Federal Court in New Jersey Holds That Failure to Timely File an Affidavit of Merit Dooms Owner’s Claim for Breach of Contract Against GeoTech Companies

Frontier Dev. LLC v. Craig Test Boring Co., 2017 U.S. Dist. Lexis 149950 (D.N.J. Sept. 15, 2017)

On September 15, 2017, the Federal District Court for the District of New Jersey dismissed plaintiff’s, Frontier Development LLC’s, complaint for breach of contract against defendants, Craig Test Boring Co., Inc. and Craig Testing Laboratories, Inc., on the grounds that plaintiff failed to timely file an affidavit of merit as required by New Jersey statute.  The case is a reminder that plaintiffs making claims that sound in professional negligence must be aware of state statues requiring the submission of an affidavit of merit.

Plaintiff was the developer of a commercial building in Egg Harbor Township, New Jersey.  To prepare the site for construction, plaintiff was required to determine the depth of the topsoil it would have to remove and whether the soil beneath the topsoil was stable enough to support the foundations.  To do so, plaintiff engaged the services of defendants to perform geotechnical testing and prepare a soil boring report.  After receiving the report from the defendants and implementing the report’s recommendations, plaintiff claimed that the report’s conclusions were faulty and, as a result, plaintiff removed an excessive amount of topsoil and loose ground underneath the topsoil causing unnecessary delays and construction costs.

On February 11, 2016, plaintiff filed a complaint against defendants alleging that defendants breached the parties’ agreement and were responsible for approximately $175,000 in additional construction costs.  On August 23, 2016, defendants filed an answer which asserted inter alia that plaintiff’s claim was barred because plaintiff failed to comply with New Jersey’s affidavit of merit statute.  Specifically, the New Jersey affidavit of merit statute requires a party alleging professional malpractice to submit an affidavit from “an appropriate licensed person that there exists a reasonable probability that the care, skill or knowledge exercised or exhibited in the treatment, practice, or work that is subject to the complaint, fell outside acceptable professional or occupational standards or treatment practices.”  According to defendants, although plaintiff’s cause of action was for breach of contract, it sounded in professional negligence, and as a result, the affidavit of merit statute must apply. Following the receipt of defendants’ answer, plaintiff filed an affidavit of merit on February 24, 2017.  The next day, defendants filed a motion to dismiss plaintiff’s complaint on the grounds that plaintiff failed to file an affidavit of merit by the statutory deadline.

In light of defendants’ motion, the court considered three separate issues: (i) whether plaintiff’s claims should be construed as a claim for professional negligence such that the New Jersey affidavit of merit statute applied; (ii) if so, whether plaintiff filed an affidavit of merit within the statutory time period; and (iii) whether any exceptions to the affidavit of merit statute applied.  As explained below, the court ruled against the plaintiff on each of the three issues and dismissed the complaint.

First, the court held that although the plaintiff labeled its cause of action as a breach of contract, the claim should be treated as one for professional negligence as a matter of New Jersey law.  Specifically, citing case precedent, the court concluded that an action for breach of contract would be deemed an action for professional negligence because the gravamen of the dispute concerned whether defendants performed their professional duties in a faulty or improper manner.  Accordingly, the court concluded that the New Jersey affidavit of merit statute applied.

Second, the court concluded that plaintiff failed to file an affidavit of merit within the statutory time period.  According to the New Jersey law, a plaintiff alleging professional negligence has 60 days to file an affidavit of merit after the defendant files its answer to the complaint.  The statute adds that “upon finding of good cause” a court may grant an extension of no more than an additional 60-days.  Thus, the maximum allowable time period is 120-days.  Guided by the statute’s text, as well as Third Circuit precedent, the court concluded that because defendants filed their answer on August 23, 2016 and plaintiff filed the affidavit of merit on February 24, 2017, even if plaintiff would have been entitled to the 60-day extension, it still would have failed to file the affidavit of merit within the maximum 120-day time period.

Third, the court considered whether any exceptions excused plaintiff’s untimely affidavit of merit, including the “common knowledge exception,” the “substantial compliance exception,” and the “extraordinary circumstances exception.”  After a review of the facts and case law applying the relevant exceptions, the court concluded that none applied.  Accordingly, the court dismissed the case with prejudice.

To view the full text of the court’s decision, courtesy of Lexis®, click here.

R. Zachary Torres-Fowler

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