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Harley Davidson Motor Co., Inc. v. Advance Die Casting

June 28, 1996

HARLEY DAVIDSON MOTOR COMPANY, INC. PLAINTIFF-APPELLANT,
v.
ADVANCE DIE CASTING, INC., DEFENDANT-RESPONDENT, AND NORTHBROOK PROPERTY AND CASUALTY INSURANCE COMPANY, DEFENDANTS.



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

Approved for Publication June 28, 1996. As Corrected July 16, 1996. Second Correction August 21, 1996,

Before Judges Dreier, A.m. Stein and Cuff. The opinion of the court was delivered by Dreier, P.j.a.d.

The opinion of the court was delivered by: Dreier

The opinion of the court was delivered by DREIER, P.J.A.D.

Harley Davidson Motor Company appeals from the dismissal of its indemnification suit against defendants Advance Die Casting, a component parts manufacturer, and its insurer, Northbrook Property and Casualty Insurance Company (Northbrook). The court's dismissal was based upon plaintiff's alleged failure to comply with the entire controversy doctrine. We reverse.

In an underlying action, *fn1 an injured motorist brought suit against Harley Davidson for defective design or manufacture of a motorcycle or its component parts. In March 1993, as the suit neared trial, Harley Davidson sent a letter to Advance Die Casting notifying it that Harley Davidson intended to produce expert testimony that the motorcycle clutch chain cover manufactured by Advance Die Casting was defective and was the cause of the motorist's injuries. The letter also included a demand that Advance Die Casting defend and indemnify Harley Davidson in the underlying litigation. Advance Die Casting referred the letter to Northbrook, which refused Harley Davidson's demand, indicating that Northbrook, on behalf of Advance Die Casting, "is currently, not in a position to assume the defense or indemnify Harely [sic] Davidson, Inc." Harley Davidson sent another request to Northbrook on July 14, 1993, five days before trial, advising Northbrook of the trial date and location, expenses incurred to date, and Harley Davidson's intent to seek indemnification and judgment for all expenses as against Northbrook on behalf of Advance Die Casting. Approximately one week later, Harley Davidson sent another letter to Northbrook, advising it that Harley Davidson was willing to contribute towards settlement of the dispute, however, since Northbrook, on behalf of Advance Die Casting, had expressed an unwillingness to make any contribution, Harley Davidson would seek indemnification and recovery of all defense costs from Northbrook.

The case was tried in July and August 1993, and the jury found the motorcycle's clutch chain cover was defectively manufactured but determined that the defect was not the proximate cause of the motorist's injuries. In October 1994, we reversed and remanded the case for a new trial on the issue of proximate cause and damages. The Supreme Court later denied certification.

On November 20, 1994, Harley Davidson sent Northbrook another letter, advising of the nature of the jury verdict and the Appellate Division decision, the intention to file a petition for certification, and a continuing request for indemnification and defense costs. By letter dated January 4, 1995, Northbrook responded to Harley Davidson's earlier letters and stated in part that Northbrook would not assume the defense or indemnification of Harley Davidson because Northbrook (and Advance Die Casting) were never directly brought into the suit, Harley Davidson accepted and altered the clutch cover, the cover was not the cause of the accident, and the year the cover in question was made was undetermined.

On March 10, 1995, a month before the underlying action was to be retried, Harley Davidson filed this separate suit against Advance Die Casting and Northbrook for common law indemnification. By letter dated April 28 Harley Davidson informed counsel for Advance Die Casting of the retrial date of the underlying litigation, but then on May 1, 1995, advised Advance Die Casting of a proposed settlement between Harley Davidson and the injured motorist. Counsel for Northbrook, on behalf of Advance Die Casting, appeared in court and agreed to the fairness and reasonableness of the settlement amount. A stipulation of dismissal with prejudice was entered in the underlying action on June 2, 1995. At no time did anyone attempt to consolidate the two matters.

Advance Die Casting made a motion to dismiss in which it raised only the in personam jurisdiction issue. Harley Davidson made a cross-motion for summary judgment responding to defendant's arguments. While noting the entire controversy issue, plaintiff argued for its inapplicability. The court, however, did not reach the jurisdictional issue because it sua sponte granted summary judgment in favor of Advance Die Casting and Northbrook on the basis of the entire controversy doctrine and dismissed Harley Davidson's complaint.

I. Entire Controversy Doctrine

The entire controversy doctrine is inapplicable in the present case because Harley Davidson's indemnification claim against Advance Die Casting and Northbrook technically did not accrue until Harley Davidson's settlement with the personal injury plaintiff. Pursuant to the entire controversy doctrine, all parties with a material interest in the litigation and all claims arising from related facts must be joined in a single action. DiTrolio v. Antiles, 142 N.J. 253, 267-68, 662 A.2d 494 (1995); Cogdell v. Hospital Center, 116 N.J. 7, 26, 560 A.2d 1169 (1989). By requiring joinder of such parties and claims, the doctrine aims to avoid waste, delay, piecemeal litigation, and unfairness to the interested parties through effectuating complete and final Dispositions. Mystic Isle Dev. Corp. v. Perskie & Nehmad, 142 N.J. 310, 322, 662 A.2d 523 (1995); DiTrolio v. Antiles, 142 N.J. at 267; Cogdell v. Hospital Ctr, 116 N.J. at 15. The Supreme Court has stated, however, that the doctrine does not apply to claims that have not yet accrued at the time of or during the original action. Circle Chevrolet Co. v. Giordano, Halleran & Ciesla, 142 N.J. 280, 294, 662 A.2d 509 (1995); Mystic Isle Dev. Corp. v. Perskie & Nehmad, 142 N.J. at 323; DiTrolio v. Antiles, 142 N.J. at 273-74; Pressler, Current N.J. Court Rules, comment 2 on R. 4:30A (1996).

It is well settled in New Jersey that a cause of action for indemnification accrues when an indemnitee becomes responsible to pay on a claim. Holloway v. State, 125 N.J. 386, 399, 593 A.2d 716 (1991); McGlone v. Corbi, 59 N.J. 86, 95, 279 A.2d 812 (1971); Adler's Quality Bakery, Inc. v. Gaseteria, Inc., 32 N.J. 55, 81, 159 A.2d 97 (1960); Cola v. Packer, 156 N.J. Super. 77, 81 n.2, 383 A.2d 460 (App. Div. 1977); New Jersey Transit Rail Operations, Inc. v. North Jersey Cleaning Servs., Inc., 277 N.J. Super. 367, 371, 649 A.2d 908 (Law Div. 1994). Because Harley Davidson became obligated to pay the injured motorist only after the settlement of the case, the indemnification claim did not accrue until that time, and thus the claim falls outside the scope of the entire controversy doctrine.

A more stringent interpretation of the entire controversy doctrine would ignore, or make mandatory, both the permissive joinder rule, R. 4:29-1(a), and the impleader (third-party practice) rule, R. 4:8-1(a). It would have a similar effect upon substantive provisions of the Joint Tortfeasor Contribution Act, N.J.S.A. 2A:53A, and even provisions of the New Jersey Tort Claims Act, N.J.S.A. 59:9-3 and 3-1. Where the claim against a third-party defendant is for a sequential claim such as indemnification, R. 4:8-1 is, and must remain, permissive, not mandatory, except as R. 4:28-1(a) (mandatory joinder) may apply. Although Pressler, Current N.J. Court Rules, comment to R. ...


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