SHAUN ARMSTRONG, Plaintiff–Appellant, v. MONMOUTH EQUIPMENT & SERVICE CO., INC., GARDEN STATE SCOOTERS, CHOICE MARKETING & SALES, INC., CHOICE MOBILITY, RUSSEL ROLT, ATP, Defendants, PRIDE MOBILITY PRODUCTS CORPORATION, Defendant–Respondent.
Plaintiff appeals from two orders entered by the Law Division on March 15, 2013: an order granting defendant Pride Mobility Products Corp. (Pride) leave to amend its answer to assert an affirmative defense raising the entire controversy doctrine, and an order dismissing plaintiff's complaint with prejudice pursuant to Rule 4:30A. For reasons that follow, we reverse the order of dismissal and remand for the reinstatement of plaintiff's complaint.
Plaintiff suffers from muscular dystrophy and is confined to a wheelchair. On July 25, 2009, he was injured on the “Disney Magic” cruise ship in Port Canaveral, Florida, when he fell from his wheelchair on a descending ramp striking the hot deck and suffering burns and fracturing both femurs. At the time, plaintiff was utilizing a Quantum 600 Model wheelchair that had been designed and manufactured by Pride.
On July 13, 2010, plaintiff filed suit in the United States District Court in Florida 1 against the Walt Disney Company, a Florida corporation, and other corporate entities employed in the cruise operation (hereinafter referred to as the Disney defendants), asserting claims for his injuries based on negligence, breach of contract, violations of the Americans with Disabilities Act, 42 U.S.C.A. § 12182(a), violations of a Florida deceptive practices statute and intentional infliction of emotional distress. On September 10, 2010, without engaging in any discovery or filing any further pleadings, plaintiff settled his claims with the Disney defendants for $160,000, pursuant to a “Settlement Agreement and Release” which required plaintiff and his counsel not to disclose “to anyone, other than their attorneys or accountants, the underlying facts of the incident, the fact of settlement or the terms of the [s]ettlement [a]greement ․ except as required by ․ court order[.]”
Thereafter, on July 22, 2011, plaintiff filed a complaint in the Law Division against Pride and other entities alleging that on July 25, 2009, he was injured while “on a cruise ship at Port Canaveral, Florida” as a consequence of the “functional and design defects” of the wheelchair and the “defective condition” in which the wheelchair had been manufactured and distributed. None of the Disney defendants was named as a party. The certification appended to the complaint pursuant to Rule 4:5–1 stated that the matter in controversy “is not the subject” of any “pending” suit or arbitration.2
Pride filed its answer to the complaint on August 10, 2011, and asserted over thirty affirmative defenses, not including an entire controversy defense, as well as cross-claims against the other defendants. Plaintiff answered defendant's initial interrogatories on March 1, 2012. In his answers, plaintiff stated that the design of the wheelchair “causes it to be unstable on declining surfaces” and that a corresponding weight shift “causes the plane of the wheelchair seat to be steeper” than the declining surface, creating a danger of “being ejected from the chair.”
In answers to supplemental interrogatories given on the same date, plaintiff stated:
Please note that as a term of my Settlement Agreement with the cruise line in a prior case in connection with the same accident, I am not at liberty to disclose the cruise line/cruise ship name unless ordered to do so by a court.
Eight months later, Pride moved to extend the time for discovery and to compel plaintiff to identify the cruise line and the settlement. On December 26, 2012, the Law Division entered an order extending discovery an additional one hundred and twenty days and requiring plaintiff to provide the identity of the cruise ship and cruise line; the amount of the settlement of the prior litigation; and copies of all pleadings and discovery in the prior litigation.
On January 17, 2013, plaintiff provided Pride with the Florida complaint, settlement agreement and a schedule setting forth the disbursement of the settlement money. Plaintiff also provided copies of photographs of the ship's ramp and deck on which he had been injured. Two weeks later, Pride filed a motion to dismiss plaintiff's complaint pursuant to the entire controversy doctrine.
Upon receiving plaintiff's opposition to the motion, which noted, among other things, Pride's failure to have asserted the entire controversy doctrine as an affirmative defense, Pride filed a second motion to amend its answer to assert that defense. Pride also submitted to the court in support of its motion to dismiss an affidavit from a representative of one of the Disney defendants stating that the ramp on the cruise ship “has been replaced since June 2011.”
On March 15, 2013, the Law Division granted both of Pride's motions. In so ruling, the motion judge referred to our holding in Hobart Brothers v. National Union Fire Ins., 354 N.J.Super. 229 (App.Div.), certif. denied, 175 N.J. (2002), but apparently focused on whether plaintiff knew he had a cause of action against the designer and manufacturer of the wheelchair at the time of the Florida action. The judge observed, “[ ] you know, it would have been very simple to name Pride Mobility—- I mean you knew the wheelchair—- in the deposition testimony. It appears that it was a knowing decision to not bring Pride into that case, to get a bite of the apple there, and then come up here and get a bite of the apple.” The judge added that “there is prejudice” to Pride because the deck where the accident occurred has been replaced. This appeal followed.3
The entire controversy doctrine, embodied in Rule 4:30A, requires a litigant to present “all aspects of a controversy in one legal proceeding.” Hobart Bros. Co., supra, 354 N.J.Super. at 240. The doctrine is an equitable rule that promotes judicial economy by preventing a party from strategically electing to hold back a component of the controversy in the first proceeding only to raise it in a subsequent proceeding. Id. 240–41; see also R. 4:30A (“Non-joinder of claims required to be joined by the entire controversy doctrine shall result in the preclusion of the omitted claims․”). However, the doctrine will only preclude a litigant from asserting a claim if the party has had a fair and reasonable opportunity to litigate the claim. Hobart Bros. Co., supra, 354 N.J.Super. at 241.
Prior to 1998, the doctrine required mandatory joinder of claims and parties, incorporating the concept of claim preclusion. Stated simply, it required that whenever possible, a party should assert all claims arising from the same transactional set of facts in a single lawsuit, “even those against different parties.” Harley Davidson Motor Co., Inc. v. Advance Die Casting, 150 N.J. 489, 497 (1997). However, in 1998, the Supreme Court amended Rule 4:30A “to restrict the scope of the doctrine to non-joinder of claims.” Hobart Bros., supra, at 242. (“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․”). R. 4:30A.
As a result of the 1998 rule amendment, “preclusion of a successive action against a person not a party to the first action has been abrogated except in special situations involving both inexcusable conduct [by the party bringing the claim] ․ and substantial prejudice to the non-party resulting from omission from the first suit.” Pressler & Verniero, Current N.J. Court Rules, comment 1 on R. 4:30A (2014). The burden of establishing both inexcusable conduct and substantial prejudice rests with the party seeking to invoke the doctrine as an affirmative defense. Hobart, supra, 354 N.J.Super. at 242; Brown v. Brown, 208 N.J.Super. 372, 384 (App.Div.1986).
Notwithstanding the substantive change in the rules, “ ‘[T]he polestar for the application of the [entire controversy] rule [remains] judicial “fairness.” ’ ” K–Land Corp. No. 28 v. Landis Sewerage Auth., 173 N.J. 59, 74 (2002) (quoting Reno Auto Sales, Inc. v. Prospect Park Sav. & Loan Assoc., 243 N.J.Super. 624, 630 (App.Div.1990)). Accordingly, “in considering fairness to the party whose claim is sought to be barred, a court must consider whether the claimant has ‘had a fair and reasonable opportunity to have fully litigated that claim in the original action.’ ” Gelber v. Zito Partnership, 147 N.J. 561, 565 (1997) (quoting Cafferata v. Peyser, 251 N.J.Super. 256, 261 (App.Div.1991)). For example, “[m]andatory joinder of claims has been applied to bar claims involving commonality of facts in cases involving piecemeal litigation where parties, for strategic reasons, withhold claims concerning the underlying litigation, thus getting two bites of the apple.” Allstate Ins. Co. v. Cherry Hill Pain & Rehab Institute, 389 N.J.Super. 130, 140 (App.Div.2006), certif. denied, 190 N.J. 254 (2007).
By the same token, “where claims are ‘separate and discrete’ from those in the initial proceeding, the mandatory joinder of claims does not bar the subsequent action.” Ibid. (quoting Hillsborough Twp. Bd. of Educ. v. Faridy Thorne Frayta, P.C., 321 N.J.Super. 275, 285 (App.Div.1999). Nor does the doctrine “apply to bar component claims either unknown, unarisen, or unaccrued at the time of the original action.” K–Land Corp., supra, 173 N.J. at 70 (quoting Pressler, Current N.J. Court Rules, [comment 3.3] on R. 4:30A [ (2002) ] (emphasis omitted).
The doctrine “requires parties to a controversy before a court to assert all claims known to them that stem from the same transactional facts․” Joel v. Morrocco, 147 N.J. 546, 548 (1997) (citation omitted). However, the doctrine “should not be viewed as encouraging or requiring the filing of premature or unaccrued claims.” K–Land Corp., supra, 173 N.J. at 74.
As we noted earlier, “the polestar for the application of the rule is judicial fairness.” Ibid. (citation omitted). Thus, the entire controversy doctrine “remains an equitable doctrine whose application is left to judicial discretion based on the factual circumstances of individual cases.” 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) (citations and internal quotation marks omitted)); see also Prevratil v. Mohr, 145 N.J. 180, 190 (1996) (noting application of the doctrine “depends on the exercise of judicial discretion in the facts of each case”). It is against these principles that we must consider the issue presented.
Initially, we observe that aside from Pride's strained reading of plaintiff's deposition testimony, the record does not establish any calculated claim splitting here and, consequently, no inexcusable conduct by plaintiff in pursuing the two actions. The claim advanced in the Florida action was negligence based upon the condition of the ramp and the deck. In this case, plaintiff asserts claims sounding in products liability. Nothing suggests that at the time of that suit plaintiff knowingly withheld a product liability claim against Pride.
We also note that the Florida action was not the subject of extended discovery in the form of depositions or forensic analyses in which Pride did not participate. Indeed, nothing happened from a litigation perspective other than the filing of the complaint. Pride is in no different a position than it would have been had plaintiff simply settled with the Disney defendants without suit.
Further, merely because the ramp where the accident occurred was “replaced” in June 2011 does not create “substantial prejudice” to Pride in mounting its defense to plaintiff's product liability claims. The ship's specifications no doubt establish the degree of declination of the ramp, and the composition and condition of the deck surface in July 2009, if even relevant here, have not been effaced from history. The draconian consequence of dismissal of plaintiff's complaint with prejudice in these circumstances is not warranted.
Consequently, we reverse the order of dismissal entered by the Law Division and we remand the matter to the trial court for an order reinstating plaintiff's complaint.
1. FN1. Plaintiff, a New Jersey citizen and resident, averred diversity of citizenship jurisdiction, 28 U.S.C.A. § 1332(a).
2. FN2. Plaintiff's counsel avers that when he was first contacted by Pride's lawyers, he verbally advised them about the Florida action. Pride's lawyers expressly deny such a communication. Given our opinion in this matter, resolution of this factual dispute is unnecessary.
3. FN3. At the time the motion was granted, Pride was the only defendant remaining in the action. Consequently, the order of dismissal was final and, therefore, appealable as of right. Rule 2:2–3(a)(1).