Binder v. Price Waterhouse & Co., LLP

• Decision Date: 30 May 2007
• Citation: 393 N.J. Super. 304,923 A.2d 293
• Parties: J. Louis BINDER, as Trustee of the Resorts International, Inc. Litigation Trust, Plaintiff-Appellant, v. PRICE WATERHOUSE & CO., L.L.P., Defendant-Respondent.
• Court: New Jersey Superior Court

923 A.2d 293

393 N.J. Super. 304

J. Louis BINDER, as Trustee of the Resorts International, Inc. Litigation Trust, Plaintiff-Appellant, v. PRICE WATERHOUSE & CO., L.L.P., Defendant-Respondent.

Superior Court of New Jersey, Appellate Division.

Argued April 25, 2007.

Decided May 30, 2007.

David H. Pikus, Florham Park, argued the cause for appellant (Bressler, Amery & Ross, attorneys; Mr. Pikus, on the brief).

Alan E. Kraus, Newark, argued the cause for respondent, Price Waterhouse & Co., L.L.P., now known as Pricewaterhouse-Coopers, LLP, (Latham & Watkins, attorneys; Mr. Kraus, Lauren K. Podesta, and Monica Y. Awadalla, on the brief).

Before Judges COLLESTER, SABATINO and LYONS.

The opinion of the court was delivered by

LYONS, J.S.C. (temporarily assigned).

Plaintiff, J. Louis Binder ("Binder") appeals the dismissal of his action for accounting malpractice and breach of contract against defendant, Price Waterhouse & Co., L.L.P. ("Price Waterhouse"). The primary issue in this case is whether tolling principles apply to preserve a state court action that was originally timely filed in, and later dismissed by, the federal courts after the normally-applicable statute of limitations had already expired. We find the proper standard to apply in this case is "equitable principles," but that because plaintiff did not act promptly to file his state court action after dismissal of the federal action, we affirm the state court's dismissal of his action. The following factual and procedural history is relevant to the issues advanced on appeal.

On November 12, 1989, creditors of Resorts International Inc. and Resorts International Financing, Inc. (collectively "Resorts") filed Chapter 11 involuntary reorganization petitions in the United States Bankruptcy Court for the District of New Jersey. On December 22, 1989, Griffin Resorts and Griffin Resorts Holding, Inc. (collectively "Griffin"), affiliates of Resorts, filed separate voluntary Chapter 11 petitions. Pursuant to an order of the Bankruptcy Court, the Chapter 11 cases were consolidated and jointly administered.

The Bankruptcy Court issued an order confirming the second-amended joint plan of reorganization on August 28, 1990. On August 29, 1990, Kenneth Feinberg ("Feinberg") was approved as the litigation trustee in the bankruptcy matter. A Final Plan and Litigation Trust Agreement were executed between Resorts, Griffin, and Feinberg to facilitate the reorganization plan on September 17, 1990. Article VIII of the Litigation Trust Agreement gave the Bankruptcy Court exclusive jurisdiction over all claims relating to the litigation trust.

The assets assigned to the litigation trust were claims originally held by Resorts against Donald J. Trump ("Trump") and affiliated entities arising from Trump's 1988 buyout of the Taj Mahal Resort. The plan authorized the trustee to prosecute claims against the Trump entities. On November 1, 1990, after confirmation of the plan, Feinberg retained Price Waterhouse to provide auditing and tax-related services to the litigation trust. On May 21, 1991, Feinberg, as trustee, entered into an agreement with Trump and affiliates, and Resorts, settling the litigation claims for $12,000,000, which funds became assets of the litigation trust. On August 17, 1994, Binder replaced Feinberg as trustee.

On April 15, 1997, nearly seven years after the Reorganization Plan was confirmed, Binder, as trustee, filed a complaint in the United States Bankruptcy Court against Price Waterhouse charging professional negligence and breach of contract and seeking damages and disgorgement fees.

Following three years of discovery, Price Waterhouse moved before the Bankruptcy Court to dismiss Binder's complaint for lack of subject matter jurisdiction. The Bankruptcy Court granted Price Waterhouse's motion to dismiss on January 4, 2002 finding there was no "related to" or "core" jurisdiction and thus, no subject matter jurisdiction.

Binder appealed to the Federal District Court, which, on December 18, 2002, reversed the Bankruptcy Court's earlier dismissal order and reinstated and remanded the matter, finding that the claims arising from the professional misconduct claim were sufficiently related to the bankruptcy case to be within the jurisdiction of the Bankruptcy Court. On June 22, 2004, the Third Circuit reversed the holding of the District Court, finding that the matter "lacked a close nexus to the bankruptcy plan or proceeding and affected only matters collateral to the bankruptcy process." Binder v. Price Waterhouse & Co., L.L.P., 372 F.3d 154, 169 (3d Cir.2004). Consequently, the District Court entered an order dismissing the bankruptcy complaint on August 9, 2004. No petition for certiorari was filed with the United States Supreme Court.

Following dismissal of the Bankruptcy Court proceedings, Binder retained new counsel ("counsel") and decided to file a new action in the Superior Court alleging identical claims and seeking identical relief to that sought in the Bankruptcy Court. On or about February 18, 2005, counsel prepared a complaint for an action in the Superior Court but failed to file or serve same. Counsel submitted a first-amended complaint to the clerk of the Superior Court for filing on or about April 29, 2005. Counsel "drafted" a second-amended complaint to correct typographical errors on or about May 31, 2005.

On September 11, 2005, a notice of administrative dismissal with prejudice for lack of prosecution was issued by the clerk of the Superior Court because as of that date, the May 31, 2005 second-amended complaint was not of record and had not been served. Consequently, on or about October 12, 2005, counsel filed a third-amended complaint. On November 11, 2005, the third-amended complaint was dismissed for failure to prosecute because service had not been timely performed. The complaint was never reinstated. On December 8, 2005, the October 12, 2005 third-amended complaint was served upon defendant.

On February 22, 2006, Price Waterhouse filed a motion to dismiss plaintiff's claim for failure to comply with the statute of limitations. Binder filed a precautionary cross-motion for reinstatement of the October 12, 2005 action and a motion hearing was held on April 28, 2006. Following the hearing, the court granted the motion to dismiss with prejudice, finding that contrary to Binder's arguments, the substantial compliance doctrine was inapplicable and equitable tolling principles did not warrant the restoration of the complaint because his delay in filing the complaint was excessive. This appeal ensued.

On appeal, Binder raises the following arguments for our consideration:

I. The Statute Of Limitations Does Not Bar An Action Dismissed By The Federal Courts For Lack Of Subject Matter Jurisdiction.

II. The Relatively Brief Interval Between Filing And Service Should Be Excused In This Otherwise Longstanding Dispute.

Binder relies significantly upon Negron v. Llarena to argue that the lawsuit should be allowed to proceed under the principles of substantial compliance or equitable tolling because he timely filed in the Bankruptcy Court.¹ 156 N.J. 296, 716 A.2d 1158 (1998). We disagree.

Actions in professional negligence and breach of contract have six-year statutes of limitations. N.J.S.A. 2A:14-1. Generally, the date when a cause of action is deemed to have accrued is the date upon which the right to institute and maintain a suit first arises. Holmin v. TRW, 330 N.J.Super. 30, 35, 748 A.2d 1141 (App. Div.), certif. granted, 165 N.J. 531, 760 A.2d 785 (2000), aff'd, 167 N.J. 205, 770 A.2d 283 (2001). It is undisputed in this case that Binder timely filed his complaint with the Bankruptcy Court on April 15, 1997 and that on this date, he had a right to institute a suit against Price Waterhouse for breach of contract and professional negligence for alleged negligence dating back to audits performed in 1991 and 1992. In Berke v. Buckley Broadcasting Corp., we recognized that 28 U.S.C. § 1367(d) tolls "the period between the running of the statute while the action is pending in the federal court and thirty days following the final judgment of the federal court deciding to exercise supplemental jurisdiction." 359 N.J.Super. 587, 595, 821 A.2d 118 (App.Div.), certif. denied, 177 N.J. 571, 832 A.2d 322 (2003). Thus, it is settled that between the April 15, 1997 filing and the District Court's dismissal of the Bankruptcy Court case on August 9, 2004, the pending federal matter suspended the running of the statute of limitations for purposes of an ensuing state court action. The paramount question at hand is whether the matter continued to be tolled during the eight-month period that the federal case was dismissed on August 9, 2004 and the filing of the first-amended complaint on April 29, 2005.

28 U.S.C. § 1367(d) "tolls the running of the state statute of limitations from its customary expiration date until the expiration of a thirty-day period following conclusion of the federal action." Ibid. Because Binder commenced the state action more than thirty days after dismissal of the federal action by the Third Circuit, relief under § 1367(d) is not available to him. Id. at 596, 821 A.2d 118. There being no statutory remedy available, Binder argues that under Negron, he should have been excused for the untimely filing of his amended complaint because he substantially complied with the statute of limitations by filing his federal bankruptcy action in good faith. We disagree.

Negron concerned a wrongful death action initially filed in the Federal District Court. Before trial, and outside the two-year statute of limitations period imposed by the New Jersey Wrongful Death Act, the suit was voluntarily dismissed on the ground that the District Court did not have jurisdiction. A complaint alleging the same facts and causes of action was subsequently filed in the Superior Court eleven weeks after dismissal. Defendants moved for summary...