Court Opinion

ID: 9693800
Source: CourtListenerOpinion
Date Created: 2023-08-25 17:00:49.067727+00
Date Added: 2024-06-11T18:19:50.479790
License: Public Domain

POLLOCK, J.,
concurring.
On January 17, 1994, plaintiff, Rita Kernan, fractured her hip when she fell on an icy sidewalk in Newark. Kernan filed her complaint on October 10, 1994. In her complaint Kernan alleged that she slipped and fell on the sidewalk adjacent to property owned and maintained by “the defendants Urban Renewal Associates, ISS Engineering Services and ABC Corp. 1-5 (said names being fictitious, the real names of said entities or individuals being currently unknown) located at One Washington Park, Newark, New Jersey.”
Defendant One Washington Park Urban Renewal Associates (OWPURA) answered the complaint on April 3, 1995. OWPURA *460stated in relevant part that it “is without knowledge or information sufficient to form a belief as to the truth of’ that allegation. The answer included six affirmative defenses, including one asserting that “[t]he alleged damages were caused by other persons over whom this defendant had no control.” It also included a cross-claim for contribution and indemnity against all co-defendants and a demand for discovery of plaintiff.
Plaintiff failed to answer interrogatories, and on January 8, 1996, the Law Division dismissed the complaint without prejudice. Thereafter, plaintiff sought reinstatement of her complaint, reciting that she was in poor health and that she had been hospitalized from June 12, 1995, until July 18, 1995, during which time she “was comatose and ventilator dependent for approximately five weeks.” After her release from St. Barnabas she “spent two weeks at Wellkind for acute rehabilitation services,” followed by “extensive therapy at Mountainview Physical Therapy in Hackettstown, N.J.” Plaintiff answered the interrogatories, and the Law Division reinstated the complaint on May 19,1996.
Following the entry of a consent order on September 13, 1996, plaintiff amended her complaint to change the designation of the corporate defendants from Urban Renewal Associates to OWPURA and from ISS Engineering Services to International Service System, Inc. (ISS).
In propounding interrogatories, plaintiff relied on the “Uniform Interrogatories to be Answered in All Personal Injury Cases: Superior Court.” See R. 4:17-l(b); Appendix II, Form C. Uniform interrogatories 1 and 3, together with OWPURA’s answers state:
1. State: (a) the full name and residence address of each defendant; (b) if a corporation, the exact corporate name; and (e) if a partnership, the exact partnership name and the full name and residence address of each partner. The premises is owned as a partnership between Mr. Charles Geyer and Kiehard C. Wolffe. One Washington Park Urban Development Association, C/O Court Appointed Manager, McCormick Organization 18-22 Bank Street, Summit, N.J.
3. If you intend to set up or plead or have set up or pleaded negligence or any other separate defense as to the plaintiff or if you have or intend to set up a *461counterclaim or third-party action, (a) state the facts upon which you intend to predicate such defenses, counterclaim or third-party action; and (b) identify a copy of every document relating to such facts.
The owner of the building is One Washington Park Urban Renewal Development Association, c/o Court appointed Manager, McCormick Organization, 18-22 Bank Street, Summit, N.J.
OWPURA’s answers to plaintiffs interrogatories do not reveal that OWPURA had been in a Chapter 11 bankruptcy since 1991.
In fact, on May 24, 1991, the Bankruptcy Court entered an order authorizing the trustee' to “retain the McCormick organization as managing agents____” The McCormick organization (McCormick) retained ISS to maintain the premises, including the sidewalk. Additionally, McCormick obtained a public liability insurance policy insuring it, OWPURA, and the trustee.
Kernan’s counsel delayed taking depositions until September 28, 1996, when he learned for the first time that OWPURA was in bankruptcy. Before us, counsel acknowledged that perhaps he should have applied to the Bankruptcy Court for leave to join the Trustee. Apparently, the practice in Bankruptcy Court is for an injured party to obtain ah order permitting suit against the trustee with recovery limited to the amount of the trustee’s public liability insurance. Kernan’s counsel explained that, bécause of the short time period between the deposition and the scheduled trial date, he elected to proceed to trial.
Viewing the facts charitably, -defense counsel’s' failure to describe OWPURA’s bankruptcy in its answer to the complaint might be explainable. Counsel, who was appearing for an insurance company, might not have known of the bankruptcy when he filed the answer to the complaint. By the time he submitted OWPURA’s answers to plaintiffs interrogatories, however, he knew of the bankruptcy. Moreover, at no time has OWPURA claimed anything but that its failure to mention its bankruptcy was intentional. Counsel tries to justify the nondisclosure of the bankruptcy by arguing that he identified the McCormick Organization as OWPURA’s property manager and that “short of disclos*462ing trial strategy, [OWPURA’s] did all that it could possibly do to alert plaintiff of this issue.”
The facts do not support counsel’s view that he did all that he possibly could to alert plaintiff to its bankruptcy. OWPURA’s pleadings and answers to interrogatories lead to the opposite conclusion, that defense counsel concealed OWPURA’s bankruptcy as a matter of “trial strategy.” That the strategy ultimately failed is small solace.
Nearly five years after her accident, a seriously incapacitated plaintiff still waits for her day in court. The defense “trial strategy” has imposed substantial costs on Kernan, the judicial system, and the public. The costs include the time and money spent by Kernan and defendants in hauling this case before the Law Division, the Appellate Division, this Court, and back to the Law Division. In effect, the defense “trial strategy” transformed a routine slip-and-fall case into a failed attempt at artful dodging.
The costs, however, extend beyond the parties to the judicial system and the public. The judges who have corrected the injustice to plaintiff could have dedicated their time to the causes of other litigants. .
All this could have been avoided if OWPURA had stated the true facts in either its answer to the complaint or its answers to interrogatories. That plaintiffs counsel may have been remiss in making discovery begs the question whether defense counsel should have disclosed OWPURA’s bankruptcy.
As the Court states:
In hindsight, plaintiff should have amended her complaint. It is equally clear that OWPURA’s counsel should have informed plaintiff that it was in bankruptcy and that a trustee had been appointed. Notably, it appears that OWPURA’s lawyer was paid by the same insurance company that was also the insurance company for the Trustee and McCormick. Hence, the insurance carrier is the real party in interest in this case. That fact suggests that the parties were hoping to have the statute of limitations run against the Trustee and McCormick while the plaintiff attempted unsuccessfully to recover from OWPURA.
The question logically arises^ whether diligent, even zealous, representation of a client justifies an attorney’s nondisclosure to *463an adversary in a civil action of material public information about the client. That OWPURA’s bankruptcy was material is made manifest by the opinions of' the Law Division, the Appellate Division, and this Court.
The Law Division dismissed Kernan’s complaint for several reasons. Among the reasons was the trial court’s conclusion that OWPURA did not owe a duty to Kernan because it was in bankruptcy and the Trustee had appointed McCormick as a property manager.
In reversing, the Appellate Division noted that OWPURA had not pled bankruptcy as an affirmative defense. The court acknowledged that it was not sure about the effect of the bankruptcy on the owner’s liability for common-law negligence, and remanded the matter to the Law Division so Kernan could seek to join McCormick as a defendant.
The majority opinion comprehensively addresses the substantive issues. This appeal, however, raises another issue that needs addressing. The unaddressed issue concerns the obligations of lawyers to each other and to the judicial system.
The Rules of Professional Conduct, the New Jersey Court Rules, the Principles of Professionalism for Lawyers and Judges, and relevant judicial decisions indicate that defense counsel should have been more forthcoming. The Rules of Professional Conduct frame the relationship between a lawyer’s duty to represent a client diligently and the lawyer’s duties to the court and an adversary. Analysis of those duties begins with RPC 1.3 Diligence, which states, “A lawyer shall act with reasonable diligence and promptness in representing a client.”
The analysis continues with RPC 3.3, which pertains to Candor Toward the Tribunal. As promulgated by the American Bar Association, RPC 3.3 provides:
(A) A lawyer shall not knowingly: (1) make a false statement of material fact or law to a tribunal; (2) fail to disclose a material fact to a tribunal when disclosure is necessary to avoid assisting a criminal or fraudulent act by the client.
*464In commenting on RPC 3.3, the American Bar Association states, “[t]here are circumstances where failure to make a disclosure is the equivalent of an affirmative misrepresentation.”
As adopted in New Jersey, RPC 3.3 exceeds the requirements of disclosure imposed by the ABA version. The New Jersey version of RPC 3.3 mandates that a lawyer shall not knowingly “fail to disclose to the tribunal a material fact with knowledge that the tribunal may tend to be misled by such failure.”
RPC 3.4, which pertains to Fairness to Opposing Party and Counsel, states in relevant part:
A lawyer shall not: (d) in pretrial procedure make frivolous discovery requests or fail to make reasonably diligent efforts to comply with legally proper discovery requests by an opposing party.
The New Jersey Court Rules strengthen the argument that defense counsel should have disclosed OWPURA’s status as a bankrupt. Rule l:4-8(a) states:
Effect of Signing, Filing or Advocating a Paper.... By signing, filing or advocating a pleading ... an attorney ... certifies that to the best of his or her knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:
(1) the paper is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation,
(3) the factual allegations have evidentiary support or, as to specifically identified allegations, they are either likely to have evidentiary support or they will be withdrawn or corrected if reasonable opportunity for further investigation or discovery indicates insufficient evidentiary support; and
(4) the denials of factual allegations are warranted on the evidence or, as to specifically identified denials, they are reasonably based on a lack of information or belief or they will be withdrawn or corrected if a reasonable opportunity for further investigation or discovery indicates insufficient evidentiary support.
In effect, Rule l:4-8(a) provides that an attorney’s signature on a pleading constitutes a certification that to the best of the attorney’s knowledge, information and belief, the pleading is not interposed for the purpose of delay. Read together, the Rules of Professional Conduct and the New Jersey Court Rules require what common courtesy and candor suggest, that pleadings and *465answers to interrogatories should not contain half-truths intended to mislead both adversaries and the court.
Two out-of-state cases confirm that defense counsel should have disclosed to Kernan the fact of OWPURA’s bankruptcy. In Spaulding v. Zimmerman, 268 Minn. 346, 116 N.W.2d 704 (1962), the Minnesota Supreme Court affirmed a trial court’s decision to set aside the settlement of an infant’s personal injury action arising out of an automobile accident. Plaintiff suffered various injuries, but his own doctors failed to detect an aneurysm in his aorta. Years later, the examining defense doctor discovered the aneurysm, which had arisen after the accident. Although the aneurysm was not detectable immediately after the accident, the accident caused the condition that gave rise to the aneurysm. Defense counsel did not disclose the existence of the aneurysm either to plaintiffs counsel or to the court when the settlement was presented for court approval. Although the Supreme Court acknowledged that “no canon of ethics or legal obligation may have required” defense counsel to disclose the aneurysm to plaintiffs counsel, it held that the trial court had not abused its discretion in setting aside the settlement.
In Virzi v. Grand Trunk Warehouse and Cold Storage Co., 571 F.Supp. 507 (E.D.Mich.1983), plaintiffs counsel presented a personal injury action for a mediation panel at the direction of the United States District Court in Michigan. The panel evaluated the case at $35,000. Unbeknown to plaintiffs counsel, his client had died nine days before the mediation. After the mediation hearing, plaintiffs counsel learned of his client’s death, but did not so inform his adversary or the court. At a subsequent pretrial conference, the case settled for $35,000. The District Court set the settlement aside at the request of defense counsel. After noting that knowledge of plaintiffs death “would have had a significant bearing on defendant’s willingness” to settle, the court concluded that plaintiffs counsel owed a duty to disclose that fact to both the court and opposing counsel.
*466Both Spaulding and Virzi present cases with more direct court involvement than the instant case. Still, the Virzi court found that a lawyer’s duty of candor to the tribunal extends beyond the court to opposing counsel. The Rules of Professional Conduct do not define the circumstances in which a lawyer’s duty of diligent representation should yield to a duty of disclosure to the court or an adversary. Spaulding and Virzi, however, illustrate the willingness of courts to remedy prejudice to a party caused by a lawyer’s non-disclosure of material facts, notwithstanding the failure of the Rules of Professional Conduct to delineate the boundaries of the overlapping duties of diligence and candor.
If counsel knew that OWPURA was bankrupt when he signed the answer to the complaint, he should have stated that fact in his answer. Compliance with Rule l:4-8(a) requires more than a statement putting Kernan to her proof. A statement that OWPURA was in bankruptcy would have alerted Keman’s counsel to facts that would have enabled him to take the appropriate action.
Additionally, Rule 4:23 imposes sanctions for failure to make discovery. Under that rule “an evasive or incomplete answer is to be treated as a failure to answer.” R. 4:23 — 1(b). OWPURA’s answer, which identified McCormick as a court-appointed manager, but did not disclose that OWPURA was in bankruptcy, was incomplete and evasive. As Justice Douglas wrote, “pretrial procedures make a trial less a game of blind man’s buff and more a fair contest with the basic issues and facts disclosed to the fullest practicable extent.” United States of America v. Procter & Gamble Co., 356 U.S. 677, 683, 78 S.Ct. 983, 986, 2 L. Ed.2d 1077 (1958).
Rules 1:4-8 and 4:23 would mean little if they did not require OWPURA to have disclosed its status as a bankrupt in its answer to the complaint and in its answers to plaintiffs interrogatories. Defense counsel apparently based his “trial strategy” on the fact that OWPURA was bankrupt without disclosing that fact to Kernan’s counsel. The fairer and more efficient practice would have been to disclose the fact of OWPURA’s bankruptcy in its *467answer to the complaint and in answers to plaintiffs interrogatories.
That practice also would comport with Principles 3 and 4 of the Principles of Professionalism for Lawyers and Judges promulgated by the New Jersey Commission on Professionalism in the Law. Those principles state in relevant part:
3. Forms of pleading, discovery, motions, or other papers, should not be used as a means of harassment, or for gaining an unfair advantage____
4. In the conduct of negotiations, or litigation, a lawyer should conduct himself or herself with dignity and fairness and refrain from conduct meant to harass the opposing party.
More egregious examples of discovery abuse may exist. The nondisclosure in this case, however, suffices to make the point. Shenanigans have no place in a lawsuit. Modern litigation is too time consuming and expensive for courts to tolerate discovery abuses. For over fifty years, courts have endeavored to transform civil litigation from a battle royal to a search for truth. Even before the adoption of the 1947 Constitution, courts were loath to allow defense counsel to lull their adversaries into a false sense of security that would subject claims to the bar of the statute of limitations. Peters v. Public Serv. Corp. of N.J., 132 N.J. Eq. 500, 507, 29 A.2d 189 (Ch.1942). In an appropriate ease, the judicial response has been to equitably estop a defendant from denying a fact that would cause a time limitation to bar a claim against the correct defendant. Zielinski v. Philadelphia Piers, Inc., 139 F.Supp. 408 (E.D.Pa.1956). Here, the Court has devised a response that permits Kernan to proceed against the correct defendant. I join in the Court’s opinion.
Justice COLEMAN joins this opinion.
Concur in result — Justices POLLOCK and COLEMAN- — -2.
For affirmance in part, modification in part — Chief Justice PORITZ, and Justices HANDLER, POLLOCK, O’HERN, GARIBALDI, STEIN and COLEMAN — 7.
Opposed — None.