LH WAGNER REALTY CORPORATION and LEO H. WAGNER, Plaintiffs–Appellants, v. BOB MARTIN, COMMISSIONER, NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, Defendant–Respondent.
Plaintiffs appeal from a February 15, 2013 order dismissing their complaint with prejudice for failure to state a claim upon which relief may be granted, R. 4:6–2(e). We reverse without prejudice and remand for further proceedings consistent with this opinion.
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. See Frederick v. Smith, 416 N.J.Super. 594, 597 (App.Div.2010), certif. denied, 205 N.J. 317 (2011). A trial court should grant the dismissal “in only the rarest of instances.” Printing Mart–Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 772 (1989). Such review “is limited to examining the legal sufficiency of the facts alleged on the face of the complaint,” and, in determining whether dismissal under Rule 4:6–2(e) is warranted, the court should not concern itself with plaintiffs' ability to prove their allegations. Id. at 746. If “the fundament of a cause of action may be gleaned even from an obscure statement of claim,” then the complaint should survive this preliminary stage. Craig v. Suburban Cablevision, Inc., 140 N.J. 623, 626 (1995) (citation and internal quotation marks omitted). “The examination of a complaint's allegations of fact required by the aforestated principles should be one that is at once painstaking and undertaken with a generous and hospitable approach.” Printing Mart–Morristown, supra, 116 N.J. at 746.
We discern the following facts from the face of plaintiffs' amended complaint, giving plaintiffs the benefit of all reasonable factual inferences. See ibid. In 1987, plaintiffs received approval from Wall Township to subdivide land in that municipality into three lots on which plaintiffs planned to build single family homes (the “Lots”). In 1993, plaintiffs transferred the Lots to another company, MY–BEN Associates. In January 1995, the New Jersey Department of Environmental Protection (DEP) issued MY–BEN a Notice of Violation (NOV), apparently for another property, and subsequently entered into negotiations with MY–BEN.
In April 1996, pursuant to a contract re-negotiation between plaintiffs and MY–BEN, MY–BEN re-conveyed the Lots to plaintiffs. Since that time, plaintiffs have held a valid deed to the Lots.1 After receiving the deed, however, plaintiffs found out about the 1995 NOV. Throughout 1996, plaintiffs repeatedly informed DEP that plaintiffs, not MY–BEN, were the rightful owners of the Lots. Despite this, in October 1996, DEP entered into an Administrative Consent Order (ACO) with MY–BEN providing that MY–BEN would perform mitigation on the Lots. MY–BEN subsequently constructed over 13,000 square feet of wetlands and a fifty-foot “buffer” on the Lots pursuant to the ACO. The remaining buildable areas were too small for the construction of single-family homes.
In May 2012, plaintiffs filed their original complaint. The Commissioner moved to dismiss in August 2012, but later withdrew that motion. In October 2012, plaintiffs filed their amended complaint alleging that DEP had taken plaintiffs' land “by causing its physical invasion by water from adjacent wetlands and prohibiting development on these wetlands, thereby substantially destroying the utility of [p]laintiff[s'] land and directly interfering with its use and enjoyment,” and “through regulatory action, depriv[ing][p]laintiff [s] of all beneficial use of [their] land.” Plaintiff sought just compensation for the taking in addition to other relief.
In November 2012, the Commissioner filed an amended motion to dismiss essentially on the grounds of collateral estoppel and res judicata, citing a previous Appellate Division opinion regarding the dispute between plaintiffs and DEP, N.J. Dept. of Envtl. Prot. v. Wagner, No. A–5205–05 (App.Div. Aug. 7, 2007) (the “2007 opinion”). The Commissioner also argued that “an [ACO] is not a physical invasion,” that DEP had not “deprived [plaintiffs] of all beneficial use” of the Lots, and that plaintiffs' actions were time-barred.
In February 2013, the judge conducted a hearing and dismissed plaintiffs' amended complaint with prejudice. He stated in relevant part that
[The Commissioner's] application before the [c]ourt is really to dismiss for failure to state a claim, and to dismiss based on the pleadings.
The complaint itself is not sufficient to afford the plaintiff any relief and doesn't really state a cause of action that would survive a motion on the grounds of inverse condemnation. There has been no physical invasion of the property. And no facts are so alleged.
This is a complaint that under [Rule ] 4:6–2 should be dismissed on its face. It does not satisfy the requirements.
[ (Emphasis added).]
The judge concluded that plaintiffs' claims were time-barred and that the 2007 opinion defeated plaintiffs' arguments that the ACO was invalid.
On appeal, plaintiffs argue primarily that the judge erred by dismissing the matter on the pleadings, R. 4:6–2(e), because he looked beyond the four corners of the complaint before concluding that plaintiffs had failed to state a claim upon which relief could be granted. Plaintiffs also argue that the judge erred by relying on the statute of limitations and theories of res judicata and collateral estoppel on a Rule 4:6–2(e) motion.
The judge looked outside the pleadings when he considered the factual and legal history of the dispute between the parties and discussed the 2007 opinion. If a judge relies on matters outside the pleadings, a Rule 4:6–2(e) motion is automatically converted into a Rule 4:46 summary judgment motion. Pressler & Verniero, Current N.J. Court Rules, comment 4.1.2. on R. 4:6–2 (2014); see also Roa v. Roa, 200 N.J. 555, 562 (2010). The judge did not, however, grant the Commissioner summary judgment. Rather, he dismissed the complaint for failure to state a claim upon which relief can be granted. And he did so relying on the Commissioner's substantive collateral estoppel, res judicata, and statute of limitations contentions. At this stage in the proceeding, however, the court should not have concerned itself with plaintiffs' ability to prove their allegations. Printing Mart–Morristown, supra, 116 N.J. at 746.
Although dismissals pursuant to Rule 4:6–2(e) “should ordinarily be without prejudice and ․ plaintiffs generally should be permitted to file an amended complaint,” Nostrame v. Santiago, 213 N.J. 109, 128 (2013), the judge dismissed the complaint with prejudice without giving plaintiffs an opportunity to amend the complaint. The dismissal should have at the very least been without prejudice, especially because the judge stated that plaintiffs alleged insufficient facts in the pleading.2
We therefore remand to allow plaintiffs an opportunity to file an amended complaint. After that, if the Commissioner believes that the facts alleged by plaintiffs are insufficient to support plaintiffs' causes of action, he may file the appropriate application anew before the judge.
Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.
1. FN1. The deed was not recorded by plaintiffs until September 2000.
2. FN2. Although a judge on a Rule 4:6–2(e) motion may dismiss an action with prejudice on statute of limitations grounds, Printing Mart–Morristown, supra, 116 N.J. at 772, it is not clear from the pleadings when plaintiffs' causes of action accrued. See Klumpp v. Borough of Avalon, 202 N.J. 409–10 (2010).