Kozyra v. Allen

• Decision Date: 18 September 1992
• Docket Number: No. 91-5972,91-5972
• Citation: 973 F.2d 1110
• Parties: Barry A. KOZYRA, Arbitrator, Geraldine Della Buono, Appellant, v. Paul J. ALLEN; M & G Convoy, Third-Party Plaintiffs, v. Angelo SOLDANI, Third-Party Defendant.
• Court: U.S. Court of Appeals — Third Circuit

Page 1110

973 F.2d 1110

Barry A. KOZYRA, Arbitrator, Geraldine Della Buono, Appellant, v. Paul J. ALLEN; M & G Convoy, Third-Party Plaintiffs, v. Angelo SOLDANI, Third-Party Defendant.

No. 91-5972.

United States Court of Appeals, Third Circuit.

Argued July 10, 1992.

Decided Aug. 26, 1992.

Order Denying Rehearing Sept. 18, 1992.

Robert V. Falvey (argued), Michael Sussen, Pennsauken, N.J., for appellant.

Michael F. Nestor (argued), Anthony J. Iacullo, Tompkins, McGuire & Wachenfeld, Newark, N.J., for appellees, Paul J. Allen and M & G Convoy.

Before SLOVITER, Chief Judge, STAPLETON and ROSENN, Circuit Judges.

OPINION OF THE COURT

ROSENN, Circuit Judge.

In this diversity action, we are asked to predict whether the New Jersey Supreme Court would carve out an exception to its "entire controversy doctrine" in favor of the appellant on this appeal. Plaintiff-appellant Della Buono, the defendant in an earlier action, argues that she did not have a fair opportunity to present her claim for personal injuries because her insurance carrier did not correspond with her, she did not participate fully in the first litigation, and she was not made aware of her obligation to assert her personal injury claim. The district court in this proceeding granted the defendants' motion to dismiss Della Buono's claims with prejudice pursuant to New Jersey's entire controversy doctrine which precludes claims that are not joined in the underlying controversy. Della Buono appealed to this court. We affirm.

I.

This litigation arose out of a three vehicle accident which occurred on May 17, 1988 in Newark, New Jersey. Plaintiff Della Buono was traveling in the left lane of the New Jersey Turnpike when Paul J. Allen, who was operating a tractor trailer owned by M & G Convoy, rear-ended the vehicle driven by Angelo Soldani and caused it to spin out of control and directly into Della Buono's path. Della Buono sustained injury to her knee requiring arthroscopic surgery.

On July 27, 1988, Soldani instituted a negligence action in the Superior Court of New Jersey, Law Division, against Allen, M & G Convoy, and Della Buono for damages he sustained as a result of the automobile accident. Della Buono was served with a Summons and Complaint which her husband forwarded to her liability insurance carrier. Pursuant to the contractual provisions of Della Buono's automobile policy, her insurance carrier defended the suit. The insurance carrier filed an answer which included a cross-claim for contribution against Allen and M & G Convoy, but it did not assert any affirmative claim for Della Buono's personal injuries. In September of 1989, the arbitrator rendered a verdict for no cause of action. Subsequently, Soldani settled with Allen and M & G Convoy and voluntarily dismissed the case as to Della Buono.

On May 10, 1990, Della Buono filed this negligence action against Allen and M & G Convoy in the United States District Court for the District of New Jersey to recover for personal injuries sustained in the same automobile accident at issue in the state court action. The defendants filed an answer and third-party complaint against Soldani. In their answer, the defendants asserted the entire controversy doctrine as an affirmative defense.

The matter went to arbitration and the arbitrator found judgment in favor of Della Buono in the amount of $90,000, assessing thirty percent against defendants Allen and M & G Convoy, jointly and severally, and seventy percent against Soldani. Subsequently, Allen and M & G Convoy filed a motion to dismiss Della Buono's complaint with prejudice, pursuant to the entire controversy doctrine. The district court granted the motion, concluding that because Della Buono's claim arose out of the same operational facts which generated the state court action, the entire controversy doctrine barred her personal injury claim. Della Buono timely appealed to this court, and we exercise jurisdiction pursuant to 28 U.S.C. § 1291 as an appeal from a final order.

II.

In deciding whether the district court properly applied the applicable law of the State of New Jersey, our review is plenary. Carter v. Rafferty, 826 F.2d 1299, 1304 (3d Cir.1987), cert. denied, 484 U.S. 1011, 108 S.Ct. 711, 98 L.Ed.2d 661 (1988). New Jersey Court Rule 4:30A, the entire controversy doctrine, provides as follows:

[N]on-joinder of claims or parties 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 doctrine is a broad one, more preclusive than both res judicata and the Restatement. Lubrizol Corp. v. Exxon Corp., 929 F.2d 960, 965 (3d Cir.1991). It attempts to respond to "the needs of economy and the avoidance of waste, efficiency and the reduction of delay, fairness to parties, and the need for complete and final disposition through the avoidance of 'piecemeal decisions.' " Cogdell v. Hospital Ctr. at Orange, 116 N.J. 7, 560 A.2d 1169, 1173 (1989) (citation omitted); see also Crispin v. Volkswagenwerk, A.G., 96 N.J. 336, 476 A.2d 250 (1984). It "embodies the principle that the adjudication of a legal controversy should occur in one litigation in only one court; accordingly, all parties involved in a litigation should at the very least present in that proceeding all of their claims and defenses that are related to the underlying controversy." Cogdell, 560 A.2d at 1172.

The doctrine, which is equitable in nature, is predicated upon judicial fairness.

                Cafferata v. Peyser, 251 N.J.Super. 256, 597 A.2d 1101, 1103 (1991) (citations omitted).   It provides "that the party whose claim is being sought to be barred must have had a fair and reasonable opportunity to have fully litigated that claim in the original action."  Id. at 1104 (citations omitted).   The doctrine requires that a component of the controversy may not be unfairly withheld.   A withholding is unfair if it effectively renders the pending litigation "merely one inning of the whole ball game."  William Blanchard Co. v. Beach Concrete Co., Inc., 150 N.J.Super. 277, 375 A.2d 675, 684 (1977)
                

Della Buono claims that the settlement reached by her liability insurer, under its contractual authority to enter settlements, does not bar her subsequent claim against third parties in the earlier action. She relies upon Humble Oil & Refining Co. v. Church, 100 N.J.Super. 495, 242 A.2d 652 (1968), which held that the plaintiff's insurance carrier's settlement of a wrongful death action against it did not preclude it from subsequently asserting property damage claims against third parties arising out of the same accident. The court reasoned that the settlement was effectuated for the insurance carrier pursuant to its contractual authority to enter into settlements rather than as the plaintiff's agent. Id., 242 A.2d at 653-54.

However, Humble Oil was decided at a time when New Jersey allowed the permissive joinder of claims. R. 4:31 (repealed). The Humble Oil court explained, "A property damage claim, a personal injury claim and a claim for contribution under the Joint Tortfeasors Contribution Law constitute separate claims for relief even though they all arise by reason of one tortious incident. Joinder of such claims is permissive, not mandatory." 242 A.2d at 654. The joinder of claims is now mandatory under New Jersey Court Rule 4:30. ¹ Thus, Humble Oil is of limited precedential value.

Della Buono argues that she did not have a full and fair opportunity to assert her claim, citing Cafferata v. Peyser, 597 A.2d 1101 and Thornton v. Potamkin Chevrolet, 94 N.J. 1, 462 A.2d 133 (1983). In Cafferata, the court held that the entire controversy doctrine should not bar a medical malpractice action where the plaintiff entered a pro se settlement of a medical bill for $160.80 in an earlier action in which no judge participated. The Cafferata court was concerned with the inequality of the forums because the plaintiff's initial action was venued in the Special Civil Part and his malpractice claim would have been decided in the Law Division.

The court found that the informal mediation-type proceeding was appropriate for small claims, but not for significant tort litigation. 597 A.2d at 1104. The court explained that the judicial system's ability to cope with minor commercial litigation is advanced by informal proceedings in which pro se litigants are able to resolve narrowly defined small claims quickly, inexpensively, and with minimum resort to legal counsel and judicial intervention, and that such proceedings were not intended to have preclusionary consequences beyond their own scope. Id. Because neither the plaintiff nor the physicians reasonably could have expected that the plaintiff, by paying the $160.80 bill, would be giving up a substantial malpractice tort claim against the physicians, the court concluded that the application of the entire controversy doctrine would be unfair and would undermine the legitimacy of small claims processing. Id.

In Thornton, the court held that a discharged African-American employee who failed to raise a claim of discrimination in a grievance arbitration could pursue that claim before the State Division on Civil Rights. The court explained that the entire controversy doctrine was not applicable "because there is no comparability between The dissent relies heavily on Cafferata, but neither that case nor Thornton supports Della Buono. As stated by the Cafferata court, at the heart of both Cafferata and Thornton are "the problems inherent in an inequality of forum." 597 A.2d at 1104. Here, the state court action involved the same facts and circumstances concerning the automobile accident. The state court, as the initial forum, was capable of adjudicating any claims the parties may have had for injuries resulting from the negligence of any of the other parties in that action.

                private contractual arbitration and court or administrative adjudications.   The

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