Court Opinion

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Opinions of the United
2008 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

9-11-2008

Studio 45 v. Union
Precedential or Non-Precedential: Non-Precedential

Docket No. 07-2795

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Recommended Citation
"Studio 45 v. Union" (2008). 2008 Decisions. Paper 544.
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NOT PRECEDENTIAL

                   UNITED STATES COURT OF APPEALS
                        FOR THE THIRD CIRCUIT

                              Case No: 07-2795

                     STUDIO 45 DISCOTHEQUE, INC.;
                        EDUARDO GONZALEZ

                                         v.

     THE CITY OF UNION CITY; CHARLES EVERETT, Chief of Police;
    CLEMENTE, Union City Police Officer; Sergeant MICHAEL FIGUEROA

                   (District of New Jersey D.C. 06-cv-01680)

                     STUDIO 45 DISCOTHEQUE, INC.;
                        EDUARDO GONZALEZ

                                         v.

      THE CITY OF UNION CITY; CHARLES EVERETT, Chief of Police;
        Sergeant MICHEL FIGUEROA; JOHN DOE (1-10), being both a
           fictitious designation and one or more police officers either
           from the City of Union City or acting as agents for the City
            of Union City but being officer under another jurisdiction
           County of local government within the State of New Jersey;
         JANE DOE (1-10), being both a fictitious designation and one
          or more police officers either from the City of Union City or
           acting as agents for the City of Union City but being officer
          under another jurisdiction County of local government within
                              the State of New Jersey

                 (District of New Jersey Civil No. 06-cv-01681)

                       Studio 45 Discotheque, Inc., Eduardo Gonzalez,

                                                Appellants
                    On Appeal from the United States District Court
                               for the District of New Jersey
                     District Court Nos. 06-cv-01680, 06-cv-01681
                    District Judge: The Honorable Faith S. Hochberg

                   Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
                                  September 9, 2008

                        Before: SCIRICA, Chief Judge, MCKEE,
                               and SMITH, Circuit Judges

                              (Filed:   September 11, 2008)

                                        OPINION

SMITH, Circuit Judge.

       Eduardo Gonzalez and his Studio 45 discotheque (“Studio 45”) appeal from an

order by the United States District Court for the District of New Jersey granting summary

judgment in favor of defendants City of Union City and local police officers (“the City”).

The District Court determined that New Jersey’s entire controversy doctrine barred this

consolidated civil rights action, brought under 42 U.S.C. § 1983, because it was

sufficiently related to a previously filed § 1983 claim. We will affirm.

       There are two issues raised on appeal. First, Studio 45 argues that the District

Court improperly granted summary judgment because it erroneously applied the entire

controversy doctrine, finding that the instant consolidated claim arose from the same set

                                             2
of core facts as the prior state court action. In addition, Studio 45 challenges the

application of the entire controversy doctrine in this case by contending that it is bad law.

We reject this latter argument outright. The entire controversy doctrine remains the law

of the state of New Jersey,1 applicable in state court actions as well as cases requiring the

application of New Jersey state law in this Court. See, e.g., Olds v. Donnelly, 696 A.2d
633 (N.J. 1997); DiTrolio v. Antiles, 662 A.2d 494 (N.J. 1995); Fields v. Thompson

Printing Co., 363 F.3d 259 (3d Cir. 2004); Bernardsville Quarry v. Borough of

Bernardsville, 929 F.2d 927 (3d Cir. 1991). Accordingly, we will address only the first

issue. Our review of the District Court’s order granting summary judgment is plenary.2

Morton Int’l, Inc. v. A.E. Stanley Mfg. Co., 343 F.3d 669, 679 (3d Cir. 2003).

       Gonzalez was the owner and operator of Studio 45, a liquor licensed establishment

in Union City, New Jersey that was used as a discotheque, dance club, and bar. In August

of 2002, the City’s Alcoholic Beverage Control Commission (ABC) suspended Studio

45’s liquor license, citing 39 violations of ABC regulations. On April 17, 2003, the

Union City Police Department was advised by the state Attorney General’s office that the

   1
    Rule 4:30A of the New Jersey Court Rules Governing Civil Practice in the Superior
Court, Tax Court, and Surrogate’s Court provides “[n]on-joinder of claims or parties
required to be joined by the entire controversy doctrine shall result in the preclusion of
omitted claims to the extent required by the entire controversy doctrine, except as
otherwise provided by R. 4:64-5 (foreclosure actions) and R. 4:67-4(a) (leave required for
counterclaims or cross-claims in summary actions).” N.J. C OURT R ULES, R. 4:30A (2008).
   2
    The District Court had jurisdiction over the case pursuant to 28 U.S.C. § 1331 and 28
U.S.C. § 1441, and we have appellate jurisdiction under 28 U.S.C. § 1291.

                                              3
establishment remained subject to the regulations governing liquor licensed entities

during the suspension of its license, including ordinances relating to permissible hours of

operation. Studio 45 bases all of its claims upon official City and police action taken to

enforce a regulation governing licensees, namely the City of Union City’s municipal

Ordinance 10-4.1,3 in the months during which its liquor license was suspended.4

         On November 19, 2003, Studio 45 filed its first complaint against the City in the

Superior Court of New Jersey, alleging § 1983 violations stemming from the alleged

wrongful closing of its establishment through the City’s enforcement of Ordinance 10-

4.1. This action was dismissed when the court granted the City’s motions for summary

judgment on August 11, 2005, November 29, 2005, and February 17, 2006.

         During the pendency of that claim, Studio 45 brought a second § 1983 action

against the City in the Superior Court of New Jersey on November 22, 2005. It filed a

third complaint citing various § 1983 violations in the Superior Court on January 20,

   3
       Ordinance 10-4.1 provides, in relevant part:

         No alcoholic beverages shall be sold, delivered to any consumer, or served to
         or consumed in any licensed premises between the hours of 2:00 a.m. and 7:00
         a.m. on any day . . . except that any licensee having both an alcoholic beverage
         license and a restaurant license for the same premises, and any hotel or club
         licensee shall have the privilege of remaining open during the aforesaid
         prohibited hours for the purpose of carrying on their usual activities, except the
         sale of alcoholic beverages.

       C ITY OF U NION C ITY, N.J. O RDINANCES §10-4.1. (2002).
   4
     The suspended liquor license was permanently revoked upon a final order issued by
the State of New Jersey Division of Alcohol Beverage Control on December 22, 2004.

                                                 4
2006. The facts alleged in these complaints against the City also claim that the City’s

efforts to enforce Ordinance 10-4.1 against Studio 45 were in violation of its civil rights.

On April 7, 2006, after the dismissal of the first action, both pending Superior Court

actions were removed to the federal District Court of New Jersey upon the City’s request.

These two claims were consolidated on July 31, 2006.

       The District Court ruled that the entire controversy doctrine was triggered because

the consolidated claim arose from the same set of core facts giving rise to Studio 45’s

first complaint. We agree. New Jersey’s entire controversy doctrine exists to “assure that

all aspects of a legal dispute occur in a single lawsuit.” Olds, 696 A.2d at 637. The

doctrine was codified to advance three goals: “(1) to encourage the comprehensive and

conclusive determination of a legal controversy; (2) to achieve party fairness . . . and (3)

to promote judicial economy and efficiency by avoiding fragmented, multiple, and

duplicative litigation.” DiTrolio, 662 A.2d at 508. Under the entire controversy doctrine,

a party cannot withhold part of a controversy for separate later litigation even when the

withheld component is a separate and independently cognizable cause of action.

Paramount Aviation Corp. v. Agusta, 178 F.3d 132, 137 (3d Cir. 1999).

       “In determining whether successive claims constitute one controversy for the

purposes of the doctrine, the central consideration is whether the claims against the

different parties arise from related facts or the same transaction or series of transactions.”

Fields, 363 F.3d at 265 (quoting DiTrolio, 662 A.2d at 502). The Supreme Court of New

                                              5
Jersey explains:

       The test for whether claims are “related” such that they must be brought in a
       single action under the New Jersey entire controversy doctrine . . . [is] as
       follows: if parties or persons will, after final judgment is entered, be likely to
       have to engage in additional litigation to conclusively dispose of their
       respective bundles of rights and liabilities that derive from a single transaction
       or related series of transactions, the omitted components of the dispute or
       controversy must be regarded as constituting an element of one mandatory unit
       of litigation.

DiTrolio, 662 A.2d at 502 (citing O’Shea v. Amoco Oil Co., 886 F.2d 584 (3d Cir. 1989)).

While we recognize that Studio 45 would like us to consider the actions of the City and

the police on different dates to be discrete and independent factual grounds, it is clear that

each instance was part of a continuing effort by the City to enforce its ordinance. On the

face of each of its three complaints, Studio 45 cites collective police activity in its attempt

to establish that the City acted in violation of its civil rights. While two instances of City

action occurred after the filling of the initial complaint, this in and of itself does not

defeat application of the entire controversy doctrine.

       Given its preclusive effect on subsequent related claims, the doctrine is applied in

conjunction with generous supplemental pleading procedures. If “a germane

supplemental pleading were not allowed, ‘the policy which favors the use of a single

action to resolve all existing controversies between the parties is impaired, if not

frustrated.’” Brown v. Brown, 506 A.2d 29, 34 (N.J. Super. Ct. App. Div. 1986) (quoting

2 Schnitzer & Wildstein, New Jersey Rules Service, A IV-409 (1954)). Studio 45’s

failure to amend its initial complaint to incorporate all related claims must result in their

                                               6
preclusion. As the District Court correctly noted, the instant claims were filed while

motions for summary judgment were pending in the prior state court action. Additionally,

Studio 45 did not allege any facts in the subsequent complaints that were not within its

knowledge during the pendency of the first state court action. Under New Jersey’s entire

controversy doctrine, Studio 45 was required to raise all claims rising from the City’s

enforcement of the ordinance in the first state action, amending its initial complaint if

necessary. In light of its failure to do so, the claims are now appropriately barred.

       Accordingly, we will affirm the judgment of the District Court.

                                              7