Scott Diamond v. Warren Diamond

• Court: New Jersey Superior Court Appellate Division
• Decided: October 10, 2024
• Docket: A-0346-23
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-0346-23

SCOTT DIAMOND AND EDWARD STREET HOLDINGS, LLC,

Plaintiffs-Appellants,

v.

WARREN DIAMOND,

Defendant-Respondent. __________________________

Argued September 10, 2024 – Decided October 10, 2024

Before Judges Perez Friscia and Bergman.

On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-0977-23.

Marc J. Gross argued the cause for appellants (Fox Rothschild LLP, attorneys; Marc J. Gross and Jordan B. Kaplan, on the briefs).

Matthew K. Blaine argued the cause for respondent (Davison Eastman Muñoz Paone, P.A. attorneys; Matthew K. Blaine and Michael J. Connolly, on the brief). PER CURIAM

Plaintiffs Scott Diamond and Edward Steet Holdings, LLC (ESH), appeal

from a trial court order dismissing their complaint against defendant Warren

Diamond with prejudice pursuant to Rule 4:6-2(e).1 After our review of the

record and applicable legal principles, we affirm.

I.

The background facts and procedural history are substantially undisputed.

Prior to the underlying action now under appeal, the parties were involved in a

matter entitled Warren Diamond v. Edward Street Holdings, LLC and Scott

Diamond, No. C-52-17 (Ch. Div. Nov. 14, 2018) (chancery action). The record

divulges the chancery action involved substantially the same factual assertions

as the matter now on appeal.

In the chancery action, Scott and ESH, an entity formed by Scott to serve

as a land holding company, filed a twelve-count counterclaim against Warren.

At count twelve, Scott asserted a cause of action against Warren for "willfully

and maliciously abus[ing] th[e] process out of the ulterior motive to unlawfully

take, by deception, assets belonging to Scott worth [twelve to fifteen] million."

1 Since Scott and Warren share the same surname, we refer to them by their first names. No disrespect is intended. A-0346-23 2 Scott claimed because of Warren's "abuse of process," he and ESH suffered

"irreparable damages."

The parties engaged in significant discovery in the chancery action.

Immediately prior to trial, the parties negotiated a settlement and executed a

consent order. The order was titled "Consent Order Dismissing Case Without

Prejudice Pending the Adjudication Pending the Adjudication of the Nacirema

Arbitration and Preserving All Rights, Claims, and Defenses of the Parties In

the Event of a Re-Filed Action" (consent order). The consent order was signed

and filed by the court on November 14, 2018.

The consent order was comprised of six paragraphs summarized in

relevant part as follows. Paragraph one dismissed the chancery action without

prejudice pending the adjudication of the "Nacirema Arbitration," which

involved related but separate issues. Paragraph two defined the date the

Nacirema Arbitration would be considered finally adjudicated. Paragraph three

permitted either party within sixty days of the final adjudication of the Nacirema

Arbitration to refile a separate action in the Union County Chancery Division

for any of the "affirmative claims, counterclaims, and/or third-party claims that

were advanced, and not dismissed, by any respective party in this action (a

'Refiled Action')." Paragraph four provided if a party "files a Refiled Action"

A-0346-23 3 the responding party had the option to "re-file his, her, or its defenses,

affirmative claims, counterclaims, or third-party claims that were advanced and

not dismissed by any respective party in this action." Paragraph five provided

"[w]ith respect to a Refiled Action . . . the parties hereby preserve all rights,

remedies, defenses, and claims for relief that he, she, or it asserted, were seeking

to obtain, or could have obtained in [the] action," including requests for

sanctions, and "any and all applicable statutes of limitation, repose, or other

defenses on limitations of actions, including but not limited to laches, waiver,

estoppel, res judicata, collateral estoppel, entire controversy, or any claim issue

preclusion doctrine, or other time-based doctrine" that may apply to a "Refiled

Action . . . shall be tolled and suspended until sixty days after the adjudication

of the Nacirema Arbitration." Paragraph six provided the process for service of

the order on the parties.

The Nacirema Arbitration was adjudicated on July 15, 2021. Neither party

filed a Refiled Action as defined and required by paragraph three of the consent

order by September 17, 2021, the end date for the sixty-day period agreed to in

the order.

Approximately eighteen months later, on March 27, 2023, plaintiffs filed

the subject complaint against Warren in the Law Division. A review of the

A-0346-23 4 complaint demonstrates the same factual background as was substantially set

forth in plaintiffs' dismissed chancery action counterclaim. The new complaint

included causes of action for "Malicious Abuse of Process" and "Malicious Use

of Process" against Warren.

Shortly after Warren was served with the complaint, he moved to dismiss

the complaint pursuant to Rule 4:6-2(e). In his motion, Warren asserted the

complaint was subject to dismissal because the consent order filed in the

chancery action barred the refiling of plaintiffs' claims after the sixty-day tolling

period. Warren also contended the consent order required any action to be filed

in the Chancery Division rather than the Law Division. Further, he argued

plaintiffs were required to file a motion under Rule 4:50-1 in the chancery action

since they were, in effect, attempting to vacate the consent order and re -open

that litigation. Lastly, Warren argued plaintiffs' complaint should be dismissed

because it was barred by the doctrines of waiver and judicial estoppel.

Plaintiffs asserted the consent order from the chancery action only

addressed the tolling of the statute of limitations for the claims included in that

action and the order was not a final order since it only dismissed the parties'

claims and defenses without prejudice. Therefore, because plaintiffs'

counterclaims in the chancery action were not dismissed with prejudice pursuant

A-0346-23 5 to the terms of the consent order, their two count Law Division complaint

asserting "new causes of action" was not a Refiled Action, was not barred by the

consent order, and should not be dismissed. Plaintiffs' opposition also argued

the doctrines of judicial estoppel and waiver were not applicable.

After oral argument, the trial court rendered a detailed written decision

granting Warren's motion and entered an order dismissing plaintiffs' complaint

with prejudice. In its decision, after setting forth the applicable legal standards

of Rule 4:6-2(e), the court found the "consent order was an agreement between

the parties approved by the court." The court further found the consent order

"operates as a contract between the parties" and courts must "examine the plain

language of the [order] and the parties' intent, as evidenced by the contract's

purpose and surrounding circumstances." The court found "simply put, the main

issue here is whether the language of the [c]onsent [o]rder precludes the filing

of plaintiff Scott's . . . complaint."

After accurately reciting the terms in the consent order, the court found

plaintiffs' opposition argument to be unpersuasive because "if taken as true, any

deadline would have no meaning." The court also found the "[c]onsent [o]rder

is clear that the sixty-day deadline applied to both the tolling of the statute of

A-0346-23 6 limitations and opportunity to re-file any of the affirmative claims,

counterclaims, and/or third-party claims."

The court further found:

[G]iven the language in the [c]onsent [o]rder, taken in conjunction with the subsequent arbitration, the matter was adjudicated on the merits once the final award was rendered in the Nacirema Arbitration. This sixty-day window provided both parties with the opportunity to re-rile any related claims, presumably for at least two reasons. First, it either party was unhappy with the outcome of the Nacirema Arbitration, they could have those claims heard in a court instead of an arbitration hearing. Second, if any claim or counterclaim was not addressed in the arbitration, they could bring those unaddressed claims in a refiled action.

The court also found that "notwithstanding the agreed upon sixty -day

window for refiling, the [Nacirema] arbitration award operated as a valid and

final judgment." After reciting the correct legal standards for the doctrine of res

judicata, the court found "following the sixty-day refiling deadline, the

arbitration award operated as a valid and final judgment." In addition, the court

denied defendant's arguments relying upon judicial estoppel and waiver, finding

neither legal basis applied to the case.

A-0346-23 7 Thereafter, although defendant's motion did not assert the entire

controversy doctrine (ECD) as a basis for dismissal in his motion, the court

found the ECD applied. The court stated, "even if this [c]ourt was found to have

misinterpreted the consent order, the [ECD] likewise demands a dismissal of the

complaint."

The court's decision cited the applicable law concerning the ECD and

referenced Rule 4:30A. The court found the factual nexus between the two

matters to be "overwhelming." The court further found the factual allegations

that support the claims for malicious use and abuse of process were "known at

the time of the original chancery action or were discovered throughout the

extensive litigation process."

The court concluded its decision by finding "[d]espite obtaining that

information through discovery in the chancery action [concerning the factual

basis of the malicious use and abuse of process], and being provided the sixty -

day window for refiling, plaintiff Scott chose not to file until March 27, 2023."

Pursuant to these alternative findings the court dismissed plaintiffs' complaint

based on the ECD.

Thereafter, an order was entered dismissing plaintiffs' complaint.

A-0346-23 8 II.

On appeal, plaintiffs assert the court erred by finding the consent order

from the chancery action barred their complaint. They argue the consent order

only addressed the tolling of the statute of limitations for the claims included in

that action and the order was not a final order since it only dismissed the parties'

claims and defenses without prejudice. Therefore, because no claims of

plaintiffs were dismissed with prejudice pursuant to the terms of the consent

order, their two count Law Division complaint asserting new causes of action

was not barred by the consent order and should not have been dismissed.

Plaintiffs also argue the court's dismissal of their complaint based on the

doctrine of res judicata and the entire controversy doctrine was error.

III.

Rule 4:6-2(e) authorizes dismissal of a complaint for "failure to state a

claim upon which relief can be granted." When considering an application for

relief under this rule, a court is required to "search[] the complaint in depth and

with liberality to ascertain whether the fundament of a cause of action may be

gleaned even from an obscure statement of claim, opportunity being given to

amend if necessary." Major v. Maguire, 224 N.J. 1, 26 (2016) (quoting Printing

Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989)). We review

A-0346-23 9 an order of dismissal under Rule 4:6-2(e) de novo and "apply the same test as

the Law Division." Smerling v. Harrah's Entm't, Inc., 389 N.J. Super. 181, 186

(App. Div. 2006).

Consent orders are essentially unique contracts, and thus in construing a

consent order, courts should use principles of contract interpretation. "A

consent order is, in essence, an agreement of the parties that has been approved

by the court." Hurwitz v. AHS Hosp. Corp., 438 N.J. Super. 269, 292 (App.

Div. 2014). As such, a consent order operates as a contract between the parties.

See ibid. Importantly, "it is a basic rule of contractual interpretation that a court

must discern and implement the common intention of the parties." Pacifico v.

Pacifico, 190 N.J. 258, 266 (2007).

The court must "examine the plain language of the contract and the parties'

intent, as evidenced by the contract's purpose and surrounding circumstances."

Hurwitz, 438 N.J. Super. at 292 (quoting Highland Lakes Country Club & Cmty.

Ass'n v. Franzino, 186 N.J. 99, 115 (2006)). "In doing so, 'the words of an

agreement are given their "ordinary" meaning.'" Woytas v. Greenwood Tree

Experts, Inc., 237 N.J. 501, 512 (2019) (quoting Flanigan v. Munson, 175 N.J.

597, 606 (2003)). "[I]f the contract into which the parties have entered is clear,

then it must be enforced as written." Serico v. Rothberg, 234 N.J. 168, 178

A-0346-23 10 (2018) (alteration in original) (quoting In re County of Atlantic, 230 N.J. 237,

254 (2017)); see also Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43 (1960)

(holding that courts generally enforce contracts as written). We apply these

standards here.

IV.

Since we review a consent order under contractual principles, we begin

with an evaluation of the specific terms in the consent order. The consent order

at paragraph three defined a "Refiled Action" as any affirmative claims,

counterclaims, and/or third-party claims that were advanced, and not dismissed,

by any respective party in this action. Paragraph five of the consent order

provided the parties preserved and are permitted to assert as part of any "Refiled

Action, all rights, remedies, defenses, and claims for relief that he, she, or it

asserted, were seeking to obtain, or could have obtained in [the] action,"

including requests for sanctions, and "any and all applicable statutes of

limitation, repose, or other defenses on limitations of actions . . . that may apply

to a Refiled Action . . . shall be tolled and suspended until sixty days after the

adjudication of the Nacirema Arbitration." (Emphasis added).

Based on our review of the record, we conclude plaintiffs were distinctly

aware of the factual basis for their claims against Warren for malicious abuse of

A-0346-23 11 process and malicious use of process pled in their Law Division complaint

before the execution and filing of the consent order in the chancery action.

Almost identical claims were made in count twelve of plaintiffs' counterclaim

in the chancery action and the record in that action plainly disclosed the facts

forming the basis of plaintiffs' "new" claims were known at the time the

chancery action concluded.

We conclude the clear language in the consent order at paragraph five

barred any claims against the other party in any Refiled Action which "he, she

or it could have obtained in the [chancery] action" unless the claims were filed

within the sixty-day tolling period. Plaintiffs' complaint asserting claims for

malicious abuse and use of process were claims they could have brought in the

chancery action. The parties are bound by their contractual agreement set forth

in the consent order regardless of whether plaintiffs' newly pled claims would

have been filed in a timely manner under the applicable statute of limitations.

Since we determine the complaint did not plead timely claims under the consent

order, the court's dismissal of the complaint was appropriate.

Plaintiffs' argument no specific language in the consent order barred new

claims from being asserted in the Law Division is unpersuasive. We conclude

plaintiffs’ argument the consent order lacks language barring their timely filed

A-0346-23 12 claims within the applicable statute of limitations holds little merit when viewed

against paragraph five of the consent order, which specifies the conditions

required to refile known claims. We view plaintiffs' new complaint as an

attempt to repackage the same claims raised, or which could have been raised in

the dismissed chancery action, and determine the claims are barred by the

consent order.

Having concluded the dismissal of plaintiffs' complaint was appropriate

for the reasons expressed in this opinion, we decline to reach the merits of

plaintiffs' contentions the court's reliance on the doctrines of res judicata and the

entire controversy were error.

Affirmed.

A-0346-23 13