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Vitug v. Alameda Point Storage, Inc.

Court of Appeal, First District, Division 5, California.

Araceli VITUG, Plaintiff and Appellant,

v.

ALAMEDA POINT STORAGE, INC., Defendant and Respondent.

No. A124999.

 

Aug. 10, 2010.

 

SIMONS, Acting P.J.

 

The California Self-Service Storage Facility Act (the Act) (Bus. and Prof.Code, § 21700 et seq.)  regulates certain aspects of the relationship between owners and renters of storage units at self-service storage facilities. In this case, we address the following question: Does the Act prohibit a self-service storage facility from continuing to charge rent and late fees to the renter of a storage unit after the facility has terminated the renter’s right to access the unit due to nonpayment of rent? In the present case, plaintiff and appellant Araceli Vitug (appellant) rented a storage unit from defendant and respondent Alameda Point Storage, Inc. (respondent). After appellant fell behind on her rent payments, respondent sent her by certified mail a preliminary lien notice and then a notice of lien sale, which stated that her “right to use” her storage unit “has been terminated.” Appellant subsequently paid respondent more than the lien amount specified in the notice. Respondent took the position that appellant’s payment was insufficient because appellant owed respondent for additional monthly rent and late fees that had accrued following issuance of the notice. Respondent also threatened to sell appellant’s property at auction and denied appellant access to her property.

 

Appellant brought suit against respondent alleging, among other things, causes of action under the Unfair Business Practices Act (§ 17200 et seq.) and the Consumer Legal Remedies Act (CLRA) (Civ.Code, § 1750 et seq.) based on allegations that respondent violated the Act by continuing to charge rent and late fees after terminating her right to use her storage unit in the notice of lien sale. The trial court granted respondent’s motion for summary adjudication and respondent’s subsequent no-merit motion regarding the CLRA claim, concluding that the Act, itself, did not prohibit respondent from charging additional rent and late fees. We agree and affirm. We do not, however, decide whether respondent had a right to charge the additional rent and late fees under appellant’s lease agreement, because appellant has forfeited that issue.

 

BACKGROUND

 

Respondent is a self-storage facility located in Alameda, California. In 2002, appellant stored her personal property at respondent’s facility pursuant to a written lease agreement.

 

Appellant became delinquent paying her rent and, on April 18, 2004, respondent sent appellant by certified mail a preliminary lien notice stating that she owed respondent $124.75 for rent and $45 for late fees (at $15 per month). The notice further stated, “If this sum is not paid in full before [May 5, 2004,] your right to use the storage space will terminate, you will be denied acces[s] and an owner’s lien on any stored property will be imposed.” On May 4, 2004, respondent sent appellant by certified mail a notice of lien sale stating, “Your right to use storage unit [No.] 1510 … has been terminated and you no longer have access to your stored property. The stored property is subject to a lien in the amount of $278[.] This amount will continue to increase under the terms of your rental agreement until paid in full.” The May 4 notice indicated that appellant’s property would be sold after a certain date, but the date is not legible on the document.

 

The sale of appellant’s property did not take place because she requested that the sale be delayed. On September 2, 2004, appellant paid respondent $500; respondent took the position that she owed an additional $272 at that point. In February 2005, respondent sent appellant an “auction letter,” and in March respondent advertised a lien sale in the Alameda Journal. Respondent sent appellant another auction letter, on April 6, and appellant contacted respondent to request further delay of the sale. Appellant signed an agreement to pay respondent $950, but she scratched out language stating that she did not contest the amount and that the agreement was in full settlement of the dispute. Appellant did not pay the $950.

 

On May 20, 2005, respondent sent appellant a second notice of lien sale, specifying a lien amount of $1,282 and that appellant’s property would be sold after June 4. Appellant executed and returned to respondent a “Declaration in Opposition to Lien Sale,” which prevented respondent from proceeding with the lien sale (see §§ 21706, 21710).

 

In 2007, appellant filed her second amended and operative complaint against respondent, alleging five causes of action. In 2008, respondent filed a motion for summary judgment, or in the alternative for summary adjudication, as to the first cause of action (declaratory and injunctive relief), the third cause of action (violation of the Unfair Business Practices Act), the fourth cause of action (conversion), and the fifth cause of action (trespass to chattels). The trial court granted the motion for summary adjudication on those four causes of action. Respondent filed a separate motion, pursuant to Civil Code section 1781, subdivision (c)(3), contending that appellant’s second cause of action (violation of the CLRA) was without merit. (See Princess Cruise Lines, Ltd. v. Superior Court (2009) 179 Cal.App.4th 36, 41-42, 101 Cal.Rptr.3d 323 (Princess Cruise ).) The trial court granted the CRLA no-merit motion and entered judgment in favor of respondent. This appeal followed.

 

DISCUSSION

 

The trial court granted respondent’s motion for summary adjudication and the CLRA no-merit motion on the ground that the Act did not prohibit respondent from charging additional rent and late fees after termination of appellant’s right to use her storage unit. We review the trial court’s decision de novo. ( Wiener v. Southcoast Childcare Centers, Inc. (2004) 32 Cal.4th 1138, 1142, 12 Cal.Rptr.3d 615, 88 P.3d 517; Princess Cruise, supra, 179 Cal.App.4th at p. 42, 101 Cal.Rptr.3d 323.)

 

At the outset, it is important to clearly delineate the scope of the issues on appeal. Appellant alleged in her complaint that respondent’s notices were inadequate under the Act and that it was a violation of the Act to charge rent and late fees after termination of appellant’s right to use her storage unit. Her unfair business practice and CLRA claims, the sole claims raised on appeal, are based on those alleged violations of the Act. Critically, appellant did not allege in her complaint that the rent and late fees could not be charged under the lease agreement, and her unfair business practice and CLRA claims are not based on violation of the lease agreement. The lease agreement was not attached to the complaint; instead, it was placed into the record by respondent, as an attachment to a declaration in support of the motion for summary judgment/adjudication. Appellant did not argue below, in opposing summary judgment/adjudication, that imposition of the rent and late fees was in violation of the lease agreement. And the only argument adequately raised on appeal is that the trial court erred in concluding respondent did not violate the Act by continuing to charge rent and late fees after mailing the notice of lien sale. Appellant makes no reasoned argument that respondent violated the lease agreement by continuing to charge rent and late fees: her briefs contain no discussion of the language of the lease agreement, and she cites no statutory or case authority that the notice of lien sale had the effect of terminating her obligation to pay rent and late fees under the agreement.  Appellant has, thus, forfeited any such contentions. ( Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785, 79 Cal.Rptr.2d 273; Dietz v. Meisenheimer & Herron (2009) 177 Cal.App.4th 771, 799, 99 Cal.Rptr.3d 464.)

 

In determining whether respondent’s conduct violated the Act, “we apply well-established rules of statutory construction. The goal of statutory construction is to ascertain and effectuate the intent of the Legislature. [Citation.] Often, the words of the statute provide the most reliable indication of legislative intent. [Citation.] However, when the statutory language is itself ambiguous, we must examine the context in which the language appears, adopting the construction that best harmonizes the statute internally and with related statutes. [Citation.] “ ‘When the language is susceptible of more than one reasonable interpretation … we look to a variety of extrinsic aids, including the ostensible objects to be achieved, the evils to be remedied, the legislative history, public policy, contemporaneous administrative construction, and the statutory scheme of which the statute is a part.” ‘ [Citations.]” ( Rothschild v. Tyco Internat. (US), Inc. (2000) 83 Cal.App.4th 488, 496, 99 Cal.Rptr.2d 721.)

 

The Act does not expressly authorize a storage facility to charge rent or prohibit a facility from charging rent in any particular circumstance. The Act does expressly authorize the imposition of late fees in section 21713.5. Under section 21713.5, subdivision (a), “[t]he owner of a self-service storage facility may assess a reasonable late payment fee if an occupant does not pay the entire amount of the rental fee specified in the rental agreement….” (Italics added.)  The dispute in this case relates to the meaning of the term “occupant,” as used in section 21713.5, subdivision (a). The Act defines “ ‘occupant’ [as] a person … who is entitled to the use of the storage space at a self-service storage facility under a rental agreement, to the exclusion of others.” (§ 21701, subd. (c).) Appellant contends she was no longer an “occupant” who could be charged late fees after respondent sent her the notice of lien sale, which stated that her right to use her storage unit had been “terminated” and she “no longer [had] access” to her property in the unit. She also points to section 21705, subdivision (c)(1)(A), which requires that notices of lien sales state “[t]hat the occupant’s right to use the storage space has terminated and that the occupant no longer has access to the stored property.” Appellant argues that, under the Act and under the language of respondent’s notice, she clearly was not a person “entitled to the use of the storage space … to the exclusion of others” (§ 21701, subd. (c)) after respondent sent her the notice of lien sale in May 2004. Accordingly, she was not an “occupant” to whom a late fee could be charged under section 21713.5, subdivision (a).

 

Respondent does not dispute that, after service of the notice of lien sale, appellant no longer met the section 21701, subdivision (c) definition of “occupant.” However, respondent points out that the term “occupant” is used many times in the Act to refer to someone who no longer has a right to access his or her unit. For example, sections 21705, subdivision (c)(1)(D) and 21707, subdivision (b) refer to the right of the “occupant” to the proceeds of a sale exceeding the lien amount. Similarly, section 21710 requires that the “occupant” be served with copies of the summons and complaint in any action to enforce an owner’s lien. Those sections of the Act use the term “occupant” in circumstances where necessarily a notice of lien sale has been sent and the “occupant” no longer has the right to access his or her unit. Respondent also relies on section 21702, which does not use the term “occupant” and which provides that the owner has a lien “for rent, labor, late payment fees, or other charges, present or future, incurred pursuant to the rental agreement and for expenses necessary for the preservation, sale, or disposition of personal property subject to the provisions of this chapter.” (Italics added.) Respondent argues section 21702 shows the Legislature contemplated that there would be “future” rent and late fees that would continue to accumulate after service of the notice of lien sale.

 

The Act is ambiguous. Looking solely at the definition of “occupant” in section 21701, subdivision (c) and the language of section 21713.5, subdivision (a) authorizing imposition of late payment fees, the Act seems to contemplate imposition of such fees only on persons with the right to access their units. On the other hand, in other sections of the Act, such as those described in the previous paragraph, the Legislature disregarded the section 21701, subdivision (c) definition and used the term “occupant” to refer to persons who no longer have the right to access their units. Furthermore, section 21702 contemplates “future” rent and late fees. Arguably, the Legislature used “occupant” in section 21713.5, subdivision (a) as it did in other portions of the Act-in a general sense, rather than as the term is defined in section 21701, subdivision (c).

 

Because there is an inconsistency between the Act’s definition of “occupant” and the Act’s use of that term, this court must determine the Legislature’s intent. We conclude that, in enacting the Act and section 21713.5 in particular, the Legislature did not intend to regulate the circumstances under which rent and late fees could be charged. Instead, the Legislature intended to provide owners with liens, establish fair procedures to enforce the liens, and determine the amount of reasonable late fees. This is apparent from the fact that the Act addresses those matters directly and in detail but does not expressly address when rent and late fees may be charged. In particular, no provision of the Act addresses whether owners may charge rent after the mailing of the notice of lien sale. The Act authorizes late fees and provides that there should be only one late fee for each late rent payment, but the Act defers to the rental agreement for determination of when the rent and associated late fee becomes due. (§ 21713.5, subd. (a)(3) [“Only one late payment fee shall be assessed for each rental fee payment that is not paid on the date specified in the rental agreement.”].) And the Act defers to the underlying rental agreement in determining the amount of rent and late fees encompassed by a lien: to wit, section 21702 provides that owners have a lien for all charges “present or future, incurred pursuant to the rental agreement.” (Italics added.)

 

The legislative history supports this interpretation. The Act, enacted in 1981, was based on a model developed by the National Self-Service Storage Facility Association. (Assem. Com. on Judiciary, Bill Dig., Assem Bill No. 750 (1981-1982 Reg. Sess.) as amended May 11, 1981, p. 4.) The purpose of the Act was to provide self-storage facility owners an “effective remedy against defaulting customers.” (Ibid.) The lien and lien sale provisions would help owners “[¶] (1) recover the storage facility; [¶] (2) collect the rent and other contractual charges owed; and [¶] (3) sell or otherwise dispose of any personal property remaining after termination.” (Sen. Com. on Judiciary, Analysis of Assem. Bill No. 750 (1981-1982 Reg. Sess.) as amended May 26, 1981, p. 3.)

 

As for late fees, the legislative history indicates that Assembly Bill No. 2263 (1999-2000 Reg. Sess.), which added the late fee provision in the year 2000, was sponsored by the California Self-Storage Coalition, which sought certainty regarding the reasonableness of late fees in the industry. A Senate Judiciary Committee analysis explained: “[Late] fees currently are not regulated by the Act. Instead, the ‘fairness’ of a particular company’s late fee has been left to the courts to resolve. The sponsor asserts that this bill would provide storage owners and operators clear statutory guidance as to what fees are permissible, thereby reducing the risk of future litigation. The sponsor argues that the bill provides a fair balance between the parties, by protecting storage customers from unreasonably excessive late fees, while providing the owners and operators with certainty in the area of permissible late fees.” (Sen. Com. on Judiciary, Analysis of Assem. Bill No. 2263 (1999-2000 Reg. Sess.) as amended May 10, 2000, p. 3.) The Legislature included a specific scale of late fees in the Act in order to avoid court proceedings to determine the legality of self-storage facility late fees as liquidated damages provisions under Civil Code section 1671. (Sen. Com. on Judiciary, Analysis of Assem. Bill No. 2263, supra, pp. 3-4.) Thus, the Legislature’s intent was to authorize late fees whenever rent is unpaid and to establish a scale of reasonable fees to avoid litigation over fee amounts. The legislative history does not reflect consideration of the circumstances governing when late fees may no longer be charged.

 

Appellant points to language in the Senate Judiciary Committee report stating, “the self-service storage facility owners contend that the fees are a fair estimate of their losses in light of the fact that they do not collect security deposits on these rental agreements, and they are unable to collect any rent for at least a month when a renter fails to pay the rent and the agreement needs to be terminated.” (Sen. Com. on Judiciary, Analysis of Assem. Bill No. 2263, supra, as amended May 10, 2000, p. 4.) Although this language suggests the Legislature was aware that at least some owners did not anticipate collecting additional rent from defaulting renters, the Legislature did not include any provisions limiting when rent may be charged to renters and it adopted language deferring to the rental agreement regarding the imposition of rent and late fees. Although it may be that rent and late fees typically may not be imposed under lease agreements after termination of access to a storage unit, the legislative history does not indicate that the Legislature intended to impose that limit through the Act. If that had been the Legislature’s intent, it likely would have done so directly, rather than through the use of a term (“occupant”) employed loosely throughout the Act.

 

If this court were to interpret the use of “occupant” in section 21713.5 as a restriction on when late fees may be charged to a renter, it would create a potential conflict with section 21702. Specifically, section 21713.5 would prohibit the imposition of late fees after termination of access to a unit, but section 21702 provides for a lien encompassing any late fees “incurred pursuant to the rental agreement,” which theoretically could include late fees imposed following a notice of lien sale. Similarly, appellant’s interpretation would create a potential internal conflict within section 21713.5, which authorizes assessment of a late fee whenever a rent payment is late under a rental agreement. (§ 21713.5, subd. (a)(3) [“Only one late payment fee shall be assessed for each rental fee payment that is not paid on the date specified in the rental agreement.”].) It would be illogical to interpret the use of the ambiguous term “occupant” in section 21713.5 as a limit on when late fees can be charged, where the Act does not purport to regulate when rent can be charged, and late fees are keyed to the rent payments. Finally, appellant’s interpretation of section 21713.5 is also in conflict with the reference to “future” late fees in section 21702.

 

Appellant argues it would be unreasonable to conclude that owners of storage facilities may continue to charge rent and late fees indefinitely. But we do not hold that the Act authorizes that result. Instead, we hold that the Act does not itself prohibit the charging of rent and late fees after termination of a renter’s access to his or her unit; the Act defers to the underlying rental agreement for determination of what charges are proper and may be included in the lien. It may be that common law or statutory authority dictates that, under month-to-month lease agreements, it is improper to charge rent and late fees after termination of a renter’s access to a storage unit. However, appellant has forfeited that issue. As noted previously, appellant did not allege in her complaint that imposition of further rent and late fees was unlawful because the lease agreement was terminated by the notice of lien sale, did not argue that ground in opposition to the motion for summary judgment/adjudication below, and has not provided reasoned argument on appeal for that proposition. Appellant’s only cognizable argument on appeal is that the rent and fees violated the Act. Accordingly, we express no opinion on the validity of the rent and late fee charges imposed following the notice of lien under general principles of contract law or any authority other than the Act.

 

Appellant has failed to show that the trial court erred in concluding that the rent and late fees imposed by respondent following the notice of lien sale were not in violation of the Act. That conclusion is fatal to the three causes of action at issue on appeal.

 

DISPOSITION

 

The judgment is affirmed. Respondent is awarded its costs on appeal.

 

We concur: NEEDHAM and BRUINIERS, JJ.

 

All further undesignated section references are to the Business and Professions Code.

 

The complaint also contains causes of action for trespass and conversion, but appellant does not contend on appeal that the trial court erred in dismissing those claims.

 

Appellant asserts in passing that “when there are no rights under an agreement, demand for further fees pursuant to that agreement can no longer be justified.” But she provides no discussion of any of the specific provisions of the lease agreement or any citation to authorities.

 

In full, section 21713.5 provides:

 

“(a) The owner of a self-service storage facility may assess a reasonable late payment fee if an occupant does not pay the entire amount of the rental fee specified in the rental agreement, subject to the following requirements:

 

“1) No late payment fee shall be assessed unless the rental fee remains unpaid for at least 10 days after the date specified in the rental agreement for payment of the rental fee.

 

“(2) The amount of the late payment fee shall be specified in the occupant’s rental agreement.

 

“(3) Only one late payment fee shall be assessed for each rental fee payment that is not paid on the date specified in the rental agreement.

 

“(b) For purposes of this section, a ‘reasonable late payment fee’ is one that does not exceed the following:

 

“(1) Ten dollars ($10), if the rental agreement provides for monthly rent of sixty dollars ($60) or less.

 

“(2) Fifteen dollars ($15), if the rental agreement provides for monthly rent greater than sixty dollars ($60), but less than one hundred dollars ($100).

 

“(3) Twenty dollars ($20) or 15 percent of the monthly rental fee, whichever is greater, if the rental agreement provides for monthly rent of one hundred dollars ($100) or more.”

 

Because the notice of lien sale was sent by certified mail, appellant did not have an opportunity to regain access to the unit; if the notice had been sent by regular first class mail, she would have had a 14-day period during which she could have regained use of her storage unit by paying the full lien amount. (§ 21705, subd. (b) .)

 

We take judicial notice of the legislative history of Assembly Bill No. 750 (1981-1982 Reg. Sess.) and Assembly Bill No. 2263 (1999-2000 Reg. Sess.). (See People v. Superior Court (Ferguson ) (2005) 132 Cal.App.4th 1525, 1532, 34 Cal.Rptr.3d 481.)

 

Appellant’s interpretation would even appear to prohibit a self-storage facility from charging, under section 21713.5, additional late fees to a renter who requests delay of a lien sale and expressly agrees to pay additional rent until he or she can pay off the lien amount.

ADT Sec. Services, Inc. v. Synnex Corp.

Superior Court of New Jersey,

Appellate Division.

ADT SECURITY SERVICES, INC., Plaintiff-Appellant,

v.

SYNNEX CORPORATION, as successor in interest to Synnex Information Technologies, Inc., Defendant-Respondent.

Argued Nov. 4, 2009.

Decided Aug. 5, 2010.

 

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-3580-08.

Timothy I. Duffy argued the cause for appellant (Coughlin Duffy, LLP, attorneys; Mr. Duffy, of counsel; Neil M. Day and Clara Y. Choi, on the brief).

 

Philip A. Bramson argued the cause for respondent (Schindel, Farman, Lipsius, Gardner & Rabinovich, LLP, attorneys; Mr. Bramson, on the brief).

 

Before Judges SKILLMAN, GILROY and SIMONELLI.

 

PER CURIAM.

 

Plaintiff, ADT Security Services, Inc., appeals from the September 12, 2008 order that granted summary judgment to defendant Synnex Corporation. We affirm.

 

I.

 

This is the second appeal concerning the parties’ rights and obligations under a contract dated July 11, 2001. Because the procedural history and statement of facts were discussed at length in our prior reported decision, Synnex Corp. v. ADT Security, 394 N.J.Super. 577, 580-84, 928 A.2d 37 (App.Div.2007), it is unnecessary for us to fully detail them here. However, the following summary will place this appeal in context.

 

ADT sells and monitors burglar alarm systems. Synnex is a distributor of information technology products. In 2001, Synnex requested ADT to design, install, and monitor a burglar alarm system at Synnex’s warehouse in Edison. On July 11, 2002, the parties executed ADT’s form contract, which contained a broad exculpatory provision. Synnex Corp., supra, 394 N.J.Super. at 582, 928 A.2d 37. The paragraph containing the exculpatory provision also governed Synnex’s obligation to indemnify ADT for third-party claims:

 

IN THE EVENT ANY PERSON, NOT A PARTY TO THIS AGREEMENT, SHALL MAKE ANY CLAIM OR FILE ANY LAWSUIT AGAINST ADT IN ANY WAY RELATING TO THE EQUIPMENT OR SERVICES THAT ARE THE SUBJECTS OF THIS AGREEMENT, INCLUDING FOR FAILURE OF ITS EQUIPMENT OR SERVICE IN ANY RESPECT, CUSTOMER [SYNNEX] AGREES TO INDEMNIFY AND HOLD ADT HARMLESS FROM ANY AND ALL SUCH CLAIMS AND LAWSUITS INCLUDING THE PAYMENT OF ALL DAMAGES, EXPENSES, COSTS AND ATTORNEYS’ FEES.

 

Pursuant to the contract, ADT installed a security system at the warehouse and provided monitoring services of the system.

 

On March 8, 2003, six months after ADT had installed the alarm system, a burglary occurred at the warehouse, resulting in a $7,600,000 loss of inventory. At the time of the loss, Mitsui Sumitomo Insurance Group (MSIG) insured Synnex. MSIG paid Synnex $7,100,000 in settlement of the loss. On March 8, 2004, MSIG brought a subrogation action in Synnex’s name against ADT, seeking to recover the monies it paid Synnex under the insurance policy, together with additional losses that Synnex incurred which were not covered by the policy. ADT filed a counterclaim for indemnification, alleging that MSIG was the real party in interest in the action, and thus, Synnex was obligated to indemnify ADT for attorney fees and other expenses it was then incurring in defending the action.

 

Prior to trial, the parties filed cross-motions for partial summary judgment. ADT sought dismissal of Synnex’s consumer fraud, gross negligence and strict liability claims. Synnex sought not only to dismiss ADT’s counterclaim for indemnification, but also to bar ADT from relying on the exculpatory provision, asserting that it was unenforceable as against public policy. On November 10, 2005, the trial court granted ADT partial summary judgment; the court also granted Synnex partial summary judgment, declaring the exculpatory provision void as contrary to public policy. However, the court did not expressly address that part of Synnex’s motion seeking to dismiss ADT’s claim for indemnification. On the same day, the court entered a confirming order, determining the exculpatory provision unenforceable. The order also dismissed ADT’s counterclaim in its entirety.

 

On November 28, 2005, ADT filed a motion in limine, seeking to clarify that its indemnification claim had not been dismissed by the court’s November 10 order, contending that the parties’ oral arguments and the court’s ruling were limited to the exculpatory liability provision only and had not addressed the indemnification claim. On December 5, 2005, the court denied the motion, concluding that it had struck the indemnification provision, along with the exculpatory provision in its November 10, 2005 decision.

 

A jury found each party 50% liable and determined the total loss sustained by Synnex was $7,645,580. The court molded the verdict and entered judgment in favor of Synnex in the amount of $3,822,740, together with pre-judgment interest.

 

On appeal, ADT argued that the trial court had erred in declaring the exculpatory provision void and in dismissing its indemnification claim. We agreed with ADT that the genesis of the complaint was primarily a subrogation claim brought by MSIG in the name of its insured seeking to recover the monies it paid to Synnex in settlement of the covered loss. Id. at 583, 928 A.2d 37. We also agreed with ADT that the exculpatory provision was valid and enforceable. Id. at 591, 928 A.2d 37. Accordingly, we reversed. Id. at 595, 928 A.2d 37. However, we did not address ADT’s argument concerning its indemnification claim. ADT filed a motion for clarification, seeking guidance as to the effect of our opinion on its contractual indemnification claim, contending that the claim remained viable because we declared the exculpatory provision enforceable. We denied the motion, and ADT did not seek certification by the Supreme Court. Nor did ADT file a Rule 4:50 motion in the Law Division seeking to vacate that part of the November 10, 2005 order that dismissed its counterclaim for contractual indemnification.

 

On May 6, 2008, ADT filed a new complaint against Synnex seeking a declaratory judgment determining that Synnex is required under the indemnification provision to indemnify it for the attorney fees and costs incurred in defending the underlying action, contending that the action, although filed in the name of Synnex, was filed on behalf of a non-party to the contract, that is, MSIG as subrogee of Synnex. The complaint also alleged causes of action for breach of contract and breach of the duty of good faith and fair dealing based on Synnex’s failure to indemnify ADT for the incurred expenses.

 

In lieu of an answer, Synnex filed a motion seeking to dismiss the complaint pursuant to Rule 4:6-2(e), supporting the motion with a certification and other documents outside of the pleadings. On September 12, 2008, the trial court, having considered matters outside of the pleadings, converted the motion to one for summary judgment, and granted the motion. In so doing, the court determined that ADT’s claims were barred by res judicata and the entire controversy doctrine (ECD), reasoning in relevant part:

 

[T]he counterclaim for indemnification in this case was dismissed with prejudice on a motion for summary judgment addressing the merits of the claim.

 

The Appellate Division did not rule that the indemnification provision entitled ADT to recovery on that ground and did not remand that issue for further finding to the trial court.

 

The court entered a confirming order the same day.

 

On appeal, ADT argues that the trial court erred by: 1) granting summary judgment based on the ECD; 2) dismissing the complaint with prejudice under Rule 4:6-2(e) as it adequately pled causes of action for breach of contract and breach of the duty of good faith and fair dealing; and 3) failing to grant oral argument on a dispositive motion.

 

A trial court will grant summary judgment to the moving party “if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law.” R. 4:46-2(c); see also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523, 666 A.2d 146 (1995). “An issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact.” R. 4:46-2(c).

 

On appeal, “the propriety of the trial court’s order is a legal, not a factual, question.” Pressler, Current N.J. Court Rules, comment 3.2.1 on R. 2:10-2 (2010). “Appellate courts employ the same standard when reviewing summary judgment orders.” Block 268, LLC v. City of Hoboken Rent Leveling & Stabilization Bd., 401 N.J.Super. 563, 567, 952 A.2d 473 (App.Div.2008).

 

II.

 

ADT first argues that the trial court erroneously dismissed its contractual claim for indemnification as barred by the ECD. ADT contends that its right to indemnification did not accrue until we issued our opinion reversing the trial court’s determination that the exculpatory provision was not enforceable. ADT further asserts that the ECD does not preclude it from filing a successive action for indemnification when it asserted the claim in the underlying action. We agree that the claim is not barred by the ECD.

 

The ECD requires mandatory joinder of claims by incorporating the concept of claim preclusion. R. 4:30A. The doctrine requires that whenever possible, a party should assert all claims arising from the same transactional set of facts in a single lawsuit. Harley Davidson Motor Co., Inc. v. Advance Die Casting, 150 N .J. 489, 497, 696 A.2d 666 (1997). A party who fails to join all known claims in a single action does so “at the risk of being precluded from asserting them in the future.” In re Estate of Gabrellian, 372 N.J.Super. 432, 444, 859 A.2d 700 (App.Div.2004), certif. denied, 182 N .J. 430, 866 A.2d 986 (2005). Accordingly, “[m]andatory joinder of claims has been applied to bar claims involving commonality of facts in cases involving piecemeal litigation where parties, for strategic reasons, withhold claims concerning the underlying litigation, thus getting two bites of the apple.” Allstate Ins. Co. v. Cherry Hill Pain & Rehab. Inst., 389 N.J.Super. 130, 140, 911 A.2d 493 (App.Div.2006), certif. denied, 190 N.J. 254, 919 A.2d 848 (2007).

 

However, the ECD does not “apply to bar component claims either unknown, unarisen, or unaccrued at the time of the original action.” K-Land Corp. No. 28 v. Landis Sewerage Auth., 173 N.J. 59, 70, 800 A.2d 861 (2002) (quoting Pressler, Current N.J. Court Rules, comment 2 on R. 4:30A (2002) (emphasis omitted)). The doctrine only “bars a subsequent action … when a prior action based on the same transitional facts has been tried to judgment or settled.”   Arena v. Borough of Jamesburg, 309 N.J.Super. 106, 111, 706 A.2d 790 (App.Div.1998); see also Watkins v. Resorts Int’l Hotel & Casino, Inc., 124 N.J. 398, 415, 591 A.2d 592 (1991).

 

Here, consistent with the primary purpose of the ECD, that is, “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, 749 A.2d 862 (App.Div.2000), ADT asserted its claim for contractual indemnification in the underlying action. Because the ECD only precludes claims not asserted in the first action, we agree the trial court erred in dismissing ADT’s complaint on that basis. Nonetheless, we affirm, concluding that the trial court correctly determined that ADT’s claim was precluded by res judicata.

 

III.

 

“[T]he doctrine of res judicata provides that a cause of action between parties that has been finally determined on the merits by a tribunal having jurisdiction cannot be re[-]litigated by those parties or their privies in a new proceeding.” Velasquez v. Franz, 123 N.J. 498, 505, 589 A.2d 143 (1991). “The rationale underlying res judicata recognizes that fairness to the defendant and sound judicial administration require a definite end to litigation.” Ibid. “For a judicial decision to be accorded res judicata effect, it must be a valid and final adjudication on the merits of the claim.”   Id. at 506, 589 A.2d 143.

 

For res judicata to apply in a given case, the party asserting the doctrine must establish that: “(1) the judgment in the prior action must be valid, final, and on the merits; (2) the parties in the later action must be identical to or in privity with those in the prior action; and (3) the claim in the later action must grow out of the same transaction or occurrence as the claim in the earlier one.” Watkins, supra, 124 N.J. at 412, 591 A.2d 592.

 

ADT contends that in the underlying action the trial court erroneously equated the indemnification provision with the exculpatory and limited liability provisions in the contract and entered an order dismissing its counterclaim for contractual indemnification, with prejudice. ADT appealed that dismissal. Although we reversed the trial court’s determination that the exculpatory provision was not enforceable as a matter of public policy, we did not separately address ADT’s claim for indemnification, thus, leaving the trial court’s dismissal of that claim in place. ADT sought clarification on the issue, and we denied the motion. However, ADT never sought certification from the Supreme Court and, accordingly, the order dismissing the counterclaim for indemnification is a final determination on the merits. ADT cannot file a new action seeking to assert the same claim as that dismissed with prejudice in the first action.

 

What is more, as previously noted, we determined that the nature of the underlying action was primarily a subrogation claim brought by MSIG, albeit, in the name of its insured. Synnex Corp., supra, 394 N.J.Super. at 583, 928 A.2d 37. Subrogation is “ ‘[t]he substitution of one person in the place of another with reference to a lawful claim, demand or right, so that he who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies or securities.’ “ Hanover Ins. Co. v. Borough of Atl. Highlands, 310 N.J.Super. 599, 603, 709 A.2d 328 (Law Div.1997) (quoting Black’s Law Dictionary (5th Ed.1979)), aff’d, 310 N.J.Super. 568, 709 A.2d 236 (App.Div.), certif. denied, 156 N.J. 383, 718 A.2d 1212 (1998).

 

However, “a subrogee’s rights can rise no higher than those of the subrogor.”   Hayes v. Pittsgrove Twp. Bd. of Educ., 269 N.J.Super. 449, 455, 635 A.2d 998 (App.Div.1994). “As the right of subrogation turns on the obligation or duty that the third party itself owes the subrogor, subrogation is wholly dependent on the merits of the subrogor’s claim against the third party.”   Holloway v. State, 125 N.J. 386, 396, 593 A.2d 716 (1991). Moreover, “[t]he subrogee, which succeeds to the position of the subrogor, may recover only if the subrogor likewise could have recovered; the subrogee gains no additional rights and is subject to all defenses that were available against the subrogors.” Ibid.

 

Here, the indemnification provision sought to be enforced only requires Synnex to indemnify ADT for expenses incurred in defending actions by third parties, not in an action brought by Synnex itself. As MSIG filed the underlying action to enforce its subrogation rights, it stepped into the shoes of Synnex, and the indemnification provision is not applicable.

 

Affirmed.

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