FREEDOM BANK, Plaintiff–Respondent, v. CAPITAL DEVELOPMENT & CONSTRUCTION MANAGEMENT, LLC and JAMES E. FUCCI, Defendants–Appellants.
Defendants, Capital Development & Construction Management LLC. and James E. Fucci, appeal from the order of the Law Division denying their application to file a notice of trial de novo from an arbitration award in favor of plaintiff Freedom Bank, outside the thirty-day period provided for in Rule 4:21A–6(b)(1). We dismiss the appeal as a sanction under Rule 2:9–9 for defendants' failure to file the transcript of the hearing in which the trial court explained its reasons for denying the relief defendants now seek this court to review.
These are the salient facts. On June 21, 2011, plaintiff filed a civil action against defendants alleging breach of promissory notes to secure payments of two loans in the amount of $250,000 and $75,000. Plaintiff sought a judgment for the outstanding principal balance, accrued interest, and counsel fees incurred in the prosecution of the collection action. Defendants filed their responsive pleading on November 23, 2011. The parties were directed to appear on June 12, 2012 for mandatory arbitration.1 The arbitration took place on this date and plaintiff was awarded $373,097.29 in damages.
Despite defendants attempts to obfuscate the matter, the record shows defendants filed their trial de novo notice with the vicinage's civil division manager on July 13, 2012, thirty-one days after the arbitrator's June 12, 2012 decision. It is equally clear that defendants have not served plaintiff with this notice of trial de novo to date. The Bergen County Statutory Arbitration Program rejected defendants' attempt to file the notice of trial de novo because it was received outside the thirty-day window provided in Rule 4:21A–6(b)(1).
On July 25, 2012, defendants filed a motion to permit the late filing. As plaintiff noted, this was the first time plaintiff became aware of defendants' decision to reject the arbitration award and seek a trial on the merits. Judge Menelaos W. Toskos heard argument on defendants' motion on August 17, 2012. After considering the record before him, Judge Toskos denied the motion. The order denying defendants' motion states “for the reasons set forth on the record at oral argument.” Although defendants discussed in their appellate brief what was allegedly argued before Judge Toskos on August 17, 2012, we do not know definitively what was said or the basis for his ruling, because defendants did not provide us with a transcript of these proceedings as part of the record in this appeal.
Defendants moved before Judge Toskos for reconsideration. The matter came for oral argument on October 18, 2012. By way of argument, defendants' counsel made the following representations to the court:
In reference to the what I'll call it the late de novo trial de novo that we submitted to the Court, we submitted it on the 30 th day which was on July 12th [, 2012]. And we sent it out Lawyer Service. And pursuant to the [R]ule 1:5–4C we sent it out Lawyer Service they are a commercial entity that holds itself out and we all know as lawyers, and you, Your Honor being a former attorney may have used also Lawyer Service. We give it to them, we gave it to them for same day delivery to the Court. They delivered it to the Court. If you look at the document that was submitted to the Court, they stamped it though the next day as they were processing it downstairs in the office of the clerk, at the finance window. But it got there. We sent it out same day, we paid for same day. They delivered it same day. But it got stamped by the personnel downstairs on I believe it was the 13th [of July 2012].
This argument was thus predicated on counsel's representation to the court that he had given the notice for trial de novo to Lawyer Service on July 12, 2012, and specifically paid and instructed Lawyer Service to deliver the notice of trial de novo that same day. To crystallize the point, defendants' counsel specifically cited Rule 1:5–4(c), which provides:
Service by Commercial Courier. Service by a commercial courier of a paper referred to in R. 1:5–1, except for motions, which are governed by R. 1:6–3, shall be complete upon the courier's receipt of the paper from the sender, provided the courier's regular business is delivery service, and provided further that it guarantees delivery to the addressee by the end of the next business day following the courier's receipt from the sender. (Emphasis added.)
As the following exchange illustrates, Judge Toskos recognized the importance of this representation by defendants' counsel:
THE COURT: Maybe I'm misunderstanding what you're saying today. You're saying that it was received on the 12 th, on June 12 thin the Court?
DEFENDANTS' COUNSEL: Yes, because it was the same day, yes Your Honor.
THE COURT: Because last time when you argued the motion  you didn't indicate it was same day service. Maybe I misunderstood it. And there was nothing to indicate that it was actually received by the Court on June 12 th.
DEFENDANTS' COUNSEL: Well we sent it out same day service with Lawyer Service. That's what we paid for. And that's what it says is same day Lawyer Service. And they got it downstairs and it's stamped the 13 th.
THE COURT: Let me—- that's not what I understood last time. [Addressing plaintiff's counsel.]
PLAINTIFF'S COUNSEL: Yes, your Honor. My understanding—-
THE COURT: Am I right?
PLAINTIFF'S COUNSEL: Yes, your understanding is correct. In our last proceeding there was no demonstration that it was same day service. The only same day service that they gave us dated July 20 th . It was for some other arbitrary document. It doesn't say that it was related to a late filing of trial de novo. During the last hearing, there was no statement made by counsel that same day service was made. Rather, they did admit that they used Lawyer Service. But Lawyer Service as we all know, while it's permitted to be used by the Court automatically goes the next day unless same day service is requested. There's been no proof of that. There's been no demonstration of that.
And as you mentioned in our last hearing, it wasn't even argued. With respect to the motion for reconsideration, the standard is arbitrary and capricious and unreasonable. We believe Your Honor underwent the appropriate fact-sensitive analysis necessary for this case. The motion was [a] motion for late trial de novo or late trial de novo sent on July 12 th, the same day that it was due in the Court. It arrived a day late. We didn't receive any notice of this motion until July 25, I believe, Your Honor.
[ (Emphasis added).]
To emphasize the haphazard nature of defendants' counsel's presentation, Judge Toskos noted that this crucial argument based on the role played by Lawyer Service was not raised by defendants in their written submissions in support of the motion for reconsideration. Thus, this ostensibly dispositive issue was raised by defendants' counsel for the first time during oral argument on the motion, without prior notice to Judge Toskos or plaintiff's counsel.
Judge Toskos returned to this issue later in the argument. While in the process of clarifying the legal points he wanted the attorneys to address in supplementary written submissions, Judge Toskos addressed defendants' counsel directly as follows:
THE COURT: The other concern I had and this was the second thing that you were talking about, and I stopped you and said let's go back to try to understand. So just so I understand it, and there's no confusion next time you're back here, and [plaintiff's counsel] understands what she's going to argue against I guess, right. Your argument is that when you handed to Lawyer Service, and I'm saying you I don't know if you personally did it, but when it was handed to Lawyer Service on July 12 th  that constituted service on the clerk that day, July 12 th?
DEFENDANTS' COUNSEL: Pursuant to the rule, yes Your Honor.
THE COURT: Not that it actually physically got to the clerk on July 12 th, because the stamp on the paper says it got to the clerk on July 13 th. There's nothing to indicate that it physically got to the clerk on July 12 th. Correct?
DEFENDANTS' COUNSEL: As I stand here today Your Honor, I believe that's correct.
PLAINTIFF'S COUNSEL: Is it being conceded then that this was not same day service requested? There's nothing indicating that in the paperwork today and in the past.
DEFENDANTS' COUNSEL: Again, it's a very—- I'm in a very awkward position in the sense that the person who handles this case, who has handled this case is my son who is not here, who is across the pond on his honeymoon. I understand that. And that's not—- I'm just saying that's a fact to whatever extent it's useful or not. But that's my understanding, Your Honor, it was Lawyer Service and it was same day service.
THE COURT: Okay. That's not what he said when he was here.
DEFENDANTS' COUNSEL: Well he'll be here the next time.
[ (Emphasis added.) ]
The next time this matter came before Judge Toskos was November 21, 2012. Appearing for defendants that day was the attorney who was on his honeymoon at the hearing held October 18, 2012. This attorney indicated that Lawyer Service had picked up the notice of trial de novo “in the evening” of July 12, 2012, and delivered it to the court the following day, July 13, 2012, at 9:50 a.m. Defendants' counsel did not cite to or rely in any way on Rule 1:5–4(c). Counsel argued instead for the court to accept the late filing based on the doctrine of substantial compliance, as discussed and applied by this court in Gerzsenyi v. Richardson, 211 N.J.Super. 213 (App.Div.1986).
Plaintiff's counsel argued Gerzsenyi was distinguishable from the salient facts here in two key respects: first, the aggrieved party in Gerzsenyi established exceptional circumstances by showing it had attempted to serve the notice the day before it was due, but was frustrated by events outside its control; and second, the aggrieved party in Gerzsenyi also attempted to serve the adversary. By contrast, the record here showed defendants did not make any attempt to serve plaintiff.
Plaintiff's counsel took great exception to defendants continued efforts to shift the factual landscape each time they appeared in court on this issue. Counsel noted that the Lawyer Service slip presented by defendants this time showed the notice of trial de novo was picked up for delivery at 7:21 p.m. on July 12, 2012, and was not delivered to the court until the following day, July 13, 2012. On these uncontested facts, plaintiff's counsel argued: “There is absolutely no way the defendants could have conceivably believed that it would then be served upon the Court and filed on the due date of the 12th.”
At the conclusion of the November 21, 2012 hearing, Judge Toskos found “undisputed” that the civil division manager's office did not receive defendants' request for a trial de novo until July 13, 2012, and thus outside the thirty-day window provided in Rule 4:21A–6(b)(1). Judge Toskos also found plaintiff did not receive notice of defendants' intent to challenge the arbitration award until July 25, 2012.
In rejecting defendants' substantial compliance argument, Judge Toskos distinguished the key facts in Stegmeier v. St. Elizabeth Hospital, 239 N.J.Super. 475 (App.Div.1990), from the prevailing facts here. Judge Toskos emphasized that in Stegmeier, this court held a motion for new trial under Rule 4:49–1 was timely filed based on the doctrine of substantial compliance when the defendant's attorney timely filed and timely delivered the motion to an independent messenger service. Id. at 482. (Emphasis added.) Under those circumstances:
There was substantial compliance by the hospital's attorney when the motion was timely filed and on the same day a copy of the motion was entrusted to an independent delivery service to effect delivery. Under these circumstances, the interests of justice require that the motion be heard on its merits, rather than being dismissed on technical grounds.
By contrast, Judge Toskos found:
Here [the request for a trial de novo] wasn't placed for delivery within the time limitation of the rule and although it wasn't really emphasized today it was emphasized on the initial motion that the papers were not given to [the courier] with the instruction that there be same day delivery. In fact, the defendant has provided us with a copy of [the courier's] tracking sheet and it says that it was standard service․ [Priority service] was not checked.
So here, as I indicated, the substantial compliance argument failed to carry the day because the notice was not given to [the courier] for same-day service. In fact, [the courier] didn't pick it up until after the courts were closed. So there's no way that the delivery could have been within the time limitation of the rule and that's required in order for substantial compliance argument ․ to be reached.
Ultimately, Judge Toskos denied defendants' motion for reconsideration and simultaneously granted plaintiff's motion to confirm the arbitration award from June 12, 2012. Judge Toskos memorialized his decision as part of an order dated November 21, 2012.
On appeal to this court, defendants argue that the trial court committed “grave errors” and failed “to adhere [to] the binding case law precedent established by this [c]ourt” and ignored “the unfair prejudice to the [a]ppellants.” According to defendants, the error committed by the trial court is so “patently” clear “as to warrant summarily vacating the previously mentioned Orders.”
We have quoted the strident language used by defendants to undermine the trial court's ruling because it stands in sharp contrast to the record before us, limited as it may be. As we have shown, Judge Toskos consistently gave defendants' counsel multiple opportunities to present evidence in support of their untenable position. Judge Toskos was fair, patient, and exceedingly indulgent to both of the attorneys who appeared to represent defendants' interests. The record before us in no way supports characterizing Judge Toskos' efforts in the manner described by defendants' counsel on appeal.
On the other hand, defendants' counsel's failure to prosecute this appeal in a manner consistent with the rules of appellate practice warrants the imposition of sanctions under Rule 2:9–9. As correctly argued by plaintiff in its response brief, this appeal should be dismissed in its entirety based on defendants' failure to include the August 17, 2012 transcript. Under Rule 2:5–3(a), “if a verbatim record was made of the proceedings before the court ․ from which the appeal is taken, the appellant shall ․ serve a request for the preparation of an original and copy of the transcript[.]”
This appeal requires us to review the trial court's decision reflected in this transcript. Defendants' failure to include this transcript makes it impossible for this court to determine whether the judge's factual finding are supported by competent evidence in the record or whether the court properly considered the legal arguments raised by the attorneys. Newman v. Isuzu Motors Am., Inc., 367 N.J.Super. 141, 145 (App.Div.2004); see also Johnson v. Schragger, Lavine, Nagy & Krasny, 340 N.J.Super. 84, 87 n.3 (App.Div.2001) ( “failure to supply pleadings that are essential to the proper consideration of the issues hinders ․ appellate review”).
A decision to dismiss an appeal for failure to comply with the rules of appellate practice in this fashion is not unprecedented. In Cipala v. Lincoln Technical Institute, 179 N.J. 45 (2004) the Supreme Court affirmed this court's refusal to review an issue raised by the appellant who failed to submit a transcript and a final order dismissing the claim. Id. at 54–55. Citing Rule 2:6–1(a)(1)(C) and Rule 2:5–3(a), the Court in Cipala noted that failing to include the transcript or order “prohibit[ed] review” of the appellant's claim. Id. at 55.
Rule 2:9–9 authorizes this court to impose a sanction for failure to properly prosecute an appeal, “including, but not limited to, dismissal of the appeal or ․ imposition of costs or attorney's fees or such other penalty as may be assessed personally against the attorney.” We are aware that the ultimate sanction of dismissal should be used sparingly, particularly to avoid making a potentially innocent client responsible for the derelictions of his or her attorney. As wisely noted by Chief Justice Weintraub, then serving as Justice Weintraub, in Gnapinsky v. Goldyn, 23 N.J. 243, 248 (1957), “[t]here may be situations in which dismissal is the necessary sanction, but where other measures will fairly adjust such mesne controversies a dismissal should not be ordered.”
We are satisfied dismissal of the appeal is warranted here. This deficiency could have been addressed and corrected by defendants at any time during the appellate process. Plaintiff's counsel featured this deficiency and called for this sanction as the lead argument in its response brief. Despite this, defendants did not make any effort to correct this problem while the appeal was pending oral argument, nor even file a reply brief addressing the legal arguments raised by plaintiff.
Members of this appellate panel also noted this deficiency at oral argument and characterized the problem as a serious and probably dispositive one. We emphasized the frustration caused by this material omission. Without this transcript, we are unable to review the central analytical basis for the trial court's ruling. Despite this, defendants' counsel did not seek post-argument leave from this court to submit the transcript of the August 17, 2012 proceedings.
Faced with such a complete failure to act and utter disregard of the rules of appellate practice, it is clear that dismissal of the appeal is the only meaningful measure available to us to protect and preserve the integrity of the judicial process.
Finally, we conclude, sua sponte, that an award of counsel fees 3 to plaintiff is also appropriate because plaintiff's counsel brought the magnitude of this deficiency to defendants' attention early on in the appellate process, thus affording defendants multiple opportunities to correct the problem by filing the transcript in question. Pursuant to Rule 2:11–4(c), we direct plaintiff's counsel to file a motion seeking reimbursement of the cost of legal services incurred in the defense of this appeal. The motion shall be supported by affidavits of counsel as prescribed by Rule 4:42–9(b) and (c). Plaintiff shall file this motion with the Clerk of the Appellate Division and serve defendants' counsel with copies by certified mail, return receipt requested, and ordinary mail, within ten days after the release of this opinion.
1. FN1. Rule 4:21A–1(a)(3) mandates arbitration for “actions on a book account or instrument of obligation.”
2. FN2. We do not know what defendants' counsel argued “last time” he was before Judge Toskos because defendants did not provide us with the transcript of the August 17, 2012 hearing as part of this appellate record.
3. FN3. In this case, an award of counsel fees is merely a symbolic sanction because plaintiff has the right to seek counsel fees as a measure of damages under the provisions of the promissory notes.