SYLLABUS
(This syllabus is not part of the opinion of the Court. It has
been prepared by the Office of the Clerk for the convenience of the
reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not
have been summarized).
Argued November 7, 2005 -- Decided January 12, 2006
PER CURIAM
This appeal involves an analysis of the relation back rule and the
further implications of that analysis under another rule. The “relation back” rule provides
that whenever the claim or defense asserted in the amended pleading arose out
of the conduct set forth or attempted to be set forth in the
original pleading, the amendment relates back to the date of the original pleading.
From October 2000 through March 2001, Theresa Notte was employed by Merchants Mutual
Insurance Company where she was supervised by William Wolfe. Over the same period,
Robert Pantano was employed by Merchants as a supervisor. Notte alleged that after
she rejected Wolfe’s sexual advances, she was subjected to a hostile work environment,
sexual discrimination, and retaliation, in violation of the Law Against Discrimination (LAD) that
lead 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 Wolfe’s harassment of and retaliation against Notte. Notte’s and Pantano’s allegations
were made in a joint complaint that they filed in January of 2003.
None of Notte’s claims are at issue in this appeal. Pantano claimed that
his wrongful discharge was in violation of the Conscientious Employee Protection Act (CEPA).
Merchants and Wolfe moved for partial summary judgment on the basis that Pantano’s
CEPA claims were time-barred under CEPA’s one-year statute of limitations. Pantano then sought
leave to replead his time-barred CEPA claims as separate common law wrongful discharge
and LAD claims. At argument before the trial court, Pantano conceded that his
CEPA claims were time-barred. The trial court denied Pantano’s request for leave to
amend his complaint. The Appellate Division reversed but did not address whether the
amendment of Pantano’s claims would be futile. This Court granted Merchants’ and Wolfe’s
motion for leave to appeal.
HELD: 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; we remand to the Appellate Division for a determination of whether amendment
of Pantano’s claims would be futile on application of the waiver provisions of
CEPA.
1. Rule 4:9-3 is clear. Whenever the claim asserted in the amended pleading
arose out of the conduct set forth in the original pleading, the amendment
relates back to the date of the original pleading. Its application is similarly
clear. Where 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. (p.8)
2. Save for the charging paragraphs in Pantano’s new common law wrongful discharge claims
and the necessary addition of conclusory allegations in the new LAD claims, Pantano’s
original complaint and his corrected amended complaint are identical. It is, therefore, clear
that the underlying conduct charged is the same in both pleadings and that
the gist of the action remains the same. Under these circumstances, the conclusion
that Pantano’s corrected amended complaint relates back to Pantano’s original complaint is compelled.
(pp. 8-9)
3. Statutes of limitation, unlike statutes of repose, are not self-executing. The defense that
a claim is time-barred must be raised by way of an affirmative defense
or it is waived. Until adjudicated time-barred, a claim filed after the expiration
of the applicable statute of limitations is nonetheless valid. The fact that Pantano’s
original claims were filed after the expiration of the applicable statute of limitations
is of no legal significance. (pp. 9-10)
In this context, the question is whether the new claims, once related back
to the original filings, were themselves timely and legally sustainable. That question requires
an examination of whether the relation back is futile. (p. 10)
5. Rule 4:9-3 must be read in conjunction with Rule 4:9-1, which requires that,
unless amendment is sought while still a matter of right, the amendment of
pleadings is allowed only by leave of court. That exercise of discretion requires
a two-step process: whether the non-moving party will be prejudiced, and whether granting
the amendment would nonetheless be futile. (p.11)
6. The Appellate Division panel concluded that defendants have no cause to complain of
the late assertion against them of claims grounded on the same conduct already
alleged in the complaint. We agree and similarly hold that no prejudice will
inure to Merchants and Wolfe by reason of the amendment sought by Patano.
(p. 11)
7. The analysis is not complete until the requested amendment is examined to determine
whether it is futile. There is no point to permitting the filing of
an amended pleading when a subsequent motion to dismiss must be granted. (p.
12)
8. In the context of a retaliatory discharge akin to Pantano’s claims, we previously
held that once a CEPA claim is instituted, any rights or claims for
retaliatory discharge based on State law or the common law are all waived.
We must remand this case to the Appellate Division for a determination of
whether, by reason of the waiver provisions of CEPA, Pantano’s proposed amendment to
his complaint would be futile and, if so, denied. (pp. 13-14)
9. We recognize that the issue appears to have been addressed in a 1997
Appellate Division decision where the plaintiff, like Pantano, originally asserted a time-barred CEPA
claim. The Appellate Division held that an employee who is barred from making
a CEPA claim has no remedy under the Act and cannot, therefore, be
seen to have any options from which to elect. We also recognize differences
between that case and this case. Those differences, and their legal effect, are
what should be explored by the Appellate Division. (pp. 14-15)
As MODIFIED, the judgment of the Appellate Division is AFFIRM ED and the matter
is REMANDED to the Appellate Division for further proceedings consistent with this opinion.
CHIEF JUSTICE PORITZ and JUSTICES LONG, LaVECCHIA, ZAZZALI, ALBIN, WALLACE and RIVERA-SOTO join
in this opinion.
SUPREME COURT OF NEW JERSEY
A-
19 September Term 2005
THERESA NOTTE and ROBERT PANTANO,
Plaintiffs-Respondents,
v.
merchants mutual insurance company, A/K/A MERCHANTS MUTUAL GROUP, and william wolfe,
Defendants-Petitioners.
Argued November 7, 2005 – Decided January 12, 2006
On certification to the Superior Court, Appellate Division.
John M. Monahan, a member of the New York bar and Louis L.
Chodoff 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, on the briefs).
David Zatuchni 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.
From October 2000 through March 2001, Theresa Notte (Notte) was employed by Merchants, where she was supervised by Wolfe. See footnote 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. See footnote 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 (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 (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.
Relying on Kernan v. One Washington Park Urban Renewal Assocs.,
154 N.J. 437,
459 (1998), Franklin Med. Assocs. v. Newark Pub. Sch.,
362 N.J. Super. 494,
506 (App. Div. 2003), and Dole v. Arco Chem. Co., Inc.,
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
(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.
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 pleading sounded in tort, contract or equity, or whether the proposed amendment related to the original or a different basis of action.
[Harr v. Allstate Ins. Co.,
54 N.J. 287, 299-300 (1969) (citations omitted).]
Here, the new common law wrongful discharge and LAD claims asserted by Pantano
against Merchants and Wolfe are based on the same facts Pantano alleged in
support of his original CEPA claims against Merchants and Wolfe. Indeed, save for
the charging paragraphs in the new common law wrongful discharge claims and the
necessary addition of conclusory allegations in the new LAD claims, Pantano’s original complaint
and his corrected amended complaint are identical. It is, therefore, clear that “the
underlying conduct, transaction or occurrence” charged is the same in both pleadings and
that “the gist of the action or the basic subject of the controversy
remains the same.” Ibid. As the Appellate Division here aptly noted, “[a] claim
that presently labels such [already pled] conduct wrongful under both the common law
and LAD is still the same matter ‘differently laid.’” Under those circumstances, the
conclusion that Pantano’s corrected amended complaint “relates back” to Pantano’s original complaint is
compelled.
Merchants and Wolfe argue, however, that Pantano’s original complaint against them was time-barred when filed and, therefore, a nullity. Thus, Merchants and Wolfe reason, there simply is nothing to which Pantano’s new claims can “relate back.” We disagree.
Statutes of limitations, unlike statutes of repose, see Greczyn v. Colgate-Palmolive, 183 N.J. 5 (2005), “are not self-executing. Such statutes are based on the goals of achieving security and stability in human affairs and ensuring that cases are not tried on the basis of stale evidence.” Zaccardi v. Becker, 88 N.J. 245, 256 (1982). For those reasons, the defense that a claim is time-barred must be raised by way of an affirmative defense, either in a pleading or by a timely motion, or it is waived. Id. at 256-57; Fees v. Trow, 105 N.J. 330, 335 (1987). Therefore, until adjudicated time-barred, a stale claim filed after the expiration of the applicable statute of limitations is nonetheless valid. In those circumstances, then, the fact that Pantano’s original claims against Merchants and Wolfe were filed after the expiration of the applicable statute of limitations is of no legal significance. Stated differently, “[b]ecause there was notice of plaintiff’s action, our holding does not offend the policy underlying the statute of limitations, and ‘accomplish[es], consistent with the general aim and policy of [the Court Rules] . . . substantial justice on the merits by permitting a technical . . . flaw to be corrected where such correction will not materially prejudice another party.” Kernan v. One Washington Park Urban Renewal Assocs., 154 N.J. 437, 459 (1998) (citations omitted); Zuidema v. Pedicano, 373 N.J. Super. 135, 149—50 (App. Div. 2004). In this narrow context, then, the question is whether the new claims, once “related back” to the original filing, were themselves timely and legally sustainable. That question requires an examination whether the “relation back” is futile.
Rule 4:9-3 must be read in conjunction with Rule 4:9-1, which requires that, unless amendment is sought while still a matter of right, the amendment of pleadings is allowed only “by leave of court which shall be freely given in the interest of justice.” We have made clear that “Rule 4:9-1 requires that motions for leave to amend be granted liberally” and that “the granting of a motion to file an amended complaint always rests in the court’s sound discretion.” Kernan v. One Washington Park Urban Renewal Assocs., 154 N.J. 437, 456-57 (1998). That exercise of discretion requires a two-step process: whether the non-moving party will be prejudiced, and whether granting the amendment would nonetheless be futile.
The Appellate Division held that it “discern[ed] no prejudice to defendants by the proposed amendment since the newly asserted claims are based on the same underlying facts and events set forth in the original pleading.” As a result, the panel concluded that “[d]efendants have no cause to complain of the late assertion against them of claims grounded on the same conduct already alleged in the complaint.” We agree, and similarly hold that no cognizable prejudice will inure to Merchants and Wolfe by reason of the amendment sought by Pantano.
However, the analysis is not complete until the requested amendment is examined to
determine whether it is futile, that is, whether the amended claim will nonetheless
fail and, hence, allowing the amendment would be a useless endeavor. Thus, while
motions for leave to amend are to be determined “without consideration of the
ultimate merits of the amendment,” Interchange State Bank v. Rinaldi,
303 N.J. Super. 239, 256 (App. Div. 1997) (citing City Check Cashing v. Nat’l State Bank,
244 N.J. Super. 304, 308-09 (App. Div.), certif. denied,
122 N.J. 389 (1990)),
those determinations must be made “in light of the factual situation existing at
the time each motion is made.” Ibid. (citing Fisher v. Yeats,
270 N.J.
Super. 458, 467 (App. Div. 1994)). More specifically, “courts are free to refuse
leave to amend when the newly asserted claim is not sustainable as a
matter of law. In other words, there is no point to permitting the
filing of an amended pleading when a subsequent motion to dismiss must be
granted.” Id. at 256-57 (citing Mustilli v. Mustilli,
287 N.J.Super. 605, 607 (Ch.
Div. 1995)).
Merchants and Wolfe allege that, because Pantano originally elected to file only CEPA
claims against them, Pantano is similarly bound by the waiver provision of Section
8 of CEPA, which states that “the institution of an action in accordance
with this act shall be deemed a waiver of the rights and remedies
available under any other contract, collective bargaining agreement, State law, rule or regulation
or under the common law.” N.J.S.A. 34:19-8. Thus, Merchants and Wolfe assert that
Pantano’s election to “institute” his action under CEPA barred Pantano’s subsequent common law
wrongful discharge and LAD claims because Pantano’s election to proceed under CEPA “shall
be deemed a waiver of [Pantano’s] rights and remedies available under any other
. . . State law [Pantano’s LAD claims], . . . or under
the common law [Pantano’s wrongful discharge claims].”
In the context of a retaliatory discharge akin to Pantano’s claims here, we
previously held that,
once a CEPA claim is “instituted,” any rights or claims for retaliatory discharge
based on . . . State law [or] the common law . .
. are all waived. The waiver exception contains a list of sources of
law that may provide a bundle of rights protecting employees from retaliatory discharge.
Parallel claims based on those rights, privileges and remedies are waived because they
represent multiple or duplicative claims based on retaliatory discharge.
Construing CEPA’s waiver clause consistent with the Legislature’s inferred intent, and consistent with
the expressed remedial purpose of the entire CEPA statute, convinces us that the
waiver provision applies only to those causes of action that require a finding
of retaliatory conduct that is actionable under CEPA. The waiver exception does not
apply to those causes of action that are substantially independent of the CEPA
claim.
[Young v. Schering Corp.,
141 N.J. 16, 29 (1995).]
In addition to determining that Pantano’s amended claims “related back” to his original
complaint and that no prejudice would inure to Merchants and Wolfe by reason
of that “relation back,” those principles required that the Appellate Division also evaluate
whether Pantano’s election to originally file CEPA claims in the circumstances presented here
effected a waiver of his common law wrongful discharge and statutory LAD claims,
or whether Pantano’s amended claims “are substantially independent of [his] CEPA claim[s],” ibid.,
an evaluation the panel did not perform. We therefore must remand this case
to the Appellate Division for a determination whether, by reason of the waiver
provisions of Section 8 of CEPA, N.J.S.A. 34:19-8, Pantano’s proposed amendment to his
complaint would be futile and, if so, denied.
That said, we recognize that, at first blush, the issue posed appears to
have been addressed in Crusco v. Oakland Care Ctr., Inc.,
305 N.J. Super. 605 (App. Div. 1997), where the plaintiff, like Pantano here, originally asserted a
time-barred CEPA claim. Reversing the trial court’s refusal to allow the plaintiff to
amend time-barred CEPA claims, the Appellate Division held that “an employee who is
barred from making a CEPA claim has no remedy under the Act and
cannot, therefore, be seen to have any options from which to elect[,]” id.
at 613, a determination we later endorsed within the context of a different
case. Ballinger v. Delaware River Port Auth.,
172 N.J. 586, 602 (2002) (holding
CEPA does not apply, as a matter of constitutional law, to bi-state entities
created by interstate compacts and, hence, CEPA’s waiver provision also was inapplicable). However,
we also recognize differences between Crusco, supra, and this case. Those differences, and
their legal effect, are what should be explored by the Appellate Division.
As modified, the judgment of the Appellate Division is affirmed, and this case is remanded to the Appellate Division for further proceedings consistent with this opinion.
CHIEF JUSTICE PORITZ and JUSTICES LONG, LaVECCHIA, ZAZZALI, ALBIN, WALLACE, and RIVERA-SOTO join in this opinion.
SUPREME COURT OF NEW JERSEY
NO. A-19 SEPTEMBER TERM 2005
ON CERTIFICATION TO Appellate Division, Superior Court
THERESA NOTTE and ROBERT
PANTANO,
Plaintiffs-Respondents,
v.
MERCHANTS MUTUAL INSURANCE
COMPANY, A/K/A MERCHANTS
MUTUAL GROUP, and WILLIAM
WOLFE,
Defendants-Petitioners.
DECIDED January 12, 2006
Chief Justice Poritz PRESIDING
OPINION BY Per Curiam
CONCURRING/DISSENTING OPINIONS BY
DISSENTING OPINION BY
CHECKLIST
Footnote: 1
Because this matter comes to us in a summary judgment setting, “our
statement of the facts is based on our consideration of the evidence in
the light most favorable to the parties opposing summary judgment.” Brill v. Guardian
Life Ins. Co. of Am.,
142 N.J. 520, 523 (1995).
Footnote: 2
None of Notte’s claims against either Merchants or Wolfe are at issue
in this appeal.