NOT FOR PUBLICATION WITHOUT THE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-1546-16T4
RONALD J. O'MALLEY,
Plaintiff-Respondent,
v.
BRIAN NEARY and THE LAW
OFFICES OF BRIAN NEARY,
Defendants-Appellants.
_______________________________
Argued April 25, 2017 – Decided June 19, 2017
Before Judges Fisher, Vernoia and Moynihan.
On appeal from Superior Court of New Jersey,
Law Division, Ocean County, Docket No. L-1844-16.
Peter W. Till argued the cause for appellant.
Peter A. Kreiner argued the cause for respondent
(Kreiner & Kreiner LLC, attorneys; Mr. Kreiner, on
the brief).
PER CURIAM
Defendants, Brian Neary and The Law Offices of Brian Neary
(conjointly: Neary), were retained on or about June 17, 2009 to
represent plaintiff in a federal criminal prosecution.1 On August
14, 2009, O'Malley also hired the law firm of Walder, Hayden &
Brogan (Walder), with which he signed a separate retainer agreement
for investigatory services regarding the same prosecution.
Plaintiff signed a second retainer with Walder on September 7,
2010 to cover the trial phase. He signed a third retainer
agreement with Walder on February 14, 2012 to cover the appeal of
plaintiff’s sentence. A separate retainer with Neary was signed
by plaintiff on April 16, 2012 for appellate work. Both firms
represented O'Malley during the trial phase and in his appeal
after sentencing.
On May 17, 2013, O'Malley filed suit against Walder alleging
breach of contract, breach of fiduciary duty, breach of the duty
of good faith and fair dealing, consumer fraud and fraud. Neary
was not named in that suit; nor was he named as a potential party
in a notice pursuant to Rule 4:5-1(b)(2). A deposition subpoena
in the Walder matter was issued to Neary as a non-party. That
deposition was taken on October 21, 2015. The suit against Walder
was subsequently settled on June 3, 2016.
1
The respective complaints filed by plaintiff against Neary and
Walder Hayden & Brogan provide the facts we here consider. The
complaints were attached to defendants' motion to dismiss.
2 A-1546-16T4
O'Malley filed suit against Neary on July 6, 2016, alleging
breach of contract and breach of the duty of good faith and fair
dealing. The following month, Neary moved for dismissal, arguing
that O'Malley's failure to name Neary in the Walder suit barred
this action under the entire controversy doctrine. The motion
judge denied the application and Neary filed a motion for leave
to appeal, which we granted. In this interlocutory appeal, Neary
claims the motion judge failed to consider and properly apply the
entire controversy doctrine. We find insufficient proofs, at
present, to warrant dismissal of the suit pursuant to the entire
controversy doctrine, and affirm the denial of Neary's motion to
dismiss the complaint.
The entire controversy doctrine is equitably rooted, thus its
applicability is left to judicial discretion based on the
particular circumstances in a given case. Mystic Isle Dev. Corp.
v. Perskie & Nehmad, 142 N.J. 310, 323 (1995); DiTrolio v. Antiles,
142 N.J. 253, 275 (1995); Cogdell v. Hosp. Ctr. at Orange, 116
N.J. 7, 27 (1989). We review a trial court's denial of a motion
to dismiss based on the entire controversy doctrine under the
abuse of discretion standard. See Paradise Enterprises v. Sapir,
356 N.J. Super. 96, 102 (App. Div. 2002) (analogously applying an
abuse of discretion standard to the trial court's application of
3 A-1546-16T4
the equitable principles of forum non conveniens), certif. denied,
175 N.J. 549 (2003).
In Kavanaugh v. Quigley, 63 N.J. Super. 153, 158 (App. Div.
1960), this court held:
It is well settled that discretion means legal
discretion, in the exercise of which the trial
judge must take account of the law applicable
to the particular circumstances of the case
and be governed accordingly. . . . [I]f the
trial judge misconceives the applicable law,
or misapplies it to the factual complex, in
total effect the exercise of legal discretion
lacks a foundation and becomes an arbitrary
act, however conscientious may have been the
judge in the performance of it. When this
occurs it is the duty of the reviewing court
to adjudicate the controversy in light of the
applicable law in order that a manifest denial
of justice be avoided.
The entire controversy doctrine entered a stage of evolution2
in 1998 when the New Jersey Supreme Court approved changes to the
New Jersey Court Rules. Rule 4:30A was amended to eliminate
mandatory party joinder. Party joinder was readdressed by the
adoption of Rule 4:5-1(b)(2).
Our Supreme Court, in Kent, supra, 207 N.J. at 445, recognized
the interplay between Rule 4:5-1(b)(2) and Rule 4:30A:
2
The history of the entire controversy doctrine has been well-
documented by a number of courts. See, e.g., Kent Motor Cars,
Inc. v. Reynolds & Reynolds, Co., 207 N.J. 428, 442-44 (2011);
Olds v. Donnelly, 150 N.J. 424, 432-34 (1997).
4 A-1546-16T4
Taken together, both Rule 4:30A and Rule 4:5-
1(b)(2) advance the same underlying purposes.
As it relates to claims and to parties, they
express a strong preference for achieving
fairness and economy by avoiding piecemeal or
duplicative litigation. Both, however,
recognize that the means of accomplishing
those goals rests with the court. That is,
Rule 4:30A requires joinder of claims but
grants authority to a trial judge to create a
safe harbor in an appropriate case. Similarly,
Rule 4:5-1(b)(2) requires that names of
potentially liable or relevant parties be
disclosed to the court, leaving to it the
decision about whether to join them or not.
We consider defendants' motion to dismiss only under the
parameters of Rule 4:5-1(b)(2),3 which mandates that, with the
initial pleading, each party submit a certification advising a
court if any other action is pending or contemplated that relates
to the controversy before the court. If an action is pending or
contemplated, the certification:
shall identify such actions and all parties
thereto. Further, each party shall disclose
in the certification the names of any non-
party who should be joined in the action
pursuant to R. 4:28 or who is subject to
joinder pursuant to R. 4:29-1(b) because of
potential liability to any party on the basis
of the same transactional facts.
[Ibid.]
3
Despite defendants' claim at oral argument to the contrary, we
believe that the issue in this case involves only party joinder,
i.e., the joinder of Neary to the Walder suit. It does not involve
the joinder of any claim that was not included in the Walder suit.
We need not examine that issue.
5 A-1546-16T4
The duty to amend the certification is continuing if the facts set
forth therein change. Ibid. Courts may impose sanctions for a
party's failure to comply with the Rule:
including dismissal of a successive action
against a party whose existence was not
disclosed or the imposition on the
noncomplying party of litigation expenses that
could have been avoided by compliance with
this rule. A successive action shall not,
however, be dismissed for failure of
compliance with this rule unless the failure
of compliance was inexcusable and the right
of the undisclosed party to defend the
successive action has been substantially
prejudiced by not having been identified in
the prior action.
[Ibid.]
"The purpose of paragraph (b)(2) . . . is to implement the
philosophy of the entire controversy doctrine." Pressler &
Verniero, Current N.J. Court Rules, comment 2 on R. 4:5-
1(b)(2)(2017). The Kent Court explained how the execution of Rule
4:5-1(b)(2) fosters the aim of the entire controversy doctrine:
The goals of avoiding piecemeal litigation and
creating efficiency as related to parties were
accomplished by substituting the mechanism of
disclosure for the automatic requirement of
joinder. That is, a party to any litigation
is obligated to reveal the existence of any
non-party who should be joined or who might
have "potential liability to any party on the
basis of the same transactional facts." R.
4:5-1(b)(2). The disclosure obligation
attaches to each party when filing its first
pleading and continues thereafter, requiring
each to file and serve amended certifications
6 A-1546-16T4
should facts or circumstances change. Ibid.
The Rule demands only disclosure, explicitly
leaving it to the court to decide whether to
require that notice of the action be given to
any non-party identified or to compel that
party's joinder.
[Kent, supra, 207 N.J. at 444-45 (citations
omitted).]
It is within a court's discretion, once noticed of a
potentially related non-party, to compel joinder of that party.
Id. at 445-46.
The motion judge found that the instant suit involved
different transactional facts than did the Walder suit, and ended
its analysis there. The judge did not make findings as to whether
the failure to submit a certification pursuant to Rule 4:5-1(b)(2),
disclosing Neary as a non-party who had potential liability in the
Walder suit, was inexcusable. Nor did the court determine if
Neary's right to defend plaintiff's action was "substantially
prejudiced by not having been identified in the prior action." R.
4:5-1(b)(2).4
4
In his initial ruling, the motion judge found that the dismissal
of the action "would create a significant prejudice against the
plaintiff if the plaintiff's allegations pan out." No finding as
to prejudice against the defendants was made at that time. At a
subsequent hearing, the judge reiterated his finding. When
plaintiff's counsel pointed out that defendants had to show
substantial prejudice, the court said, "Well, I figured that
implicit in my finding that there's substantial prejudice against
the plaintiff is that there's insubstantial prejudice against the
7 A-1546-16T4
We briefly examine the two prongs of Rule 4:5-1(b)(2).
A.
Plaintiff now contends that he did not comply with the notice
requirements of Rule 4:5-1(b)(2) because defendants willfully
failed to provide plaintiff with invoices, and that the factual
transactions in the Neary and Walder suits were discrete.
The entire controversy doctrine sprang from the
constitutional principle that courts should create rules to ensure
that matters in controversy be efficiently and completely
determined. Kent, supra, 207 N.J. at 442-43 (citing N.J. Const.
art. VI, § III, ¶ 4). In the context of the 1998 rule changes
involving the party joinder aspect of the doctrine, the Kent court
declared that "the Rule demands only disclosure," id. at 445, and
held:
The ultimate authority to control the joinder
of parties and claims remains with the court;
the parties may not choose to withhold related
aspects of a claim from consideration, see,
e.g., Hobart Bros. Co. v. Nat'l Union Fire
Ins. Co., 354 N.J. Super. 229, 240-41 (App.
Div. 2002) (quoting Oltremare v. ESR Custom
Rugs, Inc., 330 N.J. Super. 310, 315 (App.
Div. 2000)), nor may they decline to reveal
the existence of other parties in an effort
to achieve an advantage.
[Id. at 446.]
defendants." The judge did not reveal the facts underpinning his
finding.
8 A-1546-16T4
The Rule requires parties to give notice even if the nexus
to the potential party is not clear. Compliance with the Rule
allows courts to monitor the status of that party vis-à-vis pending
litigation. A judge can ascertain if any nexus between the
potential party and the pending suit is revealed during the course
of discovery. The procedure allows a court to address entire
controversy doctrine issues early on—certainly before the pending
case is settled or tried—and to avoid motions to dismiss based on
the doctrine, and the appeals that follow. A court can exercise
its prerogative to require joinder or allow a separate cause of
action against a potential party only if notice is given.
There are insufficient proofs, at this early stage of
litigation, to determine if the failure to give the Walder court
notice of the instant suit was inexcusable. Neary has not provided
O'Malley with invoices for the services rendered, thus no
comparison of the services provided to O'Malley by both firms can
be made. While the deposition of Brian Neary may have, arguably,
established that Neary and Walder were O'Malley's co-counsel in
the criminal prosecution, it did nothing to foster a comparison
of services, or to establish that the suits against each lawyer
were based on the same transactional facts. O'Malley's letter5 to
5
This letter was included in Neary's appendix, but we do not see
that it was considered by the motion judge. In the appendix, it
9 A-1546-16T4
Neary, dated November 26, 2012, gives some insight into O'Malley's
grievances against Neary on that date, but does not establish a
link between the suits.
B.
In light of our holding regarding the first prong of Rule
4:5-1(b)(2), we need not determine if defendants suffered
substantial prejudice to justify the dismissal of this case under
the second prong of the Rule.
Our Supreme Court has recognized that "substantial prejudice"
can include the loss of evidence or other proofs needed to defend
a suit, or an increase in damages occasioned by a separate action.
Kent, supra, 207 N.J. at 446-48.
Defendants advance that they have been prejudiced because
they were "denied the opportunity to participate in discovery and
to develop defenses in the broader litigation context involving
all of the participants." Defendants do not specify the discovery
or defenses to which they refer. They do not indicate the reason
discovery cannot now be obtained, or defenses cannot now be
asserted. In any event, it is unnecessary to determine if
defendant demonstrated substantial prejudice because we have
is attached to counsel's reply certification filed in connection
with Neary's motion to dismiss the complaint. We take note of it
as part of the documents that appear to have been submitted to the
motion court.
10 A-1546-16T4
concluded the record does not permit a finding that the failure
to identify Neary was inexcusable under the first prong of Rule
4:5-1(b)(2).
C.
The Rule proscribes dismissal of a successive suit unless
both inexcusable failure to comply with the notice provision and
substantial prejudice are established by the undisclosed party.
Even if both prongs are proved, courts may, instead, consider
sanctions. 6 The basis for the imposition of less draconian
remedies follows long-standing jurisprudential tenets. As we
explained in Alpha Beauty v. Winn-Dixie Stores, 425 N.J. Super.
94, 102 (App. Div. 2012):
Our Court Rules, from their inception, have
been understood as "a means to the end of
obtaining just and expeditious determinations
between the parties on the ultimate merits."
Ragusa v. Lau, 119 N.J. 276, 284 (1990)
(quoting Tumarkin v. Friedman, 17 N.J. Super.
20, 27 (App. Div. 1951), certif. denied, 9
N.J. 287(1952)); see also Ponden v. Ponden,
374 N.J. Super. 1, 9-10 (App. Div. 2004),
certif. denied, 183 N.J. 212 (2005); Tucci v.
Tropicana Casino and Resort Inc., 364 N.J.
Super., 48, 53 (App. Div. 2003). As a result,
the Supreme Court has recognized a "strong
preference for adjudication on the merits
rather than final disposition for procedural
reasons." Galik v. Clara Maass Med. Ctr., 167
N.J. 341, 356 (2001) (quoting Mayfield v.
6
Defendants did not request, and the trial court did not consider
sanctions, only dismissal.
11 A-1546-16T4
Cmty. Med. Assocs., P.A., 335 N.J. Super. 198,
207 (App. Div. 2000)).
The party asserting the entire controversy doctrine as a
defense, bears "the burden of establishing both inexcusable
conduct and substantial prejudice." Hobart Bros. v. Nat'l Union
Fire Ins. Co., 354 N.J. Super. 229, 242 (App. Div.), certif.
denied, 175 N.J. 170 (2002). Defendants, on this record, have not
met that burden and dismissal of the suit against Neary is not
warranted.
The order under review is affirmed, although we do not
foreclose the trial court's later reconsideration of these
principles, if appropriate, upon receiving a better understanding
about the facts and allegations and their relationship to the
prior suit against Walder. We do not retain jurisdiction.
12 A-1546-16T4