NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-1370-20
1707 REALTY, LLC,
Plaintiff-Appellant,
v.
REVOLUTION ARCHITECTURE, LLC, CONRAD RONCATI, R.A., ARCHITECTURA, INC., JOHNSON SOILS COMPANY, LISA V. MAHLE-GRECO, P.E., BERTIN ENGINEERING ASSOCIATES, INC., and CALSISTO BERTIN, P.E.,
Defendants-Respondents. ______________________________
REVOLUTION ARCHITECTURE, LLC, CONRAD RONCATI, R.A., and ARCHITECTURA, INC.,
Defendants/Third-Party Plaintiffs,
ULTRA GENERAL CONTRACTING CORP., ULTRA GENERAL CONTRACTING, INC., d/b/a ULTRA GENERAL CONTRACTING ENTERPRISES, INC., and ULTRA ENTERPRISES, LLC, d/b/a ULTRA GENERAL CONSTRUCTION ENTERPRISES, INC.,
Third-Party Defendants- Respondents,
and
STALWART CONSTRUCTION, LLC, STALWART CONSTRUCTION, INC., STALWART CONSTRUCTION GROUP, INC., and GREGORY FASSANO, LLC,
Third-Party Defendants. ______________________________
JOHNSON SOILS COMPANY, LISA V. MAHLE-GRECO, and CALSISTO BERTIN, P.E.,
STALWART CONSTRUCTION, LLC, STALWART CONSTRUCTION, INC., STALWART CONSTRUCTION GROUP, INC., ULTRA GENERAL CONTRACTING CORP., ULTRA
A-1370-20 2 GENERAL CONTRACTING, INC., d/b/a ULTRA GENERAL CONTRACTING ENTERPRISES, INC., ULTRA ENTERPRISES, LLC, d/b/a ULTRA GENERAL CONSTRUCTION ENTERPRISES, INC., GREENFIELD CONSTRUCTION GROUP, GREGORY FASSANO, LLC, MARCH ASSOCIATES, INC., and PETILLO INCORPORATED,
Third-Party Defendants,
ROY ROCK, LLC,
Third-Party Defendant- Respondent. ______________________________
BERTIN ENGINEERING ASSOCIATES, INC., and CALISTO BERTIN, P.E.,
STALWART CONSTRUCTION, LLC, STALWART CONSTRUCTION GROUP, INC., individually and d/b/a STALWART CONSTRUCTION, LLC, ULTRA GENERAL CONTRACTING CORP., ULTRA GENERAL
A-1370-20 3 CONTRACTING INC., d/b/a ULTRA GENERAL CONTRACTING ENTERPRISES, INC., ULTRA ENTERPRISES LLC, d/b/a ULTRA GENERAL CONSTRUCTION ENTERPRISES, INC.,
Argued February 9, 2022 – Decided July 19, 2022
Before Judges Hoffman, Whipple, and Geiger.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-2202-17.
Leonard E. Seaman argued the cause for appellant 1707 Realty, LLC (The Law Offices of Richard Malagiere, PC, attorneys; Richard Malagiere, of counsel; Leonard E. Seaman, of counsel and on the briefs).
Robyn S. Rubin argued the cause for respondents Revolution Architecture, LLC, Conrad Roncati, R.A. and Architectura, Inc. (Milber Markris Plousadis & Seiden, LLP, attorneys; Robyn S. Rubin, on the brief).
Jill A. Mucerino argued the cause for respondents Johnson Soils Company, Lisa V. Mahle-Greco, P.E., and Calisto Bertin, P.E., i/p/a Calsisto Bertin, P.E. (Wood Smith Henning & Berman, LLP, attorneys; Jill A. Mucerino, on the brief).
Michael J. Jubanyik argued the cause for respondents Bertin Engineering Associates, Inc., and Calisto Bertin, P.E. (Reilly, McDevitt & Henrich, PC, attorneys;
A-1370-20 4 Michael J. Jubanyik and Christine J. Viggiano, on the brief).
PER CURIAM
Plaintiff 1707 Realty, LLC (1707 Realty) appeals from November 20,
2020 Law Division orders dismissing with prejudice its complaint against
defendants on the basis of the entire controversy doctrine and Rule 4:5-1(b)(2).
Plaintiff also appeals from a January 12, 2021 order denying reconsideration.
For the reasons that follow, we affirm.
I.
We ascertain the following facts from the record. Plaintiff, a New Jersey
limited liability company, was established by its principals, Moshe Winer and
Martin Taub, to develop the Fairfield Marriott Inn Hotel (the Project) in North
Bergen. Tal Winer is 1707 Realty's Vice President.
As the result of construction defects at the Project, on March 24, 2017,
plaintiff filed its complaint in the matter under review, naming the following
parties as defendants: JSC, a New Jersey corporation that performs geotechnical
and special inspection services, including third-party inspections of concrete and
rebar; Lisa V. Mahle-Greco, P.E., a professional engineer in the State of New
Jersey and employee of JSC; Calisto Bertin, P.E., a professional engineer in the
State of New Jersey and principal of JSC and Bertin Engineering Associates,
A-1370-20 5 Inc.; Bertin Engineering Associates, Inc., a New Jersey corporation that
provides civil engineering services; and Conrad Roncati, R.A., a registered
architect in the State of New Jersey and principal of defendants Revolution
Architecture LLC and Architectura, Inc.
Despite initiating this action for construction defects, plaintiff did not
name its initial general contractor, Stalwart Construction LLC (Stalwart), or its
owner and president, Vincent DiGregorio, as defendants. Both Stalwart and its
subcontractor, Ultra General Contracting Corp. (Ultra), are named as third-party
defendants in the matter under review; however, only Ultra appeared as Stalwart
defaulted.
The Project
In April 2014, plaintiff entered into an agreement with Stalwart, as general
contractor, to perform site work at the Project. Shortly thereafter, Stalwart
commenced work. In September 2014, JSC began performing inspections of
Stalwart's work.
On September 12, 2014, plaintiff entered into an agreement with Stalwart
for the construction of a seven-story, 100-room hotel structure (the Tower) at
the Project. Stalwart began work on the Tower on December 17, 2014.
A-1370-20 6 In April 2015, plaintiff retained Bryan Sullivan of PTC Consultants to
serve as the owner's representative for the Project. Sullivan was responsible for
the day-to-day management of the Project. Sullivan oversaw the progress of the
Project and the status of its completion.
In May 2015, Sullivan assessed the quality of the work and alerted
plaintiff regarding defects in the construction of the Project. The defects
identified by Sullivan related to both site work and work on the Tower. Around
the same time, plaintiff became aware of alleged deficiencies with respect to
JSC's inspections.
Sullivan was the person most knowledgeable about the defects at the
Project. According to plaintiff, Sullivan was the primary individual responsible
for noting and documenting the allegedly defective conditions. Although unsure
of its existence, plaintiff's principal, Moshe Winer, testified to never seeing a
formal report prepared by Sullivan regarding the defective conditions.
By May 2015, Sullivan determined that Stalwart was not acting in
compliance with its contracts. As a result, on May 22, 2015, plaintiff issued a
Notice of Non-Compliance [w]ith Contract to Stalwart. The notice stated, in
part, that Stalwart failed to provide "standard protocol for Code[-]required
controlled inspections, scheduling, and on-site or office inspection," which was
A-1370-20 7 central to JSC's involvement with the Project. Thereafter, Stalwart began
performing remedial work under the supervision and guidance of Sullivan.
On September 28, 2015, plaintiff issued a Notice of Default to Stalwart
on the Tower contract. The Notice of Default stated that Stalwart failed "to
construct the project in accordance with industry standards[,] including but not
limited to[,] local building codes, in particular numerous failure[s] in the
placement of rebar and the pouring of concrete which required and continues to
require extensive remediation." Shortly thereafter, on October 7, 2015, plaintiff
terminated Stalwart's contracts for cause. At the time of Stalwart's termination,
the Project was partially completed, up to the second floor.
After Stalwart's termination in October 2015, March Associates
Construction, Inc. (March) replaced Stalwart at the Project. Sullivan prepared
March's scopes of work for both remedial work and for remaining and
incomplete work. According to plaintiff, no remedial work was done without
Sullivan's knowledge.
By August 15, 2017, the Project had been remediated and the North
Bergen Building Department issued a certificate of occupancy. Plaintiff credits
Sullivan with having "saved the project." Notably, plaintiff failed to put the
A-1370-20 8 defendants on notice of its claims against them prior to March remediating and
completing the Project.
One day later, on August 16, plaintiff issued summonses to defendants in
this matter. After receiving a copy of the complaint, defendant Calisto Bertin
left the following voicemail for Sullivan:
Bryan this is Calisto. You've probably getting a call from Conrad too, but I got a gift which I f**king didn't expect, and I have never done this before, but I am going to f**k this job as best I can. I am gonna go down, and I am going to use all my influence to f**k this job. Maybe if someone wants to call me and explain what all this about, we can do something about it, but right now. . . . Not you, your employer created a f**kin' enemy. Bye.
Claims Based on Sullivan's Work Product
Plaintiff's allegations as to both the claimed defects and damages are
based upon information supplied by Sullivan. Specifically, plaintiff's
identification of defects, remedial work, and its calculation of damages are based
upon information included in a "change order log" prepared by Sullivan.
Moreover, plaintiff admitted that its calculation of damages is not based upon
the personal knowledge of its principals or its own documents, but rather, upon
the records of Bryan Sullivan.
The following exchange occurred at the deposition of Tal Winer:
A-1370-20 9 Q: Okay. Could you tell me, as you sit here today, where those numbers come from and what work is reflected and included in the remediation costs and the change orders for remediation work?
A: Yes. I believe all of Mr. Sullivan's records were provided in -- in -- at the site. The paper records, I believe we provided as whatever digital records we had of his. And I remember, this was from - - he would keep meticulous spreadsheets of all the change orders. He would have his notes, he had many columns of notes. He would label them and categorize them with the values. So I mean, I am sure you have seen his records and we produce a lot of records.
Q: So what I am asking you, though, is there a document where Mr. Sullivan identified $340,295 for change orders for additional remediation work? Where did the number come from, I guess, is what I would like to know?
A: So I believe he had -- he had at least a couple of spreadsheets for change orders, one for the site work, one for the tower contract, huge spreadsheets where he labeled the change order based on the proposed change order number, the - - . . . And he would say whether or not it was remedial in nature and he would describe what the change order was about. So that's where we got those numbers.
Since Winer did not personally create the document, he testified regarding his
review of the change order log, stating, "[T]o the best of my abilities, in good
faith, I tried to figure out what was remedial in nature."
A-1370-20 10 The claimed defects were not identified with specificity until June 18,
2020, at which time plaintiff produced its expert witness reports authored by
Thornton Tomasetti, Inc. and Christopher Ling, AIA. Both Ling and Tomasetti
opined as to defects pertaining to concrete and rebar installed by Stalwart.
Plaintiff's experts did not undertake first-hand observations of work progress,
the defective conditions, or the remedial efforts.
In addition to opining as to Stalwart's defective work, both Ling and
Tomasetti offered opinions as to the approval of payment applications for "work
that either was not completed at all or was incomplete." Plaintiff specifically
claims it suffered damages due to the improper approval of incomplete work for
payment, as set forth in Payment Application Requisition No. 8. This claim is
based upon an analysis undertaken by Sullivan.
Claimed Damages
In addition to establishing liability, the damages claimed by plaintiff are
also based upon information supplied by Sullivan, which plaintiff's experts used
in calculating plaintiff's damages totaling $4,005,731, including costs caused by
delay of construction, overpayment, and remediating defective construction. In
support of the damages sought in this litigation, plaintiff retained Robert
Valentin Consulting (Valentin) as an expert, which issued a report dated
A-1370-20 11 February 17, 2020 (the Valentin Report). Plaintiff submitted the Valentin
Report to support the recovery of "costs incurred due to overpayments, deficient
installation[,] and delays," which allegedly total $1,653,754.46. The Valentin
Report opines defendants are responsible for the claimed costs due to their
failure to identify Stalwart's deficient installation for which Stalwart was
overpaid.
Engineered Devices Litigation
On November 13, 2015, while the Project was ongoing, Engineered
Devices Corporation initiated a legal action against 1707 Realty and Stalwart in
the Superior Court of New Jersey, Hudson County to recover on a construction
lien claim. Engineered Devices Corporation v. 1707 Realty LLC, No. L-4673-
15 (the Engineered Devices Litigation). On February 11, 2016, plaintiff filed
crossclaims against Stalwart and DiGregorio.
The Facts Common to All Counts, as stated in plaintiff's crossclaim,
provided, in pertinent part:
(2) Stalwart failed to supply sufficient properly skilled workers or proper materials or equipment to complete the project . . .
(3) By letter dated September 28, 2015, 1707 provided Stalwart with a Notice of Default and opportunity to cure.
A-1370-20 12 ....
(6) As a result of Stalwart's failure to cure the default, on or about October 8, 2015, 1707 terminated the Contract for cause . . .
(7) Prior to termination of the Contract, Stalwart submitted, on a periodic basis, Application and Certification for Payment ("Payment Applications") to 1707 signed by DiGregorio as a condition to get progress payments.
(8) DiGregorio certified to 1707 in the Payment Applications that the work . . . was completed in accordance with the Contract Documents . . .
(9) At the time DiGregorio made these certifications . . . the work . . . was not completed in accordance with the Contract Documents.
Count One of plaintiff's crossclaim was against DiGregorio for fraud
relating to payment applications submitted for the Project, in his capacity as
Stalwart's representative. Count Three was against Stalwart for breach of
contract for its failure and refusal to provide plaintiff sufficient properly skilled
workers or proper materials at the Project. Relevant to the matter under review,
plaintiff alleged defective work product and "numerous construction defects"
against Stalwart.
In accordance with the Rule 4:5-1, plaintiff's attorney filed a certification
with plaintiff's crossclaim, stating:
A-1370-20 13 I further certify pursuant to [Rule] 4:5-1 that the matter in controversy is not the subject matter of any other action pending in any Court or of a pending arbitration proceeding . . . I further certify that to the best of my knowledge, information and belief, no other party should be joined in this action.
On May 19, 2016, plaintiff filed a motion for leave to file a third-party
complaint against Ultra and Gregory Fassano, LLC d/b/a "Global Group"
(Global) in the Engineered Devices Litigation. In a supporting certification,
plaintiff's attorney stated that "1707 [Realty] seeks to recover from Global and
Ultra for damage to the property." He further certified that "1707 [Realty's]
claims against Global and Ultra should be included as part of the matters in
controversy to allow a full and complete resolution of all claims in one forum."
After receiving leave of court, plaintiff filed a third-party complaint
against Ultra and Global in the Engineered Devices Litigation in June 2016.
Plaintiff alleged that Ultra and Global each entered into a subcontract with
Stalwart to provide labor and materials within the concrete scope of work in the
construction of the Project. Plaintiff further alleged that Ultra and Global each
"failed to construct the project in accordance with industry standards[,]
including but not limited to[,] local building codes" and that their failure
"required and continue to require extensive remediation by 1707 to portions of
the project." Moreover, plaintiff alleged that "[t]he negligence, carelessness, or
A-1370-20 14 recklessness" of Ultra and Global were the "proximate cause of damages
suffered by 1707." Plaintiff's attorney filed a certification attached to plaintiff's
third-party complaint, stating:
I certify pursuant to [Rule] 4:5-1 that the matter in controversy is not the subject matter of any other action pending in any Court or of a pending arbitration proceeding . . . I further certify that to the best of my knowledge, information and belief, no other party should be joined in this action.
Judgment in the Engineered Devices Litigation
On January 25, 2017, an Order for Final Judgment (the DiGregorio
Judgment) was entered against Vincent DiGregorio as to plaintiff's crossclaim
for fraud in the amount of $681,506 in the Engineered Devices Litigation.
Plaintiff's calculation of the DiGregorio Judgment included consideration of
overpayment made to Stalwart, as well as damages incurred by plaintiff with
respect to remedial work at the Project.
Plaintiff's representative, Moshe Winer, testified at deposition in this
matter as follows:
Q: Why did you decide that your options were better pursuing the design professionals in this litigation for at least some of the same damages that you already have a judgment for in another litigation?
A: That's what you call double dipping, that's what you --
A-1370-20 15 Q: No, I am not. I am asking you why you made that determination, to pursue a judgment on the same grounds, at least in part, against design professionals in this litigation when you already had a judgment for those damages in another litigation?
A: Look, I . . . hired professionals and I have to take responsibility for who I hired. I believe I hired . . . a good team and that's the advice I got and that's what I did . . . . We chose not to sue Stalwart for negligence or for breach of contract, because we realized it's a sham and there's nothing there, there's no asset to recover . . . from Stalwart. Again, it was a business decision.
The Present Action
Before the Project had been completed and fully remediated, plaintiff
initiated the matter under review by filing a complaint in Bergen County on
March 24, 2017. However, plaintiff did not serve the complaint until August
22, 2017, after the certificate of occupancy for the Project was issued; as a result,
defendants were unaware of the claims pending against them until that time. In
its complaint, plaintiff alleged that JSC entered into an agreement to provide
construction testing and monitoring of certain aspects of the Project, including
testing and monitoring of cast-in-place concrete, masonry, and structural steel
installations at the Project, and further, that they are liable for defects in the
construction of the Project because they "failed to observe and/or failed to
A-1370-20 16 require the general contractor to correct various deficiencies in the project." The
complaint and subsequent iterations, filed in the form of first, second and third
amended complaints, alleged defects in the construction of the footings, stairs,
columns, foundation, and use of unacceptable fill.
In October 2017, defendant JSC filed an answer, at which time it asserted
an affirmative defense stating: "This claim is barred by the entire controversy
doctrine." Defendant Revolution filed an answer to the initial complaint on
October 24, 2017, and thereafter filed answers to the first, second and third
amended complaints on January 24, 2018, May 24, 2018, and October 30, 2019,
respectively. Revolution denied all allegations, including all allegations
grounded in negligence, fraud, corruption, or any other intentional tort, and
asserted affirmative defenses denying the same.
In November 2017, defendants served discovery demands on plaintiff.
Defendant Revolution filed a third-party complaint against Stalwart on January
3, 2018, and thereafter on third-party defendant Ultra. Third-party complaints
were also filed by defendants JSC, Lisa V. Mahle-Greco, Calisto Bertin, and
Bertin Engineering against Ultra and other subcontractors. Of the named third-
party defendants, only Ultra appeared. The named third-party defendants
A-1370-20 17 worked as subcontractors under Stalwart, and were alleged to have performed,
in part, the defective and deficient work for which plaintiff claimed damages.
Plaintiff did not serve its answers to interrogatories until May 17, 2018,
at which time Sullivan was identified for the first time as a person with
knowledge of facts relevant to this case. By that time, he had been deceased for
over two months. It was not until two years later – on June 18, 2020 – that
plaintiff produced a liability expert report identifying with specificity its claims
against defendants.
On September 9, 2020, JSC moved for dismissal of plaintiff's third-
amended complaint based upon the entire controversy doctrine and plaintiff's
failure to comply with Rule 4:5-1. In sum, the motion sought dismissal of the
complaint with prejudice based upon plaintiff's failure to identify or join
defendants in the Engineered Devices Litigation. The other co-defendants filed
cross-motions to dismiss on the same grounds. On October 6, 2020, plaintiff
filed an omnibus opposition to defendants' motions.
On November 20, 2020, the motion judge granted defendants' motions and
issued orders dismissing plaintiff's complaint with prejudice based on the entire
controversy doctrine and violations of Rule 4:5-1. Plaintiff filed a motion for
reconsideration, which the motion judge denied on January 12, 2021.
A-1370-20 18 This appeal followed, with plaintiff raising the following arguments:
I. THE STANDARD OF REVIEW
II. THE BERGEN TRIAL COURT ABUSED ITS DISCRETION IN APPLICATION OF RULE 4:5- 1.
A. THE COURT ERRED BY FAILING TO CONSIDER THE REASON FOR DELAY IN BRINGING THIS LITIGATION.
B. THE BERGEN COURT ERRED IN FINDING THAT DEFENDANTS WERE "SUBSTANTIALLY PREJUDICED."
C. THE BERGEN TRIAL COURT ERRED IN FAILING TO CONSIDER WHETHER ANY LESSER SANCTION WAS APPROPRIATE.
III. THE BERGEN TRIAL COURT ERRED AS A MATTER OF LAW WHEN IT APPLIED RULE 4:5-1 TO THE ESTABLISHED FACTS. A. THIS IS NOT A "SUBSEQUENT" ACTION.
B. 1707 COMPLIED WITH RULE 4:5- 1.
IV. THE BERGEN TRIAL COURT ERRED IN FINDING THAT THE DIGREGORIO JUDGMENT PRECLUDES RECOVERY FROM DEFENDANTS HERE.
A-1370-20 19 V. THE BERGEN TRIAL COURT ERRED IN FAILING TO CONSIDER THE MATERIALS SUPPLIED WITH THE MOTION FOR RECONSIDERATION.
II.
We review the grant or denial of a motion to dismiss under the same
standards as the trial court. Sickles v. Cabot Corp., 379 N.J. Super. 100, 106
(App. Div. 2005). Where the decision being appealed is based on equitable
principles, we review the trial court's findings under an abuse of discretion
standard. BOC Group, Inc. v. Chevron Chem. Co., 359 N.J. Super. 135, 145
(App. Div. 2003) (citing Paradise Enters. Ltd. v. Sapir, 356 N.J. Super. 96, 102
(App. Div. 2002)).
Moreover, it is well settled that "[t]he entire controversy doctrine is an
equitable principle and its application is left to judicial discretion." 700
Highway 33 LLC v. Pollio, 421 N.J. Super. 231, 238 (App. Div. 2011) (citing
Allstate N.J. Ins. Co. v. Cherry Hill Pain & Rehab. Inst., 389 N.J. Super. 130,
141 (App. Div. 2006)). The doctrine's "application is left to judicial discretion
based on the factual circumstances of individual cases." Dimitrakopoulos v.
Borrus, 237 N.J. 91, 114 (2019) (quoting Highland Lakes Country Club & Cmty.
Ass'n v. Nicastro, 201 N.J. 123, 125 (2009)). When reviewing the trial court's
A-1370-20 20 exercise of such discretion, we will reverse the trial court's decision only if it
was clearly erroneous. State v. Simon, 161 N.J. 416, 444 (App. Div. 1999).
Plaintiff argues that we should conduct de novo review based on the
Court's decision in Dimitrakopoulos, 237 N.J. at 108. There, in a case involving
the entire controversy doctrine, the Supreme Court expressed that "[a]n appellate
court reviews de novo the trial court's determination of the motion to dismiss
under Rule 4:6-2(e). Ibid. However, Dimitrakopoulos is distinguishable in that
it involved application of the entire controversy doctrine to a legal malpractice
claim. The Court wrote, "[t]he entire controversy doctrine raises special
concerns when invoked in the setting of legal malpractice." Id. at 109 (citing
Olds v. Donnelly, 150 N.J. 424, 446 (1997)). As such, the exercise of de novo
review in Dimitrakopoulos was a result of the narrow facts concerning legal
malpractice; the case does not stand for the proposition that all entire
controversy claims should be reviewed de novo.
A.
The two goals of the entire controversy doctrine are "ensuring fairness to
parties and achieving economy of judicial resources." Kent Motor Cars, Inc. v.
Reynolds & Reynolds, 207 N.J. 428, 443 (2011). Our Supreme Court has
accomplished these goals by requiring joinder of claims, Rule 4:30A, and by
A-1370-20 21 requiring the parties to identify in their first pleadings "the names of any non-
party who should be joined in the action pursuant to R. 4:28 or who is subject
to joinder pursuant to R. 4:29-1(b) because of potential liability to any party on
the basis of the same transactional facts." R. 4:5-1(b)(2). The parties to an
action have a continuing obligation to amend the initial disclosure if there is a
change in the facts stated in the original certification, and "the court may impose
an appropriate sanction including dismissal of a successive action against a party
whose existence was not disclosed[.]" Ibid.
When a trial court is presented with a motion to dismiss based on the entire
controversy doctrine,
[it] must first determine whether a Rule 4:5–1(b)(2) disclosure should have been made in a prior action because a non-party was subject to joinder pursuant to Rule 4:28 or Rule 4:29-1(b). If so, the court must then determine whether (1) the actions are "successive actions," (2) the opposing party's failure to make the disclosure in the prior action was "inexcusable," and (3) "the right of the undisclosed party to defend the successive action has been substantially prejudiced by not having been identified in the prior action." R. 4:5- 1(b)(2). If those elements have been established, the trial court may decide to impose an appropriate sanction. Dismissal is a sanction of last resort.
[700 Highway 33 LLC, 421 N.J. Super. at 236-37.]
A-1370-20 22 Notably, the primary inquiry concerns whether both actions "arise from
related facts or the same transactions or series of transactions."
Dimitrakopoulos, 237 N.J. at 109 (quoting DiTrolio v. Antiles, 142 N.J. 253,
267 (1995)). "The doctrine does not mandate that successive claims share
common legal issues in order for the doctrine to bar a subsequent actio n." Ibid.
(citing Wadeer v. N.J. Mfrs. Ins. Co., 220 N.J. 591,605 (2015) and Ditrolio, 142
N.J. at 271). Rather, we must determine whether the separate claims are part of
a "single larger controversy because they arise from interrelated facts." Ibid.
(quoting DiTrolio, 142 N.J. at 271).
Application of the entire controversy doctrine is meant to "prevent a party
from voluntarily electing to hold back a related component of the controversy
in the first proceeding by precluding it from being raised in a subsequent
proceeding thereafter." Hobart Bros. Co. v. Nat'l Union Fire Ins. Co., 354 N.J.
Super. 229, 240-41 (App. Div. 2002) (quoting Oltremare v. ESR Custom Rugs,
Inc., 330 N.J. Super. 310, 315 (App. Div. 2000)). Moreover, while the "entire
controversy doctrine is not intended to be a trap for the unwary[,]" we must also
be aware of the "possibility that a party has purposely withheld claims from an
earlier suit for strategic reasons or to obtain "two bites at the apple." Id. at 241.
A-1370-20 23 Here, the motion judge properly exercised his discretion in determining
that Rule 4:5-1(b)(2) applies in the present matter. Namely, the judge properly
found that a Rule 4:5-1(b)(2) disclosure should have been made in the Hudson
County Engineered Devices Litigation.
A Rule 4:5-1(b)(2) disclosure was required because the present action and
the Engineered Devices Litigation arose out of the same transactional facts. The
basis of plaintiff's claims in both matters involved Stalwart's defective
workmanship during the course of construction at the Project and the fraudulent
representations made regarding the quality of the workmanship. In the
Engineered Devices Litigation, plaintiff's crossclaim for breach of contract
against Stalwart claimed defective workmanship and construction defects. In
the present matter, plaintiff is seeking recovery for damages originally caused
by Stalwart's defective construction, such as defects in "concrete footings, stairs,
columns, foundations, and use of unacceptable fill," and specifically for
defendants' failure to inspect, identify and correct such defects that ultimately
resulted in remediation.
Additionally, plaintiff's third-party complaint against Ultra in the
Engineered Devices Litigation alleged that Ultra was liable for defective work
and damages. The complaint further alleged that Ultra entered into contracts
A-1370-20 24 with Stalwart to provide labor and materials. Plaintiff alleged that Ultra failed
to adhere to industry standards, including local building codes, resulting in
extensive remediation by plaintiff. In the present matter, plaintiff's allegations
regarding defects and remedial costs similarly derive from defective
workmanship on the Project.
Moreover, plaintiff's claims against DiGregorio in the Engineered Devices
Litigation were for fraudulent payment requisitions, or fraud relating to
misrepresentations made in payment applications regarding the quality and
status of the project. In the present matter, plaintiff alleges that defendants
Revolution, Roncati, and Architectura "improperly certified various contractor
payment applications certifying that the general contractor performed work that
it had not done." The facts giving rise to plaintiff's claim in the present matter,
namely fraud allegations against defendants Revolution, Roncati, and
Architectura, are the exact same as those offered in support of plaintiff's fraud
claims against DiGregorio in the Engineered Devices Litigation.
In sum, plaintiff's claims and the damages sought in both actions relate to
Stalwart's defective performance and fraudulent representations made regarding
the quality and status of the work. Accordingly, the same set of interrelated
transactional facts form the basis for both the present action and the Engineered
A-1370-20 25 Devices Litigation; as a result, we find no abuse of discretion in the motion
judge's finding that Rule 4:5-1(b)(2) applies to the present matter.
We next address plaintiff's contention that the present matter is not subject
to the entire controversy doctrine because it is not a successive action, but rather
a concurrent action. Plaintiff argues that the complaint in this action was filed
March 24, 2017, and that plaintiff filed an amended certification in the
Engineered Devices Litigation two weeks later on April 5, 2017. Therefore,
plaintiff submits that on March 24, 2017, both matters were concurrently
pending.
Plaintiff relies on Alpha Beauty v. Winn-Dixie Stores, 425 N.J. Super. 94,
101 (App. Div. 2012), in support of its argument that the present action was
pending at the same time as the Engineered Devices Litigation, and therefore
not "successive" for purposes of Rule 4:5-1(b)(2). In Alpha Beauty, the court
provided an example as to what constitutes a successive action:
The most obvious example of this would be an action where A sues B for personal injury damages, and then, later, after A v. B is concluded, A brings a claim against C for having caused the same injuries. A v. C would be a "successive action" within the intendment of the Rule and, in certain circumstances, the Rule authorizes dismissal of the successive suit against C.
[425 N.J. Super at 101.]
A-1370-20 26 The present facts sufficiently mirror the above hypothetical posited in
Alpha Beauty. The motion judge found that, on January 25, 2017, an Order of
Final Judgment was entered in the Engineered Devices Litigation against
DiGregorio on plaintiff's crossclaim in the amount of $681,506. It was not until
March 24, 2017, that plaintiff filed its complaint in the matter under review.
Despite plaintiff's filing of an amended certification on April 5, 2017, January
25, 2017 marks the date where any further litigation would be considered
successive, as this is the date when the court entered judgment. Accordingly,
we discern no abuse of discretion in the judge's finding that the present matter
constitutes a successive action.
Furthermore, the record clearly supports the motion judge's finding that
plaintiff did not comply with Rule 4:5-1(b)(2). As noted, parties to an action
are "obligated to reveal the existence of any non-party who should be joined or
might have 'potential liability to any party on the basis of the same transactional
facts.'" Kent Motor Cars, Inc., 207 N.J. at 444 (quoting R. 4:5-1(b)(2)).
Furthermore, a party has a continuing obligation to identify potentially liable
parties throughout the course of the litigation. R. 4:5-1(b)(2). This requirement
is meant to provide notice to all potentially liable parties, and intends to provide
for a "reduction of delay, fairness to parties, and the need for complete and final
A-1370-20 27 disposition through the avoidance of 'piecemeal decisions.'" 700 Highway 33
LLC, 421 N.J. Super. at 235 (quoting Cogdell v. Hosp. Ctr. at Orange, 116 N.J.
7, 15 (1989)).
In the deposition of plaintiff's principal, Moshe Winer, he testified that as
early as May 2015, plaintiff was aware that inspections performed by defendant
JSC were inadequate. However, plaintiff did not list any defendant in the matter
under review in its Rule 4:5-1(b)(2) certifications in the Engineered Devices
Litigation. Similarly, when plaintiff filed its third-party complaint in the
Engineered Devices Litigation, plaintiff did not disclose defendants as
potentially liable parties.
Despite plaintiff's contention that it complied with Rule 4:5-1(b)(2) by
identifying the existence of the Engineered Devices Litigation in the present
action, this does not negate the fact that plaintiff failed to identify defendants in
the Engineered Devices Litigation, at which time plaintiff knew defendants were
potentially liable. Therefore, we discern no abuse of discretion in the motion
judge's determination that plaintiff did not comply with Rule 4:5-1(b)(2).
We now turn to plaintiff's contention that the motion judge "erred by
failing to consider the reason for delay in bringing this litigation" and that he
instead "simply conflated engaging in piecemeal litigation with inexcusable
A-1370-20 28 conduct." In the judge's written decision granting defendants' motion to dismiss,
he stated that "[d]efendants were clearly prejudiced and deprived of vital
discovery, which [p]laintiff had an affirmative obligation to identify to the
[d]efendants including as to potentially liable parties in the Engineered Devices
Litigation, but inexcusably failed to do so." Moreover, in the judge's written
decision denying plaintiff's motion for reconsideration, he wrote, " It was clear
that this [c]ourt found the [p]laintiff's piecemeal litigation inexcusable as the
[c]ourt specifically stated such in its written opinion."
Here, plaintiff submits that it delayed this action so that plaintiff could
receive a certification of occupancy and ultimately complete the project before
defendants could sabotage it. Although carefully elucidating his reasons as to
why he found that defendants would be substantially prejudiced, the motion
judge did not set forth his specific findings as to why plaintiff's conduct was
inexcusable.
Nevertheless, we do not find this omission constitutes an abuse of
discretion. The judge, in his otherwise comprehensive written opinion, looked
to the record evidence before him, heard oral argument, and concluded that
plaintiff's noncompliance was inexcusable. Significantly, during oral argument
held on November 12, 2020, plaintiff's counsel explained,
A-1370-20 29 And our concerns were that the design professionals would stand in the way of my client getting those (indiscernible) for this project. Our concerns were borne out because . . . when we did serve the complaint, the first thing that [defendant] did . . . was pick up the phone and leave a voicemail for Bryan Sullivan . . . . He called Mr. Sullivan, and he left a profanity-laced voicemail promising to, as he said, f**k with the job. Use all of his ability and all of his political power in the North Bergen Building Department to screw up our job.
Thus, it is clear that the motion judge was well aware of plaintiff's excuse, and
found it inadequate under the circumstances, particularly in light of the
substantial prejudice suffered by defendants.
As to the substance of plaintiff's excuse, the motion judge did not abuse
his discretion in finding that it fell short of the mark. Plaintiff's reason for
delaying suit was a tactical strategy based on its claimed fear that defendants
would retaliate. Plaintiff's fears were based on nothing more than a 2017
correspondence with defendant Roncati over issues regarding payment for
Roncati's services, where Roncati wrote, "If I were you[,] I would be here
tomorrow morning to discuss the billing. Your project still hangs in the balance
and you seem to have lost perspective on who your friends are and who has
always been there to help." This payment dispute, accompanied by what can be
viewed as hard-bargaining tactics, hardly renders plaintiff's noncompliance with
Rule 4:5-1(b)(2) excusable.
A-1370-20 30 Plaintiff next contends that the motion judge erred in finding that
plaintiff's failure to comply with Rule 4:5-1(b)(2) resulted in substantial
prejudice to defendants. We disagree.
Indeed, if "the right of the undisclosed party to defend the successive
action has been substantially prejudiced by not having been identified in the
prior action," sanctions are appropriate. R. 4:5-1(b)(2). In considering
substantial prejudice, courts look to whether the party's "ability to mount a
defense . . . [is] unfairly hampered." Hobart Bros. Co., 354 N.J. Super. 229,
243. Courts have said that "[s]ubstantial prejudice in th[e] context [of Rule 4:5–
1(b)(2)] means substantial prejudice in maintaining one's defense. Generally,
that implies the loss of witnesses, the loss of evidence, fading memories, and the
like." Mitchell v. Procini, 331 N.J. Super. 445, 454 (App. Div. 2000) (citation
omitted); see also Kent Motor Cars, 207 N.J. at 446.
First, defendants were deprived of an opportunity to examine and
investigate the worksite defects. Before the project had been fully remediated,
plaintiff initiated this action by filing the complaint on March 24, 2017.
However, plaintiff did not serve process until August 22, 2017, after the
certificate of occupancy was issued, and, as such, defendants were unaware of
the claims pending against them until such time. Therefore, defendants had no
A-1370-20 31 knowledge of plaintiff's allegations against them until after remediation efforts
concluded.
Although defendants were still involved in the project throughout the
remediation period, they lacked notice that they would be subject to claims
regarding defective construction. Because of this, defendants made no attempt
to collect evidence, investigate and evaluate the claimed defects, or do anything
for purposes of mounting a defense. Had plaintiffs notified defendants of the
suit in accordance with Rule 4:5-1(b)(2), they would have been able to
adequately prepare a defense.
Second, the trial judge properly found that defendants were also depr ived
of an opportunity to "preserve and collect evidence by a key witness, Bryan
Sullivan." Sullivan was responsible for day-to-day project management and was
most knowledgeable about the defects. Sullivan had first-hand knowledge
regarding the defects, discovered the defective conditions, and coordinated and
supervised the remediation efforts. As a key witness, Sullivan would have been
available during the Engineered Devices Litigation, however, he passed away
on March 5, 2018. Plaintiff did not identify him until May 17, 2018, and
therefore defendants had no opportunity to obtain testimony from Sullivan
regarding his first-hand observations and opinions.
A-1370-20 32 In addition, the record suggests that Sullivan did not prepare a formal
report, and that his observations were only recorded in notes and pictures. Such
observations were relied upon by plaintiff and plaintiff's expert , as they relied
on Sullivan's notes to identify the defects, the remedial work, and calculation of
damages. Moreover, plaintiff's experts relied on Sullivan's identification of
defects in support of their opinions as to defects attributable to defendants. As
noted by the judge, Sullivan's unavailability directly impacts defendants' ability
to mount a defense in response to allegations based on Sullivan's notes.
In sum, the motion judge acted well within his discretion in finding that
defendants would be substantially prejudiced by the absence of a key witness,
where the loss of vital discovery would impair defendants' ability to mount a
defense.
We next address plaintiff's argument that the trial court's failure to apply
a lesser sanction constitutes an abuse of discretion. This argument lacks merit.
"Since dismissal with prejudice is the ultimate sanction, it will normally
be ordered only when no lesser sanction will suffice to erase the prejudice
suffered by the non-delinquent party." Abtrax Pharma., Inc. v. Elkins-Sinn, Inc.,
139 N.J. 499, 514 (1995). As it relates to the entire controversy doctrine, "in
the limited circumstances where a lesser sanction is not sufficient to remedy the
A-1370-20 33 problem caused by an inexcusable delay in providing the required notice,
thereby resulting in substantial prejudice to the non-disclosed party's ability to
mount an adequate defense[,]" dismissal with prejudice is a viable option.
Mitchell, 331 N.J. Super at 453-54.
After finding that plaintiff's noncompliance with Rule 4:5-1(b)(2) was
inexcusable and resulted in substantial prejudice to defendants, the motion judge
properly found that no lesser sanction would suffice. The judge ultimately found
that, since the prejudice cannot be corrected, dismissal is warranted.
Defendants' inability to examine crucial evidence and the key witness, Sullivan,
cannot be undone; for these reasons, dismissal was warranted, and we find no
abuse of discretion.
B.
Plaintiff contends that the motion judge erred in finding that the
DiGregorio Judgment, from the Engineered Devices Litigation, precludes
recovery from defendants in the present matter. Plaintiff disputes that this would
result in double recovery, and argues that damages that made up the DiGregorio
judgment do not overlap with the damages sought in the present action.
The motion judge did not err in finding that the complaint should be
dismissed to prevent double recovery. It is undisputed that at least some of the
A-1370-20 34 damages would overlap; the DiGregorio judgment was for fraudulent payment
requisitions, while plaintiff in the matter under review alleged that defendants
Revolution, Roncati, and Architectura "improperly certified various contractor
payment applications certifying that the general contractor performed work that
it had not done." Therefore, the damages asserted in the present action are
duplicative of damages for which plaintiff obtained in the prior litigation.
Because the entire controversy doctrine is designed to prevent this from
occurring, the judge did not abuse his discretion in finding that dismissal is
warranted to prevent double recovery.
Lastly, plaintiff argues that the trial court erred in failing to consider the
materials supplied with the motion for reconsideration. This argument also fails.
Motions for reconsideration are governed by Rule 4:49-2.
"Reconsideration is a matter to be exercised in the trial court's sound discretion."
Capital Fin. Co. of Del. Valley, Inc. v. Asterbadi, 398 N.J. Super. 299, 310 (App.
Div. 2008). Reconsideration should be employed only "for those cases which
fall into that narrow corridor in which either 1) the [c]ourt has expressed its
decision based upon a palpably incorrect or irrational basis, or 2) it is obvious
that the [c]ourt either did not consider, or failed to appreciate the significance
of probative, competent evidence." Cummings v. Bahr, 295 N.J. Super. 374,
A-1370-20 35 384 (App. Div. 1996) (quoting D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch.
Div. 1990)).
"A motion for reconsideration is designed to seek review of an order based
on the evidence before the court on the initial motion, [Rule] 1:7-4, not to serve
as a vehicle to introduce new evidence in order to cure an inadequacy in the
motion record." Asterbadi, 398 N.J. Super. at 310 (citing Cummings, 295 N.J.
Super. at 384). "Reconsideration cannot be used to expand the record and
reargue a motion." Ibid. "[T]he motion is properly denied if based on unraised
facts known to the movant prior to entry of judgment." Pressler &
Verniero, Current N.J. Court Rules, cmt. 2 on R. 4:49-2 (2022) (citing Palombi
v. Palombi, 414 N.J. Super. 274, 289 (App. Div. 2010); and Del Vecchio v.
Hemberger, 388 N.J. Super. 179, 188-89 (App. Div. 2006)). However, if the
new evidence "dovetail[s] and amplifie[s] the evidence already in the record," it
should be considered. Capital Fin. Co. of Del. Valley, Inc., 398 N.J. Super. at
311.
Here, the motion judge properly exercised his discretion in finding that
additional documents and arguments regarding plaintiff's inexcusable
noncompliance should not be considered on reconsideration. All of the
documents were readily available to plaintiff when defendants filed their
A-1370-20 36 motions to dismiss. Because the documents were not newly discovered evidence
that was previously unavailable, the judge's refusal to consider such evidence
was not clearly erroneous and therefore should not be disturbed.
Affirmed.
A-1370-20 37