendants' other expert could not adequately testify in its defense; (3) a need to "reconstruct the physical condition that existed" at the time of the flood was necessary; and (4) if Brown were located, the photographs of the premises' condition and his report were insufficient to enable him to recall his inspection.

We examined similar arguments by the defendant in Baskett. In "resisting [the] plaintiffs' motions for reinstatement and reconsideration[,]" the defendant argued "that he was prejudiced by the passage of time." Baskett, supra, 422 N.J. Super. at 384. Finding the defendant alleged nothing "other than generalities ('[m]emories of witnesses have clearly faded') or conjectures ('[i]t is hard to believe that a meaningful deposition of any of the plaintiffs is going to be obtainable')," we concluded there was "not a scintilla of evidence in the record to suggest that anything in this parade of horribles exists or is likely to come to pass[.]" Id. at 384-85 (alteration in original). Accordingly, we reversed the trial court's order denying reinstatement. Id. at 386.

A similar result is required here. We find the motion judge failed to consider whether defendants actually experienced prejudice. No party certified evidence was destroyed or defendants' claims were lost. Rather, the condition of the premises plaintiff alleged justifies its requested relief was recorded by photographs taken by experts, who reported their respective findings after an actual site inspection. The fact that the premises may have been altered since those inspections does not impact any witness's ability to testify as to the underlying events observed and recorded. Also, no evidence reveals Brown is deceased or actually unavailable. We do not find defendants' claim of an inability to locate him sufficient to justify a finding of actual prejudice, particularly in light of the limited efforts to locate him. As we pointed out, a basic check with the Department of Community Affairs was not undertaken. Even if defendants' assertions were accepted, plaintiff's offer to locate Brown should have been allowed, prior to penalizing plaintiff by dismissing its complaint.

When evaluating the totality of the unusual circumstances presented here -- including that defendants sought the dismissal, the delay occasioned by Laundry King's principal's recovery, the language inserted by the trial judge suggesting discovery be concluded prior to requesting reinstatement, defendants' unresponsiveness to correspondence seeking to reinstate, and the physical illness and medical conditions experienced by plaintiff's counsel -- we conclude plaintiff had demonstrated good cause for the delay. We also cannot find from this record defendants suffered prejudice. Consequently, this matter is remanded for consideration of that issue. Absent real prejudice to defendants, reinstatement must be granted.

We conclude the denial of plaintiff's motions constituted a mistaken exercise of discretion. The case is remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.

Reversed and remanded.

1 Counsel mentioned he suffered shingles, a stress fracture, underwent two knee replacements, and contracted sepsis requiring intravenous antibiotics for six weeks. Further, he listed significant illnesses suffered by plaintiff's principal's wife.

2 Perhaps a better procedure would have been to stay the case pending periodic review of the witness's recovery.

3 We take judicial notice that the public record published on the Division of Consumer Affairs website reveals a professional engineer named James R. Brown from Chester, New Jersey, whose license remains valid through April 30, 2016, and includes the same four digit license number listed on the proffered expert's report. N.J.R.E. 201.

4 In actuality, Brown had been hired by counsel for Sante Fe in its declaratory judgment action against its insurance carriers and plaintiff.