H.C. Equities, LP v. Cnty. of Union

• Decision Date: 19 July 2021
• Docket Number: A-1/2 September Term 2020,084556
• Citation: 247 N.J. 366,254 A.3d 659
• Parties: H.C. EQUITIES, LP, Plaintiff-Respondent, v. COUNTY OF UNION, New Jersey, and Union County Improvement Authority, Defendants-Appellants.
• Court: New Jersey Supreme Court

247 N.J. 366

254 A.3d 659

H.C. EQUITIES, LP, Plaintiff-Respondent,

v.COUNTY OF UNION, New Jersey, and Union County Improvement Authority, Defendants-Appellants.

A-1/2 September Term 2020

084556

Supreme Court of New Jersey.

Argued February 2, 2021

Decided July 19, 2021

Louis N. Rainone argued the cause for appellant Union County Improvement Authority (Rainone Coughlin Minchello, attorneys; Louis N. Rainone, and John F. Gillick, East Brunswick, on the briefs).

Thomas A. Abbate argued the cause for appellant County of Union, New Jersey (DeCotiis, Fitzpatrick, Cole & Giblin, attorneys; Thomas A. Abbate and Gregory J. Hazley, Teaneck, on the briefs).

A. Matthew Boxer argued the cause for respondent (Lowenstein Sandler and Gruen & Goldstein, attorneys; Fred R. Gruen, Union, of counsel, and A. Matthew Boxer and Jarrett R. Schindler, Roseland, on the briefs).

Alexander Shalom argued the cause for amicus curiae American Civil Liberties Union of New Jersey (American Civil Liberties Union of New Jersey Foundation, attorneys; Alexander Shalom, Newark, and Jeanne LoCicero, on the brief).

JUSTICE PATTERSON delivered the opinion of the Court.

The New Jersey Tort Claims Act (Act), N.J.S.A. 59:1-1 to :12-3, requires a claimant seeking to file a tort action against a local public entity or public employee to present a tort claims notice informing the entity about the potential claim. The notice must be "filed with that entity" within ninety days of the accrual of the claimant's cause of action. N.J.S.A. 59:8-7, -8. The Act, however, allows a claimant to apply to a court within one year of the accrual of the claim for leave to file a late notice of claim. Id. at -9. To secure permission to file a late notice of claim, the claimant must show that the public entity or public employee has not been substantially prejudiced by the delay and that extraordinary circumstances justify the failure to timely file. Ibid.

Plaintiff H.C. Equities, L.P. asserted contract claims against its commercial tenant, the County of Union, after the County began to withhold rent payments in response to a dispute about the condition of the leased commercial buildings. During negotiations to settle the contract matter, the County directed its co-defendant, the Union County Improvement Authority (Authority), to assess the County's real estate needs. H.C. Equities obtained a copy of a consultant's report prepared as part of that assessment and objected to statements in the report about the condition of the buildings that it had leased to the County.

In February and March 2017, H.C. Equities’ outside counsel wrote three letters to counsel for the County, two of which were also addressed to outside counsel for the Authority. In the letters, H.C. Equities objected to the consultant's report, requested the right to provide input for the consultant's analysis, sought to settle the prior litigation, and generally discussed the prospect of further litigation in the event that the parties’ disputes were not resolved. In those letters, however, H.C. Equities did not identify, describe, or quantify its potential tort claims against either defendant.

H.C. Equities filed suit against the County and the Authority, asserting conspiracy claims against both defendants and trade libel and defamation claims against the Authority. Plaintiff did not apply for permission to file a late tort claims notice until more than eight months after the expiration of the one-year period allowed under N.J.S.A. 59:8-9 for the filing of such motions.

The trial court held that H.C. Equities had failed to file the notices of claim that the Tort Claims Act requires and dismissed its tort claims. H.C. Equities appealed, and the Appellate Division reversed the trial court's determination. Relying on a combination of excerpts from the three letters written by H.C. Equities’ counsel, the Appellate Division found that H.C. Equities substantially complied with the Act's notice of claim provisions.

We disagree that in the setting of this case, a finding of substantial compliance with the Tort Claims Act can be premised on comments made by plaintiff's counsel in three different letters sent to lawyers representing the defendant public entities. We do not find that H.C. Equities’ letters, individually or collectively, communicated the core information that a claimant must provide to a public entity in advance of filing a tort claim. See N.J.S.A. 59:8-4. We conclude that H.C. Equities did not comply with the notice of claim provisions of the Tort Claims Act or file a timely motion to submit a late claim.

Accordingly, we reverse the Appellate Division's determination, and remand the matter to the trial court.

I.

A.

On December 1, 1998, H.C. Equities entered into an agreement to lease to the County two buildings in Elizabeth for a term of twenty-five years. On July 26, 2012, the County ceased making rental payments to H.C. Equities, citing the landlord's alleged neglect of the leased properties and an electrical fire that had damaged the basement in one of the buildings the previous day. Contending that the buildings were safe for occupancy, H.C. Equities asserted that the County wrongfully withheld a total of $14,846,790.16 in rent due for the period between July 26, 2012 and April 1, 2018, and that it spent $386,930.95 restoring the properties at the County's insistence.

In December 2013, H.C. Equities filed an action in the Law Division for breach of its lease agreement, seeking compensatory damages, attorneys’ fees, costs, and other relief. H.C. Equities and the County conducted negotiations to settle their dispute. According to H.C. Equities, the parties agreed on all material terms of a settlement, including a twenty-year lease extension, and the agreed-upon terms were memorialized in a settlement agreement, but the settlement agreement was not executed. H.C. Equities agreed to the dismissal of its Law Division action without prejudice pending the conclusion of settlement negotiations. The County disputes H.C. Equities’ contention that the matter was resolved in a binding settlement agreement.

In October 2015, at the County's behest, the Authority retained a real estate consultant, Colliers International (Colliers), and requested that it assess the County's long-term real estate needs. H.C. Equities contends that despite assurances by the County that Colliers’ assessment would be a "rubber-stamp" process that would not affect the parties’ settlement negotiations, the consultant's report was prepared as "part of an improper and politically motivated plot to avoid the settlement terms and particularly the lease extension."

Colliers provided the County with an initial report dated January 20, 2017. H.C. Equities characterizes the report as a "draft" of Colliers’ final report. The County asserts that the January 20, 2017 report was a preliminary report addressing a specific aspect of its real estate requirements, not a draft of the consultant's final report, and that Colliers’ full recommendations on the County's space needs were not presented until it submitted a comprehensive report dated September 19, 2017.

Although the January 20, 2017 report was not publicly disseminated, H.C. Equities obtained a copy of it. H.C. Equities has not disclosed in the record of this appeal the precise date that it received the report. It states only that it obtained the report in "early 2017."

In the January 20, 2017 report, Colliers identified "[s]ubstantial disadvantages" in the buildings that the County leased from H.C. Equities. Colliers cited "a small and inefficient floor plate, significant physical issues, and distance from the main judiciary complex." It noted that the "[e]xtensive use of office space for file storage [was] not cost efficient," and recommended that the County "[e]xit [the] building" and "identify alternate file storage solutions."

B.

1.

On February 22, 2017, H.C. Equities’ outside counsel sent a letter to County Counsel and the Authority's outside counsel. In the letter, counsel for H.C. Equities addressed the January 20, 2017 Colliers report, stating that "[i]t was only by happenstance" that his client was "able to secure a copy of the draft document." H.C. Equities’ attorney alleged that the report was "informed and influenced by parties acting in bad faith and with the intention of seeing the settlement fail." He wrote that his client "respectfully and formally requests that the Colliers Study in its present form be withdrawn from consideration by the County and the Authority, that a new, good faith analysis be conducted, and that H.C. Equities be allowed the opportunity for meaningful input into same."

After recounting the settlement negotiations between H.C. Equities and the County, H.C. Equities’ counsel wrote:

Please be advised that if the draft Collier Study is not withdrawn, then H.C. Equities will act to protect its rights in this matter. Particularly, as the study goes to the foundation of a settlement between H.C. Equities and the County, H.C. Equities will likely proceed with its original claims in the Superior Court, and prosecute additional causes of action against the appropriate parties including, but not limited to, tortious interference with the settlement, tortious interference with contract and tortious interference with prospective economic advantage.

H.C. Equities’ counsel added that "[in] light of this eventuality," his client demanded that the County and the Authority "preserve all documents, tangible things, and electronically stored information potentially related to this matter." He requested a litigation hold on such information, and threatened sanctions for noncompliance. Counsel requested that the County respond to the letter within three days.

2.

H.C. Equities’ counsel sent a second letter dated March 8, 2017 addressed to outside counsel for the Authority, with a copy sent to County Counsel. H.C. Equities’ counsel wrote that the letter was a response to a letter from the Authority's...