New Jersey Supreme Court Clarifies Tort Claims Act Notice Requirements

In H.C. Equities, LP v. County of Union (A-1/2-20/084556) (Decided July 19, 2021), the Supreme Court of New Jersey held that multiple documents cannot collectively constitute effective notice of a tort claim under the Tort Claims Act (TCA or Act).

TCA Notice Requirements

The TCA requires a claimant seeking to file a tort action against a local public entity or public employee to present a tort claims notice informing the entity about the potential claim. The notice must be “filed with that entity” within ninety days of the accrual of the claimant’s cause of action. The Act, however, allows a claimant to apply to a court within one year of the accrual of the claim for leave to file a late notice of claim. To secure permission to file a late notice of claim, the claimant must show that the public entity or public employee has not been substantially prejudiced by the delay and that extraordinary circumstances justify the failure to timely file.

Facts of H.C. Equities, LP v. County of Union

In December 1998, H.C. Equities leased to the County of Union (County) two buildings for a term of twenty-five years. In July 2012, the County ceased making rental payments, citing the alleged neglect of the properties and damage from an electrical fire. In December 2013, H.C. Equities filed an action for breach of lease, but it later agreed to the dismissal of its action without prejudice pending the conclusion of settlement negotiations.

In October 2015, the Union County Improvement Authority (Authority) retained a real estate consultant, Colliers International (Colliers), to assess the County’s real estate needs. Colliers provided an initial report dated January 20, 2017, and a second report dated September 19, 2017. H.C. Equities stated that it obtained a copy of the first report in “early 2017.” In that report, Colliers identified “[s]ubstantial disadvantages” in the buildings leased from H.C. Equities and recommended that the County “[e]xit [the] building.”

On February 22, 2017, H.C. Equities’ outside counsel sent a letter to County Counsel and the Authority’s outside counsel, alleging that the January 20 report was “informed and influenced by parties acting in bad faith and with the intention of seeing the settlement fail.” The letter also “advised that if the draft Collier Study is not withdrawn, then H.C. Equities . . . will likely proceed with its original claims . . . and prosecute additional causes of action . . . including” several tort claims. H.C. Equities’ counsel sent a second letter dated March 8, 2017 addressed to outside counsel for the Authority, with a copy sent to County Counsel, and a third letter, sent on March 9, 2017 by a second law firm to County Counsel.

On June 13, 2017, H.C. Equities, represented by a third law firm, served on the County a “Notice of Tort Claim” pursuant to the Tort Claims Act. H.C. Equities provided a copy of that Notice to outside counsel for the Authority. H.C. Equities filed suit against the County and

the Authority on April 23, 2018. It asserted claims against the County for breach of lease, claims pertaining to the alleged settlement agreement, conspiracy, and promissory estoppel. H.C. Equities asserted claims against the Authority for trade libel, defamation, and conspiracy.

The Authority moved to dismiss all claims asserted against it, contending that H.C. Equities had failed to provide a timely notice of tort claims. H.C. Equities cross-moved “for retroactive extensions of time for filing of its Notice under the [Tort Claims] Act,” asserting that its cause of action against the Authority did not accrue on the date it received the January 20, 2017 report because the County and the Authority committed a continuing tort that extended beyond the receipt of that report. In the alternative, H.C. Equities argued that there were extraordinary circumstances under N.J.S.A. 59:8-9.

The trial court held that H.C. Equities’ claims against the Authority accrued no later than March 8, 2017, when H.C. Equities stated objections to the Colliers report in its letter to the Authority. The trial court found H.C. Equities’ cross-motion for leave to file a late tort claims notice under N.J.S.A. 59:8-9 to be untimely, and stated that the cross-motion presented no showing of extraordinary circumstances under that statute. The court granted the Authority’s motion to dismiss H.C. Equities’ claims against it.

The County moved to dismiss H.C. Equities’ conspiracy and promissory estoppel claims, and H.C. Equities filed a notice of cross-motion for an extension of time to file a notice of tort claim under N.J.S.A. 58:8-9. The trial court dismissed H.C. Equities’ conspiracy claim and again denied its cross-motion for an extension of time to file its tort claims notice. The court dismissed plaintiff’s promissory estoppel claims without prejudice. Following the trial court’s orders, H.C. Equities’ only remaining claims were its breach of lease, breach and frustration of the settlement agreement, and breach of the implied covenant of good faith and fair dealing claims against the County, as well as claims asserted only against fictitious defendants. The Appellate Division reversed, holding that plaintiff’s three letters collectively constituted substantial compliance with N.J.S.A. 59:8-4’s requirements.

Court’s Decision in H.C. Equities, LP v. County of Union

The New Jersey Supreme Court reversed. “We disagree that in the setting of this case, a finding of substantial compliance with the Tort Claims Act can be premised on comments made by plaintiff’s counsel in three different letters sent to lawyers representing the defendant public entities. We do not find that H.C. Equities’ letters, individually or collectively, communicated the core information that a claimant must provide to a public entity in advance of filing a tort claim,” the court wrote. “We conclude that H.C. Equities did not comply with the notice of claim provisions of the Tort Claims Act or file a timely motion to submit a late claim.”

The court first found that H.C. Equities’ tort claims are barred unless its counsel’s letters dated February 22, 2017, March 8, 2017, and March 9, 2017 satisfy the TCA’s notice provisions by virtue of the doctrine of substantial compliance. As it explained, the substantial compliance doctrine operates to prevent barring legitimate claims due to

technical defects. A court deciding a substantial compliance claim considers the following factors: “(1) the lack of prejudice to the defending party; (2) a series of steps taken to comply with the statute involved; (3) a general compliance with the purpose of the statute; (4) a reasonable notice of petitioner’s claim, and (5) a reasonable explanation why there was not a strict compliance with the statute.”

The New Jersey Supreme Court went on to disagree with the Appellate Division’s holding that H.C. Equities’ three letters collectively establish substantial compliance with the notice requirements of the TCA. “[W]e first note that a substantial compliance analysis relying on plaintiff’s multiple, discrete communications — sent at different times and to different recipients — is inconsistent with the Tort Claims Act,” the court wrote. “The Legislature clearly envisioned that a claimant would disclose to a public entity its tort causes of action in a single document that provides clear notice of its claim, not in a series of incomplete communications that must be considered together in order to infer that a claim may be filed.”

In further support of its decision, the New Jersey Supreme Court noted that the TCA consistently uses the singular. It also stated that the New Jersey Legislature’s express purpose to “provide the public entity with prompt notification of a claim,” is not met if the public entity is required to analyze multiple communications and determine whether, viewed in the aggregate, they reveal an intent to sue. “A ruling that multiple documents can collectively constitute effective notice of a tort claim invites the very confusion that the Act was intended to avoid,” the court wrote.

The New Jersey Supreme Court also found that the Appellate Division’s ruling would impose an unreasonable burden on public entities. “The Appellate Division’s construction of the Act would require counsel for a public entity to review every letter, e-mail, or other communication received from counsel for a potential claimant and determine whether any such communication, when combined with other communications, might constitute notice of a tort claim,” the court wrote. “In the case of the Authority, which was not copied on the March 9, 2017 letter, the Appellate Division’s decision would require a public entity’s counsel to monitor the claimant’s correspondence with a different public entity.”

Finally, the New Jersey Supreme Court found there was no basis to conclude that there was substantial compliance with the TCA’s notice provisions in this case. First, court found that the record does not demonstrate a “lack of prejudice to the defending party,” noting that the letters did not alert defendants to the trade libel, defamation, and conspiracy claims that H.C. Equities would eventually assert in this action. Second, it found that H.C. Equities made no effort to file tort claims notices as N.J.S.A. 59:8-7 requires. The court determined that the third factor, “a general compliance with the purpose of the statute,” similarly favored a finding that H.C. Equities did not substantially comply with the Tort Claims Act. According to the court, the letters were inadequate to give the County and the Authority six months to review and attempt to settle the tort claims that H.C. Equities later asserted, to promptly notify the County and Authority of H.C. Equities’ tort claims so that they could investigate the facts and prepare a defense, or to afford those entities an opportunity to correct; the letters similarly failed to inform defendants in advance as to the indebtedness

or liability that they may be expected to meet. See ibid. The fourth factor, “a reasonable notice of petitioner’s claim,” also did not favor a finding of substantial compliance, as the court found that even if they are considered together, the letters do not provide notice of H.C. Equities’ tort claims. Finally, the court cited that H.C. Equities provided no “reasonable explanation why there was not a strict compliance with the statute.”

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