Court Opinion

ID: 9965363
Source: CourtListenerOpinion
Date Created: 2024-05-02 14:08:58.420159+00
Date Added: 2024-06-11T08:24:55.726882
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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-2178-21

PRAVIN PATEL,

          Plaintiff-Appellant,

v.

BHARAT MUKUND RAO
and ALKESH S. PATEL,

     Defendants-Respondents.
__________________________

                   Argued December 12, 2023 – Decided May 2, 2024

                   Before Judges Sumners and Rose.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Bergen County, Docket No. L-6475-19.

                   Patrick Papalia argued the cause for appellant (Archer
                   & Greiner, PC, attorneys; Patrick Papalia, Robert
                   Joseph Faugno and Christian A. Stueben, on the briefs).

                   David F. Lyttle argued the cause for respondent Bharat
                   Mukund Rao.

                   Richard James Kilstein argued the cause for respondent
                   Alkesh S. Patel (Kilstein & Kilstein, LLC, attorneys;
                   Richard James Kilstein, on the brief).
PER CURIAM

      Plaintiff Pravin Patel appeals the Rule 4:6-2 (e) dismissal of his complaint

with prejudice against defendants Bharat Mukund Rao and Alkesh Patel. We

affirm.

                                        I.

                                Parties' Dispute

      This appeal arises from an arbitration proceeding between Pravin 1 and

Christine Rao, equal owners of two companies which operated Dunkin' Donuts

franchises.   Bharat had no interest in the companies but was permitted to

participate in the arbitration proceeding in place of Christine, his wife, who for

reasons undisclosed in the record did not participate. Pravin and Bharat agreed

to jointly engage and pay for an independent auditor to conduct the financial

review of the companies and testify before the arbitrator. Based on Bharat's

recommendation and with Pravin's consent, Alkesh, a certified public

accountant, was appointed by the arbitrator to conduct a neutral, independent

financial analysis of the companies' operations and testify at the arbitration

hearing.

1
  Because Pravin Patel and Alkesh Patel, and Bharat Mukund Rao and Christine
Rao share last names, for convenience and to avoid confusion we refer to them
by their first names. We mean no disrespect.
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                                        2
      Relying largely on Alkesh's reports and testimony, the arbitrator awarded

the Raos $1,161,883.51 in damages. The arbitrator rejected Pravin's contention

that Alkesh's financial assessment of the companies was flawed and ruled the

assessment should be disallowed because Alkesh had a conflict of interest

considering his prior relationship with Bharat's brother-in-law.

      On June 26, 2019, the Raos filed a Chancery Division complaint and order

to show cause to affirm the arbitration award. Pravin cross-moved to vacate the

award, reasserting that Alkesh's conflict of interest invalidated his testimony.

      Over a month later, on August 1, the Chancery court entered an order

confirming the arbitration award and denying the motion to vacate the award.

On August 30, the court ordered Pravin to pay the Raos' attorney's fees and costs

of $5,359.50.

      On September 12, Pravin filed the within Law Division complaint against

Alkesh and Bharat (collectively, defendants) alleging breach of contract, breach

of duty of good faith and fair dealing, conspiracy, and fraud and

misrepresentation. Pravin also alleged a professional negligence claim against

Alkesh for not disclosing his prior relationship with the Raos and failure to

comply with the terms of a contract concerning the operation of one of the

franchises owned by Pravin and Christine.

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                                        3
      On September 24, Pravin appealed the Chancery court's orders confirming

the arbitration award and awarding the Raos attorney's fees and costs (arbitration

appeal). While the arbitration appeal was pending, the Law Division entered a

May 11, 2020 order dismissing Pravin's complaint without prejudice and staying

discovery pending our court's ruling on Pravin's the arbitration appeal. Two

weeks later, Pravin appealed that order to this court (dismissal appeal).

      While Pravin's dismissal appeal was pending, we affirmed the arbitration

appeal. Rao v. Patel, No. A-0342-19 (App. Div. Nov. 4, 2020) (slip op. at 10).

Almost a year later, we dismissed the dismissal appeal as moot because the Law

Division order dismissing Pravin's complaint without prejudice permitted Pravin

to seek restoration of his Law Division complaint following this court's

disposition of the arbitration appeal. Patel v. Rao, No. A-3556-19 (App. Div.

Oct. 22, 2021) (slip op. at 6). We reasoned:

            Pravin makes multiple arguments on the merits that the
            judge never adjudicated. But the Law Division judge
            never had the opportunity to adjudicate these issues
            because after finality in the Chancery case, no party
            acted on the Law Division judge's remarks that he
            "review the matter anew," or to "move [before] the
            [c]ourt by motion to continue the Law Division matter."
            The parties may now do that.

            [Id. at 5-6 (alterations in original).]

                                                                            A-2178-21
                                         4
      On February 2 and 3, 2022, after the Law Division complaint was

reinstated, defendants separately filed Rule 4:6-2(e) motions to dismiss with

prejudice for failure to state a claim upon which relief can be granted. On

February 24, Pravin opposed and cross-moved for leave to file a first amended

complaint to be accepted as filed nunc pro tunc.

      The Law Division granted defendants' motions and denied Pravin's cross-

motion as moot. In its written decision, the court determined Pravin's claims

were precluded under the doctrines of res judicata and collateral estoppel

because they were raised and decided in the arbitration proceeding which the

Chancery court confirmed and we affirmed. In addition, the court, applying the

entire controversy doctrine, determined that "even if [it] . . . were to conclude

that certain allegations of facts and issues were not previously raised, . . .

[Pravin] is barred from raising . . . them in a new litigation because . . . [he was]

required . . . to raise them at arbitration and his failure to do so prohibits him

from doing it now."      Finally, the court ruled Pravin could not amend his

complaint because the amended complaint did "not change any of the underlying

fact[s] at issue in [the] litigation or the merits of . . . [defendants'] [m]otions to

[d]ismiss."

                                                                               A-2178-21
                                          5
      Pravin appeals the dismissal of his complaint with prejudice, arguing the

Law Division erred in applying the doctrines of res judicata, collateral estoppel,

and entire controversy and he should have been allowed to amend his complaint

to avoid dismissal. In addition, he contends defendant's motions to dismiss

should have been converted to summary judgment motions.

                                        II.

                               Motion to Dismiss

      Appellate review of a trial court's ruling on a motion to dismiss is de novo.

Watson v. N.J. Dep't of Treasury, 453 N.J. Super. 42, 47 (App. Div. 2017) (citing

Castello v. Wohler, 446 N.J. Super. 1, 14 (App. Div 2016)). Since our "review

is plenary[,] . . . we owe no deference to the trial judge's conclusions." State ex

rel. Comm'r of Transp. v. Cherry Hill Mitsubishi, Inc., 439 N.J. Super. 462, 467

(App. Div. 2015) (citation omitted). In considering a motion under Rule 4:6-

2(e), courts must accept the facts asserted in the complaint and should accord

the plaintiff all favorable inferences.       Watson, 453 N.J. Super. at 47.     "A

complaint should be dismissed for failure to state a claim pursuant to Rule 4:6-

2(e) only if 'the factual allegations are palpably insufficient to support a claim

upon which relief can be granted.'" Frederick v. Smith, 416 N.J. Super. 594,

                                                                             A-2178-21
                                          6
597 (App. Div. 2010) (quoting Rieder v. State Dep't of Transp., 221 N.J. Super.

547, 552 (App. Div. 1987)).

      "[O]ur inquiry is limited to examining the legal sufficiency of the facts

alleged on the face of the complaint." Green v. Morgan Props., 215 N.J. 431,

451 (2013) (quoting Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J.

739, 746 (1989)). Therefore, the pleading must be "search[ed] . . . 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 . . . ."         Printing Mart-

Morristown, 116 N.J. at 746 (quoting Di Cristofaro v. Laurel Grove Mem'l Park,

43 N.J. Super. 244, 252 (App. Div. 1957)).

      A. Res Judicata

      The doctrine of "[r]es judicata prevents relitigation of a controversy

between the parties." Brookshire Equities, LLC v. Montaquiza, 346 N.J. Super.

310, 318 (App. Div. 2002) (citing Selective Ins. Co. v. McAllister, 327 N.J.

Super. 168, 172 (App. Div. 2000)) (emphasis omitted). "[F]or res judicata to

apply, there must be (1) a final judgment by a court of competent jurisdiction,

(2) identity of issues, (3) identity of parties, and (4) identity of the cause of

action." Id. at 318-19 (citing McAllister, 327 N.J. Super. at 172-73) (emphasis

                                                                           A-2178-21
                                       7
omitted). All these elements were addressed by the Law Division to support its

order.

         Pravin's complaint alleged breach of contract, breach of duty of good faith

and fair dealing, conspiracy, professional negligence, and fraud and

misrepresentation. All these issues were raised and rejected by the arbitrator,

confirmed by the Chancery court, and affirmed by this court in the arbitration

appeal.

         Pravin argues res judicata does not apply to his Law Division claims

against Bharat because Bharat was not a party to the arbitration proceeding. The

record demonstrates otherwise. Although Bharat was not a co-owner of the

Dunkin' Donuts franchises with Pravin, he was a party to the arbitration

proceeding because he participated in the businesses and was allowed to act on

behalf of his wife. The arbitration award included Bharat as party claimant,

specifically indicating the award was to "Mr. Rao." There is no indication in

the arbitration award that Pravin disputed Bharat's participation in the arbitration

proceeding or challenged Bharat's designation as a claimant.

         We agree with Pravin that Alkesh was not a party in the arbitration

proceeding, participating only as an independent expert. However, the same

issue that Pravin raised in the within matter concerning Alkesh's purported bias

                                                                              A-2178-21
                                          8
–– due to his prior relationship with the Raos, thereby invaliding his expert

testimony –– was addressed and rejected in the Chancery court's decision

confirming the arbitration award, which this court affirmed. Rao, slip op. at 9-

10. We stated:

            We agree with the [Chancery] court that as new
            information was brought to the arbitrator's attention
            about a potential conflict of interest or impropriety
            involving the auditor, the arbitrator gave [Pravin] the
            opportunity to object and the auditor was tasked with
            certifying as to his continued objectivity. We concur in
            the [Chancery] court's view that [Pravin] did not
            establish grounds to allow post-arbitration discovery,
            and arbitrations are not designed to devolve into
            another litigated matter, a posture sought to be avoided
            by the use of arbitration in the first place.

            [Ibid.]

Thus, the professional negligence claims against Alkesh arose in the arbitration

proceeding and were addressed. See e.g., Culver v. Ins. Co. of N. Am., 115 N.J.

451, 460 (1989) (recognizing where a controversy is "fairly litigated" and

resolved, it cannot be relitigated) (quoting Lubliner v. Bd. of Alcoholic

Beverage Control, 33 N.J. 428, 435 (1960)). They cannot be relitigated.

      B. Collateral Estoppel

      The doctrine of collateral estoppel is an equitable remedy that "bars

relitigation of any issue which was actually determined in a prior action,

                                                                          A-2178-21
                                       9
generally between the same parties, involving a different claim or cause of

action." In re Liquidation of Integrity Ins. Co., 214 N.J. 51, 66 (2013) (quoting

N.J. Div. of Youth & Fam. Servs. v. R.D., 207 N.J. 88, 114 (2011)).

"[C]ollateral estoppel is a branch of the broader law of res judicata which bars

relitigation of any issue actually determined in a prior action generally between

the same parties and their privies involving a different claim or cause of action."

N.J. Mfrs. Ins. Co. v. Brower, 161 N.J. Super. 293, 297 (App. Div. 1978)

(emphasis and citation omitted).

      For collateral estoppel to apply,

            the party asserting the bar must show that: (1) the issue
            to be precluded is identical to the issue decided in the
            prior proceeding; (2) the issue was actually litigated in
            the prior proceeding; (3) the court in the prior
            proceeding issued a final judgment on the merits;
            (4) the determination of the issue was essential to the
            prior judgment; and (5) the party against whom the
            doctrine is asserted was a party to or in privity with a
            party to the earlier proceeding.

            [Winters v. N. Hudson Reg'l Fire & Rescue, 212 N.J.
            67, 85 (2012) (quoting Olivieri v. Y.M.F. Carpet, Inc.,
            186 N.J. 511, 521 (2006)).]

"[I]n appropriate circumstances[,] an arbitration award can have a res judicata

or collateral estoppel effect in subsequent litigation." Nogue v. Est. of Santiago,

224 N.J. Super. 383, 385-86 (App. Div. 1988).

                                                                             A-2178-21
                                       10
      For essentially the same reasons we conclude res judicata applies to

preclude Pravin's claims against defendants, collateral estoppel has the same

effect. The "ultimate issue" in this case has been determined: the amount of

damages Pravin owes Rao because of the arbitration award, based upon Alkesh's

independent third-party evaluation. Since the determination was made by the

arbitrator, the Chancery court, and now this court concludes, Pravin is

collaterally estopped from pursuing the same claims in the present action.

      C. Entire Controversy

      The Law Division relied upon the entire controversy doctrine as an

alternative basis to bar Pravin's claims. The court determined that "even if [it]

were to conclude that certain allegations of facts and issues were not previously

raised, . . . [Pravin] is barred from raising any of them in a new litigation because

the [e]ntire [c]ontroversy [d]octrine required him to raise them at arbitration and

failure to do so prohibits him from doing so now."

      "The entire controversy doctrine is an equitable principle[,] and its

application is left to judicial discretion." 700 Highway 33 LLC v. Pollio, 421

N.J. Super. 231, 238 (App. Div. 2011) (citing Allstate N.J. Ins. Co. v. Cherry

Hill Pain & Rehab. Inst., 389 N.J. Super. 130, 141 (2006)). "Th[e] doctrine

'embodies the principle that the adjudication of a legal controversy should occur

                                                                               A-2178-21
                                        11
in one litigation in only one court; accordingly, all parties involved in a litigation

should at the very least present in that proceeding all of their claims and defenses

that are related to the underlying controversy.'" Wadeer v. N.J. Mfrs. Ins. Co.,

220 N.J. 591, 605 (2015) (quoting Highland Lakes Country Club & Cmty. Ass'n

v. Nicastro, 201 N.J. 123, 125 (2009)). The doctrine applies when the claims of

all parties arise out of the same common string of facts or circumstances. Ibid.

The underlying principle of the doctrine is to promote "[j]udicial economy and

efficiency." Cogdell v. Hosp. Ctr. at Orange, 116 N.J. 7, 23 (1989). The entire

controversy doctrine, as codified in Rule 4:30(A), requires joinder of claims but

not joiner of parties.

      Pravin argues his claims could not have been made against Bharat and

Alkesh because they were not parties. He is incorrect. As noted, the record

demonstrates that at the arbitration proceeding Bharat was a party and Pravin's

claims pertaining to Alkesh's role as an independent expert could have been

challenged. To allow Pravin to raise claims related to the arbitration dispute

after he was dissatisfied with the Chancery court's confirmation of the

arbitration award undermines judicial economy and efficiency.

                                                                                A-2178-21
                                         12
                                      III.

                             Summary Judgment

      Pravin contends had the Law Division treated defendants' Rule 4:6-2(e)

motions to dismiss as summary judgment motions, it would not have dismissed

his complaint. He asserts their motions effectively sought summary judgment

because defendants' relied upon certifications that "incorporate factual

representations and various document exhibits [(arbitration documents)] that are

well outside of the pleadings." See R. 4:46-2.

      Pravin specifically contends: (1) there was a genuine dispute of material

facts related to Alkesh's role as an independent expert and his claims against

Alkesh could not have been advanced in the arbitration proceeding because he

was not a party; (2) the motion was premature because discovery had not

commenced to allow defendants to explain how Alkesh could be joined in the

arbitration proceeding; and (3) defendants' motions should have been denied as

procedurally deficient. Citing Davis v. Devereux Found., 209 N.J. 269, 296 n.8

(2012), Pravin also argues defendants' entire joint appendix should be stricken

from the record on appeal because it contains documents related to the

arbitration proceeding that were not before the Law Division.

                                                                          A-2178-21
                                      13
      We discern no error in the Rule 4:6-2(e) dismissal of Pravin's complaint

with prejudice. There was neither a genuine dispute of material facts nor need

for discovery.

      As noted, based on the doctrines of res judicata, collateral estoppel, and

entire controversy, the dismissal was granted because Pravin's complaint raised

claims that were either previously dismissed––e.g., Alkesh's professional

negligence––by the arbitrator, the Chancery court, and this court, or could have

been raised in those prior proceedings. And as for discovery, assuming as Pravin

contends the court should have considered defendants' motions as ones for

summary judgment, Pravin has not shown what specific discovery was needed

to oppose the motions. See Badiali v. N.J. Mfrs. Ins. Grp., 220 N.J. 544, 555

(2015) (holding a party opposing a motion for summary judgment on the

grounds that discovery is incomplete must "demonstrate with some degree of

particularity the likelihood that further discovery will supply the missing

elements of the cause of action" (quoting Wellington v. Est. of Wellington, 359

N.J. Super. 484, 496 (App. Div. 2003))). Moreover, Pravin has not shown that

the discovery would have "patently . . . change[d] the outcome." Minoia v.

Kushner, 365 N.J. Super. 304, 307 (App. Div. 2004).

                                                                          A-2178-21
                                      14
      With respect to defendants' joint appendix, we conclude none of the

documents contained therein inform our decision. Therefore, striking the joint

appendix has no bearing in affirming the Law Division's dismissal order.

                                        IV.

                          Motion to Amend Complaint

      In response to defendants' motions to dismiss, Pravin cross-moved to file

a first amended complaint nunc pro tunc and argued the motions were moot.

The Law Division determined the proposed amendment "[did] not change any

of the underlying fact[s] at issue in this litigation or the merits of the [m]otions

to [d]ismiss." The court stated further that Pravin failed to establish why a

February 24, 2022 cross-motion to amend a complaint filed in 2019 was a

justified response to defendants' motions to dismiss, which were permitted after

the "[c]omplaint was previously dismissed without prejudice."

      Pravin contends the amendment "does not add any new claims or defenses

and only provides additional factual elaboration on key parts of [his] causes of

action"—specifically, Alkesh's accounting misrepresentations to the arbitrator.

Citing G & W, Inc. v. Borough of East Rutherford, 280 N.J. Super. 507, 516-17

(App. Div. 1995), where this court reversed the trial court's denial of a motion

for leave to file an amended pleading to add new parties, Pravin asserts the

                                                                              A-2178-21
                                        15
amendment should have been allowed in the interest of justice and it would not

have prejudiced defendants. We are unpersuaded.

      The Law Division did not abuse its discretion in denying Pravin's cross-

motion to amend his complaint. See R. 4:9-1; Franklin Med. Assocs. v. Newark

Pub. Schs., 362 N.J. Super. 494, 506 (App. Div. 2003). Despite the liberal

standard in allowing complaints to be amended, Kernan v. One Wash. Park Urb.

Renewal Assocs., 154 N.J. 437, 457 (1998), the court correctly recognized that

under Notte v. Merchs. Mut. Ins. Co., 185 N.J. 490, 501 (2006), "granting the

amendment would be . . . futile."

      The first amended complaint's new factual assertions fail to overcome the

overriding concern that the central issues raised in the complaint are dismissed

under the doctrines of res judicata, collateral estoppel, and the entire controversy

doctrine. The fact that Pravin sought to amend the complaint nunc pro tunc,

meaning reverting to when it was originally filed, is of no moment. The same

deficiencies warranting dismissal with prejudice of Pravin's claims in his 2019

initial complaint existed in the first amended complaint he sought to file in 2022.

      To the extent we have not specifically addressed any of plaintiff's

arguments, we conclude they lack sufficient merit to warrant discussion in a

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

                                                                              A-2178-21
                                        16
Affirmed.

                 A-2178-21
            17