STEWART TITLE GUARANTY COMPANY VS. ALL-PRO TITLE GROUP, LLC (L-2517-15, MORRIS COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: November 29, 2018
• Docket: A-1936-17T1
• Status: Unpublished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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-1936-17T1

STEWART TITLE GUARANTY COMPANY,

Plaintiff-Appellant,

v.

ALL-PRO TITLE GROUP, LLC,

Defendant-Respondent,

and

Third-Party Plaintiff,

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

A-1936-17T1 2 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 3 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). A-1936-17T1 4 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

A-1936-17T1 5 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.

A-1936-17T1 6 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

A-1936-17T1 7 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

A-1936-17T1 8 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";

A-1936-17T1 9 (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.

A-1936-17T1 10 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

A-1936-17T1 11 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.

A-1936-17T1 12