Court Opinion

ID: 9950508
Source: CourtListenerOpinion
Date Created: 2024-03-14 14:10:01.503297+00
Date Added: 2024-06-11T14:37:20.822991
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
              APPROVAL OF THE APPELLATE DIVISION

                                  SUPERIOR COURT OF NEW JERSEY
                                  APPELLATE DIVISION
                                  DOCKET NO. A-2951-21

CAROLINE J. FRANCAVILLA,
on behalf of herself and those
similarly situated,                      APPROVED FOR PUBLICATION
                                                March 14, 2024
     Plaintiff-Appellant,
                                             APPELLATE DIVISION

v.

ABSOLUTE RESOLUTIONS
VI, LLC, ABSOLUTE
RESOLUTIONS, LLC,
ABSOLUTE RESOLUTIONS
INVESTMENTS, LLC, and
ABSOLUTE RESOLUTIONS
CORPORATION,

     Defendants-Respondents.
____________________________

           Argued on February 15, 2024 – Decided March 14, 2024

           Before Judges Currier, Firko and Vanek.

           On appeal from the Superior Court of New Jersey,
           Law Division, Essex County, Docket No. L-0170-19.

           Philip D. Stern argued cause for appellant (Kim Law
           Firm, LLC, and Scott C. Borison (Borison Firm LLC)
           of the District of Columbia, Maryland, and California
           bars, admitted pro hac vice, attorneys; Yongmoon
           Kim, Muhammad Hasan Siddiqui, and Scott C.
           Borison, on the briefs).
            Mitchell L. Williamson argued the cause for
            respondents (Barron & Newburger, PC, attorneys;
            Mitchell L. Williamson, on the brief).

      The opinion of the court was delivered by

VANEK, J.S.C. (temporarily assigned)

      This appeal requires us to determine whether a putative class action

complaint seeking to claw back funds paid by a debtor in full satisfaction of a

final default judgment, entered in a prior lawsuit filed in a different court, is

barred under the entire controversy doctrine.       Because we conclude the

doctrine is applicable and prevents the assertion of the current action, we

affirm the April 13, 2022 Law Division order granting defendant 1 Absolute

Resolutions' motion to dismiss plaintiff Caroline J. Francavilla's complaint

with prejudice.

                                       I.

      The factual predicate underpinning plaintiff's complaint dates back to

2014. We derive the following salient facts from the motion record and Judge

Keith E. Lynott's thorough written statement of reasons.

1
   For clarity of the record and ease of the reader, we refer to defendants
Absolute Resolutions VI, LLC; Absolute Resolutions, LLC; Absolute
Resolutions Investments, LLC; and Absolute Resolutions Corporation,
collectively as "Absolute Resolutions" throughout this decision.

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      Plaintiff defaulted on paying a HSBC Bank USA/Sears (HSBC) credit

card balance.    As a result, during the spring of 2014, HSBC closed out

plaintiff's credit card account and assigned the outstanding debt, along with

other delinquent HSBC accounts.           Ultimately, the debt was assigned to

Absolute Resolutions.       In 2014, Absolute Resolutions filed a one-count

complaint for breach of contract in the Law Division, Special Civil Part (the

Bergen County litigation) alleging plaintiff was the owner of the HSBC

account which went into default. Absolute Resolutions sought a monetary

judgment for the outstanding balance of $3,434.31 plus costs. Plaintiff did not

answer the complaint.       On February 2, 2015, that court entered a final

judgment by default against plaintiff and in favor of Absolute Resolutions in

the amount of $3,575 (the default judgment). Plaintiff did not move to vacate

the default judgment or file an appeal.

      In March 2015, Absolute Resolutions moved for a wage garnishment to

collect on the default judgment, which plaintiff opposed. On April 14, 2015,

following a hearing, the court reduced the wage garnishment to five percent of

plaintiff's net earnings.   Plaintiff filed an additional objection to the wage

garnishment on April 29, 2016, but it was subsequently withdrawn. As of

March 1, 2017, plaintiff paid a total of $3,986.30 in full satisfaction of the

default judgment.

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                                          3
      On January 7, 2019, plaintiff filed a three-count putative class action

complaint against Absolute Resolutions in the Essex County, Law Division

(the Essex County litigation) alleging it unlawfully purchased consumers' debt

without first obtaining a business license to operate as a consumer lender or

sales finance company, as required by the New Jersey Consumer Finance

Licensing Act (CFLA), N.J.S.A. 17:11C-1 to -49.            Plaintiff sought a

declaratory judgment voiding the debts owed to Absolute Resolutions, as well

as any final judgments enforcing that debt, pursuant to the CFLA and the New

Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -228; monetary

damages under the CFA; and disgorgement of amounts paid to Absolute

Resolutions by plaintiff and the subclass she represents based on the theory of

unjust enrichment.

      On February 4, 2020, plaintiff filed a motion for class certification,

which Absolute Resolutions opposed. On April 9, 2020, after oral argument,

Judge Lynott denied plaintiff's motion to certify the class, stating it was

"premature" and that "the [e]ntire [c]ontroversy [d]octrine and related

principles may bar this action."

      On July 29, 2021, Absolute Resolutions filed a motion to dismiss

plaintiff's complaint with prejudice arguing the Essex County litigation was

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                                      4
barred based upon res judicata and the entire controversy doctrine. Plaintiff

opposed the motion.

      On April 13, 2022, Judge Lynott entered an order granting Absolute

Resolutions' motion to dismiss plaintiff's complaint with prejudice.         As

explained in the accompanying written statement of reasons:

             The [c]ourt concludes that [plaintiff]'s individual
             action against Absolute Resolutions . . . is barred by
             both res judicata and the [entire controversy doctrine].
             The present action is irrefragably a collateral attack on
             the prior judgment entered against [plaintiff] in the
             Bergen County [litigation]. In order to obtain any
             relief from that judgment, [plaintiff] was required to
             proceed by seeking the same [relief] in that action
             itself and not by asserting an entirely new action in a
             different [c]ourt.

      Judge Lynott further found plaintiff presented "no basis to dispute . . .

the present action arises from the same transactions or occurrences that gave

rise to the [Bergen County litigation]" and plaintiff "could have raised and

litigated her claims concerning the lack of licensure in the [Bergen County

litigation] including via post-judgment application – but failed or even chose

not to do so." Accordingly, Judge Lynott concluded to allow the instant matter

to proceed "would be directly at odds with the principles of finality, fairness,

consistency and judicial economy that underpin the [entire controversy

doctrine] in the first instance."

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                                        5
      Judge Lynott's rationale for dismissing with prejudice was "not on the

basis of a pleading deficiency, but the application of res judicata and the

[entire controversy doctrine]." Therefore, Judge Lynott found "[t]here is no

re-pleading of the [c]omplaint that would permit . . . [p]laintiff's [c]omplaint to

avoid the bar of these doctrines." Because plaintiff was unfit to proceed as an

individual, Judge Lynott found she was also precluded from litigating as a

class representative. This appeal followed.

                                            II.

      On appeal, plaintiff argues that the trial court erred in dismissing her

complaint as barred by res judicata and the entire controversy doctrine since

her claims are based on transactions voided by the Legislature through the

CFLA and, therefore, may be adjudicated at any time in the interest of equity

and fairness. Additionally, plaintiff contends that Absolute Resolutions has

come to the court with "unclean hands" predicated on the CFLA violation.

      The trial court considered Absolute Resolutions' motion under Rule 4:6-

2(a), for lack of jurisdiction over the subject matter.           Subject matter

jurisdiction is a threshold legal question and without it, "consideration of the

cause is 'wholly and immediately foreclosed.'" Gilbert v. Gladden, 87 N.J.

275, 281 (1981) (quoting Baker v. Carr, 369 U.S. 186, 198 (1962)).

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                                        6
      Our consideration of the trial court's application of the entire controversy

doctrine requires a mixed standard of review. We review de novo the law

guiding the trial court's determination as to the entire controversy doctrine.

See Higgins v. Thurber, 413 N.J. Super. 1, 5-6 (App. Div. 2010). "[A] trial

court's interpretation of the law and the legal consequences that flow from

established facts are not entitled to any special deference." Rowe v. Bell &

Gossett Co., 239 N.J. 531, 552 (2019) (quoting Manalapan Realty, L.P. v.

Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).

      However, the decision to apply the doctrine, as an equitable principle,

"is left to judicial discretion." 700 Highway 33 LLC v. Pollio, 421 N.J. Super.

231, 238 (App. Div. 2011).       "'[T]he boundaries of the entire controversy

doctrine are not limitless. It remains an equitable doctrine whose application

is left to judicial discretion based on the factual circumstances of indivi dual

cases.'" Highland Lakes Country Club & Cmty. Ass'n v. Nicastro, 201 N.J.

123, 125 (2009) (quoting Oliver v. Ambrose, 152 N.J. 383, 395 (1998)). Thus,

an abuse of discretion standard applies to our review of the decision to apply

the doctrine. See Mystic Isle Dev. Corp. v. Perskie & Nehmad, 142 N.J. 310,

322-23 (1995); see also Paradise Enters., Ltd. v. Sapir, 356 N.J. Super. 96, 102

(App. Div. 2002). "When examining a trial court's exercise of discretionary

authority, we reverse only when the exercise of discretion was 'manifestly

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                                        7
unjust' under the circumstances." Newark Morning Ledger Co. v. N.J. Sports

& Exposition Auth., 423 N.J. Super. 140, 174 (App. Div. 2011) (quoting

Union Cnty. Improvement Auth. v. Artaki, LLC, 392 N.J. Super. 141, 149

(App. Div. 2007)).

                                             III.

      "The entire controversy doctrine 'generally requires parties to an action

to raise all transactionally related claims in that same action.'"      Largoza v.

FKM Real Est. Holdings, Inc., 474 N.J. Super. 61, 79 (App. Div. 2022)

(quoting Carrington Mortg. Servs., LLC v. Moore, 464 N.J. Super. 59, 67

(App. Div. 2020)). "[The] mandate encompasses not only matters actually

litigated but also other aspects of a controversy that might have been litigated

and thereby decided in an earlier action."          Higgins, 413 N.J. Super. at 12.

Pursuant to Rule 4:30A, "[n]on-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. . . ."

      "[B]ecause the entire controversy doctrine is an equitable principle, its

applicability is left to judicial discretion based on the particular circumstances

inherent in a given case." Mystic Isle Dev. Corp., 142 N.J. at 323. "The

doctrine has three fundamental purposes: '(1) the need for complete and final

disposition through the avoidance of piecemeal decisions; (2) fairness to

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                                         8
parties to the action and those with a material interest in the action; and (3)

efficiency and the avoidance of waste and the reduction of delay.'"        Bank

Leumi USA v. Kloss, 243 N.J. 218, 227 (2020) (quoting DiTrolio v. Antiles,

142 N.J. 253, 267 (1995)).

      Judge Lynott found plaintiff had the ability to litigate Absolute

Resolutions' licensing status as a substantive defense in the Bergen County

litigation but, instead, pursued this subsequent litigation in Essex County as a

"conscious choice," concluding:

            [Plaintiff] contends that the validity of the assignment
            was not at issue in the prior case which concerned
            only the original debt itself.

                This assertion, while perhaps resourceful o[n] the
            part of her counsel, is ultimately unavailing. The
            basis for the claim that the assignment was invalid is
            the lack of licensure under the [CFLA]. Thus, the
            claims concerning the infirmities of the debt and prior
            judgment are inextricably linked.

                ....

                 [Plaintiff] could have raised the allegedly invalid
            assignment as a defense to the action. Indeed, it is not
            at all unusual for defendants in such cases seeking to
            collect a debt allegedly owed . . . to assert that the
            [debtor] does not hold a valid assignment, even if such
            claim is not based on the [CFLA], but on other
            grounds. To permit a litigant to raise an issue
            concerning the validity of an assignment in a
            subsequent action, when the basis for raising such
            issue was known or reasonably ascertainable by the
            litigant in a prior action is to invite all similarly-

                                                                         A-2951-21
                                       9
            situated litigants to re-cast their claims and thereby
            obtain a second bite at the apple.

      We find the trial court did not abuse its discretion in applying the entire

controversy doctrine to dismiss the Essex County litigation where the

substantive defenses raised here could have been pursued in the Bergen

County litigation. Plaintiff posits that because equity guides application of the

entire controversy doctrine, we should conclude the trial court abused its

discretion by affording Absolute Resolutions relief where it has "unclean

hands" predicated upon violation of the debt collector licensing requirements

under the CFLA.      We reject this argument as a circular attempt to use

belatedly raised substantive defenses to justify plaintiff's own violation of the

principles of finality, fairness and judicial economy in proceeding with a

second suit on the same debt.

      Plaintiff cites no binding precedent to support her demand for the

disgorgement of funds paid in full satisfaction of the default judgment, even if

Absolute Resolutions was an unlicensed debt collector. We find the decisional

law plaintiff cites both distinguishable and unpersuasive.

      Plaintiff's reliance on a decision by the Maryland Court of Special

Appeals reversing a trial court order dismissing the plaintiff's class action as

an impermissible collateral attack on a prior judgment is misplaced.         The

decision in Finch v. LVNV Funding LLC, 71 A.3d 198-205 (Md. Ct. Spec.

                                                                          A-2951-21
                                       10
App. 2013), was predicated on the Maryland Collection Agency Licensing Act

(MCALA)2 and the Maryland Consumer Debt Collection Act (MCDCA), 3 not

New Jersey law. The MCDCA also contains a private right of action, while

New Jersey's CFLA does not.        See Md. Code Ann., Com. Law § 14-203;

N.J.S.A. 17:11C-1 to -49.

       We are similarly unpersuaded by plaintiff's reliance on Jackson v.

Midland Funding LLC, 468 F. App'x 123 (3d Cir. 2012), to seek respite from

the entire controversy doctrine bar in this instance. In Jackson, the United

States Court of Appeals for the Third Circuit reversed the District Court's

decision and found the entire controversy doctrine did not preclude a cause of

action where the first litigation was dismissed well before final judgment. Id.

at 124-27. We are unpersuaded that the rationale in Jackson should be applied

to this case since plaintiff here fully satisfied the final default judgment in the

Bergen County litigation without raising the substantive issues now asserted in

this second lawsuit on the same debt. Ibid.

       We reject plaintiff's suggestion that we expand upon a line of cases

where the Court held the entire controversy doctrine inapplicable to certain

2
    Md. Code Ann., Bus. Reg. §§ 7-101 to -502.
3
    Md. Code Ann., Com. Law §§ 14-201 to -204.

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                                        11
legal malpractice claims.     See Dimitrakopoulos v. Borrus, Goldin, Foley,

Vignuolo, Hyman and Stahl, P.C., 237 N.J. 91, 99 (2019) ("The entire

controversy doctrine . . . is constrained by principles of equity. It 'does not

apply to unknown or unaccrued claims.'" (quoting Wadeer v. N.J. Mfrs. Ins.

Co., 220 N.J. 591, 606 (2015))). Plaintiff argues that she was not "damaged"

until the final default judgment was entered in the Bergen County litigation

and, therefore, her claim in this litigation should not be barred.

      To support this assertion, plaintiff cites to Olds v. Donnelly, 150 N.J.

424 (1997). Based upon the unique nature of legal malpractice claims, the

Court in Olds determined that the plaintiff's legal malpractice complaint

against his former attorney was not barred by the entire controversy doctrine

even though the claim was not raised in the underlying action. Id. at 437-43.

The Court set forth that "[t]he entire controversy doctrine raises special

concerns when invoked in the setting of legal malpractice," and "an attorney's

collection action against his or her client is not an 'underlying action' for

purposes" of negating the applicability of the entire controversy doctrine.

Dimitrakopoulos, 237 N.J. at 109, 114.

      We decline to extend the narrowly crafted exception to the entire

controversy doctrine for legal malpractice claims to this book account

litigation.   Plaintiff does not posit an argument that the present collection

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                                        12
action is in any way analogous to a client's claim against an attorney for

deviation from a standard of fiduciary care. Unlike a legal malpractice case, in

which a client may only become aware of the attorney's actionable conduct

through the judicial process, plaintiff's claim on appeal is directly tied to the

precise monetary exposure that was the subject of the Bergen County

litigation. Accordingly, we decline to erode the entire controversy doctrine b y

adopting the suggested expansion of Olds and Dimitrakopoulos to this

collection dispute.

      Although we recognize the general preference for dismissal without

prejudice, we agree with the trial court's determination that there are no

amendments or further discovery that could make plaintiff's claim legally

sustainable in this case. See Mac Prop. Grp. LLC v. Selective Fire & Cas. Ins.

Co., 473 N.J. Super. 1, 17 (App. Div. 2022), certif. denied sub nom. MAC

Prop. Grp. LLC v. Selective Fire & Cas. Ins. Co., 252 N.J. 258 (2022). Thus,

we affirm the dismissal of plaintiff's complaint with prejudice.

                                            IV.

      Since we find that Judge Lynott did not abuse his discretion by

dismissing plaintiff's putative class action complaint in the Essex County

litigation based upon the entire controversy doctrine, we need not reach the

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                                       13
remainder of the arguments raised on appeal, including the application of res

judicata to this case.

      We see no error in the trial court's determination that the non-viability of

plaintiff's claims as an individual precludes her ability to be a class

representative under Rule 4:32-1(a)(3), and, accordingly, we affirm the trial

court's April 13, 2022 order dismissing plaintiff's complaint with prejudice.

"It is well established that, in order to bring a class action lawsuit, the named

representative must individually have standing to bring their claims." Rosen v.

Cont'l Airlines, Inc., 430 N.J. Super. 97, 107 (App. Div. 2013); see R. 4:32-

1(a)(3).

      Although plaintiff also appealed the April 9, 2020 Law Division order

denying her motion to grant class certification, plaintiff did not address this

issue in her merits brief. Thus, that portion of plaintiff's appeal is deemed

abandoned. Sklodowsky v. Lushis, 417 N.J. Super. 648, 657 (App. Div. 2011).

Any disagreement with the April 9, 2020 order would also be rendered moot

based upon our affirmance of the dismissal of plaintiff's complaint with

prejudice.

      Affirmed.

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