SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2935-17T2

KVK TECH, INC. and AMRUTHAM,

INC.,

Plaintiffs-Appellants,

v.

MUTHUSAMY SHANMUGAM,

Defendant-Respondent.

_______________________________________

Submitted December 10, 2018 – Decided

Before Judges Sabatino and Haas.

On appeal from Superior Court of New Jersey, Law 

Division, Middlesex County, Docket No. L-1040-17.

Klehr Harrison Harvey Branzburg LLP, attorneys for 

appellants (Lisa A. Lori and Christopher J. Leavell, on 

the briefs).

Orrick, Herrington & Sutcliffe, LLP, attorneys for 

respondent (James H. McQuade (Orrick, Herrington & 

Sutcliffe, LLP), of the New York bar, admitted pro hac 

vice, Mark R. Thompson (Orrick, Herrington & 

Sutcliffe, LLP) of the New York bar, admitted pro hac 

vice, and Camille Joanne Rosca, on the brief).

NOT FOR PUBLICATION WITHOUT THE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.

December 18, 2018
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PER CURIAM

Plaintiff KVK Tech, Inc. ("KVK") and its affiliate company, co-plaintiff 

Amrutham, Inc. ("Amrutham"), appeal the trial court's January 19, 2018 order 

dismissing with prejudice their complaint against defendant Muthusamy 

Shanmugam ("Shanmugam"). The dismissal was fundamentally based on entire 

controversy grounds, stemming from the parties' involvement about five years 

earlier in another Law Division case litigated in a different county and a separate 

lawsuit in Pennsylvania. We affirm.

KVK and Amrutham are developers, manufacturers, and distributors of 

generic pharmaceutical products. Shanmugam is a pharmaceutical professional 

who was employed by Novel Laboratories, Inc. ("Novel"), a generic drug 

manufacture and a competitor of KVK, as a Vice President of Technical Operations 

until May 2010.

On or about August 5, 2010, the brand name drug known as "SUPREP" 

appeared in the Food and Drug Administration (FDA) "Orange Book." The Orange

Book is a publicly available list of drug products that are available for generic 

development. The Orange Book is routinely monitored by drug manufacturers as 

a source for new drugs available for generic development.
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On August 15, 2010, Shanmugam contacted KVK to discuss entering into a 

possible joint venture to develop the generic form of SUPREP ("the generic drug"). 

Shanmugam informed KVK that he learned, through the August 5, 2010 Orange 

Book listing, that SUPREP was subject to genetic manufacture. Shanmugam and 

KVK thereafter began discussions about potential financial terms of a joint venture. 

However, the parties never consummated a joint venture agreement.

On August 16, 2010, KVK began taking steps to develop the generic drug and 

also began to draft an Abbreviated New Drug Application ("ANDA") to submit to 

the FDA for approval.1 The generic drug, if approved, was going to be 

manufactured and sold by KVK's affiliate, Amrutham.

On September 2, 2010, before KVK submitted the ANDA to the FDA, counsel 

for Novel sent a letter to KVK. The letter alleged Shanmugam was breaching his 

employment agreement with Novel by working with KVK on the development of 

the generic drug. Novel's allegations were based on a premise that Shanmugam 

worked on the generic drug while he was employed with Novel. Hence, Novel 

asserted ownership over Shanmugam's work on the generic drug.

 

1 An ANDA is submitted to the FDA by a company seeking approval to 

manufacture and sell a generic drug product.
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After Novel sent the letter, Shanmugam advised KVK that he had never 

worked on the drug while employed at Novel. Even so, Shanmugam and KVK 

decided to cease working together, and Shanmugam had no further involvement in 

the manufacture of the generic drug.

Plaintiffs proceeded on their own with the development of the generic drug. 

In November 2010, Amrutham filed an ANDA for the generic drug with the FDA. 

About a week later, plaintiffs informed Novel that they had decided to pursue 

development of the generic drug. In addition, plaintiffs informed Novel that they 

had filed a declaratory action against Novel in the Court of Common Pleas of Bucks 

County, Pennsylvania, seeking an order declaring that their anticipated

manufacture of the generic drug did not violate the terms of the agreement between 

Novel and Shanmugam (the "Pennsylvania action").

On February 3, 2011, Novel filed a lawsuit against KVK, Amrutham, and 

Shanmugam in the Law Division, Somerset County (the "Somerset action"). 

Novel's claims in the Somerset action centered on KVK and Amrutham's 

development of the generic drug. Shanmugam, KVK, and Amrutham 

cooperatively defended the Somerset action as codefendants for nearly nine months 

until November 2011. At that point, KVK sought to amend its answer to file crossclaims against Shanmugam.
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KVK's proposed cross-claim sought contribution and indemnification from 

Shanmugam in connection with the claims that Novel was asserting against KVK 

in the Somerset action. KVK sought leave to assert a cross-claim after depositions 

of several persons in the Somerset action placed in dispute the veracity of 

Shanmugam's representations to KVK about his role at Novel.

Judge Allison E. Accurso, J.S.C., who was then sitting in the Law Division, 

and handling the Somerset action, granted KVK’s motion for leave to assert the 

cross-claims against Shanmugam on January 23, 2012. On February 7, 2012, KVK 

amended its answer to assert cross-claims against Shanmugam for contribution and 

indemnification.2

Thereafter, on February 16, 2012, Shanmugam and Novel entered into a 

settlement in connection with the Somerset action. Shanmugam then moved to 

 

2 KVK's proposed cross-claim reads: "KVK-Tech, Inc. ("KVK"), without 

admitting liability to plaintiff Novel Laboratories, Inc. and only in the event that 

KVK is held responsible for any damages alleged in the [c]omplaint, or any 

other relief granted to Novel on any grounds whatsoever, hereby demands 

contribution and indemnification under the Joint Tortfeasors Act, N.J.S.A. 

2A:53A-1 to -48, the Comparative Negligence Act, N.J.S.A 2A:15-5.1 to -5.8

and all other statutory, contractual or common law principles, from defendant 

Muthusamy Shanmugam, and any and all other third-party or fourth-party 

defendants hereinafter named by any party." There is no contractual 

indemnification provision between plaintiffs and Shanmugam in this case, so 

the cross-claim must be based on either common-law or statutory grounds.
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dismiss KVK’s cross-claims for indemnification and contribution. KVK opposed

Shanmugam’s motion. In its opposition, KVK conceded the propriety of dismissal 

of its cross-claim for contribution, but pressed the claim for indemnification. Before

oral argument on the motion, Assignment Judge Yolanda Ciccone, A.J.S.C., took 

over the case from Judge Accurso.

On June 15, 2012, Judge Ciccone heard oral argument on Shanmugam's 

motion to dismiss. Regarding contribution, Judge Ciccone noted that KVK 

"conceded its cross-claim for contribution cannot survive the motion." As to

indemnification, Judge Ciccone granted Shanmugam's motion and dismissed KVK’s 

cross-claim for indemnification "without prejudice." Judge Ciccone dismissed the 

cross-claim because KVK failed to plead the requisite "special relationship" between 

the parties. As Judge Ciccone reasoned:

Thus, here, in order to survive this motion to 

dismiss, KVK must show a sufficient legal relationship 

to support its duty to indemnify.

. . . .

Here, KVK argues that any liability that KVK is 

found to have stems from the actions of Shanmugam, 

who directed KVK to the product at issue, and that the 

actions of KVK in pursuing the product that 

Shanmugam suggested were made in good faith.

KVK admits that the only information provided 

from Shanmugam to KVK was the identity of the 
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product and nothing more. Nothing in KVK's crossclaim supports that there's a sufficient legal relationship

here giving rise to liability.

Furthermore, KVK has not informed the court 

that there is some other positive rule of common or 

statutory law providing a duty in this matter giving rise 

to common law indemnification.

Without more, and on the record, I am going to 

dismiss the cross-claims without prejudice.

[(Emphasis added).]

After the entry of the dismissal without prejudice in June 2012, KVK and 

Amrutham continued to litigate the matter against Novel without the involvement of 

Shanmugam. KVK did not re-plead, or seek leave to re-plead, its claim for 

indemnification against Shanmugam during this time period.

On October 3, 2013, Novel, KVK, and Amrutham entered into a settlement 

agreement, which resolved both the New Jersey and Pennsylvania actions. Pursuant 

to the terms of the settlement agreement, Novel agreed to pay plaintiffs a sum of 

money over an eight-year period, and, in exchange, KVK and Amrutham agreed to 

withdraw their ANDA for the generic drug and agreed not to take any efforts to 

market it. The parties agreed that the matter was settled, notwithstanding their intent 

to formalize the terms in a written agreement.
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The parties never executed a written settlement agreement. Rather, at some 

point, Novel learned that KVK had subsequently partnered with another 

pharmaceutical company to create the generic drug. Novel then moved to enforce 

the terms of the settlement agreement.

On October 10, 2013, Judge Ciccone granted Novel's motion to enforce the 

settlement. KVK then appealed to this court, which affirmed Judge Ciccone's 

decision in an unpublished opinion issued on February 3, 2015. See Novel 

Laboratories, Inc. v. Shanmugam, No. A-2692-13 (App. Div. Feb. 3, 2015). 

Nearly five years after Judge Ciccone's decision granting Shanmugam's 

motion to dismiss the cross-claim, KVK and Amrutham brought suit on February 

21, 2017, in the Law Division in Middlesex County against Shanmugam, based 

fundamentally on the same issues and facts at issue in the Somerset action. In this 

new lawsuit, KVK and Amrutham allege causes of action for: intentional 

misrepresentation (count one), negligent misrepresentation (count two), and 

indemnification (count three). Amrutham joins KVK's purported indemnification 

cause of action, but does not join the purported misrepresentation causes of action.

In particular, KVK and Amrutham seek damages arising from Shanmugam's 

allegedly wrongful conduct, including the costs and expenses they incurred in 

connection with the Pennsylvania and New Jersey actions. KVK and Amrutham 
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allege in pertinent part that "[b]ut for the wrongful actions and inactions of 

Shanmugam, as described above, [p]laintiffs would not have been required to 

participate in the Pennsylvania Action and the New Jersey Action to protect their 

rights."

Shanmugam moved to dismiss plaintiffs' claims, principally contending they 

are precluded under the entire controversy doctrine. Following oral argument, Judge 

Arnold L. Natali, Jr., J.S.C., issued an oral decision, granting Shanmugam's motion 

to dismiss, relying primarily on the entire controversy doctrine. This appeal by 

plaintiffs ensued.

On appeal, plaintiffs argue the trial court misapplied the entire 

controversy doctrine. In addition, plaintiffs contend the court erred in not 

finding a viable indemnification claim in the absence of a pleading alleging a 

special relationship between plaintiffs and Shanmugam or, alternatively in not 

permitting an amendment or discovery to support such a relationship. Lastly, 

plaintiffs argue the court erred in dismissing their claims of intentional and 

negligent misrepresentation.

Having carefully considered these arguments in light of the record, the 

procedural history of the multiple litigations, and the applicable law, we affirm 

the trial court's dismissal of plaintiffs' claims in the Middlesex County lawsuit. 
10 A-2935-17T2

We do so substantially for the sound reasons expressed in Judge Natali's detailed 

oral opinion. Only a few amplifying comments are in order.

Plaintiffs clearly violated the tenets of the entire controversy doctrine, and 

the public policies it is designed to advance, by failing to attempt to revive their 

claims in the Somerset action and instead waiting five years to present them in 

yet another lawsuit.

The entire controversy doctrine, as codified in Rule 4:30A, requires all parties 

to an action to raise all transactionally related claims in that action. R. 4:30A. 

"Underlying the [e]ntire [c]ontroversy [d]octrine are the twin goals of ensuring 

fairness to parties and achieving economy of judicial resources." Kent Motor Cars,

Inc., v. Reynolds & Reynolds, Co., 207 N.J. 428, 443 (2011). The Supreme Court 

has articulated the goals of the doctrine to include "'the needs of economy and the 

avoidance of waste, efficiency and the reduction of delay, fairness to parties, and the 

need for complete and final disposition through the avoidance of piecemeal 

decisions.'" Ibid. (quoting Cogdell v. Hosp. Ctr. at Orange, 116 N.J. 7, 15 (1989)). 

Furthermore, the doctrine is "'intended to be applied 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.'" Wreden v. Twp. of Lafayette, 436 N.J. Super. 117, 129 (App. Div. 
11 A-2935-17T2

2014) (quoting Hobart Bros. Co. v. Nat'l Union Fire Ins. Co., 354 N.J. Super. 229, 

240-41 (App. Div. 2002)).

We recognize, as did the trial court, that Judge Ciccone's June 2012 order 

in the Somerset action dismissed KVK's cross-claim for indemnification on a 

"without prejudice" basis. However, in Mystic Isle Dev. Corp. v. Perskie & 

Nehmad, 142 N.J. 310, 333 (1995), the Supreme Court explained: "In certain 

circumstances, especially where a plaintiff manipulates the judicial system in order 

to fragment litigation, the principles underlying the entire controversy doctrine may 

mandate that a suit be barred even though it stems from the dismissal of a prior action 

without prejudice." (Emphasis added). See also DiTrolio v. Antiles, 142 N.J. 253,

278-79 (1995) (holding that a settlement or dismissal without prejudice is but one 

factor court should consider when applying entire controversy bar). The Court in 

Mystic Isle, quoting the Restatement (Second) of Judgements, explained:

The rule that a defendant's judgment acts as a bar to a 

second action on the same claim is based largely on the 

ground that fairness to the defendant, and sound 

judicial administration, require that at some point 

litigation over the particular controversy come to an 

end. These considerations may impose such a 

requirement even though the substantive issues have 

not been tried, especially if the plaintiff has failed to 

avail himself of opportunities to pursue his remedies in 

the first proceeding, or has deliberately flouted orders 

of the court.
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[Ibid. (emphasis added) (quoting Restatement (Second) of 

Judgments § 19 cmt. (a) (1982).]

We discern no practical or legal impediment that plaintiffs would have 

encountered in an attempt to revive the indemnification claim before a final 

global settlement was achieved in the Somerset and Pennsylvania actions. 

Instead, plaintiffs waited until those cases were long over, and the files were 

long closed, before bringing this present lawsuit many years later in a different 

forum. The effort bespeaks "forum shopping" and inefficiency. Moreover, as 

to Amrutham in particular, there was never any attempt to pursue a cross-claim 

on its behalf in the Somerset action, even though it was a co-defendant with

KVK and Shanmugam in that case.

Judge Natali wisely applied the entire controversy doctrine in this case. 

In doing so, he appropriately recognized the time, effort, and expense that could 

have and should have been expended in the prior litigations if KVK wished to 

pursue claims of indemnification.

Moreover, we discern no merit to the substance of plaintiffs' proposed

causes of action. No "special relationship" among the parties was established in 

a joint venture that was never consummated. Nor are there sufficient indicia of 

misrepresentation to justify reactivating litigation that had long since concluded, 

even if those claims could have been viable at a much earlier juncture.
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Affirmed.