FOULKE MANAGEMENT CORP. VS. DOMESTIC LINEN SUPPLY CO., INC. (L-4057-13 AND L-2354-14, CAMDEN COUNTY AND STATEWIDE) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3219-17T3
FOULKE MANAGEMENT CORP.,
Plaintiff-Respondent,
v.
DOMESTIC LINEN SUPPLY CO. INC.,
Defendant-Appellant,
and
AMERICAN ARBITRATION
ASSOCIATION,
Defendant.
_____________________________________
Submitted November 7, 2018 – Decided December 5, 2018
Before Judges Suter and Firko.
On appeal from Superior Court of New Jersey, Law
Division, Camden County, Docket Nos. L-2354-14 and
L-4057-13.
Burton Neil & Associates, PC, attorneys for appellant
(Joseph D. DiGuglielmo, of counsel and on the briefs).
Capehart & Scatchard, attorneys for respondent (Laura
D. Ruccolo, on the brief).
PER CURIAM
This matter is before us for a second time. In our prior unpublished
opinion,1 we remanded and directed the trial court to resolve the dispute as to
whether Domestic Linen Supply Company, Inc., a Pennsylvania corporation
(Domestic PA) or Domestic Linen Supply Company, Inc., a New Jersey
corporation (Domestic NJ) was the contracting party to the rental agreements at
issue and stayed arbitration pending resolution of this factual dispute. On
remand, the trial judge did not comply with our directive and issued an order on
February 2, 2018, compelling a jury trial to determine the proper parties and
permitting substitution of Domestic PA for Domestic NJ if so found by the jury.
On March 15, 2018, the trial court denied defendants' motion for
reconsideration. Because our prior mandate did not direct a jury to decide
whether Domestic PA or Domestic NJ was the proper party, we vacate the
February 2, 2018 and March 15, 2018 orders, reverse, and remand to the t rial
court for further proceedings.
1
Foulke Mgmt. Corp. v. Domestic Linen Supply Co., No. A-0752-14 (App.
Div. Mar. 14, 2016).
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I.
The underlying litigation is extensive and accompanied by a complex
procedural history, as set forth in our prior opinion. For purposes of this
opinion, we provide the core facts and procedural history leading to the entry of
the orders under review.
Following remand, on May 20, 2016, the trial court notified the parties it
would dismiss the complaint for lack of prosecution. In response, plaintiff filed
a request to enter default against defendants for failing to plead or defend the
complaint that was entered on May 25, 2016. On June 13, 2016, defendants
filed an amended answer with affirmative defenses.
Following defendants' failure to respond to discovery, an order was
entered compelling them to provide discovery and extending the discovery end
date until November 11, 2016. A motion for summary judgment was filed by
defendants on March 17, 2017, seeking a ruling that Domestic PA was the proper
party to the contracts, and declaring the arbitration clauses in the contracts
valid.2 In the alternative, defendants moved for leave to amend their answer to
2
In our prior opinion, we noted that: "Our opinion is not to be construed as
suggesting the outcome of any issue concerning the parties, the validity of the
arbitration clauses, or whether discrete issues do not fall within the arbitration
clauses." Foulke, slip op. at 15. The parties were also restrained from pursuing
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assert counterclaims against plaintiff. The motions were denied on May 12,
2017, and defendants' motion for reconsideration was denied on July 7, 2017.
Thereafter, Domestic PA filed a complaint against plaintiff in the United
States District Court for the Eastern District of Pennsylvania for breach of
contract, and to compel arbitration, upon dissolution of our order. Plaintiff filed
a motion to dismiss, in lieu of an answer, on November 28, 2017, based upon
the "first filed rule" because "the issues are presently before the New Jersey
Superior Court and have been since 2013." 3
On January 2, 2018, plaintiff filed a motion in this case to determine the
proper parties, and in the event a jury found Domestic PA to be the proper party,
a substitution be made. In contravention of our clear mandate, the judge entered
the following order:
THIS MATTER having been opened to the court by
Laura D. Ruccolo, Esq. of Capehart Scatchard, P.A.,
attorneys for plaintiff in the above-entitled action, upon
Notice of Motion for an Order compelling jury trial on
factual issue of Plaintiff's contract defense and to
substitute parties based on findings; and it appearing to
the court after reviewing the moving papers that the
arbitration until the issue of identification of the proper party was resolved. We
also held that the first judge's ruling as to the validity of the arbitration clauses
was interlocutory and subject to reconsideration.
3
The outcome of the motion to dismiss is not a part of this record.
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requested relief should be granted, and for good cause
shown;
NOW THEREFORE, it is on this 2nd day of February
2018,
HEREBY ORDERED that (1) the instant matter be
heard in the presence of a jury; and (2) be permitted to
substitute parties based on findings.4
On March 21, 2018, defendants appealed the February 2, 2018 order and
requested an adjournment of the March 26, 2018 trial date. The request was
granted, and trial was rescheduled for April 16, 2018. On March 28, 2018,
defendants filed a motion with the trial court seeking a bifurcation and
proceeding first with the party identification issue.
Defendants filed a joint motion for leave to appeal the February 2, 2018
order on April 9, 2018. The next day, they renewed their request to adjourn the
April 16, 2018 trial date arguing the appeal divested the trial court of
jurisdiction. On May 10, 2018, we granted defendants' motion for leave to
appeal.
By proceeding in this manner, the trial court circumvented our directive.
In his oral decision denying defendants' motion for reconsideration, the judge
4
The motion was granted as unopposed, despite efforts made by defendants to
file opposition papers that were rejected by the clerk's office. No oral argument
was conducted.
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improvidently found that the determination of the proper party was a "factual
issue that should be decided by a jury."
II.
Defendants raise the following arguments on appeal:
A. The Court should vacate the Trial Court's
February 2, 2018 Order compelling a jury trial on
Foulke's substantive claims.
1. The Order compelling a jury trial on
Foulke's substantive claims violates the
contractual requirement of arbitration.
2. The Order compelling a jury trial on
Foulke's substantive claims violates this
Court's March 24, 2016 Order requiring the
Trial Court to first determine whether
Foulke entered the Contracts with
Domestic NJ.
3. The Trial Court lacks subject matter
jurisdiction over the case and has no power
to conduct a trial or substitute parties.
4. The Order compelling a jury trial on
Foulke's substantive claims is unnecessary
because there are no factual questions for a
jury to decide.
a. The plain language of the contracts
proves that Domestic PA is the party
to the contracts.
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b. Domestic PA's invoices to Foulke
prove that Domestic PA is the party
to the contracts.
c. Foulke's own business records prove
that Domestic PA is the party to the
contracts.
d. Foulke's attorney's own pre-
litigation communications to
Domestic PA regarding the contracts
prove that Domestic PA is the party
to the contracts.
e. The only "facts" Foulke presents to
show that Domestic NJ is the
contracting party are really questions
of law and/or inadmissible parol
evidence.
B. The Court should vacate the Trial Court's
February 2, 2018 Order permitting substitution of
Domestic PA as the defendant after trial.
1. The Order permitting substitution of
Domestic PA as the defendant after trial
violates Rules 4:2-2, 4:4-4, and 4:9-1 by
allowing Foulke to serve a complaint
against Domestic PA.
2. Foulke's claims against Domestic PA
should be heard as counterclaims in the
first-filed, prior-pending Federal Court
action.
When an appellate court orders a remand "the trial court is under a
peremptory duty to obey the mandate of the appellate tribunal precisely as it is
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written." Flanigan v. McFeely, 20 N.J. 414, 420 (1956); see also Lowenstein v.
Newark Bd. of Educ., 35 N.J. 94, 116-17 (1961); State v. Kosch, 454 N.J. Super.
444 (App. Div. 2018); Henebema v. Raddi, 452 N.J. Super. 438 (App. Div.
2017), certif. denied, 233 N.J. 215 (2018). In fact, the "terms and scope of the
remand or specific instructions it has issued regarding the litigation bind[s] the
court below whether it agrees or not." Pressler & Verniero, Current N.J. Court
Rules, cmt. 2 on R. 2:9-1 (2019).
"[T]he very essence of the appellate function is to direct conforming
judicial action. As such, the trial court has no discretion when a mandate issues
from an appellate court. It simply must comply." Tomaino v. Burman, 364 N.J.
Super. 224, 233 (App. Div. 2003) (citations omitted). The trial judge failed to
comply with these principles.
Consequently, we direct that the trial court must:
(1) conduct a case management conference within
thirty days to ascertain if there are any
outstanding discovery issues relative to the
identification of the proper party (Domestic NJ or
Domestic PA).
(2) proceed with a hearing, without a jury, within
sixty days thereafter as to the identification issue.
(3) issue an opinion within thirty days after the
completion of the hearing as to the identification
issue only.
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Thereafter, the trial court must determine whether the matter will proce ed to
arbitration as previously ordered by the first judge, or if a motion for
reconsideration will be entertained as to whether arbitration is appropriate.
We have considered defendants' other contentions in light of the record
and applicable legal principles and conclude that they are premature at this
juncture and without sufficient merit to warrant discussion in a written opinion.
R. 2:11-3(e)(1)(E).
We reverse the February 2, 2018 and March 15, 2018 orders and remand
for further proceedings in conformity with our prior opinion as well as this
opinion.
Reversed and remanded. We do not retain jurisdiction.
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