March 11, 2009
GLENN BOOTHBY, PLAINTIFF-APPELLANT,
BETTE MELENDEZ, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-1066-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 9, 2009
Before Judges Sabatino and Simonelli.
Applying principles of the entire controversy doctrine, the Law Division dismissed the complaint of Glenn Boothby in the present action against Bette Melendez (the "second lawsuit"). The dismissal occurred after Melendez had obtained a judgment against Boothby in prior litigation (the "first lawsuit"). Because we are satisfied that the trial court did not abuse its discretion or misapply the law in terminating the second lawsuit, we affirm.
Here are the factual and procedural matters relevant to our consideration of the issues. The parties once had a romantic relationship, during which time Boothby cohabitated with Melendez at her residence. The house was solely titled in Melendez's name. She obtained mortgage loans on the house to help finance Boothby's business ventures, acting as the sole named borrower. Eventually the couple separated in February 2005, and Boothby moved out, leaving behind several personal items. Boothby also agreed to make monthly payments to Melendez on the mortgage loans.
When Boothby defaulted on his agreed-upon payments, Melendez filed a complaint against him in the Law Division in August 2005. In that first lawsuit, Melendez sought Boothby's payment of the past due mortgage installments. She also alleged that Boothby owed her other financial obligations, including reimbursement for late penalties charged on the mortgages, the return of monies she loaned to him for his business expenses and taxes, and a release from her co-guaranty of a lease for his business. Boothby filed an answer denying that he owed anything to Melendez. He also asserted various affirmative defenses. He did not, however, assert a defense of setoff, nor did he include in his pleading any counterclaim. As part of his responsive pleading, Boothby included a certification pursuant to Rule 4:5-1, attesting in part that "no other action or arbitration proceeding is contemplated."
While the first lawsuit was pending, Boothby asserted on at least four occasions, either directly or through his attorney, that he had left behind valuable personal property at the residence and that Melendez was responsible to him for those items. Specifically, in a letter to Melendez's attorney dated January 30, 2006, Boothby's counsel alleged that Melendez had improperly placed for auction a collection of Italian glass and certain oil paintings belonging to him. The letter threatened civil claims against Melendez for the alleged conversion and also stated that Boothby had already filed a report of stolen property with the local police department. Thereafter, in another letter to Melendez dated March 29, 2006, Boothby alleged that she had wrongfully sold his possessions that he had left behind in the house and that he intended to amend his pleadings in the first lawsuit to include these "antics . . . in a counterclaim." In a third letter, dated July 13, 2006, Boothby reiterated his intent to file such a counterclaim and that he also would "preserve [his ability to assert the claims] by filing a separate complaint."
Despite his ongoing belief that Melendez had converted his property, Boothby did not promptly seek leave of court to amend his pleadings in the first lawsuit to add a counterclaim for relief. Instead, Boothby waited until the eve of trial. He filed a motion to amend his answer, returnable on short notice for Friday, August 4, 2006, three days prior to the trial date of Monday, August 7, 2006. In his supporting certification, Boothby attested that "[i]n order to have all claims arising out of the same proceeding to be addressed, the defendant [Boothby] is requesting that the answer be amended" to include the counterclaim. The certification further acknowledged that "[i]n hopes of resolving the matters in the entirety, we have restrained ourselves [until now] from filing this complaint."
The trial court denied Boothby's belated motion for leave to amend and issued a corresponding order on August 18, 2006. Notably, Boothby did not seek to have the court revise the form of order to reserve his potential counterclaims for a subsequent action.
The first lawsuit was adjudicated in a bench trial before Judge Malone. After considering the parties' testimony and other proofs, Judge Malone found that the two parties had essentially acted as business partners and that the joint debts they incurred should be shared accordingly. In his written decision, Judge Malone found that the parties' joint obligations, including loan proceeds, penalties and tax liens, totaled $207,921.31, and that Boothby's share was $107,960.65.
The Law Division entered final judgment against Boothby in that amount on November 30, 2006. Neither party appealed that judgment. Nor did Boothby appeal the court's order of August 18, 2006, which had denied him leave to assert a counterclaim.
Seven months after the first lawsuit was tried, Boothby brought the second lawsuit. He filed a complaint against Melendez in the Law Division on March 23, 2007, alleging that after the parties had stopped living together, she had wrongfully sold various "antiques, antiquities, works of art and collectibles" that belonged to him. In that regard, the complaint referenced Boothby's police report, which had previously been mentioned in his January 30, 2006 letter to Melendez. The complaint sought redress based upon legal theories of conversion and deceit and also sought punitive damages.
As discovery proceeded in the second lawsuit, Boothby took the deposition of Melendez. In her deposition testimony, Melendez confirmed that she had sold certain items that Boothby had left behind at the house.
Having provided Boothby with the opportunity to depose her, Melendez then moved to dismiss the second lawsuit. Her motion was predicated upon Rule 4:30A and the entire controversy doctrine. She argued that Boothby should have included his affirmative claims against her through a timely counterclaim in the first lawsuit. She also informed the court that Boothby has not paid any of the amounts due under the judgment, suggesting that it is inequitable for the second lawsuit, in which Boothby hopes to obtain a larger offsetting recovery against her, to proceed.
After hearing oral argument, Judge Lisa Chrystal granted Melendez's motion. The judge agreed that the second lawsuit-- under equitable principles--should not proceed because Boothby was clearly aware during the pendency of the first lawsuit that he had offsetting claims against Melendez but held back on asserting those claims until filing his motion to amend on the brink of trial. The judge also found that the two successive lawsuits manifestly "derive from a single transaction or related series of transactions."
Boothby now appeals, contending that the trial court abused its discretion in "dismissing a claim that was never adjudicated in any other hearing." He contends that the court erred in applying the entire controversy doctrine to this matter, and in its reliance upon case law involving the doctrine.
After carefully considering the points raised on appeal, we affirm the dismissal of the second lawsuit, substantially for the cogent reasons expressed in Judge Chrystal's letter opinion of April 11, 2008. We add several comments.
The entire controversy doctrine promotes the policies of mandatory joinder and claim preclusion associated with the more widely known doctrine of res judicata. See Pressler, Current N.J. Court Rules, comment 2 on R. 4:30A (2009); see, e.g., McNeil v. Legislative Apportionment Comm'n, 177 N.J. 364, 395 (2003) ("The concept that a party is required to bring all possible claims in one proceeding is embodied in the closely linked concepts of res judicata and the entire controversy doctrine."), cert. denied, 540 U.S. 1107, 124 S.Ct. 1068, 157 L.Ed. 2d 893 (2004); In re Estate of Gabrellian, 372 N.J. Super. 432 (App. Div. 2004) (holding the doctrine of res judicata barred a second probate action when all claims could and should have been brought in the first action because the facts supporting both actions were the same), certif. denied, 182 N.J. 430 (2005); see also Long v. Lewis, 318 N.J. Super. 449, 459 (App. Div. 1999) ("The claim preclusion aspect of the entire controversy doctrine is essentially res judicata by another name.").
Res judicata, or claim preclusion, is a long-established doctrine that restricts a litigant's ability to bring claims in a subsequent civil action that were or could have been adjudicated in an earlier lawsuit involving the same parties. Lubliner v. Bd. Of Alcoholic Bev. Control, 33 N.J. 428, 435 (1960). The doctrine "rests upon policy considerations which seek to guard the individual against vexatious repetitious litigation and the public against the serious burdens which such litigation imposes upon the community." Ibid. For these reasons, the original judgment carries with it preclusive effects. See also Restatement (Second) of Judgments Ch. 1 Scope at 1 (1982).
The entire controversy doctrine requires litigants in a civil action to raise all affirmative claims arising from a single controversy that each party might have against another party, including counterclaims and cross-claims. R. 4:30A.*fn1 It is a preclusionary device, intended to prevent fractionalized litigation by requiring the assertion of all claims arising from a single controversy in a single action. Prevratil v. Mohr, 145 N.J. 180, 190 (1996). The reasons behind the doctrine are threefold: "(1) the need for complete and final disposition through the avoidance of piecemeal decisions; (2) fairness to parties to the action and those with a material interest in the action; and (3) efficiency and the avoidance of waste and the reduction of delay." DiTrolio v. Antiles, 142 N.J. 253, 267 (1995) (citing Cogdell v. Hospital Center, 116 N.J. 7, 15 (1989)).
The doctrine applies to successive suits with related claims. Id. at 268. "In determining whether successive claims constitute one controversy for purposes of the doctrine, the central consideration is whether the claims against the different parties arise from related facts or the same transaction or series of transactions." Id. at 267. It is the factual context "giving rise to the controversy itself, rather than a commonality of claims, issues or parties, that triggers the requirement of joinder to create a cohesive and complete litigation." Mystic Isle Dev. Corp. v. Perskie & Nehmad, 142 N.J. 310, 323 (1995); see also DiTrolio, supra, 142 N.J. at 267-68 ("It is the core set of facts that provides the link between distinct claims against the same or different parties and triggers the requirement that they be determined in one proceeding.").
We agree with Judge Chrystal that the claims which Boothby has attempted to litigate in this second lawsuit derive, at a minimum, from a "related series of transactions." That factual inter-connectedness was admitted by Boothby in his August 2006 certification, in which he represented to the court that the counterclaims he wished to plead were "arising out of the same proceeding," which he raised "in the hopes of resolving the matters in their entirety."
Although Boothby now attempts to compartmentalize the first lawsuit as, in essence, only a mortgage loan case, the parties' domestic relationship and their intertwined financial dealings that were litigated in that action were much broader in their scope. That is reflected in Judge Malone's written decision, in which he traced in detail the parties' relationship and their mutual financial endeavors and commitments. Boothby's offsetting claims regarding the personal items that he left behind in the shared residence should have been timely pleaded and included within the issues presented at the first trial.
We reject Boothby's assertion that he was not truly aware of Melendez's conversion until he took her deposition in the second lawsuit. That assertion of ignorance is belied by his filing of a police report in 2006 and his repeated correspondence during the pendency of the first lawsuit threatening such a counterclaim. To be sure, Melendez's deposition answers may have provided further corroboration of Boothby's conversion theory and further quantification of the associated damages, but that does not excuse Boothby for not filing a timely counterclaim earlier when he had a reasonable basis to assert such claims. There is also no suggestion before us that Boothby was prevented from seeking her deposition during the discovery period in the first action.
Boothby argues that it is inequitable to dismiss his affirmative claims because they were not specifically adjudicated in the first lawsuit. We disagree. Boothby had more than ample opportunity to assert those counterclaims in a timely manner in the first lawsuit. His decision to wait until three days before the trial to seek leave of court to add a counterclaim, after threatening his adversary for at least seven months that he would do so, suggests that he may well have been engaged in a tactical effort to obtain leverage over Melendez on the verge of trial. There was no injustice in the court denying leave to amend the pleadings at that eleventh hour. See R. 4:9-1; Morales v. Academy of Acquatic Sci., 302 N.J. Super. 50, 56 (App. Div. 1997) (disfavoring motions for leave to amend filed on the eve of trial).
We reject Boothby's contention that his belated motion for leave to amend his pleadings in the first lawsuit sufficed to preserve his affirmative claims for future litigation. The potential entire controversy implications of such a denial are not per se inequitable, particularly where the motion for leave is made so late as to prejudice the opposing party. Wm. Blanchard Co. v. Beach Concrete, Inc., 150 N.J. Super. 277, 299 (App. Div.), certif. denied, 75 N.J. 528 (1977). Given the factual elements of Boothby's offsetting claims, the court would invariably have had to adjourn the first trial and permit additional discovery to allow Melendez a fair opportunity to oppose those late claims.
Moreover, Boothby did not appeal the denial of his motion for leave to amend nor did he request the court to specify in its dismissal order that his potential counterclaims were reserved. See, e.g., Dilorio v. Structural Stone and Brick Co., 368 N.J. Super. 134, 139 (confirming the court's authority to reserve such claims against an existing party); see also Pressler, supra, comment 3.4 on Rule 4:30A (noting a litigant's right to request judicial reservation of an unpleaded claim and thereby avoid entire controversy problems). Had the trial court denied a request to reserve the claims, Boothby could have appealed the adverse ruling in the first litigation. Instead, the forty-five days for appeal lapsed and the court's disposition became final.
Finally, we consider Boothby's assertion that Melendez acted unfairly and prejudiced him in not bringing her motion to dismiss sooner. Although we agree that Melendez preferably should have filed this case-dispositive motion before discovery was conducted in the second action, we discern no substantial prejudice to Boothby resulting from that delay. The motion was not out of time, and, moreover, it advanced the court's independent interest in discouraging piecemeal adjudications.