Beware The Entire Controversy Doctrine
Suppose you are having a number of disagreements with your business partners and litigation is inevitable. When planning the lawsuit with your attorney, it is essential to consider all claims that you possess against all responsible parties. Otherwise, claims that are not asserted in the first action may be barred in a subsequent lawsuit under the Entire Controversy Doctrine.
The Entire Controversy Doctrine is intended to encourage comprehensive determinations of disputes between parties and to avoid fragmentation of litigation. The doctrine promotes party fairness and judicial economy and efficiency. When an initial Complaint or Answer is filed in the Superior Court, the attorney is required to certify that he is unaware of any other litigation or arbitration pending between the parties and that he is also unaware of any persons or entities who should be joined as parties to the litigation.
There are notable exceptions to the entire controversy doctrine. If there is no factual nexus between the two lawsuits, the doctrine will not apply. Similarly, if a claim is unknown at the time the first suit is concluded, the claim will not be barred in the second suit.
Claims that are known, but have not yet accrued, will not trigger the entire controversy doctrine. For instance, when a tenant has defaulted on a commercial lease and the landlord obtains a judgment for rent owed through the date of the judgment, a subsequent lawsuit for future rent will not be barred. Notwithstanding this general protection against a subsequent claim for unaccrued rent, the lease may provide that upon default, all rents owed through the remainder of the lease are accelerated and discounted back to present value. In that event, the claim for future rent would have accrued, and the entire controversy doctrine could very well apply to a claim for rent that accrues subsequent to the date of the first judgment. When planning landlord/tenant litigation, the attorney must review the default provisions of the lease, because those provisions will govern whether multiple suits are permitted.
The safe bet is to bring all claims against all parties. That way, you will not have to worry about claims being precluded in a second suit. However, bringing all claims against all parties may clutter up the litigation and cause delay in having the core issues adjudicated. One way of dealing with this dilemma is to bring the issue to the attention of the first court. The entire controversy doctrine does not apply to a claim that a previous court reserved or expressly declined to entertain.
The bottom line is that an attorney litigating cases in New Jersey must carefully consider the entire controversy doctrine when planning litigation in order to protect all of the client's claims.