Kolczycki v. City of East Orange
722 A.2d 603, 317 N.J. Super. 505 (1999)
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Rule of Law:
A trial court order suppressing a defendant's answer and defenses 'without prejudice' for discovery failures does not automatically preclude the defendant from raising substantive legal defenses, such as the statute of limitations, at a subsequent proof hearing unless a 'with prejudice' order is entered. For 'continuing torts' under the New Jersey Tort Claims Act, a cause of action accrues when the right to sue first arises, and each new injury must constitute a new tort with all its elements to restart the limitations period.
Facts:
- Plaintiffs Larry Kolczycki, Thomas Matarese, and Bachelor I Tavern, Inc., owned and operated 'Charlie's West,' which they rebranded as 'Scandals' in 1991, shifting its clientele to primarily young black patrons, and by January 1992, it became very successful.
- Beginning in early 1992, East Orange police, fire officials, and building inspectors initiated a pattern of harassment, including unannounced inspections during peak business hours, blocking parking lot access, and forcing the hiring of specific police officers for security.
- Plaintiffs believed this campaign was designed to harm their business, possibly to benefit a competing club partially owned by co-defendant Ronald Salahuddin.
- By April 1992, Scandals' patronage and income had significantly declined due to the constant presence of the police and their harassment of patrons.
- On April 15, 1992, plaintiffs filed a complaint with the East Orange Police Department's Internal Affairs Unit against Lt. John Jackson, and also met with high-level city officials, but the harassment continued.
- Scandals ultimately closed at the end of September 1992, and the premises were boarded up in October.
Procedural Posture:
- July 14, 1992: Plaintiffs filed a tort claim notice with the City of East Orange.
- May 23, 1994: Plaintiffs filed a lawsuit in the Law Division (trial court) against the City of East Orange, its police and fire departments, and certain employees.
- October 14, 1994: Plaintiffs obtained a default judgment against defendants in the trial court for failure to file an answer.
- January 26, 1995: The trial court granted defendants' motion to vacate the default judgment.
- February 24, 1995: Defendants filed their answers and separate defenses in the trial court.
- July 12, 1996: The trial court ordered defendants to provide outstanding discovery.
- August 13, 1996: The trial court entered an order suppressing defendants' answer and separate defenses for failure to provide discovery, designated 'without prejudice'.
- September 27, 1996: The trial court vacated its August 13 suppression order.
- October 7, 1996: The trial court issued a case management order setting discovery deadlines and stating that failure to comply would result in suppression of defendants' answer and defenses 'without prejudice'.
- February 21, 1997: The trial court granted plaintiffs' motion to suppress defendants' answer and separate defenses 'without prejudice' due to continued non-compliance with discovery.
- After suppressing defendants' answer, the trial court conducted a proof hearing.
- The trial court entered judgment awarding plaintiffs $400,000 in damages against the City of East Orange and Lt. Jackson, and denied counsel fees.
- Defendants appealed to the Superior Court of New Jersey, Appellate Division, challenging the order striking their answer and defenses and the entry of judgment.
- Plaintiffs cross-appealed the denial of counsel fees.
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Issue:
Does a trial court's order suppressing a defendant's answer and defenses "without prejudice" for persistent failure to provide discovery preclude the defendant from asserting a statute of limitations defense during a subsequent proof hearing, or must the court determine the actual accrual date of the alleged "continuing tort" for the purposes of the New Jersey Tort Claims Act?
Opinions:
Majority - LANDAU, J.A.D.
No, an order suppressing an answer "without prejudice" does not preclude a defendant from asserting a statute of limitations defense, and a court must determine the actual accrual date of the claim to assess whether the action is time-barred under the New Jersey Tort Claims Act. The Appellate Division found that the trial court appropriately exercised its discretion in initially suppressing the defendants' answer and defenses due to persistent discovery dereliction. However, the court emphasized that since the suppression orders were specifically entered 'without prejudice,' they should not have barred defendants from asserting any defenses, including the statute of limitations, until and unless a 'with prejudice' order was entered. A 'without prejudice' designation means no rights or privileges of the party are considered waived or lost, except as expressly conceded or decided. Therefore, the proof hearing and subsequent judgment should not have occurred while the suppression order remained 'without prejudice.' The court further clarified the interpretation of the accrual date for a cause of action under the Tort Claims Act, stating that it accrues when the right to institute and maintain a suit first arises. While a 'wrongful act with consequential continuing damages' is not a continuing tort that extends the statute of limitations, the continuing tort theory allows for each new injury, if it contains all the elements of a tort without needing to refer to prior actions, to constitute a new tort. The court thus remanded the case for a determination of the accrual date of plaintiffs' cause of action or any severable portion thereof, to ascertain if the two-year statute of limitations under N.J.S.A. 59:8-8b had run.
Analysis:
This case significantly clarifies the procedural implications of discovery sanctions, particularly orders entered 'without prejudice,' highlighting that such orders do not convert into default judgments without a subsequent 'with prejudice' ruling. It reinforces that critical defenses, like the statute of limitations, remain available unless explicitly precluded. Moreover, the decision provides guidance on how to assess the accrual date for tort claims against public entities involving a pattern of conduct, distinguishing between continuing damages from a single wrongful act and genuinely 'continuing torts' where each incident constitutes a new actionable wrong. This distinction is vital for future litigants facing statute of limitations challenges in cases of ongoing harm.
