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Thompson v. Farah

January 25, 2008


On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-10406-97.

Per curiam.


Submitted October 24, 2007

Before Judges Axelrad and Messano.

On August 21, 1997, plaintiff Raymond Keith Richards filed this complaint against defendant Willy Farah seeking $26 million in damages based upon an alleged investment agreement.*fn1 The damages claimed included $10 million that plaintiff deposited in a joint account at the Clifton branch of defendant PNC Bank's (PNC) predecessor, Midlantic Bank, at Farah's request. PNC, which was subsequently added to the litigation, moved for summary judgment and argued that plaintiff's complaint should be dismissed on the following alternative grounds: 1) plaintiff failed to prove PNC was negligent; 2) plaintiff's complaint against PNC violated the Entire Controversy Doctrine (the ECD); and 3) New Jersey's multiple party deposit account statute, N.J.S.A. 17:16I-1 through -17 required dismissal of the complaint. The motion judge granted PNC's motion and dismissed plaintiff's complaint with prejudice.


Although it is this grant of summary judgment entered nearly ten years ago from which plaintiff now appeals, we begin by recounting the tortuous procedural history that surrounds the litigation and in doing so explain the inordinate delay. Plaintiff initially filed his complaint against Farah in August 1997. He thereafter moved for summary judgment based upon a "stipulation" Farah allegedly executed in which he essentially admitted his liability to plaintiff. Although the record fails to reveal the result of that motion, Farah failed to answer the complaint. As a result, plaintiff also applied for the entry of default judgment against Farah, and, on December 11, 1997, a final judgment by default was entered in favor of plaintiff against Farah for the full $26 million.

In the interim, on September 25, 1997, plaintiff also issued a subpoena duces tecum to PNC requesting documents relating to the joint account opened in his and Farah's names. On October 31, 1997, PNC responded and produced over forty pages of documents in response to the request.

On December 16, 1997, without formal motion, plaintiff filed an amended complaint, adding a single claim of negligence against PNC to the existing complaint. Plaintiff alleged that PNC was negligent in permitting Farah to open the joint account in a manner 1) inconsistent with his agreement with Farah; and 2) contrary to customary banking practices, rules and regulations. Plaintiff's claim against PNC sought damages in the amount of $10 million, the amount plaintiff had wired into the joint account, that had been deposited and withdrawn by Farah, and with which Farah had apparently absconded.

On February 27, 1998, asserting the grounds mentioned previously, PNC moved for summary judgment in lieu of answering plaintiff's amended complaint. On April 17, 1998, the motion judge granted summary judgment, determining that plaintiff's claim was barred both procedurally and substantively. He reasoned that because plaintiff failed to assert the claim against PNC in his initial complaint, it was barred by the ECD. He also reasoned that plaintiff's claim against PNC was substantively flawed because plaintiff had not relied on anything that the bank or its employees said, did, or provided to him, and because plaintiff's own conduct constituted superseding or intervening negligence, breaking any alleged chain of proximate causation. The judge failed to address PNC's third asserted ground for relief--that New Jersey's substantive banking law barred the claim. The order granting summary judgment was entered on April 23, 1998 (the April 1998 order). Following the grant of summary judgment to PNC, plaintiff moved for reconsideration which was denied by order dated July 7, 1998.

In the interim, Farah moved to vacate the prior default judgment entered against him. Before considering the merits of the application, the judge ordered Farah to file a supplemental certification demonstrating a meritorious defense to plaintiff's suit. Farah did so, and on September 29, 1998, the judge entered an order that required Farah to submit to a deposition and provide other discovery, and, opened the default judgment for the purpose of permitting Farah to plead, assert, and prove a meritorious defense. However, somewhat inexplicably, the order also specifically provided that the default judgment against Farah remained "unaffected and in full force and effect" and permitted plaintiff to continue any and all post-judgment enforcement and collection efforts against Farah.*fn2

In August of 1998, plaintiff filed a notice of appeal seeking review of the April 1998 order and the denial of his reconsideration motion. However, on November 19, 1998, Farah filed a federal bankruptcy petition resulting in the automatic removal of the proceedings to federal court. Apparently, unaware of the removal, we dismissed plaintiff's appeal on November 20, 1998, finding the April 1998 order to be interlocutory in nature and that plaintiff had failed to seek leave to appeal.

Following the filing of Farah's bankruptcy petition in November of 1998, plaintiff commenced an adversary proceeding against Farah and PNC before the bankruptcy judge, asserting essentially the same claims made in his amended state court complaint. Pursuant to Fed. R. Civ. P. 54(b), plaintiff also petitioned the bankruptcy judge for reconsideration of the April 1998 order.

After considering oral arguments on July 10, 2000, the bankruptcy judge issued a written opinion dated June 19, 2001. She denied plaintiff's motion to revise the April 1998 order concluding that plaintiff's claims of "newly discovered evidence" did not qualify as compelling circumstances under the "law of the case doctrine" and the "new" evidence presented by plaintiff did not bear on the Law Division's judge's previous determination that plaintiff's acts constituted a supervening cause. Because any additional evidence submitted by plaintiff did not materially alter the Law Division judge's analysis, she ruled plaintiff failed to provide sufficient grounds to alter the April 1998 order in any way.

Plaintiff then moved before the bankruptcy judge for an order denying Farah relief from the December 11, 1997, default judgment. On July 16, 2001, the bankruptcy judge granted plaintiff's motion, struck Farah's answer to plaintiff's complaint, and denied Farah's motion to vacate the December 1997 default judgment order.*fn3

Plaintiff filed an appeal of the bankruptcy judge's denial of his motion to reconsider the April 1998 order in the federal district court. On December 30, 2003, Judge William J. Martini dismissed that appeal because it had not been timely filed.

Plaintiff appealed Judge Martini's order to the United States Court of Appeals for the Third Circuit. On March 22, 2005, the Court of Appeals reversed Judge Martini's order, concluding that although plaintiff's appeal was untimely, the unusual circumstances of the case warranted a remand to the district court for a hearing on the merits of the appeal of the April 1998 order.

While that remand was pending, the parties consented to Judge Martini's suggestion that the appeal of the April 1998 order would be more appropriately heard by us. On January 10, 2007, ...

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