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Milkap Corp. v. Industrial Const. Co. Inc.

April 24, 1995

MILKAP CORPORATION, A NEW JERSEY CORPORATION, PLAINTIFF-APPELLANT,
v.
INDUSTRIAL CONSTRUCTION COMPANY, INC., A PENNSYLVANIA CORPORATION, DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Monmouth County.

Approved for Publication April 24, 1995.

Before Judges Skillman, Wallace and Kleiner. The opinion of the court was delivered by Kleiner, J.A.D. Skillman, J.A.D., Dissenting.

The opinion of the court was delivered by: Kleiner

KLEINER, J.A.D.

Prior to 1989, plaintiff Milkap Corporation was engaged in the business of real estate development. It intended to develop raw acreage in Montgomery Township into an approved major subdivision to be known as "Hidden Estates" encompassing twenty-six separate building lots to be sold for residential home construction.

On February 9, 1989, plaintiff entered into a contract with R & S Colonial Builders, Inc. (Colonial) and its principal Richard Grosso (Grosso) as guarantor, to sell the entire completed subdivision at $125,000 per lot. On July 18, 1989, plaintiff entered into a contract with defendant Industrial Construction Company, Inc. (Industrial) to install a roadway within the residential subdivision.

On May 25, 1990, plaintiff filed a complaint against Colonial and Grosso. Plaintiff alleged that Colonial and Grosso breached their contract to purchase the entire subdivision by failing to close title and to post performance bonds which were required prior to the completion of the subdivision. The complaint sought specific performance or, in the alternative, monetary damages. Colonial and Grosso filed an answer alleging as a specific separate defense that the roadway within the subdivision was substandard and defective. The litigation between plaintiff and Colonial and Grosso settled. *fn1

On August 13, 1993, plaintiff filed its complaint against Industrial. In count one, plaintiff alleged that defendant breached its contract by its use of inadequate materials in constructing the subdivision roadway and alleged improper installation of the roadway. Plaintiff additionally alleged that defendant refused plaintiff's demands to repair the defects in the roadway. In count two, plaintiff repeated its allegations but premised its allegations on a negligence theory. Plaintiff's complaint made specific reference to the alleged breach of contract by Colonial and Grosso, to the litigation instituted by it against Colonial and Grosso, and to the settlement of that litigation.

Defendant filed an answer to plaintiff's complaint. Thereafter, by an amended answer filed with leave of court, it specifically alleged an "entire controversy" defense. Defendant subsequently moved for summary judgment predicated upon its "entire controversy" defense. Plaintiff, in its response to defendant's motion, contended that the court rules in effect when plaintiff filed suit mandated only that all claims against entities already a party to the litigation be joined, and the court rules did not require the addition of other parties to avoid preclusion of a second lawsuit. Plaintiff's defense to the motion relied upon Cogdell v. Hospital Center at Orange, 116 N.J. 7, 560 A.2d 1169 (1989), later codified in R. 4:30A. Plaintiff contended that Cogdell was not in effect during the pendency of the litigation with Colonial and Grosso, as R. 4:30A had not yet been adopted, and therefore plaintiff was not barred in bringing its later suit against defendant. The motion Judge disagreed and concluded:

Rule 4:30A is merely a codification of the rule set forth in Cogdell regarding mandatory joinder of parties as well as claims. Cogdell was decided in 1989, before the filing of the complaint in the first action.

Furthermore, the court agrees with the defendant that there can be no question that the plaintiff . . . was aware of the potential alleged culpability of Industrial Corporation during the first lawsuit and that the policies underlying the entire controversy doctrine preclude this litigation.

The court granted summary judgment to defendant and dismissed plaintiff's complaint with prejudice. Plaintiff appeals. We affirm.

Prior to September 4, 1990, the only reference in the court rules to the entire controversy doctrine was contained in R. 4:27-1(b), governing joinder of claims, which provided that "each party to an action shall assert therein all claims which he may have against any other party thereto insofar as may be required by application of the entire controversy doctrine." Ibid. In contrast, prior to September 1990, the rule governing joinder of parties did not reference the entire controversy doctrine. R. 4:28-1. In Cogdell, supra, 116 N.J. at 26, the Supreme Court held "that the entire controversy doctrine appropriately encompasses the mandatory joinder of parties." Ibid. The Court concluded "that to the extent possible courts must determine an entire controversy in a single judicial proceeding and that such a determination necessarily embraces not only joinder of related claims between the parties but also joinder of all persons who have a material interest in the controversy." Ibid.

The Court mandated the amendment of the then current party joinder rule to reflect the applicability of the entire controversy doctrine to the failure to join Parties with a material interest in the litigation. Ibid. The Court also instructed that the amendment would be ...


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