NOT FOR PUBLICATION WITHOUT THE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.
A-2951-21
2
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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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
A-2951-21
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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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)).
A-2951-21
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
A-2951-21
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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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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-
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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
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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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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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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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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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