VINCENT THOMAS, ETC. VS. CASIMIR SPOLNICKI, ETC.(L-3422-14, OCEAN COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: September 14, 2017
• Docket: A-4415-14T4
• Status: Unpublished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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-4415-14T4

VINCENT THOMAS, individually; and VINCENT THOMAS, derivatively on behalf of and for the benefit of FANCYLIMOS OF CHERRY HILL INC., a business entity,

Plaintiff-Appellant,

v.

CASIMIR SPOLNICKI, an individual; FAVORITELIMOS.COM, a business entity,

Defendant-Respondent.

________________________________________________________________

Argued February 14, 2017 – Decided September 14, 2017

Before Judges Messano and Espinosa.

On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-3422-14.

Grant S. Ellis argued the cause for appellant (Archer Law Office, LLC, attorneys; Mr. Ellis, on the briefs).

Christian M. Towers argued the cause for respondent (Mr. Towers, attorney; Roger A. Barbour, on the brief). PER CURIAM

Plaintiff Vincent Thomas and defendant Casimir Spolnicki once

co-owned Fancylimos of Cherry Hill, Inc. (Fancylimos), a limousine

company. Since 2008, they have been involved in four separate

lawsuits regarding the disposition of Fancylimo's assets. This

appeal concerns the dismissal of the fourth lawsuit, brought by

plaintiffs in November 2014 against Spolnicki and

Favoritelimos.com (collectively, defendants) (Suit 4). Plaintiffs

appeal from an order granting defendants' motion to dismiss that

complaint as barred under res judicata and the entire controversy

doctrine.1 For the following reasons, we reverse.

I.

Fancylimos, a closely-held corporation, was formed in

January, 2005. Thomas and Spolnicki each owned a fifty percent

(50%) share in the company.

The first lawsuit was filed on December 2, 2008, by Spolnicki

and Fancylimos against Thomas in the Superior Court, Chancery

Division, Burlington County, and was later transferred to the Law

Division (Suit 1). Because a copy of the complaint has not been

provided, it is unclear what claims were asserted. A proof hearing

1 Plaintiffs also appealed from an order denying their motion to disqualify defendant's attorney. As the attorney is now deceased, this issue is moot.

2 A-4415-14T4 was held on May 1, 2009, which Thomas failed to attend. The

default judgment sheds no light on what claims were asserted and

the basis for the judgment, stating only, "Judgment is hereby

entered against the defendant, Vincent Thomas in the amount of

$165,386.40, in favor of the plaintiffs." This judgment provided

the basis for defendants' subsequent successful claim that

plaintiffs' Suit 4 complaint was barred by res judicata and the

entire controversy doctrine.

Approximately one year later, on May 7, 2010, Spolnicki filed

a Certificate of Dissolution to dissolve Fancylimos.2 On September

1, 2010, Spolnicki and Fancylimos filed a second lawsuit against

Thomas in the Superior Court, Chancery Division, Burlington County

(Suit 2). The complaint alleged that Thomas "breached his

fiduciary duties and abused his authority against the best

interests of" Fancylimos. Specifically, the complaint accused

Thomas of attempting to improperly transfer the title of three

vehicles owned by Fancylimos to his own name. The relief sought

was the dissolution of Fancylimos and an order from the court to

transfer the titles of two vehicles to Spolnicki's companies upon

payment in full.

2 Plaintiff claims he has since restored the company, and that it is filing annual reports.

3 A-4415-14T4 Thomas filed an answer that denied the allegations, and

asserted two counterclaims, making the following allegations:

Spolnicki (1) "unilaterally doubled his salary thereby reducing

the profits of the corporation," (2) "locked [Thomas] out of the

business," preventing Thomas "from having any input, control or

knowledge of or over the income, disbursement or activities of the

corporation," (3) acted "without cause and contrary to the

agreement between the parties," (4) "retained all the profits of

Fancylimos," and (5) failed to pay Thomas for services he performed

for Fancylimos and which Spolnicki had promised to pay. Thomas

demanded an accounting of Fancylimos, repayment to Thomas for

various services and loans he provided Fancylimos, and a fifty

percent pay out of all of Fancylimos's assets.

The trial court entered an order, dated October 20, 2010,

that placed the title of the three vehicles at issue into escrow

and required Thomas and Spolnicki to submit proof of payments made

on the vehicles for the purpose of dividing the vehicles equitably

between the parties. Spolnicki was granted possession of the

vehicles in the interim.

Thereafter, a consent order, dated February 9, 2011, was

entered that granted Spolnicki title of the three vehicles upon

his satisfaction of the leases on the vehicles and permitted him

4 A-4415-14T4 to sell the vehicles to purchase a limousine bus, the title of

which would be held in escrow.

A second consent order, dated March 7, 2011, allowed Spolnicki

to obtain immediate title to two of the vehicles. On August 4,

2011, an order was entered that dismissed Spolnicki's complaint

without prejudice, leaving Thomas's counterclaims intact.

A third consent order, dated April 12, 2012, endorsed title

of the third vehicle at issue to "Favorite Limos," a company owned

by Spolnicki, "pending resolution of this matter." On the

following day, the Chancery judge dismissed the matter without

prejudice, directing that the parties could re-file the matter in

the Law Division within 120 days.

Thomas refiled his claim in Ocean County (Suit 3) and then

moved for a transfer of venue to Burlington County. The motion

was granted by order dated December 7, 2012. This action was

dismissed without prejudice for lack of prosecution in October

2013 because Thomas failed to appear at a scheduled arbitration

hearing.

This appeal concerns the dismissal of Suit 4, brought by

Favoritelimos.com (Suit 4). The complaint alleged Spolnicki

improperly distributed Fancy Limo's assets following its

dissolution and sought an accounting, distribution, and

5 A-4415-14T4 appointment of receiver (count one). In addition, the complaint

asserted the following claims: breach of contract (count two),

unjust enrichment (count three), conversion of chattel (count

four), breach of fiduciary duty (count five), and a constructive

trust, replevin, disgorgement, and other equitable relief (count

six). Defendants filed an answer, denying plaintiffs' claims,

bringing two counterclaims, and demanding that the complaint be

dismissed with prejudice on res judicata grounds. Defendants

later filed a motion to dismiss the complaint, arguing that the

matter was barred by res judicata.

The trial court granted defendants' motion, dismissing

plaintiffs' complaint with prejudice under res judicata and the

entire controversy doctrine. In its oral decision, the trial

court found that a prior judge "made a full and final determination

as to the disputes before him which were in the interpersonal

relationships between the principals of [Fancylimos], Mr. Thomas

and Mr. Spolnicki, and the disposition of those assets."

In their appeal, plaintiffs argue the trial court erred in

dismissing the complaint on res judicata or entire controversy

grounds and, in the alternative, the claims for money damages

should not have been dismissed on those grounds.

6 A-4415-14T4 II.

Because the application of res judicata and the entire

controversy doctrine are questions of law, see Int'l Union of

Operating Eng'rs Local No. 68 Welfare Fund v. Merck & Co., Inc.,

192 N.J. 372, 386 (2007), we review these issues de novo. Ibid.

Under the doctrine of res judicata, a "cause of action between

parties that has been finally determined on the merits by a

tribunal having jurisdiction cannot be relitigated by those

parties or their privies in a new proceeding." Velasquez v. Franz,

123 N.J. 498, 505 (1991). New Jersey law requires three basic

elements for res judicata to apply:

(1) the judgment in the prior action must be valid, final, and on the merits; (2) the parties in the later action must be identical to or in privity with those in the prior action; and (3) the claim in the later action must grow out of the same transaction or occurrence as the claim in the earlier one.

[Watkins v. Resorts Int'l Hotel & Casino, 124 N.J. 398, 412 (1991).]

It is well settled that a "judgment of involuntary dismissal

or a dismissal with prejudice constitutes an adjudication on the

merits 'as fully and completely as if the order had been entered

after trial.'" Velasquez, supra, 123 N.J. at 507 (quoting Gambocz

v. Yelencsics, 468 F.2d 837 (3d Cir.1972)). Furthermore, Rule

4:37-2 states that "[u]nless the order of dismissal otherwise

7 A-4415-14T4 specifies, . . . any [involuntary] dismissal . . . other than a

dismissal for lack of jurisdiction, operates as an adjudication

on the merits." R. 4:37-2.

Here, there are three judgments that carry a preclusive

effect. The first is the default judgment against Thomas that

resulted from Suit 1. Second, the consent order entered on March

7, 2011 in Suit 2 is a final judgment on the issue of title

ownership of two vehicles, a 2006 Hummer H2 and a 2006 Infinity

QX56, which was granted to Spolnicki. Third, the consent order

entered on April 12, 2012 in Suit 2 is a final judgment on the

issue of title ownership to a 2008 Chrysler 300, which was granted

to "Favorite Limos," a company owned by Spolnicki and a current

defendant in this matter.

Because it is clear from the record that the parties in Suit

1 and Suit 4 are the same, the only remaining issue is whether the

claims in Suit 4 "grow out of the same transaction or occurrence"

as the claims in Suit 1. Watkins, supra, 124 N.J. at 412.

To determine whether claims are precluded from relitigation

by a preceding suit, res judicata and the entire controversy

doctrine apply in tandem. See McNeil v. Legis. Apportionment

Comm'n, 177 N.J. 364, 395 (2003). The entire controversy doctrine

mandates that "all parties involved in a litigation should at the

very least present in that proceeding all of their claims and

8 A-4415-14T4 defenses that are related to the underlying controversy." Cogdell

v. Hosp. Ctr. at Orange, 116 N.J. 7, 15 (1989). Thus, not only

are parties to a litigation barred from subsequently bringing

claims that were actually litigated, but are likewise barred from

litigating "all relevant matters that could have been so

determined." Watkins, supra, 124 N.J. at 412 (citations omitted);

see also R. 4:30A (codifying the entire controversy doctrine)

("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 . . . .").

The claim preclusion inquiry begins by determining whether

the separate claims arise from the same or related transaction or

occurrence. See DiTrolio v. Antiles, 142 N.J. 253, 267 (1995);

Watkins, supra, 124 N.J. at 412. To determine whether claims are

"related" for the purpose of claim preclusion, the test is:

if parties or persons will, after final judgment is entered, be likely to have to engage in additional litigation to conclusively dispose of their respective bundles of rights and liabilities that derive from a single transaction or related series of transactions, the omitted components of the dispute or controversy must be regarded as constituting an element of one mandatory unit of litigation.

[DiTrolio, supra, 142 N.J. at 268 (citations omitted).]

9 A-4415-14T4 As we have noted, it is unclear what issues were litigated

in Suit 1. Spolnicki asserts Suit 1 was brought "[d]ue to

[Thomas's] various thefts and misappropriations of [Fancylimos]

assets and monies." At a hearing before the trial court, counsel

for defendants explained that, based on his understanding, the

underlying issue of Suit 1 "was that Mr. Thomas stole a 67,000-

dollar Rolls Royce limousine" and "there were some significant

other LLC assets including thefts of money that we proved and [the

trial judge] in Burlington County entered the judgment after a

formal proof hearing." Defendants claim the final judgment settled

"all remaining assets of the business previously operated by the

parties" in Spolnicki's favor, an assertion that is not explicitly

supported by the final judgment.

In response, plaintiffs argue that even assuming defendants'

recollection of Suit 1 is correct, that fails to show that they

were required to bring the six claims asserted in Suit 4 in Suit

1.

The first claim in Suit 4 seeks an accounting, distribution

and appointment of a receiver, alleging that after dissolving

Fancylimos, Spolnicki "kept all the assets of [Fancylimos],"

"transferred them to . . . his new company" and "used the

assets . . . to pay his personal debts." The second claim is for

breach of contract, alleging Thomas and Spolnicki "had an oral

10 A-4415-14T4 contract for running [Fancylimos]" which Spolnicki breached by

"failing to make payments to [Thomas] and by seizing unilateral

control of the corporation's assets and converting them to his own

use." The third claim is for unjust enrichment, alleging

"[d]efendants received a benefit from [Thomas], that is, his labor

and assets." The fourth claim is for conversion of chattel,

alleging that "Defendants took Plaintiffs' property, namely, the

assets of [Fancylimos]" and "exercised dominion over Plaintiffs'

property in a manner inconsistent with Plaintiffs' rights . . .

in bad faith, intentionally, and with malice." The fifth claim

is for breach of fiduciary duty, alleging that Spolnicki "violated

this duty by appropriating the corporation's assets for himself."

Finally, the sixth claim seeks a constructive trust, replevin,

disgorgement, and other equitable relief, alleging that "Spolnicki

used the wrongfully obtained assets to pay off his mortgage . . .

[and] to fund FAVORITELIMOS.COM."

It is difficult to decipher whether any of these claims are

precluded by the default judgment in Suit 1 or the orders in Suit

2. To the extent that plaintiffs' claims regard the vehicles at

issue in the Suit 2 orders (the 2006 Hummer H2, 2006 Infinity

QX56, and 2008 Chrysler 300), these claims are undoubtedly

precluded by res judicata and the entire controversy doctrine.

11 A-4415-14T4 However, even if it is true that Suit 1 concerned Thomas's

"thefts and misappropriations of [Fancy Limo] assets and monies,"

and settled "all remaining assets of the business previously

operated by the parties," allegations in the complaint filed in

Suit 4 concern Spolnicki's conduct after the dissolution of

Fancylimos, which occurred on May 7, 2010. Thus, the default

judgment entered on May 11, 2009 could not have a preclusive effect

over claims arising from events that had not occurred at that

time.

We therefore conclude that the trial court erred in dismissing

the complaint on res judicata and entire controversy grounds.

Reversed and remanded. We do not retain jurisdiction.

12 A-4415-14T4