Gomez v. CenterPoint Legal Sols.

MERVELIN A. GOMEZ, on behalf of herself and those similarly situated, Plaintiffs-Appellants, v. CENTERPOINT LEGAL SOLUTIONS, LLC, Defendant-Respondent.

No. A-2927-20

Superior Court of New Jersey, Appellate Division

April 29, 2022

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.

Argued March 28, 2022

On appeal from the Superior Court of New Jersey, Law Division Bergen County, Docket No. L-0704-21.

Philip D. Stern argued the cause for appellants (Kim Law Firm, LLC and Scott C. Borison (Borison Firm, LLC) of the District of Columbia, Maryland and California bars, admitted pro hac vice, attorneys; Yongmoon Kim and Scott Borison, of counsel and on the briefs).

Peter G. Siachos argued the cause for respondent (Gordon Reese Scully & Mansukhani, LLP, attorneys; Peter G. Siachos, of counsel and on the brief; Kasey Theresa Mahone and Patrick D Tobia, on the brief).

Before Judges Fasciale, Firko, and Petrillo.

PER CURIAM

Plaintiff Mervelin A. Gomez appeals from a May 5, 2021 Law Division order granting defendant CenterPoint Legal Solution's (CenterPoint) Rule 4:6-2(e) motion to dismiss for failure to state a cause of action; and a June 15, 2021 order denying plaintiff's motion for reconsideration.^[1] Utilizing Rule 4:6-2(e), the trial court dismissed the complaint, with prejudice, relying solely on the entire controversy doctrine (ECD), which it applied as though there still existed a requirement of mandatory party joinder. This misapplication of the ECD which no longer compels mandatory party joinder, requires that the trial court order be reversed.

I.

Gomez filed suit in the United States District for the District of New Jersey in 2017 against a debt buyer, LVNV Funding LLC, (LVNV) its master servicer, Resurgent Capital Services, and LVNV's collection attorneys, Forster & Garbus (F&G). She alleged they violated the Federal Fair Debt Collection Practices Act and invaded her privacy when they enforced a garnishment against her bank account based on a judgment against a different person with a similar name. 15 U.S.C. § 1692 to 1692(p).

The federal claim provided for federal court jurisdiction and supplemental jurisdiction over the state law privacy claims. Gomez was unaware of CenterPoint's involvement in LVNV's collection efforts since CenterPoint's role had not been disclosed and was unknown. Gomez learned of CenterPoint when she conducted depositions of LVNV's and F&G's employees in July 2019.^[2]During these depositions, it was disclosed that CenterPoint directed or controlled the actions of F&G and that F&G had not had any contact with LVNV. Gomez alleges that the manner of CenterPoint's operations shielded it from view and its participation in, or supervision of, the practices complained of could not have been detected.

Based on what Gomez learned as a result of the deposition testimony, she filed this State court action on February 1, 2021, alleging that CenterPoint engaged in the unauthorized practice of law. ^[3] In her complaint, plaintiff complied with Rule 4:5-1(b)(2) by certifying that the matter in controversy was the subject of a pending federal lawsuit.^[4] Plaintiff asserted three causes of action in her complaint against CenterPoint: (1) enjoining CenterPoint from engaging in the unauthorized practice of law; (2) a violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -227, by committing unconscionable commercial practices; and (3) damages for the unauthorized practice of law in violation of N.J.S.A. 2C:21-22(a). We decline, on this record, to opine as to whether plaintiff alleged sufficient facts to establish each cause of action. That issue is not before us. The basis for the relief granted was not the inadequacy of the pleadings as constituted, but the perceived fatal consequence of commencing this State court action given the pendency of a related federal court suit against other parties.

This State action asserts entirely different theories of liability than those asserted in the federal suit; the claims arise exclusively under State law; CenterPoint is not a party to the federal case; the parties to the federal case are not (and need not be) parties to the state court case; the State court case is a putative class action; the federal case is not.^[5]

CenterPoint filed a motion to dismiss Gomez's complaint on March 23, 2021, claiming that Gomez's claims were barred by the ECD. Following oral argument on April 30, 2021, the trial court granted CenterPoint's motion to dismiss on May 5, 2021. In granting the motion, the trial court rejected plaintiff's argument that the ECD was inapplicable under the facts of this case:

Despite having knowledge of CenterPoint by July 25, 2019, plaintiff declined to assert claims against CenterPoint in either of her two subsequent amended complaints. Instead, plaintiff waited eighteen months before pursuing her claims against CenterPoint in the instant action. During this year[-] and[-] a[-] half, plaintiff remained actively involved in the [f]ederal [c]ourt [a]ction, opposing multiple motions, engaging in further discovery with F&G, LVNV, and Resurgent, and appearing for multiple conferences before the [f]ederal [c]ourt. At no point did plaintiff request an opportunity to join CenterPoint as a party to the [f]ederal [c]ourt [a]ction . . . .

Both actions stem from alleged wrongful collection activities on plaintiff's one and only alleged delinquent [d]ebt. In her duplicative lawsuits plaintiff maintains that CenterPoint, Resurgent and LVNV hired F&G to perform debt collection activities on the same debt. Lastly, CenterPoint would be prejudiced if forced to litigate this matter in this Court. Plaintiff had the benefit of over three years of discovery in the Federal Action - discovery which directly concerns CenterPoint. Plaintiff's claims against CenterPoint are barred by the [e]ntire [c]ontroversy [d]octrine.

A motion to reconsider was denied on June 15, 2021, for essentially the same reasons the motion was granted in the first instance. This appeal followed. On appeal, plaintiff argues the trial court misapplied the ECD and that CenterPoint, as a non-party to the federal case, had no grounds to raise the ECD and certainly none to obtain relief pursuant to it. We agree. We conclude the trial court's reasoning to rest on an incorrect understanding of the ECD and, as such, dismissal of the case with prejudice on ECD grounds was a mistaken exercise of discretion.

II.

The standard that applies to our review of this appeal is whether the judge abused his discretion by dismissing the complaint relying on the ECD. While we normally analyze appeals granting motions to dismiss pursuant to Rule 4:6-2(e) de novo, we have consistently held that a trial court's decision to apply (or not apply) the ECD is reviewed under an "abuse of discretion" standard. See, e.g., 700 Highway 33 v. Pollio, 421 N.J.Super. 231, 238 (App. Div. 2011); Unkert ex rel. Unkert v. Gen. Motors Corp., 301 N.J.Super. 583, 595 (App. Div. 1997); Busch v. Biggs, 264 N.J.Super. 385, 397 (App. Div. 1993). This standard aligns with the doctrine's fundamentally equitable purposes, the application of which is customarily "left to judicial discretion based on the factual circumstances of individual cases." Dimitrakopoulos v. Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl, P.C., 237 N.J. 91, 114 (2019) (quoting Highland Lakes Country Club & Cmty. Ass'n v. Nicastro, 201 N.J. 123, 125 (2009)). A trial court abuses its discretion when, among other reasons, its decision rests, as we conclude is the case here, on an "impermissible basis." State v. R.Y., 242 N.J. 48, 65 (2020) (quoting Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002)).

III.

"The entire controversy doctrine has been a cornerstone of New Jersey's jurisprudence for many years. It has gone through several evolutions, from a doctrine of mandatory joinder of claims, to mandatory joinder of parties, to inclusion of potential legal malpractice claims, to an exemption for legal malpractice claims." Hobart Bros. Co. v. Nat'l. Union Fire Ins. Co., 354 N.J.Super. 229, 240 (App. Div. 2002) (internal citations omitted).

The enduring spirit of the doctrine requires a litigant to present "all aspects of a controversy in one legal proceeding." The Malaker Corp. Stockholders Prot. Comm. v. First Jersey Nat'l Bank, 163 N.J.Super. 463, 496 (App. Div. 1978). It 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, Inc., 330 N.J.Super. 310, 315 (App. Div. 2000).

A. Party joinder

In general, the ECD, codified in Rule 4:30A, requires parties to raise all known and transactionally related claims in a single lawsuit. The idea is to encourage comprehensive litigation determinations, avoid fragmentation of litigation, and promote fairness and judicial efficiency. R. 4:30A. The doctrine does not require all parties be joined and has not mandated party joinder for more than twenty years.

In Hobart Bros. Co., decided in 2002, we noted the evolution of the ECD and Rule 4:30A, observing that the Supreme Court had recently amended the Rule "to restrict the scope of the doctrine to non-joinder of claims, as opposed to its earlier formulation of non-joinder of claims and parties." 354 N.J.Super. at 242.

We were clear on that point when we said:

Mandatory party joinder under the entire controversy doctrine has been eliminated, and preclusion of a successive action against a

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