Court Opinion

ID: 4431138
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:52:46.033367+00
Date Added: 2024-06-11T14:51:04.895880
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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-1668-16T3

CCM PROPERTIES, LLC, and
CARLOS GUZMAN,

        Plaintiffs-Appellants,

v.

THOMAS C. PIEPER and
ENVIROTACTICS, INC.,

     Defendants-Respondents.
______________________________

              Argued April 23, 2018 – Decided June 20, 2018

              Before Judges Fasciale and Moynihan.

              On appeal from Superior Court of New Jersey,
              Law Division, Monmouth County, Docket No.
              L-1690-16.

              David M. Shafkowitz         argued    the   cause    for
              appellants.

              Jason D. Attwood argued the cause for
              respondents, Envirotactics, Inc., (Pashman
              Stein Walder Hayden, attorneys; Jason D.
              Attwood, of counsel and on the brief).

              Shaji M. Eapen argued the cause for respondent
              Thomas C. Pieper (Morgan Melhuish Abrutyn,
              attorneys; Meredith Kaplan Stoma, of counsel;
              Shaji M. Eapen, of counsel and on the brief).
PER CURIAM

     Plaintiffs        appeal    from   three   November   18,   2016    orders

dismissing their attorney malpractice claim against defendant

Thomas C. Pieper (Pieper); dismissing their breach of contract

claim against Envirotactics, Inc. (Enviro); and denying their

motion for leave to amend the complaint.            Plaintiffs contend:

          POINT I

          THE TRIAL COURT ERRED IN ITS APPLICATION OF
          NJ RULE 4:6-2(e), GRANTING THE DEFENDANT'S
          MOTION TO DISMISS PLAINTIFF[S'] COMPLAINT FOR
          FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN
          BE GRANTED BY FAILING TO PROVIDE EVERY
          REASONABLE INFERENCE TO PLAINTIFF[S].

          POINT II

          THE TRIAL COURT ERRED IN ITS ANALYSIS OF THE
          OPERATIVE DATE FOR CALCULATING THE STATUTE OF
          LIMITATIONS.

          POINT III

          THE TRIAL COURT ERRED IN ITS APPLICATION OF
          NJ RULE 4:6-2(e), BY FAILING TO ALLOW
          PLAINTIFF[S] TO AMEND [THEIR] COMPLAINT.

     Our consideration starts with the trial judge's denial of

plaintiffs' proposed second amended complaint.              "Objection to the

filing of an amended complaint on the ground that it fails to

state a cause of action should be determined by the same standard

applicable    to   a    motion    to    dismiss   under    [Rule]   4:6-2(e)."

Interchange State Bank v. Rinaldi, 303 N.J. Super. 239, 257 (App.

Div. 1997).   Before dismissing a complaint for failure to state a

                                         2                              A-1668-16T3
claim, the trial judge should "afford[] plaintiffs an opportunity

to amend the complaint to endeavor to conform to the requisites

for [defendant's] responsibility."           Muniz v. United Hosps. Med.

Ctr. Presbyterian Hosp., 153 N.J. Super. 79, 81 (App. Div. 1977).

"'Rule 4:9-1 requires that motions for leave to amend be granted

liberally' and that 'the granting of a motion to file an amended

complaint always rests in the court's sound discretion.'"              Notte

v. Merchs. Mut. Ins. Co., 185 N.J. 490, 501 (2006) (quoting Kernan

v. One Washington Park Urban Renewal Assocs., 154 N.J. 437, 456-

57 (1998)).

     Although a motion for leave to amend is properly denied where

"there is no point to permitting the filing" because "a subsequent

motion to dismiss must be granted," ibid. (quoting Rinaldi, 303

N.J. Super. at 257), that is not the case here.              Examining the

second   amended   complaint   "in   light    of   the   factual   situation

existing at the time" it was filed, Rinaldi, 303 N.J. Super. at

256, we conclude it adequately set forth causes of action against

both defendants and should have been permitted.             We thus derive

the facts largely from the allegations in the second amended

complaint, along with the documents referenced therein.

     In 2010 plaintiffs retained Pieper to represent them in the

purchase of commercial property, and hired Enviro "to perform a

ground penetrating radar . . . survey" to "confirm the absence

                                     3                               A-1668-16T3
and/or presence of any historical underground storage tanks at the

site."   Enviro identified two underground storage tanks on the

property with respective estimated capacities of approximately 550

and 1000 gallons, and recommended that the tanks "be properly

removed from the site and the soils surrounding the [tanks] be

assessed for evidence of a discharge at the time of removal."

Plaintiffs allege that on May 10, 2010, Pieper represented "that

all issues regarding the purchase of the subject property [were]

resolved," inducing plaintiffs to close on the property that day.

     Over three years later, the bank — upon receipt of plaintiffs'

application   to   refinance   the   property    —    ordered             a    "PHASE    I

ENVIRONMENTAL SITE ASSESSMENT," (phase I report) which revealed a

"250,000-gallon    aboveground   storage   tank       .       .    .   was      formerly

present" on the property, and identified — in addition to the two

previously-discovered    underground     tanks    —       a       third       275-gallon

underground storage tank.      The bank denied plaintiffs' refinance

application. Although the record indicates the report was received

by the bank on August 30, 2013, there is no indication when

plaintiffs were notified their application was denied; or if and

when they received the phase I report.          Plaintiffs filed suit on

May 9, 2016 based on revelations learned from the phase I report.

     The trial judge found plaintiffs' claims were barred by the

six-year statute of limitations applicable to breach-of-contract

                                     4                                           A-1668-16T3
and attorney-malpractice claims1 because the phase I report put

plaintiffs "on notice that [there was] a tank problem as of March

16, 2010."    He also found plaintiffs' negligence claims against

both defendants, subject to a two-year statute of limitations,

N.J.S.A. 2A:14-2(a), were barred.

       Plaintiffs contend Pieper "failed to advise . . . that the

[Enviro]    report   previously   received   was   not   a   comprehensive

environmental review" and Enviro "failed to identify critical

environmental conditions which would have governed [p]laintiff[s']

decision to proceed" — failures they contend they did not discover

until they attempted to refinance.

       "We review a grant of a motion to dismiss a complaint for

failure to state a cause of action de novo, applying the same

standard under Rule 4:6-2(e) that governed the motion court."

Wreden v. Twp. of Lafayette, 436 N.J. Super. 117, 124 (App. Div.

2014).     We treat all factual allegations as true and carefully

examine those allegations "to ascertain whether the fundament of

a cause of action may be gleaned even from an obscure statement

of claim."2    Printing Mart-Morristown v. Sharp Elecs. Corp., 116

1
    N.J.S.A. 2A:14-1.
2
 We find plaintiffs' argument — that the trial judge "essentially
converted" defendants' motion to dismiss "to one for [s]ummary
[j]udgment, which was inappropriate" because the judge made a

                                    5                              A-1668-16T3
N.J. 739, 746 (1989) (quoting Di Cristofaro v. Laurel Grove Mem'l

Park, 43 N.J. Super. 244, 252 (App. Div. 1957)).   "Nonetheless, .

. . the essential facts supporting plaintiff's cause of action

must be presented in order for the claim to survive; conclusory

allegations are insufficient in that regard[,]" Scheidt v. DRS

Techs., Inc., 424 N.J. Super. 188, 193 (App. Div. 2012), as are

assertions that "essential facts that the court may find lacking

can be dredged up in discovery," Printing Mart, 116 N.J. at 768;

see also Edwards v. Prudential Prop. & Cas. Co., 357 N.J. Super.

196, 202 (App. Div. 2003).     "In evaluating motions to dismiss,

courts consider 'allegations in the complaint, exhibits attached

to the complaint, matters of public record, and documents that

form the basis of a claim.'"   Banco Popular N. Am. v. Gandi, 184

N.J. 161, 183 (2005) (quoting Lum v. Bank of Am., 361 F.3d 217,

222 n.3 (3d Cir. 2004)).

     Although not generally the subject of Rule 4:6-2(e) motions,

as Judge William J. Brennan (later United States Supreme Court

Justice Brennan) recognized, a statute of limitations defense is

"factual determination on [plaintiffs'] business savvy" — to be
meritless.    The trial judge's on-the-record statement that
plaintiffs were "not your unsophisticated potential homeowner" was
made in a verbal exchange during argument. The judge did not find
it as a fact and the record does not support that it influenced
his decision.

                                 6                         A-1668-16T3
properly raised on a motion to dismiss "where it affirmatively

appears on the face of the complaint that the action pleaded is

barred."   Feil v. Senisi, 7 N.J. Super. 517, 518 (Law Div. 1950);

see also Prickett v. Allard, 126 N.J. Super. 438, 440 (App. Div.)

(quoting R. 4:6-2(e)), aff'd o.b., 66 N.J. 6 (1974).

     New Jersey has adopted the discovery rule to "ameliorate[]

'the often harsh and unjust results [that] flow from a rigid and

automatic adherence to a strict rule of law.'"         Grunwald v.

Bronkesh, 131 N.J. 483, 492 (1993) (quoting Lopez v. Swyer, 62

N.J. 267, 273-74 (1973)) (second alteration in original).     Where

appropriate, "a cause of action will be held not to accrue until

the injured party discovers, or by an exercise of reasonable

diligence and intelligence should have discovered . . . a basis

for an actionable claim."   Lopez, 62 N.J. at 272.

           It is not every belated discovery that will
           justify an application of the rule lifting the
           bar of the limitations statute. The interplay
           of the conflicting interests of the competing
           parties must be considered.      The decision
           requires   more   than    a   simple   factual
           determination; it should be made by a judge
           and by a judge conscious of the equitable
           nature of the issue . . . .

           [Id. at 275.]

"In the context of legal counseling, a plaintiff may reasonably

be unaware of the underlying factual basis for a cause of action.

The inability readily to detect the necessary facts underlying a

                                 7                          A-1668-16T3
malpractice    claim   is   a   result       of   the   special   nature   of   the

relationship between the attorney and client."               Grunwald, 131 N.J.

at 493-94.     The statute of limitations, in a legal malpractice

action, "begins to run only when the client suffers actual damage

and discovers, or through the use of reasonable diligence should

discover, the facts essential to the malpractice claim."                   Id. at

494.

       Plaintiffs' contend that Pieper's alleged malpractice and

breach of contract caused them to be unaware of the "critical

fact[]" that "the report was not a Phase [I]."                We note the plain

text of Enviro's written proposal warned plaintiffs that: "[n]o

soil borings, soil sampling or groundwater sampling [would be]

performed"; the survey was "not intended to satisfy any NJDEP[3]

requirements"; the scope of work was limited to "[v]erify[ing]

absence or presence of underground storage tanks"; and the quoted

price did "not include the costs for a soil and/or groundwater

investigation."    The Enviro report similarly advised plaintiffs

to remove the underground tanks and test the soil, and noted an

investigation "satisty[ing] NJDEP requirements" may be necessary.

Nonetheless, Pieper's advice – following Enviro's report which

recommended further action – should have been preceded by an

3
    New Jersey Department of Environmental Protection.

                                         8                                 A-1668-16T3
investigation of "potential environmental soil contamination" as

plaintiffs allege in their second amended complaint.      Pieper's

alleged misadvice to close title — not discovered until plaintiffs

received the phase I report — suffices to save the malpractice

claim from dismissal.

     We agree with the judge that the scope of Enviro's proposed

work was limited to detecting the underground tanks: "They weren't

asked to look for above[-]ground tanks.   They weren't asked to do

a historical analysis of the property . . . .     They were asked

simply to look for underground tanks.     They completed that task

and advised."   The dismissal of those causes of action — grounded

in Enviro's alleged failure to detect and advise about above-

ground storage tanks, soil contamination, environmental impact and

prior use of the property — was warranted; plaintiffs clearly did

not contract Enviro for those services.

     A liberal reading of the complaint, however — accepting even

"obscure statement[s]" that form "the fundament of a cause of

action," Printing Mart, 116 N.J. at 746 — compels us to reverse

the order dismissing plaintiffs' breach-of-contract claim against

Enviro, which was retained to detect the presence of underground

tanks and detected two — not three — on the property.   Plaintiffs

adequately allege, for the purposes of a motion to dismiss, that

                                 9                         A-1668-16T3
they could not reasonably have known about the third tank until

the phase I report was issued in August 2013.4

     We   therefore   remand   the   matter   to   afford   plaintiffs    an

opportunity to file the second amended complaint and for further

proceedings consistent with the reasons set forth herein.

     Affirmed in part, reversed in part, and remanded for further

proceedings.   We do not retain jurisdiction.

4
  Plaintiffs' negligence claims against both defendants, subject
to a two-year statute of limitations, N.J.S.A. 2A:14-2(a), are
barred regardless of the discovery rule's application. Plaintiffs
filed their complaint on May 9, 2016 – well over two years after
the phase I report was issued in August 2013.

                                     10                            A-1668-16T3