By: Sean P. Dugan, Law Clerk
On June 13, 2017, Plaintiff H.C. Equities served the County of Union and Union County Improvement Authority a “Notice of Tort Claim” for “damages arising from tortious interference with contract … conspiracy, defamation and trade libel.” The claim arose out of a contract dispute where the County of Union stopped making rental payments on the lease with H.C. Equities due to alleged neglect of the property after an electrical fire. The lease was not paid from July 26, 2012 to April 1, 2018, totaling $14,846,790.16 in withheld rent. The issue decided by the New Jersey Supreme Court in H.C. Equities, LP v. County of Union, 2021 N.J. LEXIS 735 (July 19, 2021) was whether H.C. Equities properly complied with the New Jersey Tort Claims Act’s notice of claim provisions in attempting to assert tort claims against these public entities.
H.C. Equities had filed a previous lawsuit in 2013, but had it dismissed without prejudice due to settlement negotiations. In October 2015, the Authority hired a real estate consultant, Colliers International, which produced an initial report on January 20, 2017. Colliers identified “substantial disadvantages” in the building in the report and recommended that the County leave the building. H.C. Equities obtained a copy of the report, which prompted the company to send the County and Authority a letter on February 22, 2017. The letter stated that H.C. Equities believed the report was written in bad faith and wanted it to be withdrawn from consideration.
H.C. Equities sent a second letter to both the County and the Authority on March 8, 2017, in which H.C. Equities’ counsel wrote that his client would reinstate its multimillion dollar claims against the County and the Authority if the report was not withdrawn. On March 9, 2017, another law firm sent a letter to County Counsel stating that H.C. Equities would be filing a civil action “in connection with the settlement agreement or its attempted frustration.” Nothing indicated that this letter was ever sent to the Authority.
H.C. Equities filed this action against the County on April 13, 2018, claiming, “Breach of lease … breach of the implied covenant of good faith and fair dealing, conspiracy and promissory estoppel.” As for the Authority, it asserted claims for trade libel, defamation, and conspiracy.
The Authority moved to have all claims asserted against it dismissed because H.C. Equities failed to provide a timely notice of tort claims. On October 30, 2018, H.C. Equities cross-moved “for retroactive extensions of time for filing of its Notice under the Tort Claims Act.” The motion contended that H.C. Equities’ cause of action did not accrue when it obtained the Colliers report because the County and the Authority committed a continuing tort. The County also moved to dismiss H.C. Equities’ conspiracy and promissory estoppel claims and H.C. Equities cross-moved for an extension of time to file a late notice of tort claim.
The Tort Claims Act requires the notice of a tort claim include, “(a)the name and post office address of the claimant … (c) the date, place or and other circumstances of the occurrence or transaction which gave rise to the claim asserted; (d) A general description of the injury, damage or loss incurred … (e) the name or names of the public entity, employee or employees causing the injury, damage or loss, if known; and (f) the amount claimed …” The Act also requires the filing of a notice claim to be filed within 90 days after the accrual of the cause of action. However, the Act allows a claimant who missed the deadline to file a late notice within one year after the accrual of the claim, if the public entity would not be substantially prejudiced.
At the trial court level, the court held that H.C. Equities’ claims accrued no later than March 8, 2017. Under the Torts Claims Act, H.C. Equities was required to serve its tort claims notice no later than June 6, 2017, so its June 13, 2017 torts claims notice was filed too late. The March 8, 2017 accrual date also meant that H.C. Equities’ time for a motion for leave to file a late notice of claim expired on March 8, 2018. But H.C. Equities’ cross-motion was filed far later on April 18, 2019.
The trial court granted the Authority’s motion to dismiss based upon H.C. Equities’ failure to timely comply with the notice provisions of the Tort Claims Act. It also dismissed the conspiracy and promissory estoppel claims against the County, leaving the remaining breach of lease, breach of frustration of the settlement agreement, breach of the implied covenant of good faith and fair dealing claims against the County.
The Appellate Division reversed the trial court’s determination, ruling that the three separate letters jointly established compliance with the notice requirements. The Appellate Division reasoned that because the letters were written by H.C. Equities’ counsel to lawyers representing the County and the Authority, the letters met the requirement that the claimant identify itself and the public entities being sued. The Appellate Division also decided that the letters gave sufficient notice because the letter sent on February 22, 2017 stated that the action involved millions of dollars.
The Supreme Court of New Jersey reversed the Appellate Division’s decision, remanding the case back to the to trial court, upholding the dismissal of the tort claims, leaving just the contract claims against the County. The Supreme Court agreed with the trial court’s assessment that the claims accrued no later than March 8, 2017, and thus also agreed the notice and the motion for leave to file for late notice were both late. The Court also looked at the substantial compliance doctrine, which serves to ensure that legitimate claims due to technical defects are not barred, and determined that the letters collectively did not establish substantial compliance.
First, the Supreme Court noted that the Tort Claims Act consistently uses the singular, so, “a ruling that multiple documents can collectively constitute effective notice of a tort claim,” invites confusion.
The Supreme Court also ruled that the Authority was prejudiced because the letters did not alert them to the trade libel, defamation and conspiracy claims that H.C. Equities asserted in the action and the Authority was not sent a copy of the last letter, which was the only letter which stated H.C. Equities’ intention to file a new action. It also ruled that the letters did not give the Authority proper notice because the February 22, 2017 and March 9, 2017 letters did not properly give notice that H.C Equities intended to file a tort claim, and the February 22, 2017 letter did not describe the “injury damage or loss that H.C. Equities allegedly incurred.”