Photo: Tupungato/Shutterstock.com

A New Jersey appeals court has revived a lawsuit seeking damages from the firm of McCusker, Anselmi, Rosen & Carvelli over its filing of a so-called sham lawsuit to stop development of a new McDonald's restaurant.

Dismissal of the suit, based on the failure of plaintiff Passaic Industrial Properties, or PIP, to comply with a discovery order, was an abuse of judicial discretion because no consideration was given to imposition of lesser sanctions, the appeals court said Tuesday. The ruling reinstates PIP's claims against Florham Park-based McCusker Anselmi, attorneys Paul Carvelli and William Munday, and their clients, Darrin Lentini and Cristina Gervasi.

McCusker Anselmi managing partner Bruce Rosen said, in a statement, that PIP's suit is "the same meritless case as it was before this Appellate Division decision," and that the Appellate Division decision "recognized that the plaintiff needed to be sanctioned for its refusal to provide necessary discovery, but it said the trial court had to better explain why it dismissed the case instead of imposing a lesser sanction."

Rosen added that his firm "acted based on its client's representations, and as soon as we realized we had been provided erroneous information, we sought to withdraw from the case." He added that evidence in the case "shows conclusively that PIP was not ready to build because of environmental contamination, and that McCusker Anselmi did not contribute to any delay, so there are no damages."

PIP claimed its plans to develop a McDonald's in Passaic were delayed by tactics employed by McCusker Anselmi. The actions of the firm and its clients cost PIP more than $1 million, the suit claimed.

The law firm, representing a competing McDonald's franchise nearby that was owned by Lentini's father, filed a suit on behalf of three individuals who were ostensible objectors to the new fast-food establishment, challenging its approval by the city Zoning Board of Adjustment.

But that suit was dismissed in January 2016 after PIP obtained certifications from two of the three plaintiffs, showing the law firm and its lawyers had no direct contact with them before filing the suit. They said Gervasi, the girlfriend of Lentini, had spoken to them about opposing PIP's development and filing a suit.

PIP filed a suit against McCusker Anselmi, Carvelli and Munday in February 2016, seeking damages for interference with contract, interference with prospective economic advantage and malicious use of process. PIP also filed a separate suit against Lentini and Gervasi in May 2017, raising the same claims. The cases were later consolidated.

In August 2018, lawyers for Lentini and Gervasi moved to dismiss PIP's complaint, citing documents obtained in an open records request from the New Jersey Department of Environmental Protection. Lawyers for McCusker Anselmi said the documents showed the development was delayed by environmental contamination from oil leaking from a 180,000-gallon underground storage tank on the property.

Superior Court Judge Bruno Mongiardo granted the motion to dismiss, determining that delays in the project were attributable to environmental contamination and not the defendants' conduct.

Before Appellate Division Judges Jose Fuentes, Jessica Mayer and Catherine Enright, PIP argued Mongiardo erred in imposing the drastic sanction of dismissal for violation of discovery orders. The panel said judges have broad discretion in formulating sanctions, but any such penalty must be just and reasonable. Dismissal of a claim for failure to comply with discovery is the "last and least favorable option," the panel said. If a lesser sanction than dismissal is sufficient to erase the prejudice to the other party, dismissal is not appropriate, the panel said.

The judge could have precluded PIP from supporting or opposing certain claims, or could have dismissed the case without prejudice until the requested discovery was provided, the panel said.

In addition, PIP's damage claims for tortious interference and malicious use of process were based on its legal fees incurred as a result of defendants' baseless objections at zoning board meetings and their filing of sham litigation, the panel said. Such claims are separate from PIP's claims for lost profits. Therefore, the failure to produce documents did not merit dismissal with prejudice of PIP's complaint in its entirety, the appeals court said.

Kenneth DelVecchio of Stern, Kilcullen & Rufolo in Florham Park, lawyer for Lentini and Gervasi, noting the panel's reference to dismissal of the plaintiff's lost-profit claims as a potential sanction, said he was "confident that's what's going to happen back at the trial court. We're very happy with this result and confident that justice will be preserved."

PIP's lawyer, Jack Dweck of the Dweck Law Firm in New York, did not respond to requests for comment.

Christopher Carey of McElroy Deutsch Mulvaney & Carpenter in Newark, representing McCusker Anselmi, Carvelli and Munday, declined to comment.