Opinion
DOCKET NO. A-5509-12T3
07-17-2014
DENNIS BRAKE and SHERYL BRAKE, Plaintiffs-Appellants, v. MARK and LUISA MARTIN, JOSEPH WIESSNER, JOSEPH WIESSNER REALTY, JOHN BANGS, JR., JASON SCHAEFFER, ELAINE FLACCO, HARRY BASEKO, and DAYSTAR CONSTRUCTION, Defendants-Respondents.
Alexander J. Wazeter argued the cause for appellants. Tracy L. Burnley argued the cause for respondents Jason Schaeffer, Elaine Flacco, Harry Baseko, and Daystar Construction (Marshall, Dennehey, Warner, Coleman & Goggin, attorneys; Ms. Burnley, on the brief). Michael J. Hawley argued the cause for respondents Mark and Luisa Martin (Keith M. McWhirk (Mandracchia & McWhirk, LLC), attorney, joins in the brief of respondents Jason Schaeffer, Elaine Flacco, Harry Baseko, and Daystar Construction). Lauren R. Clein (Thomas, Thomas & Hafer, LLP) argued the cause for respondents John Bangs, Jr., and Fireside Hearth & Home (Ms. Clein, attorney, joins in the brief of respondents Jason Schaeffer, Elaine Flacco, Harry Baseko, and Daystar Construction).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Waugh, Nugent, and Accurso.
On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-5233-12.
Alexander J. Wazeter argued the cause for appellants.
Tracy L. Burnley argued the cause for respondents Jason Schaeffer, Elaine Flacco, Harry Baseko, and Daystar Construction (Marshall, Dennehey, Warner, Coleman & Goggin, attorneys; Ms. Burnley, on the brief).
Michael J. Hawley argued the cause for respondents Mark and Luisa Martin (Keith M. McWhirk (Mandracchia & McWhirk, LLC), attorney, joins in the brief of respondents Jason Schaeffer, Elaine Flacco, Harry Baseko, and Daystar Construction).
Lauren R. Clein (Thomas, Thomas & Hafer, LLP) argued the cause for respondents John Bangs, Jr., and Fireside Hearth & Home (Ms. Clein, attorney, joins in the brief of respondents Jason Schaeffer, Elaine Flacco, Harry Baseko, and Daystar Construction). PER CURIAM
Plaintiffs Dennis and Sheryl Brake appeal the Law Division's June 7, 2013 order denying their motion for reconsideration of the March 12, 2013 order dismissing their complaint with prejudice. We reverse and remand for an evidentiary hearing.
I.
We discern the following facts and procedural history from the record on appeal.
On August 30, 2004, the Brakes purchased a house on Birch Drive in Hammonton from defendants Mark and Luisa Martin. The house was constructed by defendant Daystar Construction.
The Brakes allege that they discovered rainwater leaking through rocks located in front of their house and into the house itself in December 2009. The leaking led to the development of mold, which the Brakes noticed as early as April 2010. They made a claim to their insurance company, State Farm Fire & Casualty Company, for property damage and the costs of remediation.
On September 19, 2011, State Farm filed a subrogation action to recoup the $9500 it paid for remediation of the water and mold damage to the Brakes' home. The complaint named Daystar and Tim Schaeffer Development Corp. (Schaeffer Development) as defendants. Daystar filed a third-party complaint against its subcontractors Fireside Hearth & Home (Fireside) and J.T.S. Custom Building and Remodeling Contractors, Inc. (J.T.S.).
The Brakes signed answers to interrogatories, prepared by subrogation counsel, in June 2012. The answers identified Coastal Environmental Compliance, LLC, (Coastal) as an expert. Coastal completed a report for the Brakes in April 2010, which was prior to the filing of the subrogation complaint. The report noted "[v]isual mold and water damage" in the living room that "was caused by significant water intrusion of the front window." It also stated that air sampling on March 31 and April 16, 2010 "revealed slightly elevated levels of . . . species of fungi that produce a mycotoxin in their spores that have the ability to cause adverse health effects such as pulmonary difficulty, ear, nose and lung infection, and allergic reactions." The report recommended that the Brakes "[c]ontact a licensed mold remediation contractor to conduct remediation of the mold at the residence[]." The Brakes paid Coastal $748 by personal check for the report.
State Farm and the parties involved in its subrogation action settled on August 7, 2012. They memorialized the settlement in a confidential release on September 20. The Brakes and State Farm are referred to as "I" and Daystar, Schaeffer Development, Firestone, and J.T.S. as "You" in the release. It provides, in pertinent part, as follows:
1. Release. I release and give up any and all claims and rights which I may have against you. This releases all claims, including those of which I am not aware and those not mentioned in this Release. This Release applies to claims resulting from anything which has happened up to now, I specifically release the following claims: any and all claims which were the subject of an action filed in the Superior Court of New Jersey, Law Division, Atlantic County, Docket Number L-8773-11, entitled DENNIS BRAKE and SHERYL BRAKE by their subrogee STATE FARM FIRE & CASUALTY COMPANY v. DAYSTAR CONSTURCTION, INC., et al.
. . . .
3. Who is Bound. I am bound by this Release. Anyone who succeeds to my rights and responsibilities, such as my heirs o[r] the executor of my estate, is also bound. This Release is made for your benefit and all who succeed to your rights and responsibilities, such as your heirs or the executor of your estate.
The releasors acknowledged receipt of $9500 and, in return, "agree[d] that I will not seek anything further including any other payment from you." The document is signed in the names of the Brakes by State Farm as subrogee. The stipulation of dismissal with prejudice was filed on November 30. The Brakes gave State Farm a limited power of attorney authorizing it to sign the release on their behalf.
On July 23, just prior to the settlement, the Brakes filed a pro se complaint against Daystar, the Martins, and several individual defendants associated with the construction and ownership of the house, as well as nondisclosure of previous mold and water damage, alleging the following causes of action: violation of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20 (count one); violation of the Home Improvement Act, which may be a reference to Home Improvement Practice regulations, N.J.A.C. 13:45A-16.1 to 16.2, adopted by the Division of Consumer Affairs pursuant to the CFA; negligent building, design, and construction (count three); personal injury (count four); and violations of a statute referred to as the "House Act," the identity of which is unclear (count five). The complaint was based on the same events that gave rise to the subrogation complaint.
On January 10, 2013, after they and the other defendants had answered, the Daystar defendants filed a motion to dismiss the complaint with prejudice based on the entire controversy doctrine. On January 22, Fireside and Bangs filed a motion to dismiss the complaint on the same basis, as well as failure to state a claim and the failure to plead consumer fraud with specificity.
Daystar, Tim Schaeffer, Jason Schaeffer, Elaine Flacco, and Harry Pizzico (i/p/a Harry Baseko).
On January 31, the Brakes, now represented by counsel, filed a cross-motion seeking leave to file an amended complaint. They sought to add additional defendants and recast their claims in four counts: negligent or defective design and construction (count one); breach of warranty (count two); consumer fraud (count three); and common law fraud (count four). Like the original complaint, the proposed amended complaint sought damages for personal injury to Sheryl Brake.
Following oral argument on March 1, the motion judge issued a written decision on March 12, explaining his reasons for granting the motion to dismiss on the basis of the entire controversy doctrine. He denied the Brakes' cross-motion to amend the complaint as moot. Implementing orders were entered the same day.
The Brakes filed a motion for reconsideration on April 1. The defendants opposed the motion and sought sanctions pursuant to Rule 1:4-8. On June 7, the judge denied the motion for reconsideration and the cross-motion for sanctions. He filed a written opinion and implementing order the same day. This appeal followed.
The notice of appeal refers only to the order denying reconsideration. Nevertheless, we consider both that order and the earlier order of dismissal. See W.H. Indus., Inc. v. Fundicao Balancins, Ltda, 397 N.J. Super. 455, 459 (App. Div. 2008).
II.
On appeal, the Brakes argue that the judge's reasons for denying their motion for reconsideration were expressed "on a palpably incorrect basis," that the entire controversy doctrine should not have been applied to the claim based on Sheryl Brake's personal injury, and that the motion judge did not focus sufficiently on considerations of fairness.
"A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm., 140 N.J. 366, 378 (1995). In the context of a motion to dismiss grounded on the entire controversy doctrine, a reviewing court, like the motion judge,
examine[s] the record in the light most favorable to [the non-movant]. See NCP Litig. Trust v. KPMG LLP, 187 N.J. 353, 365 (2006) (holding that, on a motion to dismiss, the opponent is entitled to "a generous and hospitable approach," an assumption of the truth of its allegations, and the benefit of all reasonable inferences).
[Alpha Beauty Distribs., Inc. v. Winn-Dixie Stores, Inc., 425 N.J. Super. 94, 97 (App. Div. 2012).]
The entire controversy doctrine is implemented by Rule 4:30A, which provides:
Non-joinder of claims required to be joined by the entire controversy doctrine shall result in the preclusion of the omitted claims to the extent required by the entire controversy doctrine, except as otherwise provided by R. 4:64-5 (foreclosure actions) and R. 4:67-4(a) (leave required for counterclaims or cross-claims in summary actions).In Alpha Beauty, supra, 425 N.J. Super. at 104, we explained the application of the doctrine as follows:
The entire controversy doctrine compels at times, and encourages at others, the joinder of related claims so as "to eliminate delay, prevent harassment of a party and unnecessary clogging of the judicial system, avoid wasting the time and effort of the parties, and promote fundamental fairness." Cogdell v. Hospital Center at Orange, 116 N.J. 7, 15 (1989) (quoting Barres v. Holt, Rinehart and Winston, Inc., 74 N.J. 461, 465 (1977) (Schreiber, J., dissenting)). In light of these considerations, the doctrine imposes on a litigant the duty to present "all
aspects of a controversy in one legal proceeding." The Malaker Corp. Stockholders Protective Comm. [v.] First Jersey Nat'l Bank, 163 N.J. Super. 463, 496 (App. Div. 1978), certif. denied, 79 N.J. 488 (1979). In determining what constitutes a single controversy, courts "look at the core set of facts that provides the link between distinct claims against the same or different parties." Hobart Bros. Co. v. Nat'l Union Fire Ins. Co., 354 N.J. Super. 229, 244 (App. Div. 2002).
The doctrine applies to "'matters actually litigated'" as well as matters "'that might have been thus litigated and determined.'" Vision Mortg. Corp., Inc. v. Patricia J. Chiapperini, Inc., 307 N.J. Super. 48, 52 (App. Div. 1998) (quoting Mori v. Hartz Mountain Dev. Corp., 193 N.J. Super. 47, 56 (App. Div. 1983)), aff'd, 156 N.J. 580 (1999). As an equitable doctrine, the entire controversy doctrine will not act as a bar when, considering the totality of the circumstances, its application would undermine "'its objectives, namely, the promotion of conclusive determinations, party fairness, and judicial economy and efficiency.'" K-Land Corp. No. 28 v. Landis Sewerage Auth., 173 N.J. 59, 70 (2002) (emphasis omitted) (quoting Pressler, Current N.J. Court Rules, comments 1 & 2 on R. 4:30A (2002)).
In this case, the motion judge's initial decision failed to examine the record in the light most favorable to the Brakes. For example, the fact that Sheryl Brake was referred for testing related to sinus problems in 2011 does not necessarily mean that her treating physician was concerned about mold or, if so, that she knew that mold was a concern in her case. In addition, the judge failed to consider the equitable nature of the entire controversy doctrine, particularly the component of judicial fairness. Consequently, we conclude that the motion for reconsideration should have been granted. See Capital Fin. Co. of Del. Valley, Inc. v. Asterbadi, 398 N.J. Super. 299, 310 (App. Div.), certif. denied, 195 N.J. 521 (2008).
We agree with the motion judge's conclusion that the State Farm subrogation claim and Sheryl Brake's personal injury claim "stem from a single transaction," the leaks in the Brakes' home and the resulting damage. We do not, however, find sufficient support in the record, as it now exists, to conclude, as the motion judge did, that the Brakes had sufficient knowledge in 2010 or 2011 to have had a fair opportunity to initiate a personal injury claim as part of the State Farm subrogation litigation, which involved property damage.
That question is primarily one of fact and the application of the facts to the focus of the entire controversy doctrine, which is "whether the claimant has 'had a fair and reasonable opportunity to have fully litigated that claim in the original action.'" Gelber v. Zito P'ship, 147 N.J. 561, 565 (1997) (quoting Cafferata v. Peyser, 251 N.J. Super. 256, 261 (App. Div. 1991)).
As the Supreme Court held in K-Land Corp., "'the polestar for the application of the [entire controversy] rule [remains] judicial "fairness."‘" K-Land Corp., supra, 173 N.J. at 74 (first alteration in original) (quoting Reno Auto Sales, Inc. v. Prospect Park Sav. & Loan Ass'n, 243 N.J. Super. 624, 630 (App. Div. 1990)). We particularly note that neither of the motion judge's opinions contained a significant analysis of whether application of the doctrine to bar the personal injury claim, under the circumstances of this case, would be consistent with judicial fairness.
Based upon our review of the record in light of the applicable law, we have concluded that a remand is necessary for an evidentiary hearing, which need not be overly lengthy, to address the issue of whether the Brakes had, or reasonably should have had, sufficient knowledge and time to take the steps necessary to add a claim based on Sheryl Brake's personal injuries to the then pending property-damage subrogation action, which was brought and controlled by counsel for its insurance carrier rather than themselves. With the resulting fuller record and the required focus on judicial fairness, the remand judge can consider how best to exercise the judicial discretion inherent in this equitable doctrine. Highland Lakes Country Club & Cmty. Ass'n v. Nicastro, 201 N.J. 123, 125 (2009) (quoting Oliver v. Ambrose, 152 N.J. 383, 396 (1998)). Of course, the focus on judicial fairness must include fairness to the defendants as well as the Brakes.
Consequently, the June 7 and March 12, 2013 orders are reversed and the matter is remanded for further proceedings consistent with this opinion. We stress, however, that the reversal is limited solely to the issue of whether the personal injury claim, as opposed to the expanded property damage claims, should be barred by the entire controversy doctrine.
The personal injury claim is the only claim raised on appeal. In any event, the motion judge's June 7 order is sound as it relates to additional claims for property damage contained in the Brakes' complaint.
--------
Reversed and remanded.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION