NELSON CRESPO, PLAINTIFF, v. JOSEF STAPF, JOSEF STAPF MASCHINENBAU, DEFENDANTS-RESPONDENTS, AND SCHACHNE BETTFEDERENBEAR-BEITUNGSMASCHINEN, FEATHER COMPANY, HUDSON FEATHER AND DOWN PRODUCTS, INC., PURO DOWN INTERNATIONAL OF NEW JERSEY CORPORATION, PURO INTERNATIONAL OF NEW JERSEY CORP., JOHN DOE (FICTITIOUS) AND ABC COMPANY, (FICTITIOUS), DEFENDANTS, AND JACK PIERMONT AND LERNER AND PIERMONT, ESQS., INTERVENORS-APPELLANTS.
Supreme Court of New Jersey
Argued January 6, 1992-Decided June 25, 1992.
608 A.2d 241 | 128 N.J. 351
George J. Kenny argued the cause for respondents (Connell, Foley and Geiser, attorneys).
The opinion of the Court was delivered by
POLLOCK, J.
This appeal poses the question whether the tolling provisions of
The following facts are undisputed. On March 30, 1983, while operating a feather-washing machine in the course of his employment for Puro Down International of New Jersey, Crespo injured his right hand. The machine had been built by Josef Stapf Maschinenbau, the unincorporated manufacturing firm owned by Josef Stapf, a resident of Stuttgart, Germany. Crespo consulted with Piermont, who advised him of his rights under the New Jersey workers’ compensation statute,
Piermont sought dismissal of the complaint, claiming that
Relying on the two-year statute of limitations, Stapf moved for summary judgment. Crespo answered by asserting that
Crespo did not pursue the matter in the Appellate Division, but Piermont intervened as an appellant. Neither Crespo nor the Attorney General, who had intervened in the Law Division, participated in the appeal either before the Appellate Division or this Court. The Appellate Division affirmed the judgment for Stapf.
-II-
For nearly three decades, this Court and the United States Supreme Court have reviewed challenges to
Before the 1992 amendment,
If any person against whom there is any of the causes of action specified in sections 2A:14-1 to 2A:14-5 and 2A:14-8, or if any surety against whom there is a cause of action specified in any of the sections of article 2 of this chapter, is not a resident of this State when such cause of action accrues, or removes from this State after the accrual thereof and before the expiration of the times limited in said sections, or if any corporation or corporate surety not organized under the laws of this State, against whom there is such a cause of action, is not represented in this State by any person or officer upon whom summons or other original process may be served, when such cause of action accrues or at any time before the expiration of the times so limited, the time or times during which such person or surety is not residing within this State or such corporation or corporate surety is not so represented within this State shall not be computed as part of the periods of time within which such an action is required to be commenced by the section. The person entitled to any such action may commence the same after the accrual of the cause therefor, within the period of time limited therefor by said section, exclusive of such time or times of nonresidence or nonrepresentation.
A corporation shall be deemed represented for purposes of this section if the corporation has filed with the Secretary of State a notice designating a representative to accept service of process. [Footnote omitted.]
To place the present matter in perspective, we summarize the relevant state and federal decisions construing
In the next round of challenges, corporate defendants attacked the statute on due process and equal protection grounds. In Velmohos v. Maren Engineering Corp., 83 N.J. 282, 416 A.2d 372 (1980), vacated and remanded, 455 U.S. 985, 102 S.Ct. 1605, 71 L.Ed. 2d 844 (1982), we found that as applied to corporations the statute withstood both attacks. 83 N.J. at 296-97, 416 A.2d 372. We reached that result despite our refusal to read a corporation‘s amenability to long-arm service as providing an exemption from the tolling provisions. Id. at 292-93, 416 A.2d 372. In G.D. Searle & Co. v. Cohn, 455 U.S. 404, 102 S.Ct. 1137, 71 L.Ed. 2d 250 (1982), the United States Supreme Court arrived at the same conclusion, finding that the New Jersey statute did not result in a denial of equal protection.
More recent cases have involved challenges to the statute under the Commerce Clause. In Coons v. American Honda Motor Co., 94 N.J. 307, 463 A.2d 921 (1983) (Coons I), cert. denied, 469 U.S. 1123, 105 S.Ct. 808, 83 L.Ed. 2d 800 (1985), we decided that to be “represented” within the state and to avoid the tolling statute, a foreign corporate defendant must obtain a certificate to do business. That requirement unconstitutionally burdened interstate commerce. 94 N.J. at 318, 463 A.2d 921.
The Legislature responded to Coons I by amending the tolling statute through the addition of the second paragraph. L.1984, c. 131, § 1 (eff. Aug. 23, 1984). Under the 1984 amendment, a corporation could be “represented” and receive the benefit of the limitations period if it filed with the Secretary of State a notice designating a representative to accept service of process. The tolling provisions remained unchanged for individual defendants.
The United States Supreme Court decision in Bendix Autolite Corp. v. Midwesco Enterprises, Inc., 486 U.S. 888, 108 S. Ct. 2218, 100 L.Ed. 2d 896 (1988), stimulated further commerce clause challenges to
Other than the instant suit, all subsequent challenges to the tolling statute have also involved corporate defendants. After Bendix Autolite, the United States District Court for the District of New Jersey rendered conflicting conclusions on the constitutionality of
In response to Juzwin and DiFalco, the Legislature enacted the 1992 amendment, which states that when “it appears by affidavit of plaintiff‘s attorney or any person having knowledge of the facts that, after diligent inquiry and effort, long-arm service cannot be effectuated,” the period of limitations shall be tolled. The Legislature did not state that the 1992 amendment was to apply retroactively, and nothing indicates that the Legislature intended the amendment should so apply. Crespo‘s cause of action accrued and his complaint was dismissed long before the enactment of the 1992 amendment. We are unable to find any basis to conclude that either Crespo or anyone else could reasonably have expected that the statute would apply retroactively. See Twiss v. State, Dep‘t of Treasury, 124 N.J. 461, 466-67, 591 A.2d 913 (1991). Consequently, we hold that the 1992 amendment does not govern the present matter.
-III-
In the present case, we are concerned not with a federal regulation that preempts the regulation of interstate commerce,
Because Stapf is a German citizen and his business is located in Germany, the sale of his machine to Crespo‘s employer constitutes foreign commerce. A state‘s power to regulate foreign commerce, like its power to regulate interstate commerce, is subject to the “dormant” facet of the Commerce Clause. Thus,
Courts have devised two tests for reviewing state legislation under the dormant Commerce Clause. Legislation is valid if it evenhandedly regulates to advance legitimate local interests, notwithstanding incidental effects on interstate commerce, unless “the burden imposed on such commerce is clearly excessive to the putative local benefits.” Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 847, 25 L.Ed. 2d 174, 178 (1970); see Borough of Glassboro, supra, 100 N.J. at 143. When legitimate state goals are pursued by discriminatory means, the legislation is subject to stricter scrutiny. See Healy v. Beer Inst., Inc., 491 U.S. 324, 340, 109 S.Ct. 2491, 2501, 105 L.Ed. 2d 275, 291 (1989); Maine v. Taylor, 477 U.S. 131, 138, 106 S.Ct. 2440, 2447, 91 L.Ed. 2d 110, 120-21 (1986); City of Philadelphia v. New Jersey, 437 U.S. 617, 626-27, 98 S. Ct. 2531, 2537, 57 L.Ed. 2d 475, 483 (1978). If a statute facially discriminates against interstate commerce, the burden falls on the statute‘s proponent to demonstrate that it serves a legitimate local purpose that could not be served by reasonable nondiscriminatory alternatives. Limbach, supra, 486 U.S. at 278, 108 S.Ct. at 1810, 100 L.Ed. 2d at 311; Taylor, supra, 477 U.S. at 138, 106 S.Ct. at 2447, 91 L.Ed.2d at 120-21; Borough of Glassboro, supra, 100 N.J. at 144.
Previous decisions of the United States Supreme Court and of this Court have equated the strict scrutiny standard with a rule of virtual per se invalidity. City of Philadelphia, supra, 437
The Law Division declined to apply the strict scrutiny test because it found that the purpose of the statute was to preserve causes of action of New Jersey residents and not to erect protectionist barriers against foreign corporations. 242 N.J.Super. at 258, 576 A.2d 346. In rejecting the strict scrutiny test, the Law Division ignored both the United States Supreme Court‘s admonition that “the evil of protectionism can reside in legislative means as well as legislative ends,” City of Philadelphia, supra, 437 U.S. at 626, 98 S.Ct. at 2536-37, 57 L.Ed.2d at 483, and our application of that test in Coons I, supra, 94 N.J. at 316-18, 463 A.2d 921. Regardless of the Legislature‘s purpose, facial discrimination calls for strict scrutiny. Taylor, supra, 477 U.S. at 148 n. 19, 106 S.Ct. at 2453 n. 19, 91 L.Ed.2d at 127 n. 19; Hughes, supra, 441 U.S. at 337, 99 S.Ct. at 1737, 60 L.Ed.2d at 262.
We find that
they are an integral part of the legal system and are relied upon to protect the liabilities of persons and corporations active in the commercial sphere. The State may not withdraw such defenses on conditions repugnant to the Commerce Clause. Where a State denies ordinary legal defenses or like privileges or out-of-state persons or corporations engaged in commerce, the State law will
be reviewed under the Commerce Clause to determine whether the denial is discriminatory on its face or an impermissible burden on commerce. [Bendix Autolite, supra, 486 U.S. at 893, 108 S.Ct. at 2221-22, 100 L.Ed.2d at 903.]
Before the 1992 amendments,
Before the 1992 amendments, the statute did not achieve legitimate state goals through means less burdensome on interstate commerce than those available through statutory alternatives. The pre-1992 version was designed to protect New Jersey plaintiffs by tolling the running of the statute against all out-of-state defendants. See Juzwin, supra, 900 F.2d at 690. By so tolling the limitations period, the statute ignored alternatives that do not require physical presence for the exercise of personal jurisdiction. Cf. Coons I, supra, 94 N.J. at 313-14, 463 A.2d 921 (Legislature chose not to incorporate concept of long-arm jurisdiction in tolling statute); Velmohos, supra, 83 N.J. at 292-93, 416 A.2d 372 (same). Through long-arm jurisdiction,
Even if the tolling statute passed strict scrutiny, it would fail the balancing test. In Coons I, we summarized that test:
“State regulation affecting interstate commerce will be upheld if (a) the regulation is rationally related to a legitimate state end, and (b) the regulatory burden imposed on interstate commerce, and any discrimination against it, are outweighed by the state interest in enforcing the regulation.” 94 N.J. at 316-17, 463 A.2d 921 (quoting Laurence H. Tribe, American Constitutional Law § 6-5, at 326 (1978)).
Considering the first part of the test, the purpose behind the statute is to preserve causes of action against out-of-state defendants who may not readily be found or served in New Jersey. See Juzwin, supra, 900 F.2d at 691; Crespo, supra, 242 N.J.Super. at 259, 576 A.2d 346. The second part of the test requires that we balance the benefits from preserving such causes of action against the burdens on interstate commerce. To avoid tolling under the pre-1992 statute, nonresidents must establish residency in New Jersey. That requirement would have obligated Stapf to move from Stuttgart to New Jersey to receive the benefit of the statute. Such a requirement violates the clear implication of the Bendix Autolite and Coons I opinions. In Bendix Autolite, supra, the United States Supreme Court found that the burden of requiring a corporation to subject itself to the general jurisdiction of Ohio‘s courts outweighed any benefits conferred on Ohio plaintiffs. 486 U.S.
-IV-
In an attempt to avoid the bar of the statute, Piermont urges that we find
Questions of retroactivity are among the most difficult problems that engage state and federal courts. Lemon v. Kurtzman, 411 U.S. 192, 198, 93 S.Ct. 1463, 1468, 36 L.Ed.2d 151, 160 (1973) (Lemon II); Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 374, 60 S.Ct. 317, 319, 84 L.Ed. 329, 333 (1940); Coons v. American Honda Motor Co., 96 N.J. 419, 424-25, 476 A.2d 763 (1984) (Coons II), cert.
First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed. Second, it has been stressed that “we must *** weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation.” Finally, we have weighed the inequity imposed by retroactive application, for “[w]here a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the ‘injustice or hardship’ by a holding of nonretroactivity.” [Citations omitted.]
Notwithstanding the recent decision of the United States Supreme Court in James B. Beam Distilling Co. v. Georgia, 501 U.S. 529, 111 S.Ct. 2439, 115 L.Ed.2d 481 (1991), we are constrained to follow the Chevron Oil test. In Beam, the Court focused not on the issue before us, whether the court should apply a new rule prospectively to the parties in the case giving rise to the rule, but on the separate issue, whether such a rule should be so applied in a later case involving different litigants asserting claims not barred by procedural requirements or res judicata. The specific question in Beam was whether to apply prospectively a ruling that a Georgia excise tax violated the Commerce Clause by imposing a greater tax on imported alcoholic beverages than was imposed on beverages distilled within the state. That question had been decided previously in a case involving a nearly-identical Hawaii statute in Bacchus Imports, Ltd. v. Diaz, 468 U.S. 263, 104 S.Ct. 3049, 82 L.Ed.2d 200 (1984). In Beam, the Georgia courts found the statute unconstitutional under Bacchus but gave their decision prospective application. The result was that the State of Georgia was not obligated to refund to an out-of-state distiller taxes collected under the unconstitutional statute. Thus, the retroactivity issue was limited to whether other litigants with facts
By comparison, in the present case, the retroactivity question arises in the first instance simultaneously with the challenge to the constitutionality of the statute. According to six of the nine justices in Beam, the Chevron Oil test still applies to the determination of the prospective application of a decision in such a case. Justice White concurred with that conclusion, as did Justice O‘Connor, who was joined in her dissent by Chief Justice Rehnquist and Justice Kennedy. Only Justices Scalia, Blackmun, and Marshall would overturn Chevron Oil and hold that it is beyond the power of the judiciary to make constitutional rulings prospective. Beam, supra, 111 S.Ct. at 2449-51, 115 L.Ed. 2d at 495-97. We conclude that we should continue to follow Chevron Oil in determining the issue of retroactivity.
Our analysis of that issue begins with the presumption that judicial decisions ordinarily should apply retroactively. Accountemps Div., Robert Half of Philadelphia, Inc. v. Birch Tree Group, 115 N.J. 614, 627, 560 A.2d 663 (1989); Rutherford Educ. Ass‘n v. Board of Educ. of Rutherford, 99 N.J. 8, 21, 489 A.2d 1148 (1985); Fox v. Snow, 6 N.J. 12, 14, 76 A.2d 877 (1950). Policy considerations, however, may justify limiting the retroactive effect of a judicial decision declaring a statute unconstitutional. See Lemon II, supra, 411 U.S. at 198-99, 93 S.Ct. at 1468, 36 L.Ed.2d at 160; Coons II, 96 N.J. at 425-26, 476 A.2d 763. The Chevron Oil factors reflect the policy considerations that justify a prospective application of such a judicial ruling.
Our opinion in Coons I, which was rendered four months after Crespo‘s accident, further undercuts the reasonableness of Crespo‘s reliance on the tolling statute. Coons I declared invalid the requirement that foreign corporations obtain a license from the Secretary of State to avoid the tolling of the statute of limitations. We held that the licensing requirement constituted an impermissible burden on interstate commerce. Although Coons I was not concerned with the effect of the tolling of the statute on individual defendants, its holding foreshadowed our finding of a commerce clause violation in the application of the statute to such defendants. The 1984 amendment permitting corporate defendants to designate a representative for the service of process, L.1984, c. 131, changed nothing for individual defendants. Compare Juzwin, supra, 900 F.2d at 694 (plaintiffs suing corporation could rely on presumptive constitutionality of newly-passed tolling statute effective August 23, 1984). In sum, we cannot distinguish between requiring licensure for corporate defendants and residency for indi-
Furthermore, in Coons II, we applied Coons I prospectively to benefit a plaintiff who had commenced an action in 1978 on the assumption that Coons I announced an unforeshadowed new rule of law. Coons II, supra, 96 N.J. at 433, 476 A.2d 763. During the period of limitations of the claim in Coons II, “N.J.S.A. 2A:14-22 was in full bloom.” Id. at 432, 476 A.2d 763. In contrast, when Crespo commenced his action on May 26, 1988, the bloom was off the statute. Coons I had already signalled a problem with the application of the statute‘s residency condition to individual defendants.
We note, moreover, that Crespo filed suit just three weeks before the United States Supreme Court decided Bendix Autolite. Thus, a commerce clause challenge to a nearly-identical tolling statute was in the Supreme Court‘s pipeline well before Crespo filed his complaint, thereby casting further doubt on his reasonable reliance on the statute. See Coons II, supra, 96 N.J. at 432, 476 A.2d 763 (“We must look to the law as it was at the time plaintiff contemplated starting suit ***.“). Both our decision in Coons II and the then-pending decision of Bendix Autolite before the United States Supreme Court anticipated our holding in the present case. It follows that the first Chevron Oil factor points toward the retroactive application of today‘s decision. We conclude that Crespo and Piermont could not have reasonably relied on the 1984 amendment to toll the running of the statute of limitations against individual defendants such as Stapf.
The second Chevron Oil factor requires us to “weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation.” Chevron Oil, supra, 404 U.S. at 106-07, 92 S.Ct. at 356, 30 L.Ed.2d at 306. This factor asks whether the purposes of the rule will be advanced by retroactive application. Rutherford
The final consideration is whether retroactive application would produce inequitable results and adversely affect the administration of justice. Chevron Oil, supra, 404 U.S. at 106-07, 92 S.Ct. at 355, 30 L.Ed. 2d at 306; Rutherford Educ. Ass‘n, supra, 99 N.J. at 22, 489 A.2d 1148. This factor intertwines with the first factor‘s focus on reasonable reliance. If a plaintiff could have reasonably relied on the tolling provision, retroactive nonrecognition of that provision would be inequitable. Juzwin, supra, 900 F.2d at 696. For reasons previously stated, Crespo and Piermont could not reasonably have relied on the tolling provision. Supra at 368-371, 608 A.2d at 250, 251. Nothing in the record indicates that after the accident Stapf was not at all times amenable to long-arm jurisdiction. Stapf contends, and Piermont does not refute, that his identity, address, and telephone number were known immediately after the accident and were available to Crespo or his attorney both before and after the accident. Indeed, when Crespo filed suit, he had no problem in serving Stapf. To bar Crespo‘s claim against Stapf because of Crespo‘s own failure or that of his attorney to bring a timely action is neither inequitable nor unfair.
The retroactive application of our declaration of the unconstitutionality of the statute does not leave Crespo without a remedy. Although his action against Stapf is time-barred, he
Our dissenting colleague finds unforeseeable our holding that
As the dissent acknowledges, post at 361, 608 A.2d at 246, the Appellate Division made its decision in DiFalco prospective from the date of the United States Supreme Court‘s decision in Bendix Autolite. 244 N.J.Super. at 536, 582 A.2d 1284. The court held that the statute after the 1984 amendment violated the Commerce Clause with respect to corporate defendants. Ibid. It relied on Bendix Autolite, which invalidated a statute that, like the 1984 amendment, required a corporation to designate an agent for service of process to avoid the tolling of the period of limitations. Thus, Bendix Autolite foreshadowed the invalidity of the 1984 amendment as applied to corporate defendants. The 1984 amendment, however, did not apply to individual defendants, who were still required to reside in New Jersey to avoid the tolling of the statute. As to them, the unconstitutionality of
Finally, the dissent incorrectly posits that the equities compel prospective application of our decision. It reaches this conclusion because Crespo is remitted to a legal malpractice action, in which he must prove not merely that Stapf‘s product was defective, but also that Piermont erred. Post at 375, 608 A.2d at 254. Missing from the dissent‘s calculus are the rights of the defendant, Stapf, arising from the expiration of the statute of limitations. Those rights, as the United States Supreme Court has declared, “are an integral part of the legal system ***” Bendix Autolite, supra, 486 U.S. at 893, 108 S.Ct. at 2221, 100 L.Ed. 2d at 903. According to the Court, a prospective application may be appropriate when a plaintiff “could not have known the time limitation that the law imposed on him.” Chevron Oil, supra, 404 U.S. at 108, 92 S.Ct. at 355, 30
The judgment of the Appellate Division is affirmed.
O‘HERN, J., dissenting.
I would make today‘s ruling prospective. By its 1992 amendment of
I would have interpreted the prior tolling statute (as the Legislature has since done) consistent with constitutional mandate to hold that it did not operate unless long-arm service could not be effectuated. That, however, would have required an overruling of Lemke v. Bailey, 41 N.J. 295, 196 A.2d 523 (1963). There is little profit in debating which is the clean break with the past. The majority believes that attorneys should have foreseen today‘s developments and thus reasons that the proper “remedy” is a malpractice action against attorneys, such as Crespo‘s earlier attorney, Piermont. Ante at 372, 608 A.2d at 252. I disagree. In the recent invalidation of
Hence, I believe that the majority is unnecessarily creating a very cumbersome process on remand. To dispose of the case in this way seems unproductive to me. There must be a trial within a trial-first to determine whether Piermont‘s conduct amounts to professional malpractice (after all, had Coons I so clearly invalidated all of
One of our goals should be to simplify the legal process whenever possible. I do not think that we do that here. Most recently, in Green v. Auerbach Chevrolet Corp., 127 N.J. 591, 606 A.2d 1093 (1992), we declined to apply retroactively our decision on a tolling statute because we said that the “interests of justice will be better served by prospective application of our decision.” Id. at 364, 608 A.2d at 248 (citing Accountemps v. Birch Tree Group, 115 N.J. 614, 628, 560 A.2d 663 (1989)). A malpractice suit against the attorney in that case would have provided the same “remedy” that the majority offers here. Instead, we chose the more equitable disposition of the matter. The equities in this case, as well, favor the prospective application of today‘s decision.
For reversal--Justice O‘HERN--1.