EAGLE ROCK DRYWALL, LLC VS. RIO VISTA HOMESÂ VS. ANDREW ROTHSCHILD (L-877-12, MORRIS COUNTY AND STATEWIDE), A-2445-15T3

Background

Eagle Rock Drywall (plaintiff) sued Rio Vista Homes (RV Homes), Rio Vista Construction (RV Construction), and John Mavroudis (manager) for unpaid subcontracting work and related claims, including fraud and quantum meruit.
Parties entered a written settlement agreement in Feb 2013 obligating defendants to make monthly payments; defendants defaulted after three payments and a fourth check bounced.
Plaintiff moved for judgment; the court entered judgment in Nov 2013 but specified it was not against Mavroudis personally because he did not sign the agreement; plaintiff later obtained counsel fees as part of that judgment.
Plaintiff moved in Aug 2014 to set aside the judgment and amended the complaint to add Rio Vista Homes at Northvale (RV Northvale) as a defendant; the court granted the motion to vacate the judgment and allowed the amended complaint.
At bench trial plaintiff’s sole witness was its managing member Rothschild; the court directed verdict dismissing fraud/ misrepresentation claims, concluded res judicata barred claims against RV Homes and RV Construction based on the settlement, and found plaintiff failed to prove claims against RV Northvale; judgment was entered for defendants.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether res judicata bars plaintiff's claims against RV Northvale	Res judicata does not apply because plaintiff vacated the prior judgment and amended the complaint to add RV Northvale	Claims were or could have been raised earlier; prior settlement and judgment preclude relitigation	Res judicata does NOT bar claims against RV Northvale (different entity; not in privity) but plaintiff still failed to prove claims against RV Northvale on the merits
Preclusive effect of prior settlement/judgment as to RV Homes and RV Construction	Vacatur of the judgment eliminated preclusive effect	The settlement is sufficiently firm; plaintiff had its day in court and cannot relitigate	Agreement and prior judgment are entitled to preclusive effect as to RV Homes and RV Construction despite vacatur of the judgment; plaintiff is precluded from relitigating those claims
Sufficiency of evidence against RV Northvale (quantum meruit / unjust enrichment)	Checks drawn on RV Northvale's account and overall dealings support liability/unjust enrichment	No contractual relationship with RV Northvale; plaintiff expected payment from other RV entities; plaintiff was paid for Adams Contract work	Plaintiff failed to prove a contractual or quasi-contractual obligation by RV Northvale; unjust enrichment claim fails because plaintiff did not expect remuneration from RV Northvale when performing the work
Whether implied covenant of good faith and fair dealing applies to RV Northvale	The implied covenant was breached by defendants’ conduct	No contract existed between plaintiff and RV Northvale, so no covenant applies	No contract existed between plaintiff and RV Northvale; implied covenant cannot be read into a non-existent contract

Key Cases Cited

Wadeer v. N.J. Mfrs. Ins. Co., 220 N.J. 591 (N.J. 2015) (purpose and effects of res judicata)
First Union Nat'l Bank v. Penn Salem Marina, Inc., 190 N.J. 342 (N.J. 2007) (finality and repose as goals of preclusion doctrines)
Bondi v. Citigroup, Inc., 423 N.J. Super. 377 (App. Div. 2011) (elements for res judicata stated)
Watkins v. Resorts Int'l Hotel & Casino, Inc., 124 N.J. 398 (N.J. 1991) (res judicata principles)
Walker v. Choudhary, 425 N.J. Super. 135 (App. Div.) (de novo review of res judicata application)
Selective Ins. Co. v. McAllister, 327 N.J. Super. 168 (App. Div.) (standard for reviewing res judicata issues)
Hennessey v. Winslow Twp., 183 N.J. 593 (N.J. 2005) (elements of collateral estoppel)
Perez v. Rent-A-Center, Inc., 186 N.J. 188 (N.J. 2006) (vacatur defeats collateral estoppel absent sufficiently firm prior action)
Hills Dev. Co. v. Bernards, 103 N.J. 1 (N.J. 1986) (sufficient firmness for conclusive effect under collateral estoppel)
Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150 (N.J. 2011) (appellate review standard for bench findings)
Cesare v. Cesare, 154 N.J. 394 (N.J. 1998) (trial court superiority in credibility assessments)
Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396 (N.J. 1997) (existence of implied covenant of good faith and fair dealing)
Kalogeras v. 239 Broad Ave., L.L.C., 202 N.J. 349 (N.J. 2010) (implied covenant cannot be read into non-existent contract)
McQuitty v. Gen. Dynamics Corp., 204 N.J. Super. 514 (App. Div. 1985) (no implied duties when no contract)
Thieme v. Aucoin-Thieme, 227 N.J. 269 (N.J. 2016) (elements of unjust enrichment)
Illiadis v. Wal-Mart Stores, Inc., 191 N.J. 88 (N.J. 2007) (unjust enrichment requires expectation of remuneration)
Lubliner v. Bd. of Alcoholic Beverage Control, 33 N.J. 428 (N.J. 1960) (finality doctrine quotation)
Do-Wop Corp. v. City of Rahway, 168 N.J. 191 (N.J. 2001) (appeals challenge orders/judgments not the court's reasoning)