On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-5132-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 26, 2011
Before Judges Axelrad and Ostrer.
Third-party plaintiffs appeal from the trial court's order dismissing on res judicata grounds their claim that their former business partner, third-party defendant, was liable for balances due plaintiff, a parts supplier of the business. Third-party plaintiffs also appeal from the trial court's award of attorney's fees and costs to third-party defendant. Although we affirm the dismissal, we are compelled to reverse the award of attorney's fees.
Third-party plaintiffs Richard J. Kuhn and Eugene Caufield operated an auto glass company, Auto Glass Man, along with third-party defendant Michael Brower.*fn1 After Brower left the concern in June 2006, Kuhn and Caufield continued to operate the business. Kuhn and Caufield sued Brower twice before filing the instant third-party complaint. In each prior suit, they alleged that Brower was responsible for over $100,000 of debts incurred by their business, including over $87,000 in vendors' charges. The first suit, filed in September 2006, was dismissed without prejudice by stipulation. In response to the second suit, which was filed February 28, 2008, Brower filed a counterclaim seeking monies allegedly due him. That case was resolved in advance of trial by the entry of an order on July 21, 2009 dismissing the complaint and counterclaim with prejudice. The order also stated, "neither party admits liability as to debt of underlying law suit."
Plaintiff in the instant action, Michaelson Foreign Car Parts (Michaelson), filed a complaint on October 15, 2009 against Kuhn and Caufield individually, doing business as Auto Glass Man, seeking payment of $135,576.61 on a book account, for goods sold and delivered from April 16, 2007 to January 29, 2009, including interest and fees.*fn2 Kuhn and Caufield answered the complaint and filed a third-party complaint against Brower, which recited verbatim all the allegations in the 2008 complaint that was dismissed with prejudice, adding just one paragraph, which stated:
As a result of the failure to pay the above bill, the within suit was instituted by Michaelson Foreign Car Services in which the within plaintiff seeks judgment for $135,576.61. [A]ny and all payment of this bill was the responsibility of the third party defendant, Brower, to pay and he failed to pay the above bill.
Brower's answer to the third-party complaint included an affirmative defense that the claim was barred, based on the dismissal with prejudice of the prior action. Brower's answer also alleged that the complaint violated N.J.S.A. 2A:15-59.1, and stated that he would seek attorney's fees and costs.
In response to Michaelson's motion for summary judgment, the third-party plaintiffs and Brower cross-moved against each other for summary judgment. Brower sought dismissal of the third-party complaint on res judicata grounds. He also sought the award of attorney's fees. He submitted his attorney's certification of fees and costs as follows: (a) $5,285 from December 7, 2006 through October 17, 2007, which apparently related to the first suit against Brower, which was dismissed without prejudice, and (b) $3,052.50 from January 4, 2010 through August 13, 2010, which apparently related to the third-party complaint. The certification did not address fees or costs incurred in connection with the second suit filed in 2008, which was dismissed with prejudice.
Although Michaelson sought payment only from Caufield and Kuhn - apparently because the $135,576.61 represented unpaid invoices, fee and charges after Brower left - Caufield and Kuhn claimed that Brower remained liable. Caufield and Kuhn argued that Michaelson credited payments they made after Brower resigned to the oldest invoices, thereby resolving balances due when Brower was with the business. Although the third-party complaint alleged that Brower was responsible for the full $135,576.61, third-party plaintiffs clarified that they sought from Brower only the amount due Michaelson before Brower left the business, which allegedly was roughly $86,000. They also argued that the dismissal with prejudice did not bar their third-party complaint because it stated that "neither party admits liability as to debt of the underlying law suit" - which they argued was the anticipated suit by Michaelson filed three months later.
By orders entered September 16, 2010, the court granted Michaelson's motion for judgment against Caufield and Kuhn; denied third-party plaintiffs' motion; and granted Brower's motion, dismissing with prejudice the third-party complaint, and awarding Brower $5,285 in fees. The court reasoned that the third-party complaint was barred based on the dismissal with prejudice of the 2008 suit. The court found the additional paragraph in the third-party complaint did not alter its analysis. The court also awarded fees and costs of $5,285 stating only that counsel had filed the appropriate certification.
Caufield and Kuhn then filed this appeal asserting that the court erred in dismissing the third-party complaint and awarding attorney's fees and ...