Court Opinion

ID: 4510080
Source: CourtListenerOpinion
Date Created: 2020-02-25 15:07:03.289476+00
Date Added: 2024-06-11T12:13:17.123349
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NOT FOR PUBLICATION WITHOUT THE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-2539-18T2

PASSAIC INDUSTRIAL
PROPERTIES, LLC,

          Plaintiff-Appellant,

v.

JOHN    MCCUSKER,      ANDREW
ANSELMI, BRUCE S. ROSEN,
PAUL F. CARVELLI, individually and
as co-owners of MCCUSKER,
ANSELMI, ROSEN & CARVELLI,
WILLIAM    P.  MUNDAY,         and
SEBASTIAN LENTINI,

     Defendants-Respondents.
________________________________

PASSAIC INDUSTRIAL
PROPERTIES, LLC,

          Plaintiff-Appellant,

v.

DARRIN LENTINI and CHRISTINA
GERVASI,    a/k/a    CRISTINA
GERVASI,
     Defendants-Respondents.
_________________________________

DARREN LENTINI and CHRISTINA
GERVASI,   a/k/a    CRISTINA
GERVASI,

     Third-Party Plaintiffs-Respondents,

v.

MCCUSKER, ANSELMI, ROSEN &
CARVELLI,        a    Professional
Corporation, JOHN B. MCCUSKER,
ANDREW ANSELMI, BRUCE S.
ROSEN, PAUL F. CARVELLI,
individually and as co-owners of
MCCUSKER, ANSELMI, ROSEN &
CARVELLI, and WILLIAM P.
MUNDAY,

     Third-Party Defendants-Respondents.
____________________________________

          Argued January 23, 2020 – Decided February 25, 2020

          Before Judges Fuentes, Mayer and Enright.

          On appeal from the Superior Court of New Jersey, Law
          Division, Passaic County, Docket No. L-0628-16.

          Jack S. Dweck, of the New York bar, admitted pro hac
          vice, argued the cause for appellant (Chris S. Fraser and
          Jack S. Dweck, attorneys; Chris S. Fraser and Jack S.
          Dweck, on the briefs).

          Christopher James Carey argued the cause for respondents
          John B. McCusker, Andrew Anselmi, Bruce S. Rosen, Paul

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                                     2
            F. Carvelli, William P.Munday, and McCusker, Anselmi,
            Rosen & Carvelli, PC (Mc Elroy Deutsch Mulvaney &
            Carpenter, LLP, attorneys; Christopher James Carey, of
            counsel and on the brief; Daniel Albert Malet, on the
            brief).

            Justin Michael Klein argued the cause for respondent
            Sebastian Lentini (Marks & Klein, LLP, attorneys;
            Justin Michael Klein and Steven T. Keppler, on the
            brief).

            Kenneth Nicholas Del Vecchio argued the cause for
            respondents Darren Lentini and Cristina Gervasi (Stern
            Kilcullen & Rufolo, LLC, attorneys; Kenneth Nicholas
            Del Vecchio and Michael Dinger, on the brief).

PER CURIAM

      Plaintiff Passaic Industrial Properties, LLC (PIP) appeals from a January

22, 2019 order granting summary judgment and dismissing its complaint against

defendants Paul F. Carvelli, William P. Munday, the firm of McCusker,

Anselmi, Rosen & Carvelli (collectively law firm defendants), Sebastian Lentini

(S. Lentini), Darren Lentini (D. Lentini), and Cristina Gervasi. We affirm

dismissal of plaintiff's complaint as to S. Lentini only. We reverse and remand

dismissal of plaintiff's complaint as to the law firm defendants, D. Lentini, and

Cristina Gervasi.

      PIP alleged it suffered damages as a result of defendants' wrongful

conduct, including the following: (1) the filing of sham litigation; (2) tortiously

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interfering with PIP's contractual relationships; (3) causing the loss of

prospective economic advantage; and (4) incurring unnecessary legal fees and

costs by asserting frivolous positions regarding PIP's development project.

      We summarize the facts giving rise to PIP's complaint. PIP, through its

managing member, Joseph Smouha, owns 31.6 acres of land located in the City

of Passaic (property). PIP acquired the property around 2013. In October 2014,

PIP filed an application with the City of Passaic Zoning Board of Adjustment

(Board) for site plan approval and variances for commercial development of the

property. At the time it applied to the Board, PIP had a contract to provide

preliminary groundwork for construction of a fast-food restaurant on the

property. PIP also intended to lease commercial space to other tenants upon

completion of the project.

      In December 2014, D. Lentini contacted the law firm defendants to

determine whether the franchise agreement for his father's fast-food restaurant 1

precluded building the same franchise fast-food restaurant in the area as

proposed in PIP's application. Carvelli and Munday explained the law firm

defendants could object to PIP's application before the Board. The attorneys

1
  D. Lentini is the son of S. Lentini. S. Lentini owns a fast-food restaurant near
the property, which D. Lentini manages.

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suggested D. Lentini locate three people who lived near the property and would

be interested in objecting to PIP's application. D. Lentini identified three such

individuals and provided their addresses to the law firm defendants. D. Lentini

believed the law firm defendants contacted those individuals to confirm

representation of them in opposition to PIP's development proposal. 2

      In 2015, Munday appeared at Board hearings regarding PIP's application

on behalf of three individuals who purportedly objected to the project. In fact,

the appellate record shows that at the time Munday appeared before the Board

as the legal representatives of these three ostensible objectors, none of the

attorneys in the firm had ever met these people nor made any attempt to

communicate with them directly to confirm authorization to appear before the

Board on their behalf. The Board held public hearings on various dates between

March 2015 and June 2015, and granted final approval of the application on

August 11, 2015.

      On September 24, 2015, the law firm defendants filed an action in lieu of

prerogative writs challenging the Board's approval of PIP's development

application. Once again, the record before this court shows that at the time the

2
  D. Lentini had no further contact with the law firm defendants until December
2015 because S. Lentini paid the law firm defendants' bills.

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law firm defendants filed this pleading in the Law Division, they had not met,

spoken to, or otherwise communicated directly or indirectly with the three

persons identified as plaintiffs in the action.

      In December 2015, Carvelli and Munday contacted D. Lentini to discuss

the three objectors named as plaintiffs in the prerogative writs litigation. The

law firm defendants learned PIP obtained certifications from two of the three

plaintiffs, stating they had not been contacted by the law firm defendants to

pursue a lawsuit against PIP or to appear in opposition to PIP's development

application. To the contrary, the two individuals averred they had never spoken

to anyone associated with the law firm defendants, and had no opposition to the

development of PIP's property. According to PIP, the third named plaintiff was

non-existent. Based on these certifications, PIP filed a motion for summary

judgment in the action in lieu of prerogative writs.

      Upon receipt of PIP's summary judgment motion, the law firm defendants

asked D. Lentini and his girlfriend, Gervasi, to secure responsive certifications

from two of the plaintiffs. The draft certifications, prepared by the law firm

defendants, stated Gervasi, not the law firm defendants, spoke to the two

individuals about opposing PIP's commercial development project and filing

litigation. The two plaintiffs declined to sign the certifications.

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                                         6
      The law firm defendants, realizing their "clients" never retained the firm,

sought to voluntarily dismiss the action in lieu of prerogative writs. PIP's

attorney declined to sign a stipulation of dismissal because PIP served a Rule

1:4-8 letter seeking sanctions for frivolous litigation.

      Without real clients in interest, the law firm defendants were unable to

oppose PIP's summary judgment motion. In a January 27, 2016 order, the

motion judge granted PIP's motion and dismissed the action in lieu of

prerogative writs.

       On February 16, 2016, PIP filed a complaint against the law firm

defendants, alleging their actions delayed development of the property, resulting

in significant financial losses.    PIP sought damages for interference with

contract, interference with prospective economic advantage, malicious use of

process, conspiracy, and intentional malicious conduct. 3

      According to the complaint, PIP had a lease with a fast-food restaurant for

a portion of the property, as well as letters of intent with prospective tenants to

lease other portions of the property upon completion of the project. PIP claimed

that but for the law firm defendants filing "sham" litigation on behalf of

3
 The conspiracy and intentional malicious conduct claims were dismissed in a
May 20, 2016 order. PIP does not appeal from the dismissal of those claims.
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fictitious clients, it would have been able to timely complete construction and

receive rental income from the fast-food restaurant and other tenants. PIP

asserted the law firm defendants interfered with its efforts to develop the

property, "including the submission of baseless objections by them before the

[Board] and the Superior Court of New Jersey, with negligent, false, reckless,

or baseless representations that they represented clients who were in truth and

fact non-existent, or who never engaged their services, and who had no

objections to [PIP's] application."

      As a result of the conduct of the law firm defendants, PIP alleged it

expended "substantial amounts of money," including legal fees associated with

"respond[ing] to the [law firm defendants'] baseless objections before the

[Board] and in the defense of the [c]ourt proceeding commenced by the [law

firm defendants]." PIP's alleged damages were also based on the loss of rental

income pursuant to a lease with the fast-food restaurant and unsigned letters of

intent with prospective tenants.

      The parties served discovery. In their discovery demands, the law firm

defendants requested documents referenced in PIP's complaint, including the

lease agreement with the fast-food restaurant, and documents supporting PIP's

damage claims.

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                                       8
      PIP sought to depose Carvelli, Munday, D. Lentini, and Gervasi. Because

PIP did not receive deposition dates, PIP's counsel requested a case management

conference. At the same time, the law firm defendants claimed PIP's discovery

responses were deficient and demanded more specific responses and additional

documents.

      In May 2017, PIP filed a complaint against D. Lentini and Gervasi,

asserting the identical claims alleged in its separate complaint against the law

firm defendants. PIP claimed D. Lentini owned a competing fast-food franchise

near the proposed fast-food restaurant to be constructed on PIP's property. The

pleading stated D. Lentini and Gervasi were the law firm defendants' true clients,

and caused PIP to suffer financial losses as a result of their objection to PIP's

development project.

      Upon receipt of PIP's separately filed lawsuit, D. Lentini and Gervasi

served discovery. They requested documents concerning all leases and damages

alleged in the complaint, as well as any other information supporting PIP's

damage claims.     In addition, they sought "[a]ll documents concerning any

applications or other submissions made by [PIP] to any State or local agencies

or departments (including, without limitation, the Passaic Industrial Board of

Zoning Adjustment) concerning the [property]."

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                                        9
      PIP moved to consolidate the actions against the law firm defendants, D.

Lentini, and Gervasi. In a November 15, 2017 order, PIP's complaints were

consolidated.      Defendants then filed third-party claims and counterclaims

against each other, seeking indemnification and contribution for any damages

suffered by PIP.

      Subsequent to consolidation, D. Lentini and Gervasi moved to compel

discovery from PIP and other relief related to discovery disputes. The law firm

defendants requested permission to file a separate motion seeking additional

discovery from PIP.

      In January 2018, PIP objected to the discovery demanded by D. Lentini

and Gervasi. Regarding its damages, PIP explained "sham" objectors to the

application before the Board and the frivolous action in lieu of prerogative writs

delayed construction of the fast-food restaurant and caused "great loss of

income" and expenditure of additional attorney's fees. PIP did not provide the

fast-food restaurant lease or any documents related to environmental conditions

on the property.

      In a February 6, 2018 order, the motion judge extended discovery and

compelled PIP to produce documents.         The judge ordered PIP to provide

documents referenced in the complaint and all other responsive documents no

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                                       10
later than March 9, 2018. The judge's handwritten notation on the February 6,

2018 order indicated: "In the event [PIP] fails to comply with this order, the

court will determine the appropriate remedy/sanctions, which may include

barring evidence or the dismissal of the action against defendants [D.] Lentini

and Gervasi."

      In February 2018, the law firm defendants again sought permission to file

a motion to compel discovery from PIP. The judge's staff responded "[t]here

[was] no need to file a motion" because all discovery issues would be addressed

at the case management conference scheduled for March 15, 2018.

      At the case management conference, defense counsel stated PIP failed to

produce a copy of its lease with the fast-food restaurant despite PIP's reliance

on that document in support of its damages. The judge determined the lease

would "make or break" PIP's claim for economic damages and ordered the

document be produced. PIP's counsel agreed to produce the document but

explained PIP required a court order due to a confidentiality provision in the

lease agreement.

      During the case management conference, defense counsel claimed PIP

withheld relevant documents. PIP's attorney told the judge all documents in

PIP's possession were produced, except for the lease agreement. PIP's managing

                                                                        A-2539-18T2
                                      11
member, who attended the case management conference, did not correct

counsel's statement to the judge.

      In a March 15, 2018 order, the judge compelled PIP to produce the fast-

food restaurant lease by March 19, 2018, and ordered Smouha, Carvelli, D.

Lentini, and Gervasi be deposed by May 11, 2018. The judge admonished

counsel that if the depositions were not conducted, the matter may no longer be

subject to case management. The judge scheduled another case management

conference for May 14, 2018.

      In accordance with the March 15, 2018 order, PIP provided an April 30,

2014 "ground lease" with the fast-food restaurant.          The lease included

contingencies related to the environmental condition of the property. Under the

lease, the fast-food restaurant could conduct environmental testing regarding the

soil and groundwater, and had the right to terminate the lease depending on the

testing results.

      In April 2018, upon receiving a copy of the March 15, 2018 order

compelling disclosure of the "ground lease," the fast-food restaurant sought to

intervene in PIP's action and attached a proposed intervenor complaint naming

S. Lentini and D. Lentini as defendants.         Upon receiving the proposed

intervention complaint, defendants first learned the deadlines for necessary

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                                      12
approvals related to construction of the fast-food restaurant had been "extended

in several amendments to the [g]round [l]ease."4

       PIP then filed a motion to amend its complaint to add S. Lentini as a

defendant, which the judge granted. PIP alleged S. Lentini owned a competing

fast-food restaurant and the law firm defendants secretly acted on behalf of S.

Lentini in opposing PIP's development application and filing the action in lieu

of prerogative writs.    PIP claimed S. Lentini's actions caused it to suffer

significant financial losses, including attorney's fees.

       The May 15, 2018 case management conference was adjourned to June 6,

2018. Because the judge was unable to complete the conference on June 6,

counsel agreed to return the next day to resolve outstanding discovery issues.

When counsel returned to court, the judge explained that the Civil Division

Presiding Judge had reassigned the case to a different judge. An order was

entered extending discovery until October 15, 2018, and scheduling trial for

October 29, 2018. 5

4
   The lease amendments, dated November 24, 2015, March 22, 2017, October
8, 2017, and March 21, 2018, were signed by Smouha.
5
    The trial date was subsequently adjourned to February 11, 2019.
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                                        13
      On June 8, 2018, the law firm defendants filed a motion to dismiss

plaintiff's complaint for violation of court-ordered discovery obligations

pursuant to Rule 4:23-2 or, alternatively, for summary judgment. The law firm

defendants argued PIP had not produced the lease amendments during

discovery. In opposing the motion, PIP's counsel alleged that the documents

were not provided because "no one ever asked for them."

      Around the same time, S. Lentini served a Rule 1:4-8 letter upon PIP's

counsel, demanding withdrawal of the complaint against him. Receiving no

response, on June 26, 2018, S. Lentini filed a motion to dismiss PIP's complaint.

S. Lentini argued PIP's complaint was filed for an improper purpose, contrary

to Rule 1:4-8, and its claims against him were belatedly asserted on the eve of

the extended discovery end date.

      In July 2018, PIP's counsel renewed requests for the depositions of

Carvelli, D. Lentini, and Gervasi. PIP also served a notice to depose S. Lentini.

On July 23, 2018, PIP filed a motion to strike the answer on behalf of D. Lentini

and Gervasi for failure to provide discovery or, in the alternative, to compel

discovery from all defendants.

      On August 1, 2018, D. Lentini and Gervasi moved to dismiss PIP's

complaint based on documents obtained from the New Jersey Department of

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                                      14
Environmental Protection pursuant to a request under the Open Public Records

Act, N.J.S.A. 47:1A-1 to -13.6 From these documents, defense counsel claimed

that PIP's development project was delayed due to environmental contamination

caused by oil leaking from a 180,000-gallon underground storage tank on the

property. Defendants also received subpoenaed documents from the proposed

intervenor regarding environmental issues on the property that were never

provided by PIP.

      All pending motions were assigned to a different judge.7 On January 18,

2019, the judge heard argument on all outstanding motions.       In an omnibus

January 22, 2019 order accompanied by a written statement of reasons, the judge

granted the law firm defendants' motion for summary judgment, dismissed PIP's

complaint with prejudice for discovery violations as to D. Lentini and Gervasi,

dismissed PIP's complaint as to S. Lentini, denied as moot S. Lentini's motion

to compel discovery, and denied PIP's motion to strike defendants' responsive

pleadings or, in the alternative, to compel discovery.

6
  The next day, the law firm defendants filed a cross-motion to compel discovery
from PIP. On August 9, 2018, S. Lentini, D. Lentini, and Gervasi filed a motion
to stay depositions until the resolution of all pending motions.
7
  Five different trial court judges were involved in handling this case between
February 2016, when PIP filed its complaint, through January 2019, when the
matter was dismissed with prejudice.
                                                                        A-2539-18T2
                                      15
      The judge granted the law firm defendants' motion because PIP failed to

proffer evidence creating a material issue of fact regarding its claim for lost

profits associated with the development of its property. In reviewing the ground

lease and amendments, the judge determined contingencies in the agreement

were not satisfied for reasons attributable to environmental contamination on

the property and not the conduct of the law firm defendants. In addition, because

the letters of intent from prospective tenants were unsigned, the judge held PIP's

claim for money damages related to other commercial tenants failed absent

enforceable lease agreements.

      While the judge explained his rejection of PIP's lost profit damages, the

judge did not address PIP's claim for attorney's fees and costs attributable to the

conduct of the law firm defendants, D. Lentini, and Gervasi in filing sham

litigation and opposing PIP's development application. PIP sought attorney's

fees and costs against these defendants based on tortious interference (count

one) and malicious use of process (count four). PIP's tortious interference claim

was based, in part, on defendants' baseless objections before the Board and

commencement of sham litigation without being retained by actual clients. PIP

also alleged malicious abuse of process by these defendants, causing it to incur

legal fees and "engage in continuous and protracted litigation." PIP sought

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                                       16
"costs and attorneys' fees in connection with the multiple appearances before the

[Board], the defense of the action in [l]ieu of [p]rerogative [w]rit [s], [and] the

attorneys' fees incurred in the prosecution of this action."

      The judge dismissed PIP's complaint with prejudice as against the law

firm defendants, D. Lentini, and Gervasi, finding PIP deliberately violated

discovery orders. In his written decision, the judge never explained why the

ultimate sanction, dismissing PIP's complaint with prejudice, was warranted as

opposed to any of the lesser sanctions available under Rule 4:23-2(b).

      In reviewing S. Lentini's motion, the judge dismissed PIP's complaint,

finding PIP's inclusion of S. Lentini as a defendant late in the litigation

"inexcusable" and unduly prejudicial.

      On appeal, PIP argues the judge erred in imposing the drastic sanction of

dismissal of its complaint with prejudice for violations of discovery orders. PIP

also claims the judge erred in denying its motion to compel discovery.

      We first address PIP's argument that the judge's dismissal of its complaint

with prejudice was drastic, and a lesser sanction should have been imposed. We

review a trial court's sanction for discovery misconduct to determine "whether

the trial court abused its discretion." Abtrax Pharm., Inc. v. Elkins-Sinn, Inc.,

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                                        17
139 N.J. 499, 517 (1995). We will uphold a trial court's discovery sanction

"unless an injustice appears to have been done." Ibid.

      Here, the judge relied on Rule 4:23-2 in dismissing PIP's complaint with

prejudice. Under Rule 4:23-2, if a party fails to provide court-ordered discovery,

the court may issue "such orders in regard to the failure as are just," including

striking the pleading or dismissing the action "with or without prejudice." R.

4:23-2(b)(3).

      While a judge has broad discretion in formulating sanctions under R. 4:23-

2, any sanction imposed must be "just and reasonable." Conrad v. Robbi, 341
N.J. Super. 424, 441 (App. Div. 2001). Imposition of sanctions for violation of

discovery orders requires consideration of "a number of factors, including

whether the plaintiff acted willfully and whether the defendant suffered harm,

and if so, to what degree." Gonzales v. Safe & Sound Sec. Corp., 185 N.J. 100,

115 (2005).

      Dismissal of a claim for failure to comply with discovery is the "last and

least favorable option." Il Grande v. DiBenedetto, 366 N.J. Super. 597, 624

(App. Div. 2004). "The varying levels of culpability of delinquent parties justify

a wide range of available sanctions against the party violating a court rule . . . .

If a lesser sanction than dismissal suffices to erase the prejudice to the non-

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                                        18
delinquent party, dismissal of the complaint is not appropriate and constitutes

an abuse of discretion." Georgis v. Scarpa, 226 N.J. Super. 244, 251 (App. Div.

1988). See also Robertet Flavors v. Tri-Form Const., 203 N.J. 252, 274 (2010)

(recognizing dismissal as the ultimate sanction to be ordered only when no lesser

sanction will suffice to erase the prejudice). Rather than dismissal of an entire

action, claims affected by the discovery non-compliance could be precluded as

a proper sanction. See Familia v. Univ. Hosp. of N.J., 350 N.J. Super. 563, 568

(App. Div. 2002). Cases should be disposed of on their merits rather than for

discovery violations. See Abtrax Pharm., Inc., 139 N.J. at 514.

      Although the judge determined PIP's failure to disclose environmental

documents and amendments to the ground lease was "disturbing," he never

explained why any of the lesser sanctions available under Rule 4:23-2 were

inadequate to address PIP's discovery order violations. The judge had a variety

of sanctions available in lieu of dismissing PIP's complaint with prejudice. The

judge could have precluded PIP from "support[ing] or oppos[ing] designated

claims," such as lost profits, based on the failure to produce the ground lease or

environmental documents related to the property. See R. 4:23-2(b)(2). Or, he

could have dismissed PIP's action without prejudice until the requested

discovery was provided.     See R. 4:23-2(b)(3). The judge also could have

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                                       19
awarded legal fees to defendants in pursuing and obtaining discovery from

sources other than PIP. See R. 4:23-2. Absent consideration of lesser sanctions

and why any lesser sanctions were inadequate to remedy PIP's violation of

discovery orders, the judge abused his discretion by imposing the ultimate

sanction and dismissing PIP's complaint with prejudice.

      In addition, PIP's damage claims for tortious interference and malicious

use of process were based on its legal fees incurred as a result of defendants'

baseless objections at the Board hearings and filing sham litigation. These

claims are separate from, and independent of, PIP's claims for lost profits. PIP's

failure to produce the lease amendment and environmental documents is

unrelated to its claim for legal fees based on tortious interference and malicious

abuse of process. Thus, the failure to produce those documents did not merit

dismissal with prejudice of PIP's complaint in its entirety.

      As for the dismissal of PIP's claims against S. Lentini, the judge

determined S. Lentini was belatedly named as a defendant, after six extensions

of the discovery end date and "lengthy discovery." He concluded PIP's delay in

naming S. Lentini as a party was "highly prejudicial, inexcusable and will not

be permitted."

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      A party must demonstrate prejudice as a result of the delay in prosecuting

a matter to warrant dismissal. See Moschou v. DeRosa, 192 N.J. Super. 463,

466-67 (App. Div. 1984). "[I]t is the lack of availability of information which

results from the delay that is, for the most part, determinative of the issue of

substantial prejudice." Mitchell v. Charles P. Procini, D.D.S., P.A., 331 N.J.

Super. 445, 454 (App. Div. 2000).

      Here, the judge correctly concluded that S. Lentini was prejudiced because

the earlier named defendants had over 800 days of discovery. By the time S.

Lentini was named as a defendant and served with PIP's complaint, there was

only one month left to complete discovery and a trial date had been set.

      Having reviewed the record, the judge did not abuse his discretion in

finding S. Lentini unduly prejudiced as a result of PIP's late filing of claims

against him because S. Lentini's ability to engage in necessary discovery was

hampered by the scheduled trial date and denial of any further discovery

extensions.

       To summarize, we reverse and remand dismissal of PIP's complaint as to

defendants other than S. Lentini. We affirm as to dismissal of PIP's complaint

against S. Lentini.

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      Reversed and remanded in part. Affirmed in part. We do not retain

jurisdiction.

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                                  22