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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-4415-14T4
VINCENT THOMAS,
individually; and VINCENT
THOMAS, derivatively on
behalf of and for the benefit
of FANCYLIMOS OF CHERRY HILL
INC., a business entity,
Plaintiff-Appellant,
v.
CASIMIR SPOLNICKI, an individual;
FAVORITELIMOS.COM, a business
entity,
Defendant-Respondent.
________________________________________________________________
Argued February 14, 2017 – Decided September 14, 2017
Before Judges Messano and Espinosa.
On appeal from the Superior Court of New
Jersey, Law Division, Ocean County, Docket No.
L-3422-14.
Grant S. Ellis argued the cause for appellant
(Archer Law Office, LLC, attorneys; Mr. Ellis,
on the briefs).
Christian M. Towers argued the cause for
respondent (Mr. Towers, attorney; Roger A.
Barbour, on the brief).
PER CURIAM
Plaintiff Vincent Thomas and defendant Casimir Spolnicki once
co-owned Fancylimos of Cherry Hill, Inc. (Fancylimos), a limousine
company. Since 2008, they have been involved in four separate
lawsuits regarding the disposition of Fancylimo's assets. This
appeal concerns the dismissal of the fourth lawsuit, brought by
plaintiffs in November 2014 against Spolnicki and
Favoritelimos.com (collectively, defendants) (Suit 4). Plaintiffs
appeal from an order granting defendants' motion to dismiss that
complaint as barred under res judicata and the entire controversy
doctrine.1 For the following reasons, we reverse.
I.
Fancylimos, a closely-held corporation, was formed in
January, 2005. Thomas and Spolnicki each owned a fifty percent
(50%) share in the company.
The first lawsuit was filed on December 2, 2008, by Spolnicki
and Fancylimos against Thomas in the Superior Court, Chancery
Division, Burlington County, and was later transferred to the Law
Division (Suit 1). Because a copy of the complaint has not been
provided, it is unclear what claims were asserted. A proof hearing
1
Plaintiffs also appealed from an order denying their motion to
disqualify defendant's attorney. As the attorney is now deceased,
this issue is moot.
2 A-4415-14T4
was held on May 1, 2009, which Thomas failed to attend. The
default judgment sheds no light on what claims were asserted and
the basis for the judgment, stating only, "Judgment is hereby
entered against the defendant, Vincent Thomas in the amount of
$165,386.40, in favor of the plaintiffs." This judgment provided
the basis for defendants' subsequent successful claim that
plaintiffs' Suit 4 complaint was barred by res judicata and the
entire controversy doctrine.
Approximately one year later, on May 7, 2010, Spolnicki filed
a Certificate of Dissolution to dissolve Fancylimos.2 On September
1, 2010, Spolnicki and Fancylimos filed a second lawsuit against
Thomas in the Superior Court, Chancery Division, Burlington County
(Suit 2). The complaint alleged that Thomas "breached his
fiduciary duties and abused his authority against the best
interests of" Fancylimos. Specifically, the complaint accused
Thomas of attempting to improperly transfer the title of three
vehicles owned by Fancylimos to his own name. The relief sought
was the dissolution of Fancylimos and an order from the court to
transfer the titles of two vehicles to Spolnicki's companies upon
payment in full.
2
Plaintiff claims he has since restored the company, and that it
is filing annual reports.
3 A-4415-14T4
Thomas filed an answer that denied the allegations, and
asserted two counterclaims, making the following allegations:
Spolnicki (1) "unilaterally doubled his salary thereby reducing
the profits of the corporation," (2) "locked [Thomas] out of the
business," preventing Thomas "from having any input, control or
knowledge of or over the income, disbursement or activities of the
corporation," (3) acted "without cause and contrary to the
agreement between the parties," (4) "retained all the profits of
Fancylimos," and (5) failed to pay Thomas for services he performed
for Fancylimos and which Spolnicki had promised to pay. Thomas
demanded an accounting of Fancylimos, repayment to Thomas for
various services and loans he provided Fancylimos, and a fifty
percent pay out of all of Fancylimos's assets.
The trial court entered an order, dated October 20, 2010,
that placed the title of the three vehicles at issue into escrow
and required Thomas and Spolnicki to submit proof of payments made
on the vehicles for the purpose of dividing the vehicles equitably
between the parties. Spolnicki was granted possession of the
vehicles in the interim.
Thereafter, a consent order, dated February 9, 2011, was
entered that granted Spolnicki title of the three vehicles upon
his satisfaction of the leases on the vehicles and permitted him
4 A-4415-14T4
to sell the vehicles to purchase a limousine bus, the title of
which would be held in escrow.
A second consent order, dated March 7, 2011, allowed Spolnicki
to obtain immediate title to two of the vehicles. On August 4,
2011, an order was entered that dismissed Spolnicki's complaint
without prejudice, leaving Thomas's counterclaims intact.
A third consent order, dated April 12, 2012, endorsed title
of the third vehicle at issue to "Favorite Limos," a company owned
by Spolnicki, "pending resolution of this matter." On the
following day, the Chancery judge dismissed the matter without
prejudice, directing that the parties could re-file the matter in
the Law Division within 120 days.
Thomas refiled his claim in Ocean County (Suit 3) and then
moved for a transfer of venue to Burlington County. The motion
was granted by order dated December 7, 2012. This action was
dismissed without prejudice for lack of prosecution in October
2013 because Thomas failed to appear at a scheduled arbitration
hearing.
This appeal concerns the dismissal of Suit 4, brought by
plaintiffs in November 2014 against Spolnicki and
Favoritelimos.com (Suit 4). The complaint alleged Spolnicki
improperly distributed Fancy Limo's assets following its
dissolution and sought an accounting, distribution, and
5 A-4415-14T4
appointment of receiver (count one). In addition, the complaint
asserted the following claims: breach of contract (count two),
unjust enrichment (count three), conversion of chattel (count
four), breach of fiduciary duty (count five), and a constructive
trust, replevin, disgorgement, and other equitable relief (count
six). Defendants filed an answer, denying plaintiffs' claims,
bringing two counterclaims, and demanding that the complaint be
dismissed with prejudice on res judicata grounds. Defendants
later filed a motion to dismiss the complaint, arguing that the
matter was barred by res judicata.
The trial court granted defendants' motion, dismissing
plaintiffs' complaint with prejudice under res judicata and the
entire controversy doctrine. In its oral decision, the trial
court found that a prior judge "made a full and final determination
as to the disputes before him which were in the interpersonal
relationships between the principals of [Fancylimos], Mr. Thomas
and Mr. Spolnicki, and the disposition of those assets."
In their appeal, plaintiffs argue the trial court erred in
dismissing the complaint on res judicata or entire controversy
grounds and, in the alternative, the claims for money damages
should not have been dismissed on those grounds.
6 A-4415-14T4
II.
Because the application of res judicata and the entire
controversy doctrine are questions of law, see Int'l Union of
Operating Eng'rs Local No. 68 Welfare Fund v. Merck & Co., Inc.,
192 N.J. 372, 386 (2007), we review these issues de novo. Ibid.
Under the doctrine of res judicata, a "cause of action between
parties that has been finally determined on the merits by a
tribunal having jurisdiction cannot be relitigated by those
parties or their privies in a new proceeding." Velasquez v. Franz,
123 N.J. 498, 505 (1991). New Jersey law requires three basic
elements for res judicata to apply:
(1) the judgment in the prior action must be
valid, final, and on the merits; (2) the
parties in the later action must be identical
to or in privity with those in the prior
action; and (3) the claim in the later action
must grow out of the same transaction or
occurrence as the claim in the earlier one.
[Watkins v. Resorts Int'l Hotel & Casino, 124
N.J. 398, 412 (1991).]
It is well settled that a "judgment of involuntary dismissal
or a dismissal with prejudice constitutes an adjudication on the
merits 'as fully and completely as if the order had been entered
after trial.'" Velasquez, supra, 123 N.J. at 507 (quoting Gambocz
v. Yelencsics, 468 F.2d 837 (3d Cir.1972)). Furthermore, Rule
4:37-2 states that "[u]nless the order of dismissal otherwise
7 A-4415-14T4
specifies, . . . any [involuntary] dismissal . . . other than a
dismissal for lack of jurisdiction, operates as an adjudication
on the merits." R. 4:37-2.
Here, there are three judgments that carry a preclusive
effect. The first is the default judgment against Thomas that
resulted from Suit 1. Second, the consent order entered on March
7, 2011 in Suit 2 is a final judgment on the issue of title
ownership of two vehicles, a 2006 Hummer H2 and a 2006 Infinity
QX56, which was granted to Spolnicki. Third, the consent order
entered on April 12, 2012 in Suit 2 is a final judgment on the
issue of title ownership to a 2008 Chrysler 300, which was granted
to "Favorite Limos," a company owned by Spolnicki and a current
defendant in this matter.
Because it is clear from the record that the parties in Suit
1 and Suit 4 are the same, the only remaining issue is whether the
claims in Suit 4 "grow out of the same transaction or occurrence"
as the claims in Suit 1. Watkins, supra, 124 N.J. at 412.
To determine whether claims are precluded from relitigation
by a preceding suit, res judicata and the entire controversy
doctrine apply in tandem. See McNeil v. Legis. Apportionment
Comm'n, 177 N.J. 364, 395 (2003). The entire controversy doctrine
mandates that "all parties involved in a litigation should at the
very least present in that proceeding all of their claims and
8 A-4415-14T4
defenses that are related to the underlying controversy." Cogdell
v. Hosp. Ctr. at Orange, 116 N.J. 7, 15 (1989). Thus, not only
are parties to a litigation barred from subsequently bringing
claims that were actually litigated, but are likewise barred from
litigating "all relevant matters that could have been so
determined." Watkins, supra, 124 N.J. at 412 (citations omitted);
see also R. 4:30A (codifying the entire controversy doctrine)
("Non-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 . . . .").
The claim preclusion inquiry begins by determining whether
the separate claims arise from the same or related transaction or
occurrence. See DiTrolio v. Antiles, 142 N.J. 253, 267 (1995);
Watkins, supra, 124 N.J. at 412. To determine whether claims are
"related" for the purpose of claim preclusion, the test is:
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, supra, 142 N.J. at 268 (citations
omitted).]
9 A-4415-14T4
As we have noted, it is unclear what issues were litigated
in Suit 1. Spolnicki asserts Suit 1 was brought "[d]ue to
[Thomas's] various thefts and misappropriations of [Fancylimos]
assets and monies." At a hearing before the trial court, counsel
for defendants explained that, based on his understanding, the
underlying issue of Suit 1 "was that Mr. Thomas stole a 67,000-
dollar Rolls Royce limousine" and "there were some significant
other LLC assets including thefts of money that we proved and [the
trial judge] in Burlington County entered the judgment after a
formal proof hearing." Defendants claim the final judgment settled
"all remaining assets of the business previously operated by the
parties" in Spolnicki's favor, an assertion that is not explicitly
supported by the final judgment.
In response, plaintiffs argue that even assuming defendants'
recollection of Suit 1 is correct, that fails to show that they
were required to bring the six claims asserted in Suit 4 in Suit
1.
The first claim in Suit 4 seeks an accounting, distribution
and appointment of a receiver, alleging that after dissolving
Fancylimos, Spolnicki "kept all the assets of [Fancylimos],"
"transferred them to . . . his new company" and "used the
assets . . . to pay his personal debts." The second claim is for
breach of contract, alleging Thomas and Spolnicki "had an oral
10 A-4415-14T4
contract for running [Fancylimos]" which Spolnicki breached by
"failing to make payments to [Thomas] and by seizing unilateral
control of the corporation's assets and converting them to his own
use." The third claim is for unjust enrichment, alleging
"[d]efendants received a benefit from [Thomas], that is, his labor
and assets." The fourth claim is for conversion of chattel,
alleging that "Defendants took Plaintiffs' property, namely, the
assets of [Fancylimos]" and "exercised dominion over Plaintiffs'
property in a manner inconsistent with Plaintiffs' rights . . .
in bad faith, intentionally, and with malice." The fifth claim
is for breach of fiduciary duty, alleging that Spolnicki "violated
this duty by appropriating the corporation's assets for himself."
Finally, the sixth claim seeks a constructive trust, replevin,
disgorgement, and other equitable relief, alleging that "Spolnicki
used the wrongfully obtained assets to pay off his mortgage . . .
[and] to fund FAVORITELIMOS.COM."
It is difficult to decipher whether any of these claims are
precluded by the default judgment in Suit 1 or the orders in Suit
2. To the extent that plaintiffs' claims regard the vehicles at
issue in the Suit 2 orders (the 2006 Hummer H2, 2006 Infinity
QX56, and 2008 Chrysler 300), these claims are undoubtedly
precluded by res judicata and the entire controversy doctrine.
11 A-4415-14T4
However, even if it is true that Suit 1 concerned Thomas's
"thefts and misappropriations of [Fancy Limo] assets and monies,"
and settled "all remaining assets of the business previously
operated by the parties," allegations in the complaint filed in
Suit 4 concern Spolnicki's conduct after the dissolution of
Fancylimos, which occurred on May 7, 2010. Thus, the default
judgment entered on May 11, 2009 could not have a preclusive effect
over claims arising from events that had not occurred at that
time.
We therefore conclude that the trial court erred in dismissing
the complaint on res judicata and entire controversy grounds.
Reversed and remanded. We do not retain jurisdiction.
12 A-4415-14T4
VINCENT THOMAS, ETC. VS. CASIMIR SPOLNICKI, ETC.(L-3422-14, OCEAN COUNTY AND STATEWIDE)
Combined Opinion