Notte v. Merchants Mut. Ins. Co.

• Decision Date: 12 January 2006
• Citation: 185 N.J. 490,888 A.2d 464
• Parties: Theresa NOTTE and Robert Pantano, Plaintiffs-Respondents, v. MERCHANTS MUTUAL INSURANCE COMPANY, a/k/a Merchants Mutual Group, and William Wolfe, Defendants-Petitioners.
• Court: New Jersey Supreme Court

888 A.2d 464

185 N.J. 490

Theresa NOTTE and Robert Pantano, Plaintiffs-Respondents, v. MERCHANTS MUTUAL INSURANCE COMPANY, a/k/a Merchants Mutual Group, and William Wolfe, Defendants-Petitioners.

Supreme Court of New Jersey.

Argued November 7, 2005.

Decided January 12, 2006.

COPYRIGHT MATERIAL OMITTED

John M. Monahan, Binghampton, NY, a member of the New York bar and Louis L. Chodoff, Cherry Hill, argued the cause for appellants (Sweeny & Sheehan, attorneys for Merchants Mutual Insurance Company and Wolf, Block, Schorr and Solis-Cohen, attorneys for William F. Wolfe; Mr. Chodoff and Gaetano Mercogliano, Westmont, on the briefs).

David Zatuchni, Princeton, argued the cause for respondents (Zatuchni & Associates, attorneys).

PER CURIAM.

The clear language of Rule 4:9-3, the "relation back" rule, provides that "[w]henever the claim or defense asserted in the amended pleading arose out of the conduct, transaction or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading[.]" In this appeal, we reaffirm the plain import of the Rule and hold that, under the circumstances present here, the causes of action pled in the corrected amended complaint by plaintiff Robert Pantano (Pantano) against defendants Merchants Mutual Insurance Company (Merchants) and William Wolfe (Wolfe) relate back to the date of the filing of the original complaint.

However, any analysis under Rule 4:9-3 also implicates Rule 4:9-1, under which a request to amend a pleading will be denied either if prejudice will inure to the party opposing the amendment or if the amended pleading itself is without legal merit, that is, if the amendment as proposed would be futile. The Appellate Division held, and we agree, that Merchants and Wolfe are not prejudiced by the pleading amendment sought by Pantano. However, Merchants and Wolfe also allege that the proposed amended claims against them have been statutorily waived and, hence, any proposed amendment would be futile. Because the Appellate Division did not address the "futility" prong of the "relation back" test, we remand this case to the Appellate Division.

I.

From October 2000 through March 2001, Theresa Notte (Notte) was employed by Merchants, where she was supervised by Wolfe.¹ During that same period, Pantano also was employed by Merchants as a supervisor. Notte alleged that, after rejecting Wolfe's unwanted sexual advances, she was subjected to a hostile work environment, quid pro quo sexual discrimination, and retaliation, ultimately leading to her constructive discharge from employment on March 28, 2001. Pantano alleged that his employment with Merchants was terminated on March 27, 2001 because he "objected to[,]" "refused to ... participate in[,]" and "alerted and complained to Merchants concerning" Wolfe's harassment towards and retaliation against Notte.

Almost twenty-one months later, on January 13, 2003, Notte and Pantano filed a joint complaint against Merchants and Wolfe. Specifically, in three separate counts, Notte alleged that Merchants was liable to her for creating a hostile work environment, quid pro quo sexual discrimination, and retaliation, in violation of the Law Against Discrimination (LAD), N.J.S.A. 10:5-12a and 12d, and, in a fourth count, Notte alleged that Wolfe was liable to her under the LAD as an aider and abettor, N.J.S.A. 10:5-12e.² In contrast, Pantano alleged only that his discharge from employment was the direct and proximate result of Merchants' and Wolfe's violations of the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -8. Merchants and Wolfe timely filed separate answers and affirmative defenses, among which each asserted that Notte's and Pantano's claims were barred under the applicable statute of limitations. A discovery end-date of July 25, 2004 was assigned, and discovery was conducted uneventfully.

In early September 2004, some six weeks after the discovery deadline expired, Merchants and Wolfe separately filed motions for partial summary judgment as to Pantano's CEPA claims, alleging exclusively that they were time-barred under the one-year statute of limitations set forth in Section 5 of CEPA, N.J.S.A. 34:19-5. Later, on September 27, 2004, Pantano sought leave to file an amended complaint, repleading the CEPA claims as common law wrongful discharge claims against Merchants and Wolfe, respectively. On November 1, 2004, Pantano sought leave to file what he termed a "corrected amended complaint" that, in addition to repleading the then-pending CEPA claims as common law wrongful discharge claims, sought to add a LAD retaliation claim against Merchants, in violation of N.J.S.A. 10:5-12d, and a LAD aider and abettor claim against Wolfe, in violation of N.J.S.A. 10:5-12e. In sum, then, Pantano sought leave to replead his time-barred CEPA claims as separate common law wrongful discharge and LAD claims against each of Merchants and Wolfe. Merchants and Wolfe opposed Pantano's cross-motions.

At argument before the trial court, Pantano conceded that his originally filed CEPA claims against Merchants and Wolfe were time-barred, and the trial court entered summary judgment in favor of Merchants and Wolfe on those claims. Pantano, however, argued that, pursuant to R. 4:9-3, his common law wrongful discharge and LAD claims against Merchants and Wolfe — although by that point themselves time-barred — would not be time-barred if they "related back" to the filing of his original complaint. The trial court disagreed and denied Pantano's request for leave to amend his complaint.

Granting Pantano's motion for leave to appeal, the Appellate Division reversed. Based on Harr v. Allstate Ins. Co., 54 N.J. 287, 255 A.2d 208 (1969), the panel reasoned that "[t]he plain and explicit language of Rule 4:9-3 requires only that the amended claim relate back to the underlying transaction or facts alleged in the original pleading, and not to technically asserted discrete claims or counts." According to the Appellate Division,

[u]nlike a new or different claim, where relation-back is a matter within the court's discretion, Rule 4:9-3, if the permitted amendment asserts a germane claim, that is one arising out of facts set forth in the original pleading, "it is entitled to relation-back." Wimmer v. Coombs, 198 N.J.Super. 184, 187 (App.Div.1985); see also Harr, supra, 54 N.J. at 299-300 . This is because a defendant who has timely notice of the conduct alleged to be wrongful is not prejudiced by the late assertion of other claims attributable to the same conduct already alleged in the complaint. Wimmer, supra, 198 N.J.Super. at 188-89 .

Before the Appellate Division, Merchants and Wolfe also argued that, because a claim can only "relate back" to a claim that was valid when filed, "relation back" was inappropriate here because Pantano's original claims were barred by the CEPA statute of limitations when they were filed and, hence, were a nullity. Citing Zuidema v. Pedicano, 373 N.J.Super. 135, 860 A.2d 992 (App.Div.2004), the panel, however, concluded that "even where the claims in the original pleading are not legally cognizable, the amended claim is permitted under Rule 4:9-3 so long as it `implicate[s] the same transaction or occurrence, regardless of the merits....'" Id. at 150, 860 A.2d 992.

Relying on Kernan v. One Washington Park Urban Renewal Assocs., 154 N.J. 437, 459, 713 A.2d 411 (1998), Franklin Med. Assocs. v. Newark Pub. Sch., 362 N.J.Super. 494, 506, 828 A.2d 966 (App.Div.2003), and Dole v. Arco Chem. Co., 921 F.2d 484, 488 (3d Cir.1990), the Appellate Division dismissed Merchants' and Wolfe's assertions of prejudice as a bar to the requested amendment under R. 4:9-1. The panel noted that "the newly asserted claims are based on the same underlying facts and events set forth in the original pleading [and, therefore, Merchants and Wolfe] have no cause to complain of the late assertion against them of claims grounded on the same conduct already alleged in the complaint." The Appellate Division did not address whether amendment of Pantano's claims would be futile. Instead, the panel concluded only that "the motion court erred in its restrictive interpretation of Rule 4:9-3, and further, to the extent it even found prejudice, abused its discretion in denying [Pantano's] motion to amend his complaint under Rule 4:9-1."

We granted Merchants' and Wolfe's motion for leave to appeal. 185 N.J. 32, 878 A.2d 850 (2005). For the reasons that follow, and to the extent the panel held both that Pantano's new claims "relate back" to his original complaint and, hence, are not time-barred, and that neither Merchants nor Wolfe is prejudiced thereby, we affirm the judgment of the Appellate Division. Nevertheless, because the issue was not addressed by the panel, we remand the cause to the Appellate Division for a determination whether amendment of Pantano's claims would be futile on application of the waiver provisions of CEPA, N.J.S.A. 34:19-8.

II.

A.

In its substance, Rule 4:9-3 is clear: "Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading[.]" Its application is similarly clear:

The rule should be liberally construed. Its thrust is directed not toward technical pleading niceties, but rather to the underlying conduct, transaction or occurrence giving rise to some right of action or defense. When a period of limitation has expired, it is only a distinctly new or different claim or defense that is barred. Where the amendment constitutes the same matter more fully or differently laid, or the gist of the action or the basic subject of the controversy remains the same, it should be readily allowed and the doctrine of relation back applied. It should make no difference whether the original...