On certification to the Superior Court, Appellate Division.
The opinion of the Court was delivered by O'hern, J. Chief Justice Poritz and Justices Handler, Pollock, Garibaldi, Stein and Coleman join the Justice O'HERN's opinion.
The opinion of the court was delivered by: O'hern
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
Marc Gelber and Marlene Gelber v. The Zito Partnership et al. (A-66-96)
Argued December 2, 1996 -- Decided February 26, 1997
O'HERN, J., writing for a unanimous Court.
This appeal, like Joel v. Morrocco, also decided today, concerns an application of the entire controversy doctrine.
In August 1991, Marc and Marlene Gelber (the homeowners) filed a complaint against the Zito Partnership and its two principals, Matthew R. Zito and Daniel Falcone (the architect). When the homeowners filed their complaint, they certified, pursuant to Rule 4:5-1(b)(2), that the matter in controversy was not the subject of any other action pending in any court or of a pending arbitration proceeding. At that time, the certification was true. In July 1993, the architect took the deposition of an expert witness for the homeowners, during which he learned that the homeowner had brought a separate claim in a May 1992 arbitration proceeding against Elecon Builders (the contractor), which had been hired to complete the renovations that were the subject of the 1991 suit against the architect. In connection with that arbitration, the homeowners again recited that the matter in controversy was not the subject of any other pending action in any court.
During that arbitration process, the contractor had opposed the homeowners a claim on the basis that the architect was responsible for some of the damages. That notwithstanding, in October 1992, an arbitrator entered a monetary award against the contractor in favor of the homeowners, which the contractor would not pay. Therefore, in November 1992, the homeowners brought a summary action to confirm the arbitration award. In opposition to the confirmation action, the contractor submitted an affidavit disputing the award and claiming that the homeowners' filing of the suit against the architect had not been disclosed to him until after the arbitration proceeding.
After learning of the arbitration proceedings, the architect filed a motion to dismiss the homeowners complaint, alleging that the homeowner was attempting to "double dip," in violation of the entire controversy doctrine. The architect further alleged that the homeowner had violated Rule 4:5-1(b)(2), which places a continuing duty on litigants to notify the parties and the court of any other pending litigation or arbitration proceeding. The Law Division granted that motion. The Appellate Division affirmed, ruling that, even if the homeowners had not yet formulated the extent of the claims against the contractor prior to entering the arbitration action, the homeowner should have informed defendant and the court of the arbitration proceeding as required by the Rule 4:5-1(b)(2). One member of the panel Dissented with respect to claims against the architect that dealt with improper design and other claims "that had nothing to do with Elecon."
The homeowners appealed to the Supreme Court as of right under Rule 2:2-1(a).
HELD: There has been a sufficient showing of prejudice to the architect, resulting from violation of the notice requirements of Rule 4:5-1, to warrant a measured application of the entire controversy doctrine to preclude the homeowners' pursuit of claims that were intertwined with the construction defects.
1. The Court did not intend that violation of the notice requirements of Rule 4:5-1 should result in automatic orders for dismissal. Rather, courts must carefully analyze each of the pillars of the entire controversy doctrine before dismissing claims or parties to a suit. (p.5)
2. In considering fairness to the party whose claim is sought to be barred, a court must consider whether the claimant has had a fair and reasonable opportunity to have fully ...