Opinion ID: 806790
Heading Depth: 1
Heading Rank: 5

Heading: The AOM Statute and Dismissal of the Action

Text: Having cleared jurisdictional and choice-of-law hurdles, we finally arrive at the core of Nuveen’s appeal— whether, based on New Jersey state law, it can escape the harsh consequences of its counsel’s failure to file timely affidavits of merit as required by the AOM Statute. As it did before the District Court, Nuveen argues that the Statute does not apply to all or a portion of the complaint and that, if it does apply, its counsel’s mistake can be excused based on its substantial compliance with the Statute or extraordinary circumstances. To review, the AOM Statute requires a plaintiff in a malpractice action against a licensed professional seeking “damages for personal injuries, wrongful death or property damage” to file an affidavit of merit from an appropriate licensed professional within 60 days of the defendant filing its answer. N.J. Stat. Ann. § 2A:53A-27. Upon a showing of good cause, the court may extend this deadline an additional 40 60 days. Id. Absent the plaintiff’s showing of one of four limited exceptions, if the affidavit of merit is not filed within 60 (or 120) days, the failure to file requires dismissal of the action with prejudice. Id. § 2A:53A-29. The four limited exceptions are: (i) a statutory exception regarding lack of information; (ii) a “common knowledge” exception; (iii) substantial compliance with the affidavit-of-merit requirement; or (iv) “extraordinary circumstances” that warrant equitable relief. See id. § 2A:53A-28; Ferreira v. Rancocas Orthopedic Assocs., 836 A.2d 779, 782–83 (N.J. 2003); Hubbard v. Reed, 774 A.2d 495 (N.J. 2001); Cornblatt v. Barow, 708 A.2d 401, 411–12 (N.J. 1996). We go out of turn, and consider first the arguments that, if the AOM Statute applies, Nuveen’s failure to file timely affidavits should be excused based on either its substantial compliance with the Statute or extraordinary circumstances. Our answer in each instance is no. We conclude with whether the Statute applies to all or but a portion of this action, as it is there that we reserve ruling pending the certification of two questions to the New Jersey Supreme Court.
The New Jersey Supreme Court has established a fivepart test to determine whether the equitable doctrine of substantial compliance excuses noncompliance with the AOM Statute: (1) the lack of prejudice to the defending party; (2) a series of steps taken to comply with the statute involved; (3) a general compliance with the purpose of the statute; (4) a reasonable notice of petitioner’s claim[;] and (5) a 41 reasonable explanation why there was not a strict compliance with the statute. Galik v. Clara Maass Med. Ctr., 771 A.2d 1141, 1149 (N.J. 2001) (quoting Bernstein v. Bd. of Trs. of Teachers’ Pension & Annuity Fund, 376 A.2d 563, 566 (N.J. Super. Ct. App. Div. 1977)). “Satisfying those elements guarantees that the underlying purpose of the statute is met and that no prejudice is visited on the opposing party.” Id. Though the New Jersey Supreme Court has noted that establishing the elements of substantial compliance “is a heavy burden,” id. at 1152, it also has stated that Cornblatt, in which it established that the doctrine applies to the Statute, is not a “narrow authorization of substantial compliance in the affidavit of merit setting.” Id. at 1150. Overall, the analysis is fact sensitive, “involving the assessment of all of the idiosyncratic details of a case to determine whether ‘reasonable effectuation of the statute’s purpose’ has occurred.” Id. at 1151 (quoting Cornblatt, 708 A.2d at 401).
The District Court held that Withum and Lindabury suffered prejudice by filing and defending their motions to dismiss. Nuveen argues that its noncompliance did not cause them prejudice because the complaint was sufficiently detailed to provide them with reasonable notice of its claims. Thus, it contends, Withum and Lindabury were prepared for the suit after receiving the complaint. In addition, Nuveen asserts that Withum and Lindabury did not incur undue additional defense costs in filing and litigating the motions to dismiss the complaint. See Fink v. Thompson, 772 A.2d 386, 394 (N.J. 2001) (holding that an affidavit that inadvertedly excluded the name of a defendant-professional involved in the malpractice action did not prejudice the defendant- 42 professional, and noting that “permitting plaintiff’s case to proceed would not result in undue additional defense costs”). We agree that the incurrence of additional costs to bring a motion to dismiss based on the failure to file the requisite affidavit is not sufficient to cause prejudice to a defendant. If the costs of filing and defending the motion to dismiss were sufficiently prejudicial to preclude a showing of substantial compliance, few plaintiffs could prove substantial compliance. Yet courts have found substantial compliance in a variety of circumstances. See, e.g., Burns v. Belafsky, 766 A.2d 1095, 1101 (N.J. 1999) (holding that failure to timely file affidavit was not prejudicial because it was “simply too early in the litigation for that claim to be credible”); Mayfield v. Cmty. Med. Assocs., P.A., 762 A.2d 237, 243 (N.J. Super. Ct. App. Div. 2000) (stating that, where the affidavit was timely filed but served late, “there has been no showing of prejudice to defendants that would outweigh the strong preference for adjudication on the merits rather than final disposition for procedural reasons”). Nuveen provided Withum and Lindabury with a complaint that was detailed enough to place them on notice of the asserted claims without the affidavits. The only apparent prejudice they suffered was the cost of filing and defending the motions to dismiss. This is not sufficient prejudice to preclude a finding of substantial compliance. Nonetheless, Nuveen still must demonstrate the other four factors.
Nuveen argues that, in holding that it did not take a “series of steps” necessary for substantial compliance, the District Court overlooked its actions to verify the merit of its complaint. Nuveen highlights that it conducted an 18-monthlong investigation to support its allegations, which allowed it 43 to submit a detailed complaint. During this extensive investigation, it consulted two experts who later submitted affidavits, one of whom provided it with a 16-page report before it filed the complaint. It also notes that it provided Withum and Lindabury the affidavits one day after they filed their motions to dismiss. Though Nuveen may have researched its complaint and scrambled to correct its mistake regarding the affidavits, its failure to take some action to comply with the affidavit requirement before the AOM Statute’s deadline expired appears fatal here. A review of New Jersey Supreme Court cases discussing substantial compliance reveals that the “series of steps” element requires some effort by the plaintiff to provide the defendant with a statement of a professional discussing the merits of the action by the expiration of the 120-day period. See, e.g., Ferreira, 836 A.2d at 784 (declining to find substantial compliance where “[p]laintiff’s counsel did not, within the statutory time frame, take steps to forward the affidavit to opposing counsel”); Palanque v. Lambert-Woolley, 774 A.2d 501, 506 (N.J. 2001) (“In both Galik and Fink, the plaintiffs took a series of steps that notified the defendants about the merits of the malpractice claims filed against them. Here, no such action was taken. Plaintiff obtained an expert report but did not provide the report or an affidavit to defendant. The action taken by plaintiff falls short of meeting the elements of substantial compliance.”); Fink, 772 A.2d at 386 (finding a “series of steps” where plaintiff served a timely affidavit that did not identify one of the defendant-professionals, but identified “unknown” professionals, and also provided a pre-suit expert report in which the unidentified defendant-professional was mentioned by name); Galik, 771 A.2d at 1151 (finding a “series of steps” where “[p]laintiff retained an expert before filing suit, forwarded the medical records to the expert, obtained both an initial and a supplementary expert report, 44 and sent both to defendants’ carriers who attempted to settle the case on defendants’ behalf”); Burns, 766 A.2d at 1101 (finding substantial compliance where affidavit was served after 60 days, but before 120 days, after the answer, and only after defendants filed motions to dismiss); Cornblatt, 708 A.2d at 411–12 (finding substantial compliance where plaintiff served a certification instead of an affidavit). These decisions comport with the AOM Statute’s goal of weeding out frivolous lawsuits by providing defendants with independent opinions of the actions. See Chamberlain, 210 F.3d at 610. As long as a defendant receives timely (that is, within the time allowed by the Statute) an opinion in the form of a document or combination of documents authored by a non-party discussing the merits of the action as to each defendant, the plaintiff will have fulfilled the “series of steps” element of substantial compliance. Nuveen communicated with two professionals before it filed the complaint. One professional provided it with a report; the other merely discussed the potential action on the telephone. Nuveen did not provide the report to Withum and Lindabury, and did not file it with the complaint. It also did not obtain the affidavits until more than 120 days after Withum and Lindabury filed their answers. The result is that it did not timely provide Withum and Lindabury with independent verification that the allegations in the complaint were sufficient to state causes of action for malpractice. Nuveen’s failure to engage in a “series of steps” undermines its argument that it substantially complied with the Statute.
In arguing that it generally complied with the purposes of the AOM Statute, Nuveen again references the detailed complaint and its provision of the affidavits one day after 45 Withum and Lindabury filed their motions to dismiss. However, the purpose of the Statute is to identify frivolous malpractice actions by requiring independent verification of the validity of claims. Regardless how detailed a complaint is, a pleading is self-serving and cannot be substituted for this independent verification. In not attempting to provide independent verification of the merit of the complaint until more than 140 days after Withum and Lindabury filed their answers, Nuveen did not comply with the purposes of the Statute. As to the fourth factor, we agree with the District Court that Nuveen’s detailed complaint provided Withum and Lindabury with reasonable notice of Nuveen’s claims. Reasonable notice refers to whether the defendant can understand the basis of the malpractice suit such that it can begin defending itself. If a complaint is conclusive or does not specify particular professionals, an affidavit will be necessary to supplement the complaint for the defendant to be on reasonable notice of the asserted claims. See, e.g., Kindig v. Gooberman, 149 F. Supp. 2d 159, 166 (D.N.J. 2001) (noting that the filing of complaint first notified the defendants). But if a complaint is detailed, as here, it should provide the defendant with reasonable notice of the claims. Finally, Nuveen provides one reason for its lack of strict compliance: inadvertence by its counsel. However, New Jersey state courts have rejected attorney inadvertence alone as a sufficient ground for a party’s failure to comply with the AOM Statute. See, e.g., Paragon Contrs., Inc. v. Peachtree Condo. Ass’n, 997 A.2d 982, 986 (N.J. 2010) (“[A]n attorney’s inadvertence in failing to timely file an affidavit will generally result in dismissal with prejudice.”). Nuveen’s counsel’s failure to exercise sufficient diligence in obtaining and serving affidavits is not a reasonable explanation for Nuveen’s noncompliance with the Statute. 46