On appeal from the Superior Court, Law Division, Sussex County.
Pressler, Gaulkin and Ashbey. The opinion of the court was delivered by Pressler, P.J.A.D.
Plaintiff Tall Timbers Property Owners Association (Association) appeals from a summary judgment dismissing its complaint on preclusionary grounds. We affirm in part and reverse in part.
Tall Timbers Community consists of ten fully developed campsite sections in Sussex County, each in condominium ownership and each administered by its own condominium association. Plaintiff Association is a nonprofit association representing the joint and mutual interests of all the separate condominium associations and their members. Defendant Tall Timbers, Inc. is the predecessor in title of the entire tract. Individual defendants John Schneider, John Armenia and Joseph Galanis are the stockholders, directors and officers of the corporate defendant. Individual defendants Joan Schneider, Lucy Armenia
and Nancy Lee Galanis are their wives and assignees, as partners, of certain recreational amenities and facilities serving the campground, including a clubhouse, lake, lake recreation areas, mountain recreation areas and swimming pools. The wives' partnership sold these facilities to the Association for $215,000, taking back a purchase money note for $80,000, secured by a mortgage. The contract of sale required the seller to make improvements in and repairs to a dam located within the campground, which the partnership had also conveyed to the Association.
In May 1985 the wives' partnership instituted an action in the Chancery Division seeking rescission of the agreement based on allegations of mutual mistake. They also sought compensatory damages allegedly occasioned by the Association's breach of various terms of the agreement as well as a judgment of foreclosure of the purchase money mortgage because of alleged payment default. In July 1985 the Association filed not only a counterclaim in that action seeking enforcement of the partnership's contractual obligations in respect of the dam but also a third-party complaint against Tall Timbers, Inc. seeking similar relief. In August 1985, while the Chancery action was pending, the Association filed this action in the Law Division seeking damages for defects in and misrepresentations respecting the campground's water and septic system. Process did not, however, then issue and the named defendants who were either plaintiffs or third-party defendants in the Chancery action were then entirely unaware that this action had been instituted. The Chancery action was concluded by a judgment entered in March 1986 embodying the parties' settlement of all matters in controversy. After entry of that judgment, process finally issued in this action.
Defendants in this action, after being served with process, moved for summary judgment dismissing the complaint on the ground that it was barred both by the entire controversy doctrine and the releases which underlay the settlement of the
Chancery action.*fn1 The motion was supported by the affidavit of individual defendant John Schneider, who asserted, in part, that had the fact of the institution of this action been known to the named defendants herein, none would have participated in the settlement of the Chancery action. Plaintiff did not oppose the motion in the mistaken belief that its adjournment request had been granted. The motion was granted and the action dismissed by order entered in June 1986. Plaintiff appeals.
We affirm the order of dismissal with prejudice as to those defendants in this action who were parties to the Chancery action, namely, the corporate defendant and the defendant wives. We think it clear from the foregoing recital of the facts that the claims raised by plaintiff in this action arose out of the same overall transaction as that which gave rise to the Chancery action, namely, the ultimate conveyance of the campground and its amenities to the condominium owners and their associations. It further appears that the specific claims made by plaintiff in this action were intentionally withheld from the Chancery action for the express purpose of enabling it to negotiate a favorable settlement to what it knew, but what defendants did not know, was only a fragment of the entire controversy. There appears no other reason, and none is suggested, for plaintiff's filing of this action during the pendency of the Chancery action but its withholding of process in this action until final disposition of the Chancery action. In short, we are satisfied that the underlying principles and policies of the entire controversy doctrine were not only violated by this effort to bring successive actions but were also intended to be so violated. See, e.g., R. 4:27-1(b). And see Thornton v. Potamkin Chevrolet, 94 N.J. 1 (1983); Falcone v. Middlesex County Med. Soc., 47 N.J. 92 (1966); Foley Machinery Co. v. Amland Contractors, Inc., 209 N.J. Super. 70, 77 (App.Div.1986); Jones