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Zaberers Limited Liability Company, Zaberers East Corporation and v. Td Bank

July 3, 2012

ZABERERS LIMITED LIABILITY COMPANY, ZABERERS EAST CORPORATION AND ROBERT VAN SCIVER, PLAINTIFFS-APPELLANTS,
v.
TD BANK, N.A., DEFENDANT-RESPONDENT.



On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. L-5308-10.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted February 8, 2012

Before Judges Lihotz, Waugh and St. John.

Plaintiffs Zaberers Limited Liability Company (LLC), Zaberers East Corporation (Corp.), and Robert Van Sciver (collectively Zaberers) appeal from an order dated December 17, 2010, granting the cross-motion of defendant TD Bank, N.A. (TDB), to dismiss Zaberers' complaint for damages stemming from TDB's alleged conduct related to commercial property formerly owned by LLC. Following our review of the record on appeal, we reverse and remand.

I.

The matter in controversy involves two related lawsuits between the parties: a 2009 complaint brought by TDB to recover on a loan evidenced by a promissory note filed against LLC as maker, and Corp. and Van Sciver as guarantors (2009 lawsuit); and the 2010 complaint, which is the subject of this appeal, filed by Zaberers against TDB for damages arising from breach of contract, negligence, trespass, fraud and other causes of action (2010 lawsuit).

In the 2009 lawsuit, TDB sought to recover on a loan in the principal amount of $375,000 plus accrued interest. The loan was partially secured by a mortgage on commercial property owned by LLC. TDB, as mortgagee, subsequently foreclosed on the property, which was sold at a sheriff's sale in 2010.

Approximately eight months after the 2009 lawsuit was filed, Zaberers attempted to answer, but their filing was not accepted by the court, as it was out of time. However, all parties believed that the answer had been properly filed. In November 2009, a few weeks after the answer was submitted (but not filed), the 2009 lawsuit was administratively dismissed for lack of prosecution. In summer 2010, the court granted TDB's motion to reinstate the 2009 lawsuit and Zaberers' cross-motion to file an answer. However, the judge, citing Rule 4:7-4, denied Zaberers' cross-motion to file a counterclaim, holding that it was untimely because it was not included with the originally submitted answer.

Zaberers then filed the 2010 lawsuit against TDB, alleging the same claims pled in their proposed counterclaim. During oral argument on Zaberers' subsequent motion to consolidate the 2009 and 2010 lawsuits and TDB's cross-motion to dismiss the 2010 lawsuit with prejudice, Zaberers contended that the denial of their motion to file a counterclaim in the 2009 lawsuit was not a decision on the merits and did not preclude the 2010 lawsuit. The judge granted TDB's cross-motion to dismiss the complaint, holding that Zaberers' newly filed complaint was an "end-run" around the order denying their motion to file a counterclaim in the 2009 lawsuit.

On appeal, Zaberers argues that the judge erred in failing to comprehend that their claims were not "omitted" under Rule 4:7-4 in the 2009 lawsuit, because the events giving rise to their claims did not occur until after all parties thought the answer had been filed; the claims were not mandatory counterclaims; and the motion judge had no authority to dismiss the 2010 lawsuit with prejudice. TDB argues that res judicata and the entire controversy doctrine bar Zaberers from pursuing the 2010 lawsuit.

II.

Because the motion judge considered material outside of the pleadings, we review his order granting the motion to dismiss under the summary judgment standard of review. See R. 4:6-2 ("If . . . matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided by R. 4:46 . . . ."). Viewed most favorably to plaintiff, see R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995), the judge must afford the parties a "reasonable opportunity to present all material pertinent to such a motion," R. 4:6-2. We owe no deference to the trial judge's conclusions of law, which we review de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

The motion judge's reasoning for dismissing Zaberers' complaint in the 2010 lawsuit and denying their motion to consolidate was stated as follows: a new lawsuit has been filed which sets forth the very claims that I denied Zaberers and the other related defendants to pursue while I denied them the right to proceed with the counterclaim. . . . But, they could pursue whatever defense they might have in that suit. . . . I'll have to conclude that I cannot allow another lawsuit to proceed which was simply running around my earlier order. . . . The Zaberers and related defendants can pursue their ...


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