July 23, 2009
DAVID LAMARR, PLAINTIFF-RESPONDENT,
CITY OF NEWARK, NEWARK POLICE DEPARTMENT, DEFENDANTS-APPELLANTS.
PAUL GODLEY AND EICHEN LEVINSON & CRUTCHLOW, LLP, PLAINTIFFS-RESPONDENTS,
CITY OF NEWARK, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket Nos. L-10579-06 and L-5963-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 6, 2009
Before Judges Winkelstein, Gilroy and Chambers.
These two consolidated cases involve indemnification issues arising from the shooting of plaintiff Paul Godley by David Lamarr, while an off-duty police officer of the defendant City of Newark (the City). This appeal requires us to decide whether Lamarr's indemnification claims against the City are barred by the doctrine of res judicata and the entire controversy doctrine due to prior litigation in federal court. We conclude that they are not and affirm the denial of the City's motion for summary judgment.
On July 27, 2003, a confrontation regarding a woman developed between Godley and Lamarr. Lamarr was a Newark police officer and, at the time, he was off-duty but still partially in uniform and armed with his police weapon. Lamarr contended that when Godley approached him and verbally threatened him, he pulled out his gun, identified himself as a police officer, and told Godley to freeze. Instead, Godley's hand moved toward a bulge at his waist, and Lamarr fired his gun. Godley claimed that as he was putting his hands in the air, Lamarr, who was cursing, shot him. In fact, Godley was unarmed, and he sustained serious injuries from the shooting. Lamarr was indicted for attempted murder, aggravated assault, and possession of a weapon for an unlawful purpose. After a jury trial, he was acquitted of all charges.
On November 15, 2004, Godley filed in state court a personal injury and civil rights complaint against the City and Lamarr. Shortly after being served, the City on February 10, 2005, removed the case to federal court. (This litigation will be referred to as "the federal case.")*fn1
Lamarr filed his answer to the federal case on May 18, 2005. In his answer, he asserted a cross-claim for common law contribution and indemnification against the co-defendants, including the City, stating that should he be found liable, "his liability is passive, vicarious and secondary, compared to the liability of the co-defendants, which was active and primary.
The Defendant David Lamarr therefore demands indemnification from the co-defendants."
While the federal case was pending, Lamarr filed on December 29, 2006, a state court action against the City of Newark. This litigation (the Lamarr state court action) is one of the consolidated cases in this appeal. Although all parties agree that Lamarr's complaint asserts a claim for attorney's fees and costs against the City arising from his defense of the federal case, they disagree on whether it also asserts a claim for contractual indemnification against the City. A review of the language in the complaint reveals that it expressly sets forth a claim for contractual indemnification against the City based on the City's negotiated agreement with the Fraternal Order of Police.*fn2
On January 26, 2007, the federal court granted summary judgment for the City. It found insufficient support in the record for Godley's civil rights claims against the City under 42 U.S.C.A. § 1983 for improper hiring, failure to train, inadequate investigation and supervision, and discrimination. The federal court also dismissed Godley's state law claims against the City for negligent hiring, training, and supervision. In reaching this decision, the federal court did not address any indemnification issues nor did it address the question of whether Lamarr was acting within the scope of his employment. The federal court entered an order dismissing "all claims" against the City "with prejudice."
The federal case proceeded on Godley's claims against Lamarr. On May 15, 2007, Lamarr moved to amend his answer to file a third-party complaint against the City for indemnification and contribution. The motion was denied as untimely.
At the trial of the federal case on June 6, 2007, Lamarr stipulated liability and stated that he was acting in his official capacity at the time of the incident. The parties understood that the case would proceed to a bench trial on damages. Further, Lamarr agreed to assign his indemnification claims against the City to Godley, and Godley agreed not to seek any payments from Lamarr personally. At the time the stipulation was placed on the record, the federal judge indicated that counsel for the City had asked to be heard, and the judge said: "I told [him] that the City of Newark is not a party to this case, that this Court had an application to in fact amend the complaint to bring them in for indemnification. The Court denied that application . . . ."
A trial was held on damages in the federal case and a judgment was entered against Lamarr in the sum of $2,589,327.38. Godley then filed a state court action against the City seeking payment of this sum as assignee of Lamarr's contractual indemnification claims against the City (Godley's state court action). At that time, Lamarr's state court action was still pending, and the two cases were consolidated on December 7, 2007. The City's motion for summary judgment seeking dismissal of both cases was denied on July 18, 2008, and we granted leave to appeal.
The City contends that the claims of Lamarr and Godfrey are barred by the entire controversy doctrine and that Godley's claim based on the assignment from Lamarr is also barred by the doctrine of res judicata. The City further contends that the trial court, by allowing the case to proceed, improperly extended the holding in Griggs v. Bertram, 88 N.J. 347 (1982), to the facts in this case.
We first address whether the pending state court claims are barred by the entire controversy doctrine. The entire controversy doctrine is an equitable principle that requires the parties to a suit to assert "all transactionally related claims" they have against each other and if they do not, they may not bring those claims in subsequent litigation. K-Land Corp. No. 28 v. Landis Sewerage Auth., 173 N.J. 59, 70 (2002) (quoting Pressler, Current N.J. Court Rules, comments 1 & 2 on R. 4:30A (2002)). The doctrine is intended "to encourage comprehensive and conclusive litigation determinations, to avoid fragmentation of litigation, and to promote party fairness and judicial economy and efficiency." Ibid. (quoting Pressler, Current N.J. Court Rules, comments 1 & 2 on R. 4:30A (2002)). Although referenced in the court rules, the scope of the doctrine has been left to case law. Ibid.; R. 4:30A. Under the entire controversy doctrine, claims must be joined so "that all aspects of the controversy between those who are parties to the litigation be included in a single action." K-Land Corp. No. 28 v. Landis Sewerage Auth., supra, 173 N.J. at 70 (quoting Pressler, Current N.J. Court Rules, comments 1 & 2 on R. 4:30A (2002)).
Further, the Court has noted that:
In determining the appropriate scope of the entire controversy's claim joinder requirement, it is significant that "the leading cases establishing and applying the entire controversy doctrine as a bar to the subsequent assertion of omitted claims appear to have involved deliberate and calculated claim-splitting strategies designed to frustrate the orderly administration of justice, as opposed to an innocent omission by an uninformed litigant." [Ibid. (quoting Prevratil v. Mohr, 145 N.J. 180, 203 (1996) (Stein, J., dissenting)).]
In this case, Lamarr did not assert his contractual indemnification and attorney fee claims in the federal suit. He was not required to do so under federal procedural rules. The assertion of cross-claims is permissive rather than mandatory under the federal rules. F.R.C.P. 13(g). Arguably, the failure to assert permissive claims in a federal suit, results in their being barred in later litigation in New Jersey under the state's interpretation of the entire controversy doctrine. See Blazer Corp. v. N.J. Sports and Exposition Auth., 199 N.J. Super. 107, 112 (App. Div.) (holding that a plaintiff must bring all state law claims in his federal suit, and a subsequent suit on the state claims in state court will be barred by the entire controversy doctrine), certif. denied, 101 N.J. 261 (1985); but see Watkins v. Resorts Int'l. Hotel & Casino, Inc., 124 N.J. 398, 412 (1991) (stating that the court in Blazer "may not have sufficiently considered the federal law of claim preclusion in resorting to the entire controversy doctrine"). However, this principle would not bar the state court claims against the City because those claims were pending against the City in state court at the same time the litigation was pending in federal court.
The entire controversy doctrine bars only successive lawsuits involving related claims; it does not bar claims that are pending in different courts at the same time. Kaselaan & D'Angelo Assocs., Inc. v. Soffian, 290 N.J. Super. 293, 299 (App. Div. 1996). As we stated in Kaselaan: the entire controversy doctrine only precludes successive suits involving related claims. It does not require dismissal when multiple actions involving the same or related claims are pending simultaneously. As we noted in American Home Prods. Corp. v. Adriatic Ins. Co., 286 N.J. Super. 24, 33 (App. Div. 1995), "[t]he fact that an action pending in another State involves the same parties and the same or substantially similar claims does not bar prosecution of a subsequent action here in New Jersey." Although multiple pending actions arising out of the same or related operative facts pose some of the same dangers of fragmented and duplicative litigation that the entire controversy doctrine seeks to address, those dangers do not require the dismissal of the second filed action prior to the conclusion of the first action. Instead, the court rules provide other appropriate means to prevent unfairness to affected parties or an undue burden on the court system. Thus, Rule 4:5-1(b)(2) requires the first pleading of a party to include a certification as to whether the matter is the subject of any other pending action and whether there is any other party who should be joined. Rule 4:5-1(b)(2) further provides that "[t]he court may compel the joinder of parties in appropriate circumstances, either upon its own motion or that of a party." In addition, a party in a related pending action may seek intervention in the newly filed action pursuant to Rule 4:33, consolidation of the cases pursuant to Rule 4:38-1, "or . . . whatever other steps may be appropriate to protect [its] interests." Pretrial and case management conferences provide the court with additional opportunities to assure that related cases are processed in a manner which is fair to the parties involved and conserves judicial resources. [Id. at 299-300 (citations omitted) (alterations in original).]
In Rycoline Prods., Inc. v. C & W Unlimited, 109 F.3d 883, 889 (3d Cir. 1997), the Third Circuit followed Kaselaan, and held "that [New Jersey's] Entire Controversy Doctrine does not preclude the initiation of a second litigation before the first action has been concluded."
Neither Rycoline nor Kaselaan addressed the application of the entire controversy doctrine, after one of the cases has ended. Id. at 889 n.2; Kaselaan & D'Angelo Assocs., Inc. v. Soffian, supra, 290 N.J. Super. at 301 n.1. However, we note the extensive discussion in Kaselaan, regarding the various management techniques the courts can use when related actions are pending in separate courts, and recognizing that "[t]here also may be circumstances in which related action should be allowed to proceed simultaneously." Kaselaan & D'Angelo Assocs., Inc. v. Soffian, supra, 290 N.J. Super. at 300-01. In our analysis, we are guided by the following statement the Court made when considering whether the entire controversy doctrine barred litigation in New Jersey where related litigation had been brought in Pennsylvania.
If Pennsylvania courts do not have a comparable party-joinder rule, principles of comity suggest that New Jersey should not seek to export its entire controversy doctrine to regulate the conduct of attorneys in that jurisdiction. In other words, attorneys conducting litigation in Pennsylvania courts should not have to accommodate their practices to the demands of New Jersey courts. A corollary of that proposition, however, is that New Jersey courts need not necessarily grant relief when parties deliberately refrain from seeking relief in other jurisdictions when doing so would have been much fairer to all parties involved. [Mortgagelinq Corp. v. Commonwealth Land Title Ins. Co., 142 N.J. 336, 345 (1995).]
Here we perceive no unfairness to the parties in allowing the contractual indemnification claims to be litigated in New Jersey at the conclusion of the federal litigation. Those claims were pending in state court during the federal litigation, and the City was well apprised of those claims in state court during the federal litigation. The federal court never ruled substantively on any indemnification claims against the City, and those claims could not logically be resolved until the liability of Lamarr to Godley had been determined. Indeed, under traditional legal principles a claim for indemnification does not accrue until the indemnitee is held responsible for the claim. McNally v. Providence Wash. Ins. Co., 304 N.J. Super. 83, 94 (App. Div. 1997). Plaintiffs have not engaged in calculated, manipulative claim splitting by bringing the suits in state court.
Finally, we note that "the polestar for the application of the [entire controversy] rule is judicial 'fairness.'" K-Land Corp. v. Landis Sewerage Auth., supra, 173 N.J. at 74 (quoting Reno Auto Sales, Inc. v. Prospect Park Sav. & Loan Ass'n, 243 N.J. Super. 624, 630 (App. Div. 1990)) (alteration in original). "[E]quitable considerations remain to 'ease the path upon which the doctrinal bar [of the entire controversy doctrine] travels.'" Allstate N.J. Ins. Co. v. Cherry Hill Pain and Rehab. Inst., 389 N.J. Super. 130, 139 (App. Div. 2006) (quoting Hillsborough Twp. Bd. of Educ. v. Faridy Thorne Frayta, P.C., 321 N.J. Super. 275, 284 (App. Div. 1999)), certif. denied, 190 N.J. 254 (2007). The doctrine will be relaxed where joinder is unfair, and since it is an equitable doctrine, "its applicability is left to judicial discretion based on the particular circumstances inherent in a given case." Id. at 141 (quoting Mystic Isle Dev. Corp. v. Perskie & Nehmad, 142 N.J. 310, 323 (1995)). The doctrine will be not applied "where to do so would be unfair in the totality of the circumstances and would not promote any of its objectives, namely, the promotion of conclusive determinations, party fairness, and judicial economy and efficiency." Pressler, Current N.J. Court Rules, comment 3.2 on R. 4:30A (2009). Allowing plaintiffs' claims to proceed in state court is consistent with these principles.
For all of these reasons, the contractual indemnification claims in the state court actions are not barred by the entire controversy doctrine.
We next address whether Godley's state court action is barred by the doctrine of res judicata based on the resolution of the federal case.
Res judicata is a "common-law doctrine barring relitigation of claims or issues that have already been adjudicated." Tarus v. Borough of Pine Hill, 189 N.J. 497, 520 (2007) (quoting Velasquez v. Franz, 123 N.J. 498, 505 (1991)). It prevents the "re-litigation of the same controversy between the same parties." In re Estate of Gabrellian, 372 N.J. Super. 432, 446 (App. Div. 2004), certif. denied, 182 N.J. 430 (2005). For the doctrine to apply, a final judgment must have been rendered by a court of competent jurisdiction, and the issues, parties, and cause of action must be identical. Ibid.
Here the City contends that due to the dismissal of all claims against it in the federal case, the claims in Godley's state court action are barred. We reject this argument.
The federal judge never addressed Lamarr's indemnification claims against the City in his decision granting summary judgment. Further, Lamarr's cross-claims against the City in the federal action were only common law indemnification claims. He did not assert claims for contractual indemnification against the City in the federal case. As a result, the contractual indemnification claims brought against the City in the pending state court actions are not barred by the doctrine of res judicata, since the causes of action in the state and federal courts were not identical.
We note that the City also contends that the trial court should not apply to this case the analysis set forth in Griggs v. Bertram, supra, 88 N.J. 347, concerning whether an insurer is bound by a settlement its insured reached with a claimant. This issue is not ripe for appellate review since the trial court has not made a final determination on the application of Griggs to this case.