Court Opinion

ID: 4429743
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:29:31.90708+00
Date Added: 2024-06-11T14:50:53.691218
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NOT FOR PUBLICATION WITHOUT THE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-2481-17T3

SUBWAY REAL ESTATE, LLC,

          Plaintiff-Appellant,

v.

IMAD U. MIRZA and CAPE
REGIONAL SUBWAY,
INCORPORATED,

     Defendants-Respondents.
_________________________________

                    Argued December 5, 2018 – Decided December 26, 2018

                    Before Judges Reisner and Mawla.

                    On appeal from Superior Court of New Jersey, Law
                    Division, Atlantic County, Docket No. L-1947-16.

                    JoyAnn Kenny argued the cause for appellant (Fisher
                    Zucker, LLC, attorneys; Forrest S. Turkish, on the
                    briefs).

                    Michael Pocchio, Jr., argued the cause for respondents
                    (Law Office of Michael Pocchio, Jr., attorneys; Michael
                    Pocchio, Jr., of counsel and on the brief).

PER CURIAM
      Plaintiff Subway Real Estate, LLC (SRE or plaintiff) appeals from two

December 18, 2017 orders, denying its motion for summary judgment, and

dismissing its complaint against defendants Imad Mirza and Cape Regional

Subway, Inc., pursuant to the entire controversy doctrine and the rule concerning

party joinder. See R. 4:30A; R. 4:5-1(b)(2).

      "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).       Equitable principles also apply in

enforcing Rule 4:5-1(b)(2), requiring the disclosure of non-parties who should

be joined in the lawsuit so that all issues can be decided in one action. See Kent

Motor Cars, Inc. v. Reynolds & Reynolds, Co., 207 N.J. 428, 452 (2011). In

this case, we conclude that barring plaintiff's complaint under the entire

controversy doctrine gave defendants an unjustified windfall and was not

required to serve the doctrine's purposes. We reach the same conclusion with

respect to plaintiff's violation of Rule 4:5-1(b)(2).      Hence, dismissing the

complaint was a mistaken application of discretion. Therefore, we reverse the

order on appeal and remand this case to the trial court.

      Since we write primarily for the parties and the trial court, all of whom

are familiar with this matter, our discussion can be brief. Mirza, through his

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company Cape Regional Subway, LLC (collectively, Mirza), obtained a

franchise to operate a Subway sandwich shop in the Hamilton Mall in Atlantic

County.    SRE, a related entity that handled the leasing for the Subway

franchisor, held the lease from the landlord, Hamilton Mall (Hamilton). Mirza,

as the sub-lessee, agreed to pay Hamilton the rent and agreed to pay SRE's

counsel fees if Mirza violated the sublease.

      At some point, Mirza stopped paying the rent, and Hamilton filed suit

against SRE and Mirza in Morris County. Having no valid defense against the

Hamilton action, SRE quickly settled with Hamilton for $40,000. Hamilton then

dismissed its action against both SRE and Mirza. A few weeks later, SRE filed

this lawsuit against Mirza in Atlantic County, seeking to recoup the $40,000 it

paid Hamilton, plus costs and counsel fees pursuant to the sublease. The motion

judge in Atlantic County dismissed the action as violating the entire controversy

doctrine and the party joinder rule. R. 4:30A; R. 4:5-1(b)(2).

      The entire controversy doctrine is designed to promote fairness to the

parties, judicial efficiency, and complete and final dispositions by avoiding

piecemeal litigation. DiTrolio v. Antiles, 142 N.J. 253, 267 (1995). In applying

the entire controversy doctrine, the "polestar . . . is judicial 'fairness.'" Wadeer

v. New Jersey Mfrs. Ins. Co., 220 N.J. 591, 605 (2015) (quoting DiTrolio, 142

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N.J. at 272). As illustrated by the Supreme Court's decision in Kent Motor Cars,

the Rules concerning the joinder of issues and parties in a single lawsuit are not

to be applied mechanically, where barring a lawsuit would produce an unjust

result. For example, even an inexcusable violation of Rule 4:5-1(b)(2) will not

necessarily require dismissal of a complaint.

      In Kent Motor Cars, the Court addressed a situation in which an auto

dealership claimed that Reynolds, the company that printed the dealership's sales

forms, misprinted the forms, leading to the dealership becoming liable to its

customers for consumer fraud violations. 207 N.J. at 432-35. The dealership

should have, but did not, file a claim for contribution against Reynolds in the

customers' consumer fraud action (the Wilson case). Id. at 435-36. Nonetheless,

the Court held that the interests of justice did not warrant barring the dealership's

separate lawsuit against Reynolds:

                    Certainly, from a systemic perspective, because
             the claim against Reynolds is essentially one for
             contribution, it would have been preferable for it to
             have been addressed in the context of the Wilson
             litigation. . . . Divorcing it from the Wilson action and
             proceeding on it as if it were an entirely separate claim
             raises the specter of the sort of inefficient, piecemeal
             litigation that the Entire Controversy Doctrine and the
             corollary Rule governing notice of related matters and
             nonparties were designed to eliminate.

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                   That the Rule was violated, that the violation was
            inexcusable, cannot be questioned. Nonetheless, the
            strong preference of the court system for orderly and
            efficient adjudication of disputes does not militate in
            favor of dismissal of the complaint in its entirety. First,
            the sanction of dismissal would create, in this case, a
            windfall for Reynolds. To the extent that the form it
            sold violated the applicable MVSP regulations and to
            the extent that such a violation was one that the CFA
            was intended to address, it would be unjust to permit
            Reynolds to avoid any responsibility to its customer. . .
            . To the extent that there may remain other, lesser
            prejudice relating to loss of evidence, there is a wide
            array of sanctions available to the trial court to address
            any injustice. The trial court should not hesitate to
            impose any and all sanctions it concludes are needed to
            ensure that a just remedy is achieved between these
            parties.

            [Id. at 451-52 (emphasis added).]

      The same principles discussed in Kent Motor Cars apply here. In this

case, dismissing SRE's complaint would give Mirza a windfall. His failure to

pay Hamilton the rent resulted in the Hamilton lawsuit. It does not appear that

SRE or Mirza had a meritorious defense to Hamilton's claim for the rent. Hence,

SRE acted reasonably in limiting its potential liability, and that of Mirza, by

reaching a quick settlement with Hamilton. On this record, few if any judicial

resources were consumed in the Hamilton litigation. There were no trial court

proceedings in that case, beyond Hamilton's filing of the complaint and Mirza's

filing of an answer.

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      Nor do we perceive any inconvenience or unfairness to Mirza in SRE's

filing the second lawsuit. In fact, Atlantic County, where SRE filed its lawsuit,

and where Mirza lives and conducted business, appears to be a more convenient

venue for Mirza than Morris County, where Hamilton filed its lawsuit. There is

no evidence in this record that Mirza was prejudiced in any way by SRE's choice

to withhold asserting its cross-claim in the Hamilton suit and instead filing it as

an affirmative claim in a separate suit. If, on remand, Mirza can establish a

claim of prejudice, the trial court may impose sanctions on SRE, short of

dismissal, "to address any injustice." Kent Motor Cars, 207 N.J. at 452. 1

      Reversed and remanded. We do not retain jurisdiction.

1
   In light of our disposition, we do not reach SRE's additional appellate
arguments. On remand, the trial court should reconsider and address the merits
of SRE's summary judgment motion against defendants.
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