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APPELLATE DIVISION AFFIRMS TRIAL COURT’S DISMISSAL OF PLAINTIFF’S COMPLAINT AS BARRED BY THE ENTIRE CONTROVERSY DOCTRINE IN CONTRACTUAL DISPUTE

November 14, 2018

ROBERT B. SPAWN reports on a recent unpublished decision from the Superior Court of New Jersey, Appellate Division.

A recent New Jersey case involved a Plaintiff whose home in Sayreville suffered significant damage in Superstorm Sandy.  In December 2012, Plaintiff hired Third-Party Defendant (“Contractor A”) to repair her home.  Contractor A partially completed the repairs before requesting additional money from Plaintiff to continue working on her home.  Plaintiff refused Contractor A’s request because she was dissatisfied with the quality of the work, and, consequently, Contractor A walked off the job prior to April 2013.  Subsequently, in April 2013, Plaintiff hired Defendant (“Contractor B”) to finish repairing her home, and Contractor B completed its work in May 2013.

 

Then, in July 2013, Plaintiff sued Contractor A for improper construction work and violations of the Consumer Fraud Act.  Plaintiff did not name Contractor B as a Defendant in the litigation against Contractor A.  However, during her deposition in the Contractor A litigation, Plaintiff expressed dissatisfaction with the work done by Contractor B.  Two years after filing suit, Plaintiff settled the litigation against Contractor A and released all claims against Contractor A, holding it harmless for any claims arising for work performed on Plaintiff’s home.  A mere five days after settling the Contractor A litigation, Plaintiff sued Contractor B, again claiming violations of the Consumer Fraud Act in connection with the repairs to her home and alleging that the work done by Contractor B was defective.  Contractor B, in turn, filed a third-party complaint against Contractor A, seeking indemnification and contribution for any damage done to Plaintiff’s home.  After discovery had concluded, both Contractor A and Contractor B moved to dismiss the complaint filed by Plaintiff.

 

The trial court found in favor of Contractor A and Contractor B and dismissed Plaintiff’s claims with prejudice.  The trial court reasoned that the litigation at hand (the Contractor B action) was a successive action arising from the same facts underlying the previously-settled Contractor A litigation.  As such, the entire controversy doctrine (“ECD”) barred Plaintiff’s claims against Contractor B, as all Defendants would be substantially prejudiced if Plaintiff were allowed to proceed with the Contractor B litigation.  Plaintiff appealed, arguing that the ECD was inapplicable to the case at bar.

 

The Appellate Division, in affirming the trial court’s decision, explained that R. 4:30A requires a party to raise all transactionally-related claims in a singular action.  To be sure, if a plaintiff is required to join claims arising from the same series of transactions in one litigation, and she fails to do so, she is precluded from bringing those omitted claims in any future litigation.  The Appellate Division further noted that the ECD embodies the principle that the adjudication of a legal controversy should occur in one litigation in only one court.  Applying these principles to the instant matter, the Appellate Division asserted that the joinder of Plaintiff’s claims against Contractor B in the previous Contractor A litigation would have ensured a comprehensive, just, and conclusive disposition of the entire controversy in one legal action and would have promoted fairness to all parties.  Indeed, Plaintiff’s claims against Contractor A and Contractor B arose from the same factual transaction (the restoration of Plaintiff’s home), and, as such, Plaintiff was required to bring claims against both contractors in the same litigation.  Thus, the Appellate Division concluded that Plaintiff’s failure to join her claims against Contractor B with her claims against Contractor A in the previous litigation warranted dismissal of her complaint against Contractor B.

 

Please contact Robert B. Spawn if you have any questions or need assistance in connection with this subject.