Original WP 5.1 Version
This case can also be found at 15 N.J. Tax 106.
NOT FOR PUBLICATION WITHOUT THE APPROVAL
OF THE TAX COURT COMMITTEE ON OPINIONS
TAX COURT OF NEW JERSEY
DOCKET NO. 011022-93
ERNEST AND ROBIN VOGELBACHER :
DIRECTOR, DIVISION OF :
Decided: August 1, 1995
Ronald J. Cappuccio for plaintiff.
Paul Tannenbaum for defendant
(Deborah T. Poritz, Attorney General of New Jersey,
This is a sales and use tax case in which defendant,
Director, Division of Taxation, has moved to dismiss the complaint
with prejudice pursuant to R. 4:23-5(a)(2) for failure to answer
interrogatories. An order dismissing the complaint without
prejudice was entered on December 2, 1994. The 90-day period
prescribed by R. 4:23-5(a)(2) elapsed on March 2, 1995. The
Director's motion to dismiss with prejudice was filed on March 7,
Also before the court is plaintiffs' motion to vacate the
dismissal without prejudice on the ground that plaintiffs supplied
answers to defendant's interrogatories on April 20, 1995.
In support of its motion to dismiss with prejudice,
defendant maintains that plaintiffs have not established "excep
tional circumstances" within the meaning of R. 4:23-5(a)(2).
Defendant further maintains that plaintiffs' answers to 13 of de
fendant's 27 interrogatories were not "fully responsive" as re
quired by R. 4:23-5(a)(1). Thus, according to defendant, even if
its motion to dismiss without prejudice is denied, plaintiffs' mo
tion to vacate the dismissal without prejudice should not be
In response to defendant's motion, plaintiffs assert that
they have demonstrated "exceptional circumstances" in that
plaintiffs were unable to obtain the documents necessary to answer
the interrogatories. Plaintiffs maintain that their accountants
had all the required documents and that plaintiffs were unable to
obtain the documents until February 1995. Relying on the 1990
Report of the Committee on Civil Practice, 125 N.J.L. Index Page
421 (1990), quoted in Pressler, Current N.J. Court Rules, Comment
3 to R. 4:23-5 (1995), plaintiffs maintain that the "main objective
[of the amended rule] is to compel the answers rather than to
dismiss the case ...." Relying on Aujero v. Cirelli,
110 N.J. 566,
577 (1988), plaintiffs assert that they have established a factual
basis for relaxing R. 4:23-5. According to plaintiffs, these facts
include the minimal delay in answering defendant's interrogatories,
a lack of fault on plaintiffs' part since the delay was
attributable to the failure of their accountants to turn over the
needed records, and the absence of prejudice to the defendant in
the event R. 4:23-5(a)(2) is relaxed. Finally, plaintiffs maintain
that a separate basis for denying defendant's motion is provided by
R. 4:50-1 because that rule, which permits relief from a judgment,
would be applicable in the event a dismissal with prejudice were
entered. Plaintiffs conclude by stating that they have meritorious
defenses. In particular, according to plaintiffs, Mrs. Vogelbacher
has no liability for the sales tax obligations of Mr. Vogelbacher's
sole proprietorship, and the deficiency assessment is excessive.
On October 13, 1993, plaintiffs filed a complaint
challenging an assessment of sales and use tax totaling $166,222
plus interest and penalty, which brought the total assessment at
that time to $306,773.
On March 3, 1994, defendant served the interrogatories in
question. The pretrial conference was initially scheduled for
August 15, 1994. As the result of a conference call and at
plaintiffs' request, the pretrial conference was adjourned to
December 1, 1994, and plaintiffs were directed to answer the
defendant's interrogatories by September 26, 1994. On plaintiffs'
subsequent motion (which defendant did not oppose), the court
further extended the discovery period, requiring plaintiffs to
serve answers to the interrogatories by November 15, 1994.
On November 16, 1994, defendant moved to dismiss the
complaint for failure to answer interrogatories. Finding that
defendant had fully complied with the requirements of R. 4:23-5(a)(1), on December 2, 1994, the court entered an order dismissing
the complaint without prejudice. The 90 day period specified in R.
4:23-5(a)(2) expired on March 2, and on March 7, 1995, defendant
moved to dismiss the complaint with prejudice.
At plaintiffs' request, the motion to dismiss with
prejudice was twice adjourned and ultimately was heard on May 12,
1995. In the meantime, on April 20, 1995, plaintiffs served
answers to the interrogatories and on May 1 filed a motion to
vacate the prior judgment of dismissal without prejudice.
On the return date, I queried plaintiffs' counsel
concerning the absence of the affidavit required by R. 4:23-5(a)(2)
stating that his clients had been notified of the pendency of the
motion to dismiss with prejudice. Plaintiffs' counsel produced a
letter of April 28, 1995 addressed to Mr. Vogelbacher making him
aware of the return date on defendant's motion to dismiss with
prejudice. Subsequently, plaintiffs' counsel supplied a
certification making the same representations and attaching a copy
of the April 28, 1995 letter. I concluded that counsel's letter,
albeit not precisely in the form prescribed in Appendix II-F of the
Court Rules, complied with the requirements of R. 4:23-5(a)(2)
because it timely notified Mr. Vogelbacher of the time and place of
the dismissal motion and advised him that he could appear and be
heard. Counsel's in-court statements appeared to me to satisfy the
requirement of an affidavit. Any technical defect in that respect
was cured by the subsequent submission of counsel's certification.
In court, plaintiffs' counsel stated that Mr.
Vogelbacher's business involves landscaping and lawn maintenance.
The Vogelbachers' personal and business accountants, the firm of
F.X. Duffy, are located in Philadelphia. According to plaintiffs'
counsel, all the records of the business were turned over to and
kept by the accountants, and the accountants failed to supply the
documents required to answer defendant's interrogatories. Although
counsel produced a copy of a letter of March 11, 1994 forwarding a
copy of defendant's interrogatories to Mr. and Mrs. Vogelbacher, he
was unsure whether he had supplied a copy of the interrogatories to
the accountants and did not know whether the Vogelbachers had done
so. Nor could he testify to the Vogelbachers' attempts to secure
the documents from the accountants. Counsel then requested a
continuance of the motion to permit the Vogelbachers to provide
Being concerned that "exceptional circumstances" within
the meaning of R. 4:23-5(a)(2) might yet be shown if the
Vogelbachers were to testify and bearing in mind the magnitude of
the assessment in the event the complaint were dismissed with
prejudice, I adjourned the motion to June 16, 1995.
Mr. Vogelbacher appeared on the adjourned return date.
He corroborated counsel's testimony that F.X. Duffy did all the
accounting for his business and personal affairs. He stated that
the accountants had all the records for the business with the
possible exception of invoices and cards on which Mr. Vogelbacher
entered amounts received from customers, which he could not locate.
He stated that, during the initial administrative phase of the
case, he had been represented by Mr. Patrick Duffy of the firm of
F.X. Duffy. Subsequently, Mr. Patrick Duffy was killed, and Mr.
Robert Todd of the same firm took on the matter. Mr. Vogelbacher
could not remember exactly when he had asked Mr. Todd for the
documents necessary to answer the State's interrogatories. He did
say it was a "number of times". He did recall a meeting in October
1994 with Mr. Todd and plaintiffs' counsel. At that meeting Mr.
Todd stated that he would provide the documents.
On a date in February 1995 Mr. Vogelbacher went to the
Philadelphia offices of F.X. Duffy and obtained one or more boxes
containing the required documents. He delivered them immediately
to his counsel. On cross-examination he stated that he believed he
had asked for the documents in January 1995. He stated that his
counsel had frequently asked him for the documents. Rule 4:23-5(a)(2) states in pertinent part that, when a
motion to dismiss with prejudice is made after 90 days from the
date of the order dismissing without prejudice, "[t]he motion shall
be granted unless exceptional circumstances are demonstrated." The
question in this case is whether such "exceptional circumstances"
have been shown.
It is clear that "exceptional circumstances" require a
more exceptional showing then ordinary "good cause." Suarez v.
Sumitomo Chemical Co.,
256 N.J. Super. 683, 689 (Law Div. 1991).
Exceptional circumstances generally involve "external factors (such
as poor health or emergency) which substantially interfered with
the party's ability to meet the discovery obligations." Ibid.
Adopting the analysis just quoted, the Appellate Division in
Rodriguez v. Luciano,
277 N.J. Super. 109 (App. Div. 1994),
sustained a trial court's dismissal with prejudice where the
alleged "exceptional circumstances" were stated to be the law
firm's "difficulty in locating the client as well as ... the
transitory staff problems burdening [the] office." Id. at 112.
Citing Rodriguez, the Appellate Division in Martin Glennon, Inc. v.
First Fidelity Bank,
279 N.J. Super. 48, 53 (App. Div. 1995),
certif denied, __ N.J. __ (May 10, 1995), stated that "Inaction is
usually an insufficient excuse. The 'exceptional circumstances'
are usually confined to 'poor health or emergency' or the like."
The appellate court there accepted the trial judge's conclusion
that "exceptional circumstances" had been shown when counsel of
record had relied upon an attorney selected by an insurance carrier
to conduct discovery. The attorney had failed to answer
interrogatories and was later fired. The appellate court stated
that it might have reached a different result and that "the motion
judge acted within the outer limits of his discretion" in granting
relief from the prior discovery order. Id. at 54.
Under these authorities, plaintiffs' testimony and the
arguments of their counsel fail to establish "exceptional
circumstances." Having heard both plaintiffs' counsel and Mr.
Vogelbacher himself, I am not convinced that plaintiffs were faced
with extraordinary problems in obtaining the required documents.
The testimony was vague as to when and how often Mr. Vogelbacher or
his counsel asked the accountants for the documents. No precise
dates were offered. The closest the testimony came to any
certainty was that a meeting was held in October 1994 between Mr.
Vogelbacher, his counsel, and Mr. Robert Todd of F.X. Duffy, at
which time the documents were requested, and Mr. Todd assured Mr.
Vogelbacher that the documents would be provided.
The dismissal without prejudice was entered on December
2, 1994. There was no indication that Mr. Vogelbacher did anything
until January 1995 to follow up with Mr. Todd. The documents were
supplied sometime during February. At this point, plaintiffs could
have avoided a motion to dismiss with prejudice because they were
still within the 90 day period following entry of the dismissal
without prejudice. The answers were not served until April 20,
1995, 139 days after entry of the dismissal without prejudice and
44 days after the motion to dismiss with prejudice had been filed.
In proposing the present amended version of R. 4:23-5(a),
the Civil Practice Committee stated that, "It is the contemplation
of the Committee, however, that only the most extraordinary
circumstances would relieve a party of the dispositive consequences
of the 'with prejudice' dismissal order." Report of the Committee
on Civil Practice, supra, quoted in Pressler, supra at 1045.
Having heard Mr. Vogelbacher and his counsel, I am not convinced
that the "extraordinary circumstances" required to defeat the
Director's motion to dismiss with prejudice have been shown. The
most the testimony establishes is an uncooperative accounting firm,
but even this appears unlikely because there is no convincing
evidence of repeated, persistent, attempts to obtain the documents
from the accountants. Furthermore, Mr. Vogelbacher testified that
F.X. Duffy continues as his accounting firm, and it defies common
sense that a taxpayer's accountants would fail to cooperate in a
tax dispute of this magnitude. Nor does it ring true that
plaintiffs' accountants would fail to appear or produce an
affidavit on plaintiffs' behalf since the firm continues to
Even if the accounting firm was not cooperative, there
has been no showing that plaintiffs were helpless to pressure the
firm into providing the documents. Plaintiffs had a lawyer. There
was no showing that plaintiffs' counsel was called into play except
to meet once with plaintiff and the accountants in October 1994.
Although plaintiff testified that he had asked his counsel to write
a letter to the accountants in an attempt to secure the documents,
he could not remember when, and there was no evidence that any such
letter had in fact been written.
The only extraordinary or exceptional fact in the entire
scenario was the death of Mr. Patrick Duffy. Plaintiff stated that
this caused "confusion," but there was no suggestion that Mr.
Duffy's death contributed to the delay in answering the
Plaintiffs are correct that the purpose of R. 4:23-5 is
to obtain the requested discovery rather than to dismiss the case.
That purpose is accomplished by a two-step procedure, which permits
service of the interrogatories within 90 days of the initial
dismissal without prejudice. Once the 90 day period has expired,
however, "[t]he filing of the 'with prejudice' motion dramatically
shifts power from the delinquent party to the moving party."
Suarez v. Sumitomo Chemical Co., supra, 256 N.J. Super. at 688. At
that point, only "exceptional circumstances," not ordinary good
cause, can avert the entry of an order dismissing with prejudice.
The testimony and arguments before me suggest no "external factors"
in the nature of poor health or emergency. Instead, they suggest
inaction and disregard of the discovery rules. As stated by Judge
Dreier in Martin Glennon, Inc. v. First Fidelity Bank, supra, 279
N.J. Super. at 53, "Inaction is usually an insufficient excuse."
Plaintiffs' suggestion that R. 4:23-5(a)(2) should be
relaxed under R. 1:1-2 is not convincing. Rule 4:23-5 was amended
precisely to bring some certainty to the exercise of discretion by
trial judges in vacating dismissals under the prior rule. SeeAujero v. Cirelli, supra, 110 N.J. at 579-81. That cause will not
be served by returning to the prior practice of relaxing the rules
to permit the routine reinstatement of cases dismissed under R.
The Court in Aujero suggested that the Committee on Civil
Practice might wish to consider reversing the sequence of former R.
4:23-5(a), under which dismissal was mandatory where timely answers
were not served, and the exercise of discretion was reserved to
motions to restore a dismissed case. Aujero v. Cirelli, supra, 110
N.J. at 580-81. The Committee appears to have adopted the Court's
suggestion. Prior to the running of the 90 days and the filing of
a motion to dismiss with prejudice, the delinquent party need only
serve fully responsive answers, certify to that fact, pay costs
amounting to $100 or $300, and pay counsel fees as the court may
direct. Suarez v. Sumitomo Chemical Co., supra, 256 N.J. Super. at
688. Once a timely motion to dismiss with prejudice has been
filed, the new rule requires that the complaint be dismissed with
prejudice absent a showing of exceptional circumstances -- "The
motion shall be granted unless exceptional circumstances are
demonstrated." R. 4:23-5(a)(2) (emphasis added). Just as there
was little discretion under the prior practice to deny a motion to
dismiss for failure to answer interrogatories, the court's
discretion not to grant a "with prejudice" motion under the amended
rule is severely circumscribed. SeeAujero v. Cirelli, supra, 110
N.J. at 580.
Even if the former standards for relaxing R. 4:23-5(a)
were applied here, it is far from clear that the case would be
restored. The factors to be considered included (1) the extent of
the delay, (2) the underlying reason or cause, (3) the fault or
blamelessness of the litigant, and (4) the prejudice that would
accrue to the other party. Jansson v. Fairleigh Dickinson Univ.,
198 N.J. Super. 190, 195 (App. Div. 1985). The delay in the
present case was significant. Answers were served more than a year
after the interrogatories were propounded, 139 days after entry of
the order dismissing without prejudice, and 44 days after the
motion to dismiss with prejudice had been filed. The cause of the
delay was Mr. Vogelbacher's failure to obtain the necessary
documents from his accountants and, to some extent, his attorney's
failure to immediately answer the interrogatories once the
documentation was supplied. Thus, Mr. Vogelbacher is not blameless
for the delay. While there appears to be little prejudice to the
Director, as will be seen below, the Director still does not know
the basis of plaintiffs' claim that the assessment was improper,
and at some point, the public cost of defending a lawsuit against
the State must become a factor.
Nor may plaintiffs successfully argue that the ultimate
sanction should not be visited on them because answers were
ultimately supplied. To begin with, the eventual service of
answers by the delinquent party cannot routinely and standing alone
establish "exceptional circumstances" within the meaning of R.
4:23-5(a)(2) or the rule will have no teeth. Something more is
required, and here nothing has been shown.
To the extent that service of fully responsive
interrogatory answers might nevertheless motivate a court to find
"exceptional circumstances," plaintiffs have no leg to stand on
because their answers were not responsive. Plaintiffs' complaint
alleges that defendant "wrongfully imposed sales tax on exempt and
non-taxable items [and] ... wrongfully assessed a use tax against
the plaintiffs for purchases for [sic] items that are not subject
to use tax." Defendant propounded 27 interrogatories and in
responding to plaintiffs' motion to vacate the "without prejudice"
order, asserts that 13 of plaintiffs' answers are unresponsive.
Plaintiffs answered nine of these 13 interrogatories, "To be
supplied." Most of the nine interrogatories go to the heart of the
case, requesting, e.g., the basis for plaintiffs' claim that exempt
sales were assessed, copies of exemption certificates showing sales
exempt from sales tax, invoices for sales or services made or
performed by plaintiffs during the assessment period, identity of
out-of-state customers to the extent plaintiffs claim that sales
out-of-state were made, and the portion of the total assessment
being contested. As made evident by plaintiffs' answer "to be
supplied," more than thirteen months after defendant's
interrogatories were served plaintiffs still had provided no
factual support for the allegations in their complaint. In fact,
defendant was no closer to knowing the thrust of plaintiffs'
lawsuit than it was when the complaint was filed.
Prior to the filing of a motion to dismiss with
prejudice, the Appellate Division has held that "unless plaintiff's
bad faith is demonstrable from the overall nature of the answers,"
a motion to dismiss should ordinarily be treated as a motion for
more specific answers. Zimmerman v. United Services Automobile
260 N.J. Super. 368, 373 (App. Div. 1992). Many of
plaintiffs' answers are so deficient on their face as to be "non
answers" that arguably would not meet the liberal standard of
Zimmerman were this a motion to vacate prior to the filing of a
"with prejudice" motion. Here, where a "with prejudice" motion has
been filed, there is even less reason to accept plaintiffs'
deficient answers as establishing "exceptional circumstances"
sufficient to restore the case.
Plaintiffs argue that R. 4:50-1 (e) or (f) should be
applied because relief under this rule would be available if an
order dismissing the complaint with prejudice were granted.
The short answer is that R. 4:50 applies only to final
orders and judgments, and no final judgment has been entered. In
any event, the circumstances of this case would not warrant
vacating a final judgment. Rule 4:50-1(e) permits a final judgment
to be vacated if, among other things, the judgment has been
satisfied and it would no longer be equitable to enforce it.
Although plaintiffs eventually answered defendant's
interrogatories, they did so 44 days after defendant had filed its
motion to dismiss with prejudice, and many of the answers were
plainly unresponsive. This is hardly comparable to vacating a
judgment of possession where a residential tenant who had withheld
rent in good faith pays the back rent in full two days after
judgment is entered. Cf.Stanger v. Ridgeway,
171 N.J. Super. 466,
474 (App. Div. 1979).
As to R. 4:50-1(f), our Supreme Court has made clear that
relief from a judgment under that subsection is available only if
another subsection of the rule does not apply and "truly
exceptional circumstances" are present." Baumann v. Marinaro,
95 N.J. 380, 395 (1984). In Baumann, the Court found that alleged
attorney, jury, and trial court errors did not constitute
exceptional circumstances sufficient to justify relief from a
judgment. In reaching that conclusion, the Court compared two
United States Supreme Court decisions construing the analogous
federal rule. Those decisions suggest that, for purposes of R.
4:50-1(f), exceptional circumstances require a showing of inability
to plead or defend based on factors beyond the delinquent party's
control, e.g., indigency, incarceration, or lack of an attorney.
These "factors beyond the delinquent party's control" are similar
to the factors suggesting exceptional circumstances for purposes of
R. 4:23-5(a)(2). SeeSuarez v. Sumitomo Chemical Co., supra, 256
N.J. Super. at 689. As plaintiffs have not established exceptional
circumstances sufficient to avoid a dismissal with prejudice under
R. 4:23-5(a)(2), they cannot establish exceptional circumstances
under R. 4:50-1(f).
Plaintiffs' reliance on Housing Authority of Morristown
135 N.J. 274 (1994), is misplaced. There, the Court
held that a default judgment for possession in a summary
dispossession action could be vacated under R. 4:50-1(f) where the
landlord was a public housing authority, the dispossessed tenant
was on public assistance and had five minor children, and the
tenant paid the back rent in full three days after she was evicted
from her apartment. The Court stated: "Courts should use Rule
4:50-1 sparingly, in exceptional situations; the Rule is designed
to provide relief from judgments in situations in which, were it
not applied, a grave injustice would occur." Id. at 289. Noting
the peculiar facts, including the housing authority's pubic policy
responsibility and the likelihood that the tenant would have been
eligible for emergency rental assistance had she been permanently
evicted, the Court affirmed the trial judge's order under R. 4:50-1(f) vacating the prior default judgment. Plainly, no similar
public policy considerations militate in plaintiffs' favor here,
nor would a "grave injustice" occur if the judgment were enforced.
As plaintiffs have failed to establish (1) "exceptional
circumstances" (2) a basis for relaxing R. 4:23-5(a)(2), or (3)
applying R. 4:50-1, defendant's motion is granted. Plaintiffs'
motion to vacate the dismissal without prejudice is correspondingly
denied. Once the 90 days elapsed and defendant moved to dismiss
with prejudice, the service of interrogatory answers could not
avoid a dismissal with prejudice absent a showing of "exceptional
circumstances." The court will enter judgment dismissing the
complaint with prejudice.