October 9, 2008
CHARLES BENJAMIN AND SHARI BENJAMIN, PLAINTIFFS-APPELLANTS,
MEYERS RECREATIONAL, KEMLITE COMPANY, INC., DEFENDANTS, AND TRAIL-LITE, A DIVISION OF R-VISION, INC., DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-810-06 and Docket No. L-676-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 2, 2008
Before Judges Payne and Alvarez.
This is an appeal from a dismissal of two complaints filed under Docket Numbers L-810-06 and L-676-07. The proceedings relate to the same facts, involve the same parties, and essentially relate to the same claim for damages. For the reasons that follow, we affirm as to the initial complaint, L-810-06, but reverse and remand as to L-676-07.
On February 1, 2001, plaintiffs Charles Benjamin and Shari Benjamin purchased a 2001 Trail-Lite travel trailer from Sunbird Recreational, now known as Meyers Recreational and/or Meyer's RV Center, a named defendant.*fn1 The trailer was manufactured by defendant Trail-Lite,*fn2 a division of R-Vision, Inc. The laminated areas on the trailer were manufactured by defendant Kemlite.*fn3
Plaintiffs' initial complaint filed on March 2, 2006, sought compensatory and other damages arising from the delamination, which allegedly began in August 2005, of significant areas of the trailer. Plaintiffs' theories of recovery included breach of contract, breach of express and implied warranties, and violations of the Uniform Commercial Code (UCC), the Magnuson-Moss Warranty Act, 15 U.S.C.A. §§ 2301-2312, and the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to 20.
Defendant thereafter filed a motion to dismiss the complaint with prejudice for failure to state a claim upon which relief can be granted pursuant to Rule 4:6-2(e). Defendant asserted, as grounds for dismissal, that the four-year limitation period in which to file a complaint for breach of warranty, N.J.S.A. 12A:2-725(1), expired on February 20, 2005, more than a year before the complaint was filed. Plaintiffs did not oppose the dismissal with prejudice because their attorney believed defendant was correct as a matter of law. Dismissal was granted without the appearance of counsel, no record was made because the motion was unopposed, and an order was signed on May 26, 2006.
Plaintiffs' counsel then "became aware" that when plaintiffs purchased the travel trailer, they also purchased from defendant a five-year Supplemental Structural Warranty (SSW). On June 22, 2006, plaintiffs filed a motion for reconsideration, seeking reinstatement of the complaint on the grounds that the SSW constituted newly-discovered evidence. Defendant successfully opposed the application based on the argument that because plaintiffs had written to defendant demanding that the SSW be honored, on October 25, 2005, four months prior to the filing of their complaint, they were well aware of its existence at the time the motion to dismiss was filed. The October 25, 2005, letter was written directly by plaintiffs to defendant prior to the lawsuit and, presumably, before either party was represented. The motion for reconsideration was denied without prejudice in an undated order.
Plaintiffs proceeded to file a second complaint, Docket No. L-676-07, on February 15, 2007. That complaint also sought compensatory and other damages under theories of breach of contract, breach of the SSW, and violations of the UCC, the Magnuson-Moss Warranty Act, and the CFA.
Plaintiffs subsequently filed a second motion for reconsideration on March 28, 2007, under the docket number of their first complaint. They requested clarification as to whether "plaintiff[s] should be allowed to proceed by way of restoration of their [c]omplaint under Docket No. OCN-L-810-06 or make another reconsideration motion under that Docket No. . . . or whether plaintiffs are allowed to proceed with their new [c]omplaint (under Docket No. OCN-L-676-07)."
Meanwhile, defendant, under Docket No. L-676-07, the second complaint, filed a motion to dismiss pursuant to Rule 4:6-2(e) for failure to state a claim upon which relief can be granted. Defendant contended that the complaint had to be dismissed as barred under the doctrines of res judicata and collateral estoppel, and characterized the proceeding as frivolous litigation. Defendant also requested costs and fees pursuant to N.J.S.A. 2A:15-59.1, the frivolous litigation statute.
The second motion for reconsideration filed by plaintiffs, and defendant's Rule 4:6-2(e) motion, were consolidated for purposes of oral argument and decided on May 11, 2007. The motion judge opined, first, that the motion for reconsideration should be denied because the SSW was not newly-discovered evidence. Accordingly, the initial order dismissing the first complaint with prejudice was not vacated. Secondly, the motion judge agreed with defendant that application of the doctrines of res judicata and collateral estoppel mandated dismissal of the second complaint. He denied the request for counsel fees and costs under the frivolous litigation statute, and no cross-appeal has been filed on that point.
Motions for reconsideration must be filed within twenty days after service of the judgment or order. R. 4:49-2. The time frame cannot be relaxed. R. 1:3-4(c); Eastampton Ctr., LLC v. Planning Bd. of Eastampton, 354 N.J. Super. 171, 187 (App. Div. 2002); cf. Baumann v. Marinaro, 95 N.J. 380, 387-89 (1984) (holding that time to file a motion for new trial under Rule 4:49-1 cannot be enlarged). Accordingly, we concur with the motion judge's conclusion that nearly a year is too long a delay for an application for reconsideration, even in these unusual circumstances.
The dismissal of the second complaint is a different matter. A motion pursuant to Rule 4:6-2(e), for failure to state a claim upon which relief can be granted, requires searching scrutiny of the complaint, made with liberality, as even a glimmer of a cause of action compels denial of the application. Printing Mart v. Sharp Electronics, 116 N.J. 739, 746 (1989). Plaintiffs must be given "every reasonable inference of fact." Ibid. It is a process "at once painstaking and undertaken with a generous and hospitable approach." Ibid.
The motion court's decision to dismiss was grounded in the doctrines of res judicata and collateral estoppel. Res judicata would bar the claims asserted in plaintiffs' second complaint if the following conditions were met:
(1) a final judgment by a court of competent jurisdiction,
(2) identity of issues,
(3) identity of parties and
(4) identity of the cause of action.
[Selective Ins. Co. v. McAllister, 327 N.J. Super. 168, 172-73 (App. Div.), certif. denied, 164 N.J. 188 (2000) (quoting T.W. v. A.W., 224 N.J. Super. 675, 682 (App. Div. 1988), certif. denied, 117 N.J. 44 (1989)).]
A final judgment dismissing the first complaint was entered by the Law Division, obviously a court of competent jurisdiction. The complaints raise virtually identical issues. As defendant correctly points out, the only differences between the first and second complaint are that the negligence theory raised in the first was omitted from the second and that the existence of the SSW was added to the second. The parties were the same. The cause of action was arguably altered only slightly by the inclusion of a claim for breach of the SSW. At first blush, therefore, res judicata would appear to apply.
In order for res judicata to bar a cause of action, however, there must have been a fair opportunity for all claims to have been addressed in the first proceeding. Selective Ins. Co., supra, 327 N.J. Super. at 172. No opportunity to litigate the claims whatsoever was extended to these plaintiffs. No discovery was exchanged. No answer was filed by defendant, who upon receipt of the complaint promptly filed the Rule 4:6-2(e) motion. Therefore, since there was no fair opportunity for the claims to be addressed, res judicata is inapplicable.
Similarly, principles of collateral estoppel do not bar plaintiffs from pursuing their cause of action, as that doctrine also requires a fair opportunity to be heard. First Union Bank v. Penn Salem Marina, 190 N.J. 342, 353 (2007). The final judgment entered must be on the merits in order for the doctrine to be held against a claimant. Perez v. Rent-a-Center, Inc. 375 N.J. Super. 63, 76-77 (App. Div. 2005), rev'd on other grounds, 186 N.J. 188 (2006). That was obviously not the case here.
Furthermore, collateral estoppel is an equitable doctrine and should not be applied where it would be unfair to do so. Id. at 77. The discovery of evidence reasonably obtainable before the entry of judgment will not ordinarily justify withholding the doctrine. Kozlowski v. Smith, 193 N.J. Super. 672, 675 (App. Div. 1984). In this case, however, there is a unique factor that levels the equitable playing field.
Just as plaintiffs apparently failed, for reasons not explained on the record, to tell their attorney about the SSW, defendant also failed to disclose its existence. Defendant's counsel must have been just as unaware of the existence of the five-year warranty as plaintiffs' attorney, as he filed the application to dismiss based on the four-year statute of limitations. It would be inequitable to hold plaintiffs' silence against them, while rewarding defendant for its failure to come forward.
Generally, the four-year limitations period begins after the cause of action has accrued, meaning when the breach occurs. N.J.S.A. 12A:2-275(1). The breach of warranty occurs when tender of delivery is made. N.J.S.A. 12A:2-725(2). There is an exception, however, when, as in this case, "a warranty explicitly extends to future performance of the goods and discovery of the breach must await the time of such performance." Ibid. Under the exception, the cause of action accrues when the breach is or should have been discovered.
Ibid.; see also Poli v. DaimlerChrysler, 349 N.J. Super. 169, 175-76 (App. Div. 2002).
Here, the warranty was breached, at least from plaintiffs' perspective, in October 2005, four years after the sale and one year prior to the expiration of the SSW. In other words, plaintiffs had a right to file their action within four years of October 25, 2005, when the breach occurred. See N.J.S.A. 12A:2-725(2). Both the first and second complaint fall well within that four-year statutory time frame.
Plaintiffs did not have a fair opportunity to litigate their claims. Had they been vigilant, such an opportunity would have been previously extended to them. Similarly, had defendant been more vigilant, it would have been able to enjoy the repose from litigation it now seeks. Accordingly, we find that neither the doctrine of res judicata nor collateral estoppel bars plaintiffs from pursuing their second complaint. The judgment of the court is therefore reversed and the matter remanded for proceedings in accord with this opinion.
Affirmed as to L-810-06 and reversed and remanded as to L-676-07.