On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5413-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Telephonically argued: December 3, 2009
Before Judges Cuff, Payne and Waugh.
Third-party defendant Brian P. Trava and defendant Lawrence Law are endodontists, who had practiced together under the name Brian Trava, D.M.D., and Lawrence Law, D.M.D., P.A. (Trava/Law P.A.). The dissolution of their professional practice was accompanied by litigation, which concluded with a settlement. Trava continued his practice in Hawthorne under the corporate name Brian Trava, D.M.D., P.A. (Trava P.A.); Law continued his practice in Wayne under the name Innovative Endodontics, P.C. (Innovative). Five months after both parties executed the settlement agreement, plaintiff Trava P.A. commenced this action in which it alleged violations of the settlement agreement. Plaintiff and third-party defendant appeal from a May 29, 2008 order granting summary judgment to Law and Innovative, and a July 28, 2008 order awarding attorneys' fees in favor of defendants Law and Innovative.
Trava and Law provided endodontic services at three locations. Law filed a complaint on February 7, 2005, in which he sought relief against Trava and Trava/Law P.A. pursuant to N.J.S.A. 14A:12-7, the minority shareholder statute. A fiscal agent was appointed. During the course of the litigation, one of the three offices operated by the parties closed. Trava continued to operate the office in Hawthorne; Law operated the office in Wayne.
On March 2, 2006, the parties executed a settlement agreement effective February 21, 2006. Four provisions of the settlement agreement are relevant to this appeal. First, Law sold his stock in Trava/Law P.A. to Trava for approximately $700,000. Second, Trava/Law P.A. retained the rights to all accounts receivable, including those generated by Law, who waived and relinquished any rights to those accounts. Third, Trava and Trava/Law P.A. released Law from all liability on account of actions taken by him through the date of the settlement agreement. Fourth, the losing party in any litigation between the parties to the settlement agreement would bear the legal fees and costs of the winning party.
According to Trava P.A., it learned, following execution of the settlement agreement, that Law had received payments from patients and insurance companies for work performed during the litigation, and Law deposited these payments into the Innovative account. Plaintiff's July 21, 2006 complaint alleged conversion, tortious interference, and breach of contract.
Plaintiff complained that Law diverted payments received by him both pre-closing and post-closing of the settlement agreement for work performed during the litigation. All payments were deposited in the Innovative account post-closing. According to a spreadsheet supplied to the court by Trava and Trava P.A., all of the disputed payments total $189,000. Plaintiff asserts the disputed funds are accounts receivable that belong to it; Law insists the payments are "on-hold billings" or "work in progress" that belong to him.
Innovative and Law filed an answer, counterclaim, and third-party complaint in which they denied plaintiff's allegations and claimed that Trava interfered with their ongoing patient relationships by ignoring the distinction between accounts receivable and on-hold billing and by harassing their patients for payment. They also asserted that Trava and agents of plaintiff made defamatory and disparaging remarks about them. As a result of these actions, defendants asserted that Trava and his current professional association breached the settlement agreement, converted payments due to them, defamed them, tortiously interfered with their practice, violated Law's common law right to privacy, and breached the covenant of good faith and fair dealing.
Defendants filed a motion for summary judgment arguing that the litigation was barred by the express terms of the March 2, 2006 settlement agreement. The motion judge granted partial summary in favor of defendants Law and Innovative and dismissed all claims set forth in plaintiff's complaint. He found that "[t]he payments allegedly received or collected by defendants pre-closing and pre-settlement agreement cannot, under any circumstances, be an 'account receivable.'" Furthermore, the release provision of the settlement agreement was clear on its face and barred each claim asserted by plaintiff in its complaint. Plaintiff's motion for reconsideration was denied and plaintiff was assessed $93,744.46 in counsel fees and $5665 in costs.
Although the order subject to this appeal granted only partial summary judgment, we address the merits. Pursuant to a March 10, 2008 consent order, all remaining claims, including those claims asserted in defendant's counterclaim and third-party complaint, have been submitted to binding arbitration. All claims as to all parties that have not been referred to arbitration have, therefore, been resolved, and due to the binding nature of the arbitration, no further claims remain to be resolved by the court. We, therefore, proceed to address the orders subject to plaintiff's notice of appeal.
On appeal, plaintiff argues that the entire controversy doctrine does not apply to its complaint. It also contends the award of legal fees was in error and premature. It urges that the allocation of fees and costs should be referred to the arbitrator. It also argues that the motion judge should not have denied its cross-motion for discovery or quashed a February 2007 subpoena.
Our review of the opinion rendered by the motion judge does not support plaintiff's contention that the motion judge relied on the entire controversy doctrine to dismiss the case. Rather, the judge stated that paragraph 10 of the settlement agreement barred plaintiff's complaint because its claims for monetary payments arose prior to the effective date of the settlement agreement. The judge also found that Law was entitled to the funds deposited by him ...