Kent Motor Cars, Inc. v. Reynolds & Reynolds, Co.
207 N.J. 428
| N.J. | 2011Background
- Dealerships and Reynolds dispute party joinder under Entire Controversy and Rule 4:5-1(b)(2) sanctions.
- Wilson action (2003) alleged CFA, TCCWNA, and MVSP violations based on Reynolds form font size and dealership fees.
- Dealerships did not implead Reynolds in Wilson; later settlement occurred in 2005 in Wilson, with Reynolds not a party to settlement.
- In 2007–2008, Dealerships sued Reynolds for indemnity/treble CFA damages; Reynolds argued substantial prejudice due to Rule 4:5-1(b)(2) noncompliance.
- Trial court granted summary judgment for Reynolds; Appellate Division reversed as to Reynolds but affirmed Universal Underwriters Group ruling.
- Supreme Court granted certification to resolve separate issues: sanctions under Rule 4:5-1(b)(2) and STEO coverage for truth-in-lending/leasing claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Substantial prejudice standard applied? | Dealerships: prejudice not shown; noncompliance not excusable. | Reynolds: prejudice established by loss of evidence and windfall risk. | Substantial prejudice found; but dismissal not automatic; sanctions limited rather than total dismissal. |
| CFA claim vs contribution viability after Rule 4:5-1(b)(2) violation? | Dealerships seek CFA recovery and treble damages. | Reynolds argues CFA claim would be improper windfall; damages should not treble anew. | CFA claim barred; contribution claim allowed to proceed with proper allocation of damages. |
| Scope of STEO coverage for Wilson claims? | Dealerships contend Wilson claims arise from truth-in-lending/leasing; thus STEO applies. | Universal: Wilson claims are general CFA/TCCWNA/MVSP issues, not truth-in-lending/leasing. | STEO coverage not triggered; Wilson claims fall outside truth-in-lending/leasing; defense/indemnity denied. |
Key Cases Cited
- Circle Chevrolet Co. v. Giordano, Halleran & Ciesla, P.C., 142 N.J. 280 (1995) (expands Entire Controversy doctrine)
- Mortgagelinq Corp. v. Commonwealth Land Title Ins. Co., 142 N.J. 336 (1995) (expands Entire Controversy doctrine)
- Cogdell v. Hosp. Ctr. at Orange, 116 N.J. 7 (1989) (ties to economy and final disposition in controversies)
- Olds v. Donnelly, 150 N.J. 424 (1997) (guides joinder and efficiency considerations)
- Flomerfelt v. Cardiello, 202 N.J. 432 (2010) (insurer duty to defend depends on complaint-policy comparison)
- Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165 (1992) (insurer defense duty framework; claims ambiguous but covered if plausible)