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Gisela Carino v. Allstate Financial Services


April 12, 2011


On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. L-5032-02.

Per curiam.


Argued March 15, 2011

Before Judges Parrillo and Skillman.

Plaintiff Gisela Carino appeals from a June 11, 2010 order of the Law Division denying her motion to reinstate her complaint against defendants*fn1 filed back on November 15, 2002. We affirm.

The matter arises out of plaintiff's failed attempt to affiliate her securities license with AFS in October 2000. AFS is a broker/dealer registered with the Securities and Exchange Commission (SEC) and is a member of the National Association of Securities Dealers (NASD), now known as the Financial Industry Regulatory Authority (FINRA).

Prior to commencing employment with ANJ as a sales producer in January 1999, plaintiff worked for Prudential Financial Services (Prudential) from May 1989 to October 1998, when she was terminated based upon allegations that her field underwriting methods placed Prudential at risk of increased liability. Plaintiff's securities license affiliation with Prudential ended with her dismissal. On October 4, 2000, plaintiff applied to AFS for a position as Field Services Specialist, which would permit her to sell security products for AFS, a relatively new actor in the securities industry. As part of her required application package, plaintiff submitted her Series 6 license issued by NASD, which was nearing its two year expiration on October 20, 2000.*fn2 On October 17, 2000, AFS rejected plaintiff's application because of her previous termination by Prudential. Plaintiff was not notified, however, until May 2001 that her application had been rejected. By that time, her Series 6 license had expired.

On November 15, 2002, plaintiff filed a complaint against defendants alleging negligence and breach of contract, and seeking damages for the expiration of her license. Specifically, plaintiff alleged that had AFS notified her of its rejection prior to October 20, 2000, her license may not have expired because she would have sought affiliation elsewhere, and, furthermore, that the lapse in licensing was irremediable in light of her discharge by Prudential.

As part of her application to AFS, plaintiff executed a Form U-4, "Uniform Application for Securities Industry Registration of Transfer," which, among other things, provided for binding NASD arbitration:

I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a customer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of the SROs indicated in Item 11 as may be amended from time to time and that any arbitration award rendered against me may be entered as a judgment in any court of competent jurisdiction.

Item 11 on plaintiff's Form U-4 listed NASD as the organization with whom she was seeking to register her license through AFS. Accordingly, defendants filed a motion to dismiss plaintiff's complaint, which the trial court granted without prejudice, holding that NASD arbitration was the appropriate forum to resolve plaintiff's dispute.

Plaintiff appealed, and we affirmed the trial court's dismissal. Carino v. Allstate Fin. Servs., LLC, No. A-3278-02 (App. Div. Dec. 30, 2003) (slip op. at 5-6). Specifically, we found that "[b]y executing the Form U-4, plaintiff agreed to arbitrate any claims she may have against AFS, in accordance with NASD rules and regulations. . . . [P]laintiff's claims arose out of her potential employment with AFS and the pre-employment Form U-4 agreement; thus, they must be arbitrated." Id. at 6.

Plaintiff then filed a demand for arbitration with NASD. Because AFC,*fn3 ANJ and Allstate were not registered with NASD and, therefore, not subject to arbitration, NASD determined to exercise jurisdiction over only AFS, Crist and Lombino, who were members or affiliates of NASD. The matter proceeded to binding arbitration before a panel of three NASD arbitrators, who conducted four pre-hearing conferences and eighteen hearing sessions over the course of nine days that extended over a period of eight months. At the conclusion of the hearing, the arbitration panel issued a unanimous decision rejecting plaintiff's claims in their entirety. Plaintiff acknowledged that she was "given full and ample opportunity to present [her] case as satisfactory to [her]."

Plaintiff subsequently filed a five-count complaint and order to show cause against all defendants, including AFC, ANJ and Allstate.*fn4 Following argument, the court denied plaintiff's show cause application on December 7, 2007, and thereafter, on March 28, 2008, denied plaintiff's motion for reconsideration.

Following the close of discovery, defendants moved for summary judgment, requesting confirmation of the arbitration award as a matter of law. Plaintiff opposed the motion and filed a self-styled cross-motion for partial summary judgment. On November 21, 2008, the court entered an order granting defendants' motion for summary judgment and dismissing plaintiff's complaint with prejudice. Upon plaintiff's request, on December 11, 2008, the court entered another order denying plaintiff's cross-motion. Because plaintiff appealed only the December 11, 2008 order denying her cross-motion and not the November 21, 2008 order dismissing her complaint, defendants moved to dismiss plaintiff's appeal, which we ultimately granted. Carino v. Allstate Fin. Servs., LLC, No. A-2598-08 (App. Div. July 2, 2009).

On April 26, 2010, plaintiff moved in the Law Division to reinstate her November 15, 2002 complaint, set a trial date, and set a hearing date on her motion to vacate the arbitration award. Following argument, the trial court denied plaintiff's motion on grounds of res judicata, collateral estoppel, and the entire controversy doctrine on June 11, 2010.

On appeal, plaintiff raises the following issues:






We have considered each of these issues in light of the record, the applicable law, and the arguments of counsel, and we are satisfied that none of them is of sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E). We add, however, the following comments.

"Whether to grant or deny a motion to reinstate a complaint lies within the sound discretion of the trial court." Sullivan v. Coverings & Installation, Inc., 403 N.J. Super. 86, 93 (App. Div. 2008) (citing Cooper v. Consol. Rail Corp., 391 N.J. Super. 17, 22-23 (App. Div. 2007)). An abuse of this discretion "arises when a decision is made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis." Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002) (citations and internal quotation marks omitted). "Appellate courts have generally declined to interfere with matters of discretion unless it appears that an injustice has been done." Comeford v. Flagship Furniture Clearance Ctr., 198 N.J. Super. 514, 517 (App. Div. 1983) (citations omitted), certif. denied, 97 N.J. 581 (1984). Here, we discern no abuse of judicial discretion because the doctrines of res judicata and collateral estoppel bar plaintiff's claims against defendants, including ANJ and Allstate, who were not parties to NASD arbitration.

The doctrine of res judicata, or claim preclusion, precludes a plaintiff from relitigating the same claim against the same parties, provided the claims have been "fairly litigated and determined." First Union Nat'l Bank v. Penn Salem Marina, Inc., 190 N.J. 342, 352 (2007) (emphasis added); Velasquez v. Franz, 123 N.J. 498, 505 (1991). The doctrine applies when "the judgment relied upon [is] valid, final and on the merits; the parties in the two actions [are] either identical or in privity with one another; and the claims [grew] out of the same transaction or occurrence." Olds v. Donnelly, 291 N.J. Super. 222, 232 (App. Div. 1996) (emphasis added), aff'd, 150 N.J. 424 (1997). An arbitration award has the same effect under the doctrine of res judicata as a judgment of the court. See Raritan Plaza I Assocs., L.P. v. Cushman & Wakefield of N.J., Inc., 273 N.J. Super. 64, 71 (App. Div. 1994); see also Restatement (Second) of Judgments § 84 (1982).

Here, the arbitration award operated as a valid and final judgment. The award itself states that it is "final and . . . not subject to review or appeal by the arbitration panel or by NASD Dispute Resolution[,]" pursuant to NASD arbitration rules, which provide that "all awards rendered . . . shall be deemed final and not subject to review or appeal." NASD Code of Arb. Proc. 10330(b).

Second, although defendants ANJ and Allstate were not under NASD's jurisdiction, they are nevertheless affiliated and related to AFS, and plaintiff has not demonstrated otherwise. Privity "'ordinarily means identity of interest, through succession to the same rights of property involved in the prior litigation.'" L. L. Constantin & Co. v. R. P. Holding Corp., 56 N.J. Super. 411, 417-18 (Ch. Div. 1959) (quoting Hudson Transit Corp. v. Antonucci, 137 N.J.L. 704 (E. & A. 1948)). "A relationship is usually considered close enough only when the party is a virtual representative of the non-party, or when the non-party actually controls the litigation." Zirger v. Gen. Accident Ins. Co., 144 N.J. 327, 339 (1996) (citations and internal quotation marks omitted). "Privity generally involves a party to earlier litigation so identified in interest with a party to later litigation that they represent the same legal right." E.I.B. v. J.R.B., 259 N.J. Super. 99, 102 (App. Div.), certif. denied, 130 N.J. 602 (1992). Measured against this standard, we find the requisite relationship exists among the various entities such that ANJ and Allstate are in privity with the parties in the earlier arbitration proceeding and need not have been participants therein to be bound thereby.

Finally, the claims in the matter plaintiff seeks to reinstate arise "out of the same transaction or occurrence" as the claims adjudicated in arbitration proceedings, see Olds, supra, 291 N.J. Super. at 232, namely, whether AFS, Crist or Lombino were negligent in handling plaintiff's application, resulting in the loss of her Series 6 license, and whether AFS is estopped from rejecting plaintiff's application because defendants Lombino and Crist promised her a position. In fact, plaintiff herself admits that the claims contained in the 2002 complaint are identical to those already adjudicated in NASD arbitration.

The doctrine of collateral estoppel equally bars reinstatement of plaintiff's complaint, because her identical claims clearly present identical issues. "Collateral estoppel, or issue preclusion, is part of the wider law of res judicata which prohibits relitigation of any issue actually determined in a prior action, generally between the same parties, involving a different claim or cause of action." Morton Int'l, Inc. v. Gen. Accident Ins. Co. of Am., 266 N.J. Super. 300, 321 (App. Div. 1991) (emphasis added) (citing State v. Gonzalez, 75 N.J. 181, 186 (1977)), aff'd, 134 N.J. 1 (1993). The doctrine "requires a similar, yet less demanding, analysis than res judicata." First Union, supra, 190 N.J. at 352 (citations omitted). Under collateral estoppel, "[i]f an issue between the parties was fairly litigated and determined, it should not be relitigated." Ibid.

For collateral estoppel to apply, the party asserting the doctrine must demonstrate the following elements:

(1) the issue to be precluded is identical to the issue decided in the prior proceeding;

(2) the issue was actually litigated in the prior proceeding;

(3) the court in the prior proceeding issued a final judgment on the merits;

(4) the determination of the issue was essential to the prior judgment; and

(5) the party against whom the doctrine is asserted was a party to or in privity with a party to the earlier proceeding.

[Ibid. (quoting Hennessey v. Winslow Twp., 183 N.J. 593, 599 (2005)).]

Thus, unlike res judicata, which focuses on identical claims, application of the doctrine of collateral estoppel requires identical issues, along with notice to and a full and fair opportunity to be heard by the party sought to be precluded, and equality of forum. Pressler & Verniero, Current N.J. Court Rules, comment 7.1 on R. 4:5-4 (2011).

We have already found that the issues plaintiff seeks to litigate in her 2002 complaint are identical to those resolved in binding arbitration. Moreover, although the traditional rule calls for mutuality of parties, the modern trend favors "a more pragmatic case-by-case approach[,]" Konieczny v. Micciche, 305 N.J. Super. 375, 385 (App. Div. 1997), whereby "'the question to be decided is whether a party has had his day in court on an issue, rather than whether he has had his day in court on that issue against a particular litigant.'" Ibid. (quoting McAndrew v. Mularchuk, 38 N.J. 156, 161 (1962)). Thus, as with the doctrine of res judicata, the fact that ANJ and Allstate were not parties to NASD arbitration does not preclude the application of collateral estoppel.

To be sure, an arbitration award will be given collateral estoppel effect in subsequent judicial proceedings only when there is equality of forum. See Pressler & Verniero, Current N.J. Court Rules, comment 7.1 on R. 4:5-4 (2011). In other words, the arbitration "proceeding must entail the essential elements of adjudication." Konieczny, supra, 305 N.J. Super. at 384-85. "[A] plaintiff, in order to avoid the preclusion bar, must demonstrate that he or she 'lacked full and fair opportunity to litigate the issue' in the prior proceeding, or there are 'other circumstances [that] justify affording [the plaintiff] an opportunity to relitigate the issue.'" Id. at 386 (quoting Restatement (Second) of Judgments § 29 (1982)). Thus, our courts have "acknowledged the preclusive effect of an arbitration when the party to be bound has had an ample chance to be heard in the arbitral forum[,]" Panniel v. Diaz, 376 N.J. Super. 597, 611 (Law Div. 2004); see also Habick v. Liberty Mutual Fire Insurance Co., 320 N.J. Super. 244, 257 (App. Div.), certif. denied, 161 N.J. 149 (1999), requiring a "full and fair opportunity to litigate the issue in the first action." Zirger, supra, 144 N.J. at 338.

In making this determination, the court should consider factors, including whether:

(1) the prior forum afforded [the] plaintiff[] procedural opportunities in the presentation and determination of the issues;

(2) [the] plaintiff[] could have effected joinder of the present defendant in the prior proceeding; and

(3) other compelling circumstances make it appropriate that [the] plaintiff[] be permitted to relitigate the issue.

[Konieczny, supra, 305 N.J. Super. at 386.]

Here, plaintiff had a full and fair opportunity to present her case, see Habick, supra, 320 N.J. Super. at 257, which plaintiff's counsel had acknowledged at the conclusion of the arbitration proceedings. Indeed, plaintiff and counsel participated in eighteen hearing sessions over the course of nine days, during which plaintiff called twelve witnesses. The arbitral forum afforded plaintiff ample opportunity to have the issues raised in her 2002 complaint fairly and fully determined. Plaintiff has presented no compelling reason why her claims should now be relitigated in the Law Division.


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