State of New Jersey, Ex Rel., Joshua M. Harman v. Trinity Industries, Inc.

• Court: New Jersey Superior Court Appellate Division
• Decided: December 27, 2024
• Docket: A-3788-21
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-3788-21

STATE OF NEW JERSEY, ex rel., JOSHUA M. HARMAN,

Plaintiff-Appellant,

v.

TRINITY INDUSTRIES, INC. and TRINITY HIGHWAY PRODUCTS, LLC,

Defendants-Respondents.

Argued November 15, 2023 – Decided December 27, 2024

Before Judges Accurso, Vernoia and Gummer.

On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-1344-14.

Justin Strother (Diamond McCarthy, LLP) of the Texas bar, admitted pro hac vice, argued the cause for appellant (Stone & Magnanini, LLP, Justin Strother, Allan Diamond (Diamond McCarthy, LLP) of the Texas and New York bar, admitted pro hac vice, and Melissa Marrero (Diamond McCarthy, LLP) of the Texas bar, admitted pro hac vice, attorneys; Robert A. Magnanini, Allan Diamond, Justin Strother, and Melissa Marrero, on the briefs).

Bradley G. Hubbard (Gibson, Dunn & Crutcher, LLP) of the Texas bar, admitted pro hac vice, argued the cause for respondents (Eckert Seamans Cherin & Mellott, LLC, Bradley G. Hubbard, Allyson N. Ho (Gibson, Dunn & Crutcher, LLP) of the Texas bar, admitted pro hac vice, John C. Fitzpatrick (Bartlit Beck LLP) of the Illinois bar, admitted pro hac vice, and Robert S. Salcido (Akin Gump Strauss Hauer & Feld, LLP) of the District of Columbia bar, admitted pro hac vice, attorneys; John C. Fitzpatrick and Robert S. Salcido, of counsel and on the brief; Robert P. Zoller, David P. Skand, Allyson N. Ho, and Bradley G. Hubbard, on the brief).

The opinion of the court was delivered by

ACCURSO, P.J.A.D.

In this long-running qui tam case filed on behalf of the State of New

Jersey under the New Jersey False Claims Act, N.J.S.A. 2A:32C-1 to -18,

relator Joshua M. Harman appeals from a February 16, 2022 order denying his

motion to "amend" his then time-barred complaint in an action previously

dismissed without prejudice a year before, as well as the order denying his

motion for reconsideration. Because we agree with the trial court that the

complaint is indisputably time-barred, we affirm.

The facts providing the background of this matter are set out in the Fifth

Circuit's 2017 opinion in the parties' federal False Claims Act suit, United

A-3788-21 2 States ex rel. Harman v. Trinity Indus. Inc., 872 F.3d 645 (5th Cir. 2017). Our

focus is on the procedural history of that case and this one.

Defendant Trinity Highway Products, LLC, a subsidiary of Trinity

Industries, Inc., manufactures a guardrail "end terminal" system, the ET-Plus,

under license from Texas A&M University designed by the engineers at the

University's Transportation Institute to slow vehicles colliding with it to

survivable speeds and otherwise reduce the risks a collapsing guardrail poses

to the driver and any passengers in the vehicle. In addition to a comprehensive

rendition of the facts, the Fifth Circuit's opinion contains an appendix with

diagrams of the ET-Plus system by Trinity and Harman. Id. at 670-71. Trinity

sells ET-Plus systems to highway contractors, who have installed them

throughout the country, including in New Jersey.

In January 2000, the Federal Highway Administration accepted the ET-

Plus for use on the National Highway System, clearing the way for the federal

government to reimburse states installing the ET-Plus system. Id. at 648. At

that time, the ET-Plus was designed for use with standard 27.75-inch-high

guardrails. The proliferation of SUVs and light trucks on the nation's roads,

however, led to the need for taller guardrails. Trinity worked with the

engineers at the Transportation Institute to develop a modified ET-Plus system

A-3788-21 3 for use with the new 31-inch guardrails. The engineers at the Transportation

Institute crash tested the new ET-Plus at the 31-inch height and prepared a

report for the Highway Administration, which approved the modified ET-Plus

for the 31-inch guardrail height in September 2005. Id. at 648.

In January 2012, Harman, a competitor of Trinity's, went to the Highway

Administration with an extensive PowerPoint presentation about changes to

the ET-Plus that he believed were not disclosed to the Highway Administration

in 2005 and were resulting in accidents around the country. Id. at 649.

Harman does not dispute that he advised the Highway Administration at that

meeting of Trinity's "change from a five- to four-inch guide channel, the

shortening of the guide channel, the change in the exit gap from one-and-a-half

inches to one inch, [and] the diminished height of the extruder chamber."

Ibid.

The Highway Administration met with Trinity three times the following

month to discuss Harman's allegations. Id. at 650. Trinity admitted that a

detailed drawing of the 2005 changes it had prepared and sent to the engineers

at the Transportation Institute for inclusion in the package to the Highway

Authority was inadvertently omitted. It insisted, however, that "the May 2005

A-3788-21 4 crash test" conducted by the Transportation Institute "was of an ET-Plus

system with a modified terminal head." Ibid.

Harman filed a federal qui tam suit under seal against Trinity in the

Eastern District of Texas the following month, March 2012, in which the

government declined to intervene. Ibid. On June 17, 2014, shortly before trial

in the case, the Highway Administration released an official memorandum

stating it had "'validated that the ET-Plus with the 4 inch guide channels was

crash tested in May 2005,' that '[t]he Trinity ET-Plus with 4-inch guide

channels became eligible for Federal reimbursement . . . on September 2,

2005,' and that there was 'an unbroken chain of eligibility for Federal-aid

reimbursement [that] has existed since September 2, 2005, and the ET-Plus

continues to be eligible today.'" Ibid.

The first trial ended in a mistrial. Ibid. Before the start of the second

trial, Trinity applied to the Fifth Circuit for a writ of mandamus. Although

denying the application, the circuit court issued this caution:

This court is concerned that the trial court, despite numerous timely filings and motions by the defendant, has never issued a reasoned ruling rejecting the defendant's motions for judgment as a matter of law. On its face, [the Highway Administration's] authoritative June 17, 2014 letter seems to compel the conclusion that [the Highway Administration], after due consideration of all the facts, found the

A-3788-21 5 defendant's product sufficiently compliant with federal safety standards and therefore fully eligible, in the past, present and future, for federal reimbursement claims. While we are not prepared to make the findings required to compel certification for interlocutory review by mandamus, a course that seems prudent, a strong argument can be made that the defendant's actions were neither material nor were any false claims based on false certifications presented to the government.

[Id. at 650-51.]

A new trial began promptly after the circuit's denial of the writ, and the jury

returned a verdict for Harman in October 2014. Id. at 651.

In the wake of the verdict, the Highway Administration "did not

withdraw its approval of the ET-Plus units; rather, it sought independent

testing of the units and confirmation . . . that the units being tested were the

same as those installed across the country." Ibid.

The independent testing ordered by the Highway Administration was

undertaken by a joint task force of state, federal, and foreign transportation

experts between December 2014, and January 2015. Ibid. The task force

"examined over one thousand existing ET-Plus installations across the country

between November 2014 and January 2015 and concluded that: (1) '[t]here is

no evidence to suggest that there are multiple versions [of the ET-Plus] on our

nation's roadways' and (2) the units that were crash tested were 'representative

A-3788-21 6 of the devices installed across the country.'" Ibid. The Highway

Administration announced the findings in March 2015, declaring its approval

of the ET-Plus remained in place, and Trinity, which had suspended sales

following the verdict, resumed its marketing of the device. Ibid.

The district court in Texas subsequently denied Trinity's JNOV motion

and entered judgment for Harman and the United States in the amount of

$663,360,750. Ibid. Trinity appealed. Id. at 651-52.

In the meantime, Harman had sued Trinity in the Superior Court on

behalf of the State of New Jersey on June 14, 2014, just days before the

Highway Administration issued its memorandum stating the ET-Plus with 4-

inch guide channels had been continuously eligible for federal reimbursement

since September 2, 2005. Harman alleged a false claim for each time the

New Jersey Department of Transportation had reimbursed a contractor for an

ET-Plus system following the 2005 changes Trinity made, which it alleged

rendered the units non-compliant with the federal Highway Administration's

approval and the relevant federal safety standard.

Following the federal jury's verdict, the Department removed the ET-

Plus terminal from its Qualified Product List on October 31, 2014, thus

suspending installment of or reimbursement for the ET-Plus terminal. It did

A-3788-21 7 not, however, mandate replacement of existing units, which remain in use

along the State's highways.

The New Jersey complaint remained under seal throughout the federal

trial of Harman's claims; Trinity's appeal to the Fifth Circuit, which reversed

the judgment for Harman and remanded for entry of judgment for Trinity

based on Harman's failure to establish the materiality of any alleged false

statement by Trinity under the federal False Claims Act; and the United States

Supreme Court's denial of Harman's petition for certiorari, 586 U.S. 1067

(2019). The New Jersey Attorney General thereafter declined to intervene in

this action, and the complaint was finally unsealed in April 2019, three months

after the Supreme Court had declined to hear Harman's federal appeal.

Harman served Trinity in September 2019 and filed an amended

complaint in October, alleging that Trinity had falsely certified to the federal

Highway Authority that the ET-Plus "was identical in design to the original

approved design." Trinity moved to dismiss the complaint. On June 1, 2020,

the trial judge granted the motion to dismiss without prejudice, citing

Harman's failure to "adequately plead that Trinity [had] made a false claim . . .

an essential element of [the New Jersey False Claims Act]" or adhere to Rule

4:5-8, which requires parties to plead fraud with specificity.

A-3788-21 8 Harman's counsel did not cross-move to amend Harman's complaint to

cure the deficiencies, nor file a new action. Instead, Harman let the statute of

limitations expire on his claims on October 31, 2020, six years after the

Department suspended reimbursement for the ET-Plus. See N.J.S.A. 2A:32C-

11(a). Seven months later, on June 1, 2021, Harman filed a motion under Rule

4:50-1 to "reopen" the action previously dismissed without prejudice and for

leave to file a second amended complaint based on a 2005 exchange of email

between two Trinity executives about the "five failed flared crash tests"

Harman had made "a centerpiece" of its federal trial, but which the Fifth

Circuit found "were actually of a distinct, experimental system — not the type

of ET-Plus system on American roadways" and thus irrelevant to the federal

Highway Administration's 2005 approval of the ET-Plus.

Judge Massi denied the motion, rejecting Harman's argument that he

didn't have access to the emails until 2021, as there was no dispute that

Harman's attorney had used the so-called "smoking gun" email chain "in other

cases since 2018." The judge also found amendment would be futile because

both the State and federal government had concluded Trinity had not

defrauded them about the ET-Plus system, and it remained in use on the State's

highways. Finally, Judge Massi found Trinity would be prejudiced as the

A-3788-21 9 statute of limitations had expired on Harman's claims and there was no

equitable basis for relief.

Harman moved for reconsideration pursuant to Rule 4:49-2. Judge

Massi denied the motion with prejudice, again deeming the amendment futile

and rejecting Harman's new argument that the email chain had been

unavailable to him on account of a protective order entered in another matter.

The judge found Harman had failed to explain why he "never mentioned the

protective orders in his motion to amend" or why he waited seven months after

admittedly reading the email chain to attempt to reopen the action.

Harman appeals, contending the trial court erred in failing to find his

amended complaint would "relate back" to his timely filed 2014 action under

Rule 4:9-3 and that refusing to equitably toll the statute of limitations was

inequitable because: Trinity withheld evidence of the emails; it would

effectively transform the earlier dismissal without prejudice into a dismissal

with prejudice, contrary to the express language of that order; the proceedings

were effectively stayed while the State conducted its investigation and

determined not to intervene; and Trinity would suffer no prejudice

"considering the parties have been engaged in active litigation from 2011 to

present." We disagree on all points.

A-3788-21 10 Rule 4:9-3 has no applicability here. Harman's 2014 false claims action

was dismissed without prejudice on June 1, 2020, four months prior to the

October 31, 2020 expiration of the statute of limitations on his claims. As

Harman failed to file a cross-motion to amend his complaint in response to

Trinity's successful Rule 4:6-2 motion, he was left with the option of filing a

new action before the statute of limitations expired. He failed to do so. By the

time Harman sought to file his second amended complaint on June 1, 2021,

"nothing remained to which the [proposed amended complaint] could relate

back." Molnar v. Hedden, 138 N.J. 96, 104 (1994).

There is also no question but that Harman "had to be aware of the statute

of limitations problem. It is elementary that a dismissal without prejudice

adjudicates nothing and does not constitute a bar to re-institution of the action,

subject to the constraint imposed by the statute of limitations." O'Loughlin v.

Nat'l Cmty. Bank, 338 N.J. Super. 592, 603 (App. Div. 2001). That constraint

is dispositive here.

The law is well settled that "the principal consideration behind statutes

of limitations is fairness to the defendant." Id. at 102. The five failed crash

tests to which the "smoking gun" emails refer were "a centerpiece" of the

federal suit tried in 2014. Not only has the Fifth Circuit determined those

A-3788-21 11 crash tests are irrelevant to Harman's claims against Trinity, it is undisputed

that Harman's counsel made use of the email chain, referring to them in other

suits since 2018. See Oltremare v. ESR Custom Rugs, Inc., 330 N.J. Super.

310, 319 (App. Div. 2000) ("[k]nowledge possessed by an attorney relative to

the prosecution of a cause of action is generally imputed to the client "). "The

imputation of an attorney's knowledge to a client is even more appropriate

when dealing with facts that are associated with the type of advice traditionally

given by an attorney, such as how and when to . . . file a lawsuit." Ibid.

In addition, Harman admits he'd read the emails himself by November

2020, seven months before he filed his application to amend his previously

dismissed complaint. There was simply no basis for the trial court to have

refused to apply the statute of limitations here, and doing so would have

deprived Trinity of its "vested right to be forever free" of Harman's claim in

this action. McGlone v. Corbi, 59 N.J. 86, 94 (1971). See also Czepas v.

Schenk, 362 N.J. Super. 216, 225 (App. Div. 2003) (refusing to allow a

plaintiff to proceed in a manner "tantamount to allowing a plaintiff to

indefinitely extend a statute of limitations until he or she could construct a

cause of action against a defendant, rendering the statutory limitation period

meaningless").

A-3788-21 12 We also agree with Judge Massi that Harman made no effort in his

proposed amended complaint to cure his failure to plead his fraud claims with

specificity, see Universal Health Servs., Inc. v. U.S. ex rel. Escobar, 579 U.S.

176, 187 (2016) (interpreting federal false claims act to incorporate common

law meaning of fraud), or meet the demanding materiality standard that led to

the dismissal of his complaint in the first place, making reinstatement futile.

See C.V. by & through C.V. v. Waterford Twp. Bd. of Educ., 255 N.J. 289,

306 (2023). In short, Harman has simply provided us no basis to conclude

Judge Massi abused his discretion in denying Harman's application to re-

instate his time-barred action.

Affirmed.

A-3788-21 13