D'Agostino v. Appliances Buy Phone, Inc., 120715 FED3, 15-1171

Docket Nº:15-1171
Opinion Judge:PER CURIAM
Judge Panel:Before: JORDAN, BARRY and VAN ANTWERPEN, Circuit Judges
Case Date:December 07, 2015
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit




No. 15-1171

United States Court of Appeals, Third Circuit

December 7, 2015


Submitted Pursuant to Third Circuit LAR 34.1(a) December 2, 2015

On Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 13-cv-07122) District Judge: Honorable Peter G. Sheridan

Before: JORDAN, BARRY and VAN ANTWERPEN, Circuit Judges



Steven D'Agostino appeals from the order of the United States District Court for the District of New Jersey dismissing his complaint, and denying his motion for summary judgment as moot. For the following reasons, we will affirm in part and vacate in part the District Court's order, and remand the matter for further proceedings.

This dispute arises out of a failed business relationship between D'Agostino, a website developer, and Appliances Buy Phone, Inc. ("ABP"), an online retailer of large home appliances; its sole shareholder, Steven Sigman (Sigman); and his wife Cheryl Sigman (collectively the "ABP defendants"). Beginning in 2003, D'Agostino provided various software design and website maintenance services for the ABP defendants and their website, AppliancesBuyPhone.com. In 2009, D'Agostino assisted Sigman with the development of a second website, Applicance4sale.com, for which Sigman owned the domain name. By 2010, however, the business relationship had soured and D'Agostino filed a complaint in the Superior Court of New Jersey, Law Division, against the ABP defendants and Google Inc.1, asserting several state causes of action including unjust enrichment and breach of contract, as well as several federal claims, including one for cybersquatting. See D'Agostino v. Appliances Buy Phone, Inc., D.N.J. Civ. No. 10-cv-05414. On Google's motion, the matter was removed to the United States District Court for the District of New Jersey. The matter was remanded back to the Superior Court of New Jersey after D'Agostino amended his complaint to delete any federal claims and the District Court declined to exercise supplemental jurisdiction over the remaining state-law claims. In July 2013, the state court dismissed the claims against Google on summary judgment. A month later, partial summary judgment was granted in favor of the remaining ABP defendants.2 In October 2013, a trial commenced on the remaining claims and a verdict was returned for the ABP defendants.

On November 22, 2013, while D'Agostino's motion for a new trial was pending in state court, he filed this matter in the District Court asserting that the ABP defendants infringed upon his copyright in computer software by sharing it with another website developer, thereby violating his rights under both state and federal law. The complaint further alleged that the defendants had repeatedly registered the domain name "Applicances4Sale.com" in bad faith, with no intention of using it, in violation of the Anti-Cybersquatting Consumer Protection Act (ACPA), 15 U.S.C. § 1125(d). D'Agostino also sought damages for breach of contract, fraud, and breach of implied covenant of good faith and fair dealing. The District Court granted the defendants' motion to dismiss, determining that the anti-cybersquatting claim, which was raised in the initial federal complaint but which D'Agostino deleted upon amendment, was barred by the statute of limitations. The court declined to exercise supplemental jurisdiction over the remaining state-law claims. D'Agostino filed a motion for reconsideration, arguing that the cybersquatting claim was not barred because it was a continuing wrong, and that the Court erred in failing to exercise jurisdiction over his copyright infringement claim. After a hearing, the District Court denied the motion. This appeal ensued.

We have jurisdiction pursuant to 28 U.S.C. § 1291. Our review of a motion to dismiss is plenary. Morrow v. Balaski, 719 F.3d 160, 165 (3d Cir. 2013). We accept the complaint's allegations as true, view them in the light most favorable to the plaintiff, and dismiss only if the claims lack facial plausibility. Id.

The Cybersquatting Claim

D'Agostino argues that the District Court erred in holding that his cybersquatting claim was time barred. His arguments are not without some force.3 Nevertheless, because we may affirm a claim's dismissal on any basis that finds support in the record, we turn to a question argued by the Appellees both in the District Court and here – whether D'Agostino's claim was barred by principles of res judicata. We conclude that it was.

Appellees argued in their motion to dismiss, as they do on appeal, that the cybersquatting claim is barred by the doctrine of claim preclusion and its "idiosyncratic" application in New Jersey, the entire controversy doctrine. Rycoline Prods., Inc. v. C & W Unlimited, 109 F.3d 883, 886 (3d Cir. 1997). Federal courts must, of course, give 'full faith and credit' to the judgments of state courts. 28 U.S.C. § 1738. It is clear that a federal cybersquatting claim can be raised in state court, as federal courts do not have exclusive jurisdiction over actions arising under the Lanham Act. See Aquatherm Indus., Inc. v. Fla. Power & Light Co., 84 F.3d 1388, 1394 (11th Cir.1996); Alpharma, Inc. v. Pennfield Oil Co., 411 F.3d 934, 938 (8th Cir. 2005). Where, as here, there is concurrent state and federal jurisdiction, we must look to state law to determine the preclusive effect of a state court judgment. Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 85 (1984). The entire controversy doctrine requires a party to bring all related claims in a single action "against a particular adversary or be precluded from bringing a second action based on the omitted claims against that party." In re Mullarkey, 536 F.3d 215, 229 (3d Cir. 2008). "The effect of the doctrine is to preclude a party from withholding from the action for separate and later litigation a constituent component of the controversy even where that component is a separate and independently cognizable cause of action." Brown v. Brown, 506 A.2d 29, 32 (N.J. Sup. Ct. App. Div. 1986).

The entire controversy doctrine applies when (1) the judgment in the first action is valid, final, and on the merits; (2) there is identity of the parties, or the parties in the second action are in privity with those in the first action; and (3) the claim in the later action grows out of the same transaction or occurrence as the claim in the first action. See Watkins v. Resorts Int'l Hotel & Casino, Inc., 591 A.2d 592, 599 (1991). We agree with Appellees' contention – which D'Agostino has not disputed – that the cybersquatting claim "arose out of [the] same business relationship, the same parties and the same course of dealing that [were] the subject" of the state court action. Because it could have been brought as part of the state court action, it is precluded.

D'Agostino argues generally that he should not be precluded from pursuing his claim because,...

To continue reading