Vision Mortgage Corp. v. Patricia J. Chiapperini, Inc.

D’ANNUNZIO, J.A.D.,

(dissenting).

I would affirm the judgment for defendant on the ground that under the entire controversy doctrine plaintiff should have combined the claim based on the Nazario appraisal in its action on the Willis appraisal. I have nothing to add to the majority’s lucid and concise statement of uncontroverted material facts.

The entire controversy doctrine is codified in R. 4:30A. This rule “advances the purpose of R. 4:5-1.” Olds v. Donnelly, 150 N.J. 424, 434, 696 A.2d 633 (1997). R. 4:5-1(b)(2) requires a party’s first pleading to contain “a certification as to whether the matter in controversy is the subject of any other action pending in any court or of a pending arbitration proceeding, or whether any other action or arbitration proceeding is contemplated (emphasis added).” It also requires each party “during the course of litigation to file and serve on all other parties and with the court an amended certification if there is a change in the facts stated in the original certification.” Further, “the court may compel the joinder of parties in appropriate circumstances, either upon its own motion or that of a party.” Ibid.

The purposes of the doctrine are several — judicial economy, efficiency, avoidance of waste, the reduction of delay, fundamental fairness to parties, avoidance of piecemeal litigation and harassment of parties — but they are often reduced to two when referring to the overriding policy behind the doctrine: fairness to parties and judicial economy. Cogdell v. Hospital Ctr., 116 N.J. 7, 15, 17, 560 A.2d 1169 (1989); see Joel v. Morrocco, 147 N.J. 546, 548, 688 A.2d 1036 (1997). In Cogdell, supra, the Court extended the doctrine to require the mandatory joinder of all parties “who have a material interest in the controversy.” 116 N.J. at 26, 560 A.2d 1169.

In the present case, plaintiff contends that the entire controversy doctrine does not bar this action because it is “unrelated” to the prior action involving the Willis appraisal. I disagree. The Supreme Court observed in DiTrolio v. Antiles, 142 N.J. 253, 662 A.2d 494 (1995), that “[i]n determining whether successive claims constitute one controversy for purposes of the doctrine, the central consideration is whether the claims ... arose from related facts or the same transaction or series of transactions.” Id. at 267, 662 A.2d 494.

We applied the concept of a “related series of transactions,” ibid., in Malaker Corp. Stockholders Protective Comm. v. First Jersey Nat’l Bank, 163 N.J.Super. 463, 395 A.2d 222 (App.Div. 1978), certif. denied, 79 N.J. 488, 401 A.2d 243 (1979), a case cited with approval in DiTrolio, supra, 142 N.J. at 267, 662 A.2d 494. In Malaker, we held that plaintiff’s claim against the bank for its alleged breach of a loan commitment should have been raised by plaintiff in an earlier action by the bank on an overdue note. 163 N.J.Super. at 491-500, 395 A.2d 222. There we articulated the following test:

Consequently, although we agree with the trial judge’s characterization of certain of plaintiffs’ claims as being separate and independent ones, capable of separate adjudication, we disagree that such characterization is dispositive of or even bears on whether the claims were barred by the prior state court judgment. The essential inquiry is whether the claims here asserted derive from a single transaction or a series of related transactions, a portion of which was disposed of by final judgment in the earlier lawsuit. If they have such derivation, they are barred.

[Id. at 497, 395 A.2d 222.]

We had formulated a similar standard in William Blanchard Co. v. Beach Concrete Co., 150 N.J.Super. 277, 375 A.2d 675 (App.Div.), certif. denied, 75 N.J. 528, 384 A.2d 507 (1977):

[The entire controversy doctrine] must be applied empirically. That is to say, an evaluation must be made of each potential component of a particular controversy to determine the likely consequences of the omission of that component from the action and its reservation for litigation another day. If those consequences are likely to mean that the litigants in the action as framed will, after final judgment therein is entered, be likely to have to engage in additional litigation in order to conclusively dispose of their respective bundles of rights and liabilities which derive from a single transaction or related series of transactions, then the omitted component must be regarded as constituting an element of the minimum mandatory unit of litigation. That result must obtain whether or not that component constitutes either an independent cause of action by technical common-law definition or an independent claim which, in the abstract, is separately adjudicable.

[150 N.J.Super. at 293-94, 375 A.2d 675 (emphasis added).]

See also Tevis v. Tevis, 79 N.J. 422, 434, 400 A.2d 1189 (1979) (holding that marital tort, an assault, should have been asserted in the prior divorce action); Boardwalk Regency Corp. v. Square Brighton Corp., 288 N.J.Super. 494, 500-01, 672 A.2d 1185 (App.Div.1996) (determining that action by lessee against sublessee for late charges should have been joined in prior litigation by third party against city to compel condemnation of part of leased premises, an action in which lessee and sublessee had intervened); Mori v. Hartz Mountain Dev. Corp., 193 N.J.Super. 47, 55-57, 472 A.2d 150 (App.Div.1983) (concluding that action for rent against former cotenant as assignee of lease should have been asserted in earlier partition action).

I agree with Judge Pressler’s observation in William Blanchard Co., supra, that “the task of definitionally circumscribing the outer limits of a given controversy for purposes of application of the doctrine is inordinately difficult.” 150 N.J.Super. at 293, 375 A.2d 675. See e.g., Joel v. Morrocco, supra; Illiano v. Seaview Orthopedics, 299 N.J.Super. 99, 690 A.2d 662 (App.Div.1997). We must, therefore, evaluate the impact of plaintiffs reservation of the claim regarding the Nazario appraisal in terms of the purposes of the entire controversy doctrine.

The doctrine seeks to promote judicial economy and efficiency. Plaintiffs failure to assert the Nazario claim in the Willis action undercuts those goals. To prevail on either claim plaintiff would have had to establish the standard of performance in the appraisal business, defendant’s deviation from that standard, and damage to plaintiff as a proximate result of any deviation.

The first element, the standard of performance will be the same in both cases. By splitting the claims, plaintiff made it necessary to establish the standard twice, thereby duplicating effort and court time. It is likely that a separate trial in each case would include duplicative evidence about the nature and characteristics of the mortgage loan business and the appraisal business. Such evidence would be necessary to inform fully the trier of fact regarding the standard of performance, breach of the standard, proximate cause and damages. Each case would, of course, involve evidence peculiar to it regarding specific deviation from the standard of performance and the amount of damages.

Fairness to the parties is also an objective of the doctrine. I am persuaded that there is great potential for mischief in presenting and settling one claim while holding a second identical claim in reserve. Moreover, regarding judicial efficiency, it would have been reasonable to expect that if plaintiff had asserted both claims in the same action, a settlement would have resolved both claims.

Although each appraisal involved a discrete mortgage transaction, each was a component part of a series of transactions involving plaintiff and defendant. Mortgagelinq Corp. v. Commonwealth Land Title, Ins., Co., 142 N.J. 336, 662 A.2d 536 (1995) involved a failure to join certain defendants in an earlier action in Pennsylvania, in violation of the doctrine. Although joinder of claims was not an issue, the complaint alleged mortgage fraud involving twenty-four separate real estate transactions which were properly combined in one action. It serves, therefore, as an exemplar of how plaintiff should have proceeded in the present case.

In light of the trial court’s correct application of the entire controversy doctrine in granting judgment for defendant, it is unnecessary to consider the court’s ruling regarding the thorny issue of when the cause of action had accrued under the six-year¹ statute of limitations.

1 The California limitations period is only two years. Slavin v. Trout, 18 Cal.App.4th 1536, 23 Cal.Rptr.2d. 219, 220 (1993). California's short limitations period may explain the Slavin court’s core concern: that two years from default may not be sufficiently long for a mortgagee to determine whether it has suffered actual damages from an inadequate appraisal.