The Entire Controversy Doctrine “is intended to be applied to prevent a party from voluntarily electing to hold back a related component of the controversy in the first proceeding by precluding it from being raised in a subsequent proceeding thereafter.”  Oltremare v. ESR Custom Rugs, 330 N.J. Super. 310, 315 (App. Div. 2000).

For example, if a condominium association sues a residential developer for construction defects but fails to plead under the Consumer Fraud Act (which carries lucrative treble damages), the Entire Controversy Doctrine would likely prevent the association from recovering in a later lawsuit under the Consumer Fraud Act. By contrast, if the developer and the association’s president get into a car accident after a deposition about the construction defect suit, the personal injury claims from the car accident would not have to be joined in the construction defect suit because those two claims do not arise out of the same transaction or event.

It is therefore invaluable for litigants to identify all possible causes of action related to a transaction or event, preferably before commencing suit.

Stark & Stark’s Litigation Group has extensive experience navigating such complex issues, to maximize your relief and avoid legal pitfalls like the Entire Controversy Doctrine. If you have questions regarding this, or other similar complex issues, please feel free to contact me: ckvitka@stark-stark.com.

After initial inquiries regarding the timing of the replacement of their aging roof, the unit owners were advised that roofs were replaced when they leaked. Associations generally have a duty to repair, replace and maintain the Association’s common elements in an effort to prevent damage to unit owner property, and thus a policy which requires association members to incur property damage to their home before the Board will even investigate the integrity of a Common Element may be a per se violation of the Association’s fiduciary duty to each and every unit owner. Moreover, Associations hire experts in various fields to give them advice on many issues of governance. Board members should generally rely upon the opinions of the Association’s experts, unless there are compelling reasons to ignore those opinions.
 

Sworn testimony in this matter established that after complaints of leaks, the board hired a roofer to make a minor repair only, with specific instructions not to evaluate the overall condition of the roof. More problematic for the Association, was evidence that showed when the Association’s roofer later recommended a complete replacement of the roof, the board ignored that opinion, and instead hired a different roofer who provided them with an opinion that the roof would last several more years. Although the Association was replacing newer roofs in the community, these unit owners were forced to endure ever increasing leaks. 
 

Deposition testimony obtained in the matter appeared to point to a personal animus against these unit owners, rather than an objective determination of the condition of their roof, as conducted by the Association’s experts.  After months of litigation and expense, and faced with unfavorable testimony from various sources, the Association ultimately agreed to replace the unit owners’ roof and to pay a significant cash-settlement.
 

This matter should serve as a cautionary tale to all Associations. Notwithstanding their volunteer status, board members have a fiduciary duty to each and every unit owner, which requires them to treat constituents equally and set personal feelings aside to when rendering business decisions that affect everyone in the community. Boards that operate outside of these boundaries run the risk of inviting lawsuits and potentially paying money to aggrieved unit owners.
 

Stark & Stark represents over 300 condominium and homeowners associations in New Jersey, Pennsylvania and New York, and can advise your Association of ways to ensure that your Association’s Board operates properly and legally.

Cary Kvitka is a member of Stark & Stark’s Lawrenceville, New Jersey's Litigation Group. For more information, please contact Mr. Kvitka.

Here is what you can restrict:

• You may impose restrictions against commercial solicitations, (such as prohibiting outside advertisers from placing advertising materials on cars parked in the lots).
• You may also impose some restrictions on the time, place and manner of non-commercial speech activities at your shopping malls.

However, even if you believe that the “time, place and manner” restrictions meet the general standard of balancing the commercial interest of minimizing the disruption at the shopping malls with the constitutionally protected interest of public expression, you would still open yourself to liability by enforcing those restrictions by yourself or through the use of a private security force.  Further, the local police departments would probably not help you to enforce those restrictions because they are agents of the government, and are therefore only permitted to curtail free-speech activities under extremely limited circumstances.

Therefore, there is little that you can do as a shopping mall owner or manager in New Jersey to prohibit non-commercial speech at your shopping malls.  You could only curtail non-commercial speech activities and/or expect the police to take significant action if a public gathering at your shopping mall becomes unruly, blocks pedestrian or automobile traffic, involves harassing behavior, involves the use of megaphones or disrupts the ability to reasonably conduct business.  If any of that happens, you can call the police and file a complaint.  However, most police departments would only disperse such protests if they become unruly, and they would most likely not take any action simply because the protesters failed to obtain a permit.

Rule 4:5-1(b)(2) of the New Jersey Rules of Court enforces the Entire Controversy Doctrine, by imposing a continuing obligation upon litigants to identify all parties to pending or contemplated legal actions, which are related to the matter in controversy. If a party fails to comply with that requirement in a first lawsuit, and then files a second lawsuit against a different party, the Court may dismiss that second lawsuit if “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.”
 

The New Jersey Supreme Court recently addressed this issue under the Consumer Fraud Act. In Kent Motor Cars, Inc. d/b/a Honda of Princeton v. Reynolds and Reynolds, Co. (A-102/103-09), the Defendant, a printer (“Reynolds”), sold pre-printed "Buyer's Order" forms to the Plaintiff automotive dealerships (collectively, the “Dealerships”). The Dealerships were named defendants in a class action lawsuit that alleged, among other things, violations of the Consumer Fraud Act (“CFA”). Even though the Dealerships knew that the class action lawsuit involved the Buyer’s Order forms that they purchased from Reynolds, they did not comply with Rule 4:5-1(b)(2) by identifying their potential claim against Reynolds. 
 

After settling the class action lawsuit, the Dealerships filed a complaint against Reynolds under the CFA because its Buyer's Order forms violated regulations. Notably, violations of the CFA can result in treble (3X) damages.
 

The Supreme Court held that the Dealerships’ failure to comply with Rule 4:5-1(b)(2) in the class action lawsuit was inexcusable. It also held that allowing the matter to proceed against Reynolds under the CFA would result in “substantial prejudice” to Reynolds because:

If Reynolds had been joined in [the class action lawsuit], its liability would have been limited to a portion of damages, trebled under the CFA, and a portion of counsel fees associated with the claim against Reynolds for a regulatory violation. By ignoring [Rule 4:5-1(b)(2)] and filing a successive CFA claim, the Dealerships seek from Reynolds all of their damages and counsel fees incurred in Wilson, and they seek trebling of both under the CFA. The Court cannot endorse a plan to permit trebling of damages already trebled.” [Emphasis added]
 

Therefore, the Supreme Court prohibited the Dealerships from pursuing the CFA claim against Reynolds. However, the Court permitted the Dealerships to pursue their claim for a contribution from Reynolds toward the damages they incurred in the class action lawsuit because in that scenario:

The Dealerships must prove what parts of the [class action] settlement and attorneys' fees are attributable to Reynolds' [Buyer’s Order] form. Thus, although the violation of Rule 4:5-1(b)(2) was inexcusable and it would have been more efficient to address the contribution claim in [the class action lawsuit], to the extent that its form violated regulations, dismissal of the entire complaint would unjustly allow Reynolds to avoid any responsibility.

The Court’s decision clearly seeks to balance the injustice of allowing the Dealerships to recoup three-times their damages against Reynolds under the circumstances; while also seeking to hold Reynolds liable to the extent that their Buyer’s Order forms were deficient. Even though the Court essentially “split the baby,” this case should serve as a reminder to any party involved in complex litigation (including commercial litigation, condominium transition litigation, construction litigation, etc.) that it has a continuing obligation to identify related parties.  The more ominous message from the New Jersey Supreme Court is that by failing to join those related parties, litigants run the risk of permanently waiving their rights to pursue the damages that they could otherwise recover.