On appeal from Superior Court of New Jersey, Law Division, Camden County.
Approved for Publication May 16, 1996.
Before Judges Skillman, P.g. Levy and Eichen. The opinion of the court was delivered by Skillman, J.A.D.
The opinion of the court was delivered by: Skillman
The opinion of the court was delivered by
The issue presented by this appeal is whether the entire controversy doctrine requires the dismissal of a state court action arising out of the same sequence of events as a previously filed federal district court action, even though the federal action has not yet been concluded.
On June 9, 1992, plaintiff, Kaselaan & D'Angelo Associates, Inc. (K&D), together with its parent corporation, Hill International, Inc. (Hill), filed a diversity action in the federal district court for New Jersey against William D'Angelo, a former K&D employee who had been a principal of K&D before its purchase by Hill, alleging that D'Angelo had breached his employment contract by accepting employment with another company. On February 8, 1993, K&D and Hill amended their federal complaint to add various other defendants, including D'Angelo's new employer, T.G.I. Stephens, Inc. (TGI), to the action.
On October 25, 1993, plaintiff filed this action in the Law Division against defendants Warren L. Soffian and two law firms with which he is affiliated, alleging that Soffian, who represented K&D both before and after its purchase by Hill and who also represented D'Angelo in his negotiations with TGI, breached his fiduciary duties to K&D and tortiously interfered with K&D's contract with D'Angelo. In their answer, defendants asserted that this action is barred by the entire controversy doctrine.
The plaintiffs in the federal district court action subsequently moved for leave to file a second amended complaint, adding defendants as parties. The district court granted plaintiffs' motion but noted that defendants' joinder would destroy diversity jurisdiction. Plaintiffs then filed a motion for reconsideration, arguing that defendants' joinder would subject the entire complaint to dismissal because the case was originally brought in the district court and thus could not be remanded to state court. However, the district court refused to reconsider the matter, concluding that the amendment was proper even though it would destroy diversity jurisdiction and subject the entire complaint to dismissal. Although the plaintiffs in the federal action filed their second amended complaint, they immediately dismissed the claims against defendants.
Thereafter, defendants filed motions in the Law Division seeking dismissal of the state court action on the ground that it was barred by the entire controversy doctrine or, in the alternative, a stay of proceedings pending a final resolution of the federal action. The trial court denied the motion for a stay but subsequently granted defendants' motion to dismiss the complaint based on the entire controversy doctrine. In deciding the motion to dismiss, the court assumed that defendants' joinder in the federal action would result in a remand of the entire action to state court. Plaintiff filed a motion for reconsideration, pointing out that this assumption was incorrect, which resulted in the court summarily reversing itself and denying defendants' motion to dismiss on the basis of the entire controversy doctrine. The court subsequently filed a statement of reasons which stated in pertinent part:
It now appears that ... the Federal action could not have been transferred to the State court, so in effect joining the defendants in the Federal action would have resulted in a dismissal of the Federal action. A new action could not have been filed in the State court because the statute of limitations would have expired. Therefore, the plaintiff would be without a remedy. Such a result would be unconscionable.
We granted defendants' motion for leave to appeal from the denial of their motions for dismissal and for a stay pending the outcome of the federal action. We affirm the denial of defendants' motion to dismiss, although for different reasons than those expressed by the trial court, and remand for reconsideration of defendants' motion for a stay.
Initially, we note that the trial court failed to cite any authority for its statement that "[a] new action could not have been filed in the State court because the statute of limitations would have expired." Furthermore, plaintiff's appellate brief does not offer any support for this part of the trial court's decision. In response to this court's questions at oral argument, plaintiff acknowledged that most counts of its federal complaint appear to be governed by the six-year limitations period provided by N.J.S.A. 2A:14-1, which has not yet expired. In any event, the limitations period for filing an action in State court may be tolled under some circumstances by the filing of a complaint in federal court that is subsequently dismissed for lack of diversity jurisdiction. Galligan v. Westfield Centre Serv., Inc., 82 N.J. 188, 190, 193-95, 412 A.2d 122 (1980). Therefore, the trial court's denial of defendants' motion to dismiss is not sustainable on the grounds set forth in its statement of reasons.
Nevertheless, we are satisfied that the entire controversy doctrine does not require the dismissal of this action in its present procedural posture. The entire controversy doctrine requires a party to "litigate all aspects of a controversy in a single legal proceeding." Leisure Technology-Northeast, Inc. v. Klingbeil Holding Co., 137 N.J. Super. 353, 357, 349 A.2d 96 (App. Div. 1975). The doctrine's purposes are "(1) the need for complete and final Disposition through the avoidance of piecemeal decisions; (2) fairness to parties to the action and those with a material interest in the action; and (3) efficiency and the avoidance of waste and the reduction of delay." DiTrolio v. Antiles, 142 N.J. 253, 267, 662 A.2d 494 (1995). "The application of the doctrine requires that a party who has elected to hold back from the first proceeding a related component of the controversy be barred from thereafter raising it in a subsequent proceeding." William Blanchard Co. v. Beach Concrete Co., Inc., 150 N.J. Super. 277, 292-93, 375 A.2d 675 (App. Div.), certif. denied, 75 N.J. 528 ...