On appeal from Superior Court of New Jersey, Law Division, Gloucester County, Docket No. GLO-L-1603-01.
The opinion of the court was delivered by: Fuentes, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Telephonically argued March 7, 2007
Before Judges Winkelstein, Fuentes and Baxter.
Plaintiff, the estate of James Simmermon, appeals from the order of the Law Division granting defendant Dryvit Systems, Inc.'s (Dryvit) motion for summary judgment. Defendant is the manufacturer of a synthetic stucco used to cover plaintiff's home. Plaintiff filed this consumer fraud action in this State, alleging that the material flaked and cracked, and as a result he suffered ascertainable damages.
At issue in this appeal is whether plaintiff is bound by the terms of a settlement in a class action filed in the State of Tennessee against defendant. The Law Division answered this question in the affirmative, and entered an order dismissing plaintiff's New Jersey case. The trial court found that: (1) plaintiff is within the class of litigants covered by the Tennessee case; (2) he was constructively on notice of his right to opt out of the settlement; (3) despite such notice, he failed to opt out of the settlement; and (4) he is bound by the terms of the settlement, and thus precluded from prosecuting his New Jersey case.
After a careful review of the record, and in light of prevailing legal standards, we reverse. We hold that Dryvit's failure to comply with the requirements of Rule 4:5-1(b)(2) prevents it from invoking the preclusive effect of the settlement agreement in the Tennessee matter. We address this issue in the following factual context.
On September 11, 2001, plaintiff filed this cause of action against defendant Dryvit. Approximately eleven months earlier, on November 14, 2000, a class action suit was filed against Dryvit in the Tennessee Circuit Court, alleging negligent installation of synthetic stucco on the homes of the members of the class. Posey v. Dryvit Sys., Inc., No. 17,715-IV (Jefferson County Cir. Ct., Tenn.). The class was defined as:
[A]ll Persons who, as of the Notice Date, in any State other than North Carolina, own Property that is clad in whole or in part with Dryvit EIFS installed after January 1, 1989. Excluded are those who: (1) prior to the Notice Date, have settled with Settling Defendant, providing a release of claims relating to Dryvit EIFS; or (2) have obtained a judgment against Settling Defendant for a Dryvit EIFS claim, or had a judgment entered against them on such a claim in Settling Defendant's favor.
On March 15, 2002, Dryvit filed its responsive pleading in this New Jersey case. The pleading did not mention the then- pending Tennessee class action.
On April 8, 2002, the parties in the Posey class action reached a settlement agreement with Dryvit. On January 14, 2003, the Tennessee court issued a final order: (1) approving the settlement; (2) conditionally certifying the settlement class; and (3) approving the proposed Notice Plan, as well as the form of Class Notice of Settlement and Summary Notice. The order specifically provided that:
Any Settlement Class Member who did not timely file and serve an objection in writing to the Settlement Agreement, to the entry of Final Order and Judgment, or to Class Counsel's application for fees, costs, and expenses, in accordance with the procedure set forth in the Class Notice and mandated in the Order Granting Preliminary Approval of Settlement, is ...