DIRECT COAST TO COAST, LLC VS. JOSEPH PETERSON,ET AL. (L-6322-12, MIDDLESEX COUNTY AND STATEWIDE), A-1384-14T3

Background

Plaintiffs Direct Coast To Coast, LLC and Selective Transportation Corporation are New Jersey freight companies that provided services to The Banfield Group, LLC; Banfield fell behind on payments in 2009–2010.
Defendant Joseph Peterson formerly owned Banfield, sold his ownership interest in late 2008, retained a perfected security interest in Banfield’s assets, and thereafter regained possession of assets in 2010 after Banfield defaulted.
Plaintiffs sent demand letters in 2010 seeking inflated, non-discounted charges if unpaid; they sued Banfield and related consignees in 2011, obtained default judgments against Banfield/Auburn, and recovered about $67,000.
Plaintiffs did not name Peterson in the 2011 suits despite threatening to sue him and later learning facts in discovery suggesting Peterson diverted funds; they did not amend Rule 4:5-1 disclosures to identify him.
In 2012 plaintiffs sued Peterson directly to collect the prior default judgments; a default entered then was vacated for lack of service, Peterson answered and counterclaimed, and moved for summary judgment.
The trial court granted summary judgment for Peterson, holding plaintiffs’ suit barred by the entire controversy doctrine, time-barred under 49 U.S.C. § 14705(a) for at least part of the claim, and that Peterson owed no fiduciary duty to plaintiffs; fee requests by both sides were denied.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the suit is barred by the entire controversy doctrine	Plaintiffs argued their claims against Peterson were separate and not required in the 2011 suits	Peterson argued plaintiffs knew of him and inexcusable withheld claims, prejudicing his defense	Court: barred — failure to join was inexcusable and prejudiced Peterson; successive litigation disallowed
Whether 49 U.S.C. § 14705(a) statute of limitations bars claims	Plaintiffs contended claims are not for freight charges so federal 18‑month limit does not apply (or applies only partially)	Peterson argued the suit seeks recovery for freight charges subject to §14705 and is time‑barred	Court: claims at least partially time‑barred under §14705; plaintiffs failed to show how much survives
Whether Peterson owed fiduciary duties to plaintiffs	Plaintiffs argued Peterson (as corporate principal/broker/insider) owed duties not to misappropriate or commingle funds	Peterson argued he sold his interest in 2008 and later repossessed assets as a secured creditor—no fiduciary relationship existed	Court: no fiduciary duty — Peterson was a secured creditor who retook assets post‑sale; plaintiffs failed to show fiduciary relationship
Whether fee awards or sanctions were warranted	Plaintiffs sought fees/conditions to vacate default and dismissal of counterclaims; argued bad faith by Peterson	Peterson cross‑moved for fees and sanctions for frivolous litigation and ethical violations	Court: denied both — vacating for lack of service precluded conditional fees; judge did not find frivolous conduct or abuse of discretion in denying sanctions

Key Cases Cited

Hobart Bros. Co. v. Nat'l Union Fire Ins. Co., 354 N.J. Super. 229 (App. Div.) (addresses inexcusable failure to disclose parties in successive litigation)
Baureis v. Summit Trust Co., 280 N.J. Super. 154 (App. Div.) (examines unfairness and fragmentation from successive actions and Rule 4:5‑1 disclosure failures)
Emmert Indus. Corp. v. Artisan Assocs., Inc., 497 F.3d 982 (9th Cir.) (holds §14705(a) requires carriers to sue within 18 months and preempts longer state limitations)
McKelvey v. Pierce, 173 N.J. 26 (2002) (defines requirements for establishing fiduciary duty)
Olivieri v. Y.M.F. Carpet, Inc., 186 N.J. 511 (addresses privity and collateral estoppel considerations)
700 Highway 33 L.L.C. v. Pollio, 421 N.J. Super. 231 (App. Div.) (procedure for evaluating Rule 4:5‑1 omissions and prejudice in successive suits)
Rendine v. Pantzer, 141 N.J. 292 (discusses deference to trial court fee determinations)
Reg'l Constr. Corp. v. Ray, 364 N.J. Super. 534 (App. Div.) (conditional fee awards when vacating defaults)
Packard‑Bamberger & Co. v. Collier, 167 N.J. 427 (standards for awarding counsel fees and appellate review of fee rulings)