DIMITRO DIMITROV et al. v. ZORICA DIMITROV

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1640-04T21640-04T2

DIMITRO DIMITROV and

ZORICA DIMITROV,

Plaintiffs-Appellants,

v.

EDWARD PETRUS,

Defendant-Respondent.

 
_______________________________

Submitted December 13, 2005 - Decided April 10, 2006

Before Judges R. B. Coleman and Seltzer.

On appeal from the Superior Court of

New Jersey, Law Division, Bergen County,

L-1647-04.

Paul Fernandez and Associates, attorneys

for appellants (Mr. Fernandez, on the

brief).

Daniel Jurkovic, attorney for respondent.

PER CURIAM

Plaintiffs, Dimitro Dimitrov and Zorica Dimitrov, appeal from an October 22, 2004, order dismissing their Law Division complaint against defendant, Edward Petrus, on entire controversy grounds. We affirm.

Given the basis for the dismissal of the complaint, we recite the procedural history of this litigation at some length. In 1999, the Dimitrovs engaged Petrus to perform work on a home they were constructing in East Rutherford. After the work had been completed, a dispute arose respecting the $4,270 balance Petrus claimed was owed to him. When the dispute could not be amicably resolved, Petrus filed a "Notice of Unpaid Balance and Right to File Lien" pursuant to the Construction Lien Law, N.J.S.A. 2A:44A-1 to -38. Because the construction affected residential property, he also submitted the matter to arbitration pursuant to N.J.S.A. 2A:44A-21(b)(3). The arbitrator ultimately issued an award in the amount of $4,045. Petrus filed a construction lien claim, N.J.S.A. 2A:44A-21(b)(8), and initiated a Special Civil Part action to confirm the arbitrator's award. When the Dimitrovs failed to answer, a default judgment was entered against them. The record does not contain a copy of that judgment, but it appears to have been entered in October or November 2000.

Thereafter, apparently prompted by an execution issued on the default judgment, the Dimitrovs filed a motion to vacate the default judgment and for permission to file an answer and counterclaim. The proposed pleadings asserted that Petrus's work was deficient, thus excusing the Dimitrovs from payment of the balance of the contract price and entitling them to damages. Those claims are identical to the claims asserted in the Dimitrovs' complaint, the dismissal of which led to this appeal. The motion was granted on January 5, 2001. The order granting the motion required that the pleadings be filed within ten days, and made the ability to file the responding papers "subject to fees being paid." The fees required to be paid were the sums due to the officer handling the execution issued on the default judgment.

The Dimitrovs failed to make that payment or file the answer and counterclaim within the ten day period. However, on February 9, 2001, they retained an attorney who filed a "motion to file an answer and counterclaim out of time . . . ." The accompanying certification, by the Dimitrovs' attorney, explained the failure to pay the sums due to the officer and to file the answer and counterclaim within the time set out in the order. The failure to file was explained by reporting that "my client says she did not even receive the order within ten days so, by the time she received it, it was too late [to meet the filing deadline]."

The failure to pay the sums due to the court officer was explained by the statement that they were paid on January 29, 2001, "the same day that Ms. Dimitrov received in the mail the amount of the fees due to Superior Court Officer Ramoth." Assuming the order required the payment of fees by January 15, 2001, there is no indication that the Dimitrovs took any steps to ensure that they were informed timely of the amount due.

The motion to permit the answer and counterclaim to be filed beyond the 10-day period was denied by order of February 28, 2001. An appeal from that order was filed on April 12, 2001. The result of a successful appeal, of course, would have been the litigation of the issues identified in the Dimitrovs' 2004 complaint, the dismissal of which led to this appeal. On May 7, 2001, while their appeal was pending, the Dimitrovs filed a complaint in the Law Division. That complaint made the same allegations, and sought the same relief, as did the pleadings that the Dimitrovs sought to file in the Special Civil Part and which were the subject of the pending appeal.

That complaint was, "[a]pparently in November 2001 . . . dismissed without prejudice for failure to proceed." On August 6, 2001, before the complaint was dismissed, the appeal was dismissed. The Dimitrovs' brief explains the dismissal of the appeal as follows:

However, the Notice of Appeal was not continued, as plaintiffs were advised, since the Special Civil Part did not have jurisdiction of the matter in that it was beyond the monetary amount of the court, they could initiate an action against the defendant herein seeking to recover on what was, in the initial action, filed as a counterclaim.

A new complaint was, thereafter, filed raising the identical allegations contained in both the pleadings which the Dimitrovs sought to file in January, 2001, and in the complaint which they did file on May 7, 2001. We infer that this latest complaint was filed at some time in 2004 because, although the complaint is not included in the Appendix as required by R. 1:6-1(a)(1)(A), Petrus's answer was dated September 17, 2004. His answer raised various affirmative defenses including the "Entire Controversy Doctrine" and the "Doctrine of Res Judicata." Petrus moved to dismiss the complaint on entire controversy grounds. The motion was granted on October 22, 2004, and this appeal followed.

On appeal the Dimitrovs raise the following arguments:

POINT I

THE COURT COMMITTED REVERSIBLE ERROR IN FAILING TO PERMIT THE PLAINTIFFS TO PROCEED WITH THEIR COUNTERCLAIM.

POINT II

THE COURT, AS A TRIER OF FACT, COMMITTED REVERSIBLE ERROR IN THIS MATTER.

POINT III

THE ENTIRE CONTROVERSY DOCTRINE DID NOT REQUIRE THAT THE COUNTERCLAIM BE JOINED IN THE LOWER COURT AS IT EXCEEDED THE MONETARY VALUE PERMITTED IN THE SPECIAL CIVIL PART.

POINT IV

THE DOCTRINE OF EQUITABLE ESTOPPEL SHOULD HAVE PRECLUDED THE GRANTING OF SUMMARY JUDGMENT IN THIS MATTER.

POINT V

THE COURT BELOW SHOULD HAVE RELAXED THE RULES SINCE THE MATTERS WHICH TRANSPIRED OCCURRED WHEN THE PLAINTIFFS-APPELLANTS WERE IN A PRO SE POSITION AND WAS NOT FULLY COGNIZANT OF THE MATTERS REQUIRED.

Although the appeal before us is from the dismissal of the Dimitrovs' 2004 complaint, many of the arguments they raise relate to the actions of the judge in 2001, denying their second motion to file an answer and counterclaim. Those actions, however, were the subject of the appeal they allowed to be dismissed in August, 2001. Accordingly, we confine ourselves to the propriety of the judge's dismissal of the Dimitrovs' 2004 suit.

We begin our analysis with the recognition that the entire controversy doctrine requires that "all aspects of the controversy between those who are parties to the litigation be included in a single action." Pressler, Current N.J. Court Rules, comment 2 on R. 4:30A (2005). The doctrine is based upon the "twin pillars" of "fairness to the parties and fairness to the system of judicial administration." Joel v. Morrocco, 147 N.J. 546, 555 (1997). We recognize that the doctrine is equitable and is not applied when to do so would be unfair in the particular circumstances presented and would not advance the goals of party fairness and judicial economy. The application of the doctrine "is left to judicial discretion based on the factual circumstances of individual cases." Brennan v. Orban, 145 N.J. 282, 291 (1996).

In essence, the Dimitrovs assert that the dismissal of the 2004 complaint was an abuse of discretion. In support of that claim, they assert that they could not have pled their cause of action in the litigation begun by Petrus in 2001, to confirm the arbitration award, because their counter-claim would have exceeded the jurisdictional limit of the Special Civil Part. However, R. 6:4-1(c) specifically permits a defendant to file a counterclaim exceeding the jurisdictional limit of the Special Civil Part when accompanied by (1) an affidavit that the value of the counterclaim exceeds the jurisdictional limit of the Special Civil Part and (2) a motion in the Law Division seeking removal. The Rule provides that the "Law Division shall order the transfer" upon a finding that it is likely that the value of the counterclaim exceeds the jurisdictional limit of the Special Civil Part. There is no question that the Dimitrovs could have litigated their counterclaim. Indeed, they were given specific permission to do so. When, as here, the counterclaim deals with the same factual complex giving rise to the complaint, the policy considerations underlying the entire controversy doctrine require that all facets of the dispute be joined in one action.

We recognize that the doctrine should not be applied to bar a second action when the first suit did not present a "fair and reasonable opportunity to have fully litigated that claim in the original action." Karpovich v. Barbarula, 150 N.J. 473, 481 (1997) (quoting Cafferata v. Peyser, 251 N.J. Super. 256, 261 (App. Div. 1991)). The cases involving that concept, however, are readily distinguished.

Cafferata v. Peyser, for example, involved a small claims action instituted by a physician for the balance of a medical bill which settled for less than $300 after mediation with a law clerk and with no judicial involvement. That settlement, we held, did not preclude a malpractice action because the small claims case did not give the injured patient a full and fair opportunity to litigate his claim. Similarly, we have held that an accounting malpractice action is not barred by a prior estate accounting action because of the "limited nature of the accounting procedure in general and the hearing on exceptions in particular readily indicates that that was neither the forum nor the procedure for litigating a professional malpractice claim against persons not in interest in the estate." Perry v. Tuzzio, 288 N.J. Super. 223, 230 (App. Div. 1996).

This case is substantially different. First, the issues relating to Petrus's deficient work performance were known by the Dimitrovs and, so far as we can tell from their brief, were raised in the arbitration. Under similar circumstances, a party has been prohibited from raising a counter-claim or set-off after failing to do so in prior proceedings. See Gelber v. Zito Partnership, 147 N.J. 561 (1997) (precluding law division action respecting issues that could have been, but were not, raised in the arbitration); Shoremount v. APS Corp., 368 N.J. Super. 252, 256 (App. Div. 2004) (entire controversy doctrine barred claims for set-off outside a settlement agreement reached in arbitration).

Moreover, unlike the plaintiff in Cafferata, who was faced with a minor claim that was resolved in a Small Claims proceeding without the expenditure of substantial judicial resources, the Dimitrovs were faced with a substantial balance due, and, over the course of several years, had invoked substantial judicial resources. They understood they had a potential defense relating to the quality of Petrus's work and were, or could have been, involved in arbitration in which the issues were, or could have been, raised. They recognized their right to defend against the claim for a balance due with affirmative claims of poor workmanship when Petrus sought to confirm the arbitration award and simply failed to advance those claims.

Additionally, the Dimitrovs elected, in 2001, to ask court permission to plead the counterclaims in the action initiated by Petrus. When the trial court refused (after they had failed to meet conditions originally imposed on permission to do so), they elected to appeal that decision, and then, by allowing the appeal to be dismissed, simply evaded the possibility that the appeal would have been unsuccessful. Under these circumstances, we perceive no unfairness to the Dimitrovs in the application of the doctrine. They had numerous opportunities to raise the issue and simply failed to do so. On the other hand, it is manifestly unfair to Petrus to require him to proceed through arbitration; a suit to confirm the arbitration award; an appeal that was ultimately dismissed for lack of prosecution, a suit filed in 2001, also dismissed for lack of prosecution; and another suit filed in 2004. Similarly, the strain upon the system of judicial administration is plain. We cannot say that the dismissal of the 2004 suit on entire controversy grounds was incorrect.

Affirmed.

 

Because the history of this controversy involves prior litigation in which plaintiffs here, the Dimitrovs, were defendants and defendant here, Edward Petrus, was plaintiff, we refer to the parties by name rather than by party designation.

Because the certification related facts known to the attorney only by virtue of statements made by the Dimitrovs, the material was not properly before the motion judge. See R. 1:6-6.

We take this information from the Dimitrovs' brief on appeal, although it is unsupported by any reference to the record.

(continued)

(continued)

11

A-1640-04T2

April 10, 2006