SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1384-14T3

DIRECT COAST TO COAST, LLC 

and SELECTIVE TRANSPORTATION

CORPORATION,

Plaintiffs-Appellants/

Cross-Respondents,

v.

JOSEPH PETERSON, individually and

as an agent of THE BANFIELD GROUP,

LLC,

Defendant-Respondent/

Cross-Appellant,

and

LISA MARIE HARRISON, individually

and as an agent of THE BANFIELD 

GROUP, LLC and JERRY KETEL, 

individually and as an agent of 

THE BANFIELD GROUP, LLC,

Defendants.

____________________________________

Argued December 21, 2016 

Before Judges Alvarez, Higbee and Manahan.

Telephonically reargued February 28, 2017 –

Decided May 22, 2017

NOT FOR PUBLICATION WITHOUT THE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.
2 A-1384-14T3

Before Judges Alvarez, Accurso and Manahan.

On appeal from Superior Court of New Jersey, 

Law Division, Middlesex County, Docket No. 

L-6322-12.

Ronald Horowitz argued the cause for 

appellant/cross-respondent.

Craig Rothenberg argued the cause for 

respondent/cross-appellant.

PER CURIAM

Plaintiffs Direct Coast To Coast, LLC and Selective 

Transportation Corporation appeal from a summary judgment 

dismissing their complaint against defendant Joseph Peterson, as 

well as orders denying their motions for reconsideration and for 

counsel fees and costs as a condition of vacating a prior

default against Peterson and for obtaining the dismissal of his 

counterclaims with prejudice. Defendant cross-appeals from the 

denial of his motion to impose fees and costs on plaintiffs and 

their counsel for pursuing frivolous litigation and violating 

the rules of professional conduct. We affirm each of the

orders.

The essential facts are undisputed. Plaintiffs are 

affiliated freight transportation companies located in New 

Jersey. The Banfield Group, LLC was a freight transportation 

broker located in Oregon with which plaintiffs did business for 

several years. 
3 A-1384-14T3

Defendant owned a majority interest in Banfield until the 

end of 2008 when he entered into an agreement conveying his 

interest to the company and a remaining member, who continued to 

operate the business. The purchase price was payable over 

several years, coinciding with a part-time employment agreement 

for defendant, and defendant was provided a security interest in 

Banfield's tangible and intangible assets. As part of the 

transaction, Banfield and the remaining member agreed to defend, 

indemnify and hold defendant harmless from any damages arising 

out of the ownership or operation of the company going forward. 

Defendant's security interest was evidenced by a UCC Financing 

Statement filed with the State of Oregon. Defendant was 

apparently Banfield's only secured creditor. 

In 2009, Banfield began to fall behind in its payments to 

plaintiffs for freight services. In January 2010, plaintiffs 

sent demand notices to Banfield. Direct's notice advised if 

payment of the full amount of $128,733.03 owed was not received 

within five business days, Direct would eliminate the minimum 

rates and discounts accorded Banfield and seek "full bureau 

rates" for a total of $468,238.71. Selective sent a similar 

notice advising if Banfield failed to pay the $17,872.96 it 

owed, Selective would seek payment of $104,732.48. The 

statements of account attached to those notices provided that 
4 A-1384-14T3

the balances owed were incurred by Banfield in late 2009, months 

after defendant sold his interest in the company. 

In addition to not paying plaintiffs, Banfield also stopped 

paying defendant. In late January 2010, Banfield surrendered 

its assets to defendant, acknowledging he had "a first position 

perfected security interest in all of the tangible and 

intangible assets" of the company. In March 2010, defendant's 

lawyer wrote to Banfield's creditors, including plaintiffs, 

advising that defendant sold his interest in Banfield in 

December 2008, had "a first perfected security interest in all 

of the assets" of the company, and that following default by 

Banfield, its assets were surrendered to him in lieu of 

foreclosure. The letter also advised that the value of the 

remaining assets was significantly less than the sums owed 

defendant. 

Following Banfield's demise, plaintiffs continued to do 

business in 2010 and 2011 with defendant, through Auburn 

Logistics, a company owned by defendant's brother. In early 

2011, after learning that plaintiffs' counsel was attempting to 

collect on Banfield's debts, defendant wrote to him twice. 

Defendant advised plaintiffs' counsel of the sale of defendant's

interest in Banfield, and that Auburn had no responsibility for 

Banfield's debts. In response, plaintiffs' counsel wrote to 
5 A-1384-14T3

defendant at Auburn, advising if payment of $475,851.73 was not 

received within ten days, "suit will be instituted in New Jersey

against you, your company and The Banfield Group, together with 

all shippers and consignees."

Plaintiffs thereafter instituted separate suits in the Law 

Division in Middlesex County against Banfield, Auburn and a 

number of Banfield's consignees and shippers seeking the nondiscounted balances plaintiffs claimed were due from Banfield. 

Plaintiffs sued Auburn on a theory of successor liability. 

Although having threatened to sue defendant, plaintiffs did not 

name him in those actions, despite their knowledge of his role 

in Banfield and Auburn and did not identify him in their Rule

4:5-1 disclosures. Instead, they took defaults against Banfield 

and Auburn for the non-discounted amounts plaintiffs claimed 

Banfield owed and settled with several consignees and shippers, 

recovering $67,000.

Plaintiffs concede they received additional information in 

the course of discovery in the 2011 suits that defendant 

allegedly diverted payments received from Banfield customers,

for services rendered by plaintiffs, to himself and withdrew 

"substantial funds" from Banfield's bank accounts in 2010. 

Notwithstanding, plaintiffs never sought to join defendant in 

those actions or amend their Rule 4:5-1 disclosures to identify 
6 A-1384-14T3

defendant as a person potentially liable to them on the basis of 

those facts.

After the 2011 litigation ended, plaintiffs filed this 

action in the Law Division against defendant "individually and 

as an agent of The Banfield Group, LLC" to recover the default 

judgments secured in the 2011 suits, less the sums recovered 

from Banfield's customers in those actions. Plaintiffs obtained 

a default judgment against defendant in January 2013 for 

$515,779.21. 

Defendant moved to vacate the default, claiming he had not 

been served. Specifically, defendant claimed no one was present 

at his Oregon home when he was allegedly served, as he and his 

wife, the only two members of their household, were in 

California celebrating a family birthday on the alleged date of 

service. Following a plenary hearing at which both defendant 

and the process server testified, the court concluded defendant 

had not been served and vacated the default judgment. 

Defendant filed an answer and counterclaim, and discovery 

ensued with each side accusing the other of failing to produce 

discovery. Defendant eventually moved for summary judgment 

arguing the entire controversy doctrine barred plaintiffs' 

claims against him, that the complaint was filed beyond the 

eighteen-month statute of limitations imposed on interstate 
7 A-1384-14T3

motor carriers seeking to recover charges for transportation or 

services by 49 U.S.C. § 14705(a), that defendant did not owe 

plaintiffs fiduciary duties as a matter of law and that he 

should be awarded his counsel fees and costs as a sanction for 

the bad faith of plaintiffs and their lawyer in pursuing the 

action.

In a comprehensive written opinion, Judge Paley found 

plaintiffs' failure to join defendant in the first of these 

successive actions was inexcusable and caused defendant 

substantial prejudice. See Hobart Bros. Co. v. Nat'l Union Fire 

Ins. Co., 354 N.J. Super. 229, 242 (App. Div.), certif. denied, 

175 N.J. 170 (2002). Specifically, the judge found on the 

undisputed facts that plaintiffs were aware of defendant's 

affiliation with Banfield since at least 2010, as reflected in 

their demand letters, and had even threatened to sue defendant 

before instituting the 2011 suits. The judge further found that 

plaintiffs were aware in 2011 that defendant had taken a 

security interest in all of Banfield's assets when he sold his 

interest in the company in late 2008. 

The court concluded that by holding back their claim 

against defendant under those circumstances and suing him only 

after recovering a default judgment against Banfield, plaintiffs 

were seeking to deprive him of any meaningful opportunity to 
8 A-1384-14T3

challenge the amount of the judgments and thus to capitalize on 

their failure to exclude him from the prior lawsuits. See

Baureis v. Summit Trust Co., 280 N.J. Super. 154, 160 (App.

Div.), certif. denied, 141 N.J. 99 (1995) (concluding 

particularized evaluation of successive action revealed risk of 

substantial unfairness to the defendant, unreasonably fragmented

litigation of the same issues and posed an unfair burden on 

judicial economy). The judge further found that intervening 

events, notably the remaining member's personal bankruptcy, 

"substantially prejudiced" defendant by depriving him of the 

ability to obtain the benefit of his contractual 

indemnification. 

Judge Paley also concluded plaintiffs' claims were timebarred because plaintiffs filed their complaint in September 

2012, thirty-three months after the last services were provided. 

The judge concluded the Interstate Commerce Commission 

Termination Act of 1995 (ICCTA), 49 U.S.C. § 13501, barred the 

claims because plaintiffs were attempting to recover for unpaid 

freight charges notwithstanding that plaintiffs styled them as 

constituting a breach of fiduciary duty. See 49 U.S.C. § 

14705(a) ("A carrier providing transportation or service subject 

to jurisdiction under chapter 135 must begin a civil action to 

recover charges for transportation or service provided by the 
9 A-1384-14T3

carrier within 18 months after the claim accrues."); Emmert 

Indus. Corp. v. Artisan Assocs., Inc., 497 F.3d 982, 987, 989-90

(9th Cir. 2007) (holding the statute's plain language requires a 

carrier to bring its claims to recover for transportation or 

service within eighteen months of accrual and "necessarily 

preempts" state law providing for a longer period of 

limitation).

Finally, the judge found defendant did not owe any 

fiduciary duties to plaintiffs because defendant was not under 

any "duty to act for or give advice for the benefit of 

plaintiffs on matters within the scope of their relationship." 

See McKelvey v. Pierce, 173 N.J. 26, 57 (2002). Defendant was 

not a director or officer at the time the debts accrued and only 

retook control of Banfield's assets after the debts were accrued 

pursuant to his perfected security interest. The judge found 

plaintiffs had thus "failed to demonstrate the existence of any 

fiduciary interest flowing to them."

Plaintiffs appeal, contending the court erred by holding 

the action barred by the entire controversy doctrine, that 49 

U.S.C. § 14705 "does not apply to bar any of the claims by 

plaintiff, Direct, and only some of the claims by plaintiff, 

Selective," that as a "corporate principal, defendant owed a 

duty to bona fide creditors not to misappropriate corporate 
10 A-1384-14T3

funds and, as a broker, not to comingle trust funds," that they 

were entitled to their counsel fees and costs and that the case 

was not ripe for summary judgment. We reject those arguments.

We review a grant of summary judgment using the same 

standard that governs the trial court. Murray v. Plainfield 

Rescue Squad, 210 N.J. 581, 584 (2012). Thus, we consider 

"whether the evidence presents a sufficient disagreement to 

require submission to a jury or whether it is so one-sided that 

one party must prevail as a matter of law." Liberty Surplus 

Ins. Corp., Inc. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 

(2007) (quoting Brill v. Guardian Life Ins. Co. of Am., 142 N.J.

520, 536 (1995)). Applying that standard here, we find no 

reason to disturb Judge Paley's careful findings.

There is no dispute that plaintiffs were well aware of 

defendant's role in Banfield, the entity that accrued the debts,

and Auburn, the entity plaintiffs sued in 2011 under a theory of 

successor liability, at the time of the first suits. They admit 

they threatened to sue defendant before instituting the 2011 

litigation and confirmed in discovery facts they claim show 

defendant diverted funds paid to Banfield by consignees and took 

for himself funds in Banfield's bank account after assuming 

control of the company in 2010 pursuant to the surrender of 

assets. Plaintiffs' claims that defendant breached fiduciary 
11 A-1384-14T3

duties to them are inextricably interwoven with the claims they 

brought in the 2011 litigation against Banfield and its 

customers. 

It is further undisputed that the original freight charges 

owed by Banfield to Direct totaled $121,389.38,

1 and that Direct 

obtained a default judgment against Banfield for $475,851.73, 

including "loss-of-discount and/or non-payment penalties . . . 

of $354,462.35, almost three times the actual amount of the 

alleged debt." Likewise, although Banfield only owed Selective 

$13,870.54, Selective obtained a default judgment against it for 

$95,521.10, including loss-of-discount and/or non-payment 

penalties of $81,650.56.

Although claiming they had no obligation to name defendant 

in the 2011 litigation, plaintiffs continue to assert that

defendant is precluded from challenging the amount of the 

judgments against Banfield in this suit, presumably because of 

their contention that defendant was in privity with Banfield. 

See Olivieri v. Y.M.F. Carpet, Inc., 186 N.J. 511, 521 (2006) 

(noting for the doctrine of collateral estoppel to foreclose

 

1 Plaintiffs admitted defendant's allegation in his statement of 

material facts in support of his motion for summary judgment 

that "[a]ccording to the spreadsheet attached to Direct's 2011 

Complaint, the original amount owed is $121,389.38" not the 

$128,733.03 demanded before suit was filed.
12 A-1384-14T3

relitigation of an issue, the party asserting the bar must show,

among other things, that "the party against whom the doctrine is 

asserted was a party to or in privity with a party to the 

earlier proceeding"). Accordingly, we find no error in the 

trial court's conclusion that this is precisely the sort of 

successive litigation the entire controversy was designed to 

prohibit. See 700 Highway 33 L.L.C. v. Pollio, 421 N.J. Super.

231, 236-37 (App. Div. 2011) (holding once a court determines a 

Rule 4:5-1(b)(2) disclosure should have been made in the first 

of successive actions, it must decide whether the party's 

failure to make the disclosure was "inexcusable," and whether 

the undisclosed party's ability to defend the successive action 

has been substantially prejudiced).

Had plaintiffs joined defendant in the 2011 suits, 

defendant could have asserted his claim that plaintiffs were not 

authorized to assess penalties for late payment2 against Banfield 

and asserted cross-claims or third-party claims for contractual 

indemnification, which the subsequent bankruptcy of the personal 

indemnitor made impossible in this action. There appearing on 

 

2 Plaintiffs admitted that Direct sent several letters to 

Banfield between 2004 and 2007 agreeing to provide it "a 77% 

discount on any freight Direct picks up from The Banfield Group 

and is billed to the Banfield Group," none of which "contained 

any provisions authorizing Direct to assess Banfield penalties 

for late payment."
13 A-1384-14T3

the undisputed facts no reason other than litigation strategy 

for plaintiffs to have held back their claims against defendant, 

we agree with Judge Paley that to permit this suit to go forward 

would impose substantial unfairness upon defendant and

unreasonably fragment the litigation contrary to the fair 

demands of judicial economy. See Baureis, supra, 280 N.J. 

Super. at 159. Plaintiffs' claim that defendant was aware of 

the first action and thus should have intervened in order to 

protect his interest is without merit. See id. at 163-64 ("We 

are aware of no principle which would require a party to 

intervene in a pending lawsuit in order to prevent later 

litigation against it.").

Plaintiffs' argument that their claims are not barred by 

the statute of limitations because they "do not seek freight 

transportation charges from [defendant]," elevates form over 

substance and provides further support for the court's holding 

that the case is barred by the entire controversy doctrine 

because inextricably intertwined with the 2011 litigation. 

There can be no dispute that plaintiffs in this action seek to 

hold defendant responsible for the judgments entered against 

Banfield for freight transportation charges. Their argument 

that 49 U.S.C. § 14705 "does not apply to bar any of the claims 

by plaintiff, Direct, and only some of the claims by plaintiff, 
14 A-1384-14T3

Selective," is based on their claim that Direct did not act as a 

"motor carrier" and "many of Selective's shipments were 

intrastate."

Plaintiffs, however, contended in the 2011 litigation that 

both Selective and Direct were motor carriers and admitted the 

same in this suit in response to defendant's statement of 

undisputed material facts.3 Although conceding that Selective is 

a motor carrier, plaintiffs assert "its transportation for 

Banfield was mostly in New Jersey" and thus the federal statute 

of limitations would not apply. In their reply brief, 

plaintiffs assert that "at bare minimum, both [p]laintiffs are 

entitled to over $11,000 of unpaid freight transportation 

charges," noting "[o]f course, these are [d]efendant's 

 

3 In their reply brief, plaintiffs assert that although Direct is 

concededly a freight forwarder and a freight forwarder is a 

motor carrier under the ICCTA, "not all shipments tendered to a 

freight forwarder are actually transported by the freight 

forwarder (i.e. it is brokered to another motor carrier)." 

Plaintiffs thus insist that "Direct's pursuit of unpaid freight 

transportation charges from its customer Banfield, and against 

its customer's principal herein" as a freight forwarder are not 

inconsistent positions. We add the emphasis to note the 

inconsistency between this statement and plaintiffs' assertion 

that they are not seeking unpaid freight charges against 

Banfield. Plaintiffs have also not attempted to identify among 

the many hundreds of pages of invoices in the record which ones 

reflect Direct acting only as a "broker" or those that reflect 

charges for intrastate travel. 
15 A-1384-14T3

calculations based on the discounted basis and not the nondiscounted basis which is permitted under federal law." 

It bears emphasizing that plaintiffs have sued defendant on 

judgments totaling over $500,000, that they have insisted 

elsewhere in their papers that their claims are not for unpaid 

freight charges, that federal law does not control their cause 

of action against defendant and that this is not a successive 

action to those they failed to join defendant to in 2011. As 

plaintiffs concede that the federal statute of limitations bars 

at least part of their claim and have made no effort to quantify 

how much survives beyond asserting that "at bare minimum, both 

[p]laintiffs are entitled to over $11,000 of unpaid freight 

transportation charges," we cannot conclude on this record that 

the trial court erred in finding their claim barred by 49 U.S.C.

§ 14705. See State v. Hild, 148 N.J. Super. 294, 296 (App. Div.

1977) (noting a court is not obligated to search the record to 

substantiate an argument advanced in an appellate brief).

Plaintiffs' claims that defendant "as a corporate principal

owed a duty to bona fide creditors not to misappropriate 

corporate funds and, as a broker, not to comingle trust funds," 

ignores the undisputed evidence in the record that defendant 

sold his interest in Banfield at the end of 2008 and only retook 

control in 2010 pursuant to the agreement to surrender assets to 
16 A-1384-14T3

him as Banfield's only secured creditor. Plaintiffs have not 

cited any authority to suggest that a secured creditor in 

possession of a perfected security interest as defendant here 

owes a fiduciary duty to unsecured creditors such as plaintiffs. 

Accordingly, we need not consider the claim further. See Weiss 

v. Cedar Park Cemetery, 240 N.J. Super. 86, 102 (App. Div. 1990) 

(noting the failure to adequately brief an issue permits the 

court to treat it as waived).

Plaintiffs' claim for counsel fees and costs as a condition 

of vacating a prior default against Peterson and for obtaining 

the dismissal of his counterclaims with prejudice; and 

defendant's cross-appeal from the denial of his motion to impose 

fees and costs on plaintiffs and their counsel for pursuing 

frivolous litigation and violating the rules of professional 

conduct require only brief comment. It is well established that 

"fee determinations by trial courts will be disturbed only on 

the rarest of occasions, and then only because of a clear abuse 

of discretion." Rendine v. Pantzer, 141 N.J. 292, 317 (1995).

The court vacated the default judgment entered against 

defendant here following a plenary hearing in which it 

determined defendant was never served. Accordingly, there was 

no basis for imposing on defendant the obligation of plaintiffs' 

fees as a condition of vacating the judgment under Rule 4:50-1. 
17 A-1384-14T3

See Reg'l Constr. Corp. v. Ray, 364 N.J. Super. 534, 543 (App. 

Div. 2003). As for securing the dismissal of defendant's 

counterclaims, Judge Paley declined to find the claims were 

frivolous or brought in bad faith. Defendant's claim for 

frivolous litigation sanctions is barred by the failure to 

observe the Rule's requirements. See Trocki Plastic Surgery 

Ctr. v. Bartkowski, 344 N.J. Super. 399, 406 (App. Div. 2001), 

certif. denied, 171 N.J. 338 (2002). In no event could we find 

Judge Paley abused his considerable discretion in declining to 

award either party fees on this record. See Packard-Bamberger & 

Co. v. Collier, 167 N.J. 427, 444 (2001).

The parties' remaining arguments, to the extent we have not 

addressed them, lack sufficient merit to warrant discussion in a 

written opinion. See R. 2:11-3(e)(1)(E). 

Affirmed.