Francavilla v. Absolute Resolutions VI, LLC, ___ N.J. Super. ___ (App. Div. 2024). Judge Vanek wrote this opinion for the Appellate Division in this putative class action case. Her first sentence describes the essence of the matter: “This appeal requires us to determine whether a putative class action complaint seeking to claw back funds paid by a debtor in full satisfaction of a final default judgment, entered in a prior lawsuit filed in a different court, is barred under the entire controversy doctrine.” The Law Division applied the entire controversy doctrine. Plaintiff appealed, but the Appellate Division affirmed.
Plaintiff, Ms. Francavilla, had defaulted on payment of a credit card balance. The credit card issuer assigned that debt to defendant. Defendant, Absolute Resolutions VI, LLC (“Absolute”) sued on the debt in the Law Division, Bergen County, and won a judgment by default. Ms. Francavilla did not seek to vacate the judgment or to appeal it.
Thereafter, Absolute moved to garnish Ms. Francavilla’s wages in order to satisfy the judgment. Ms. Francavilla opposed that and got the amount of the garnishment reduced. One year later, she filed another objection to the garnishment but withdrew it. Ultimately, Ms. Francavilla satisfied the default judgment in full.
Twenty two months after paying the judgment amount, Ms. Francavilla filed this case in the Law Division, Essex County. She alleged, on behalf of a putative class, that Absolute Resolutions had violated the New Jersey Consumer Finance Licensing Act, N.J.S.A. 17:11C-1 to -49 (“the CFLA”), by purchasing consumer debt without first having obtained a license as a consumer lender or sales finance company. After denying Ms. Francavilla’s motion for class certification as premature, the Law Division granted Absolute’s motion to dismiss for lack of jurisdiction, Rule 4:6-2(a), based on the entire controversy doctrine. That court stated that Ms. Francavilla “could have raised and litigated her claims concerning the lack of licensure in the [Bergen County litigation] including via post-judgment application – but failed or even chose not to do so” (emphasis by the Law Division, as quoted by Judge Vanek). The Law Division also found Ms. Francavilla not to be a proper class representative.
The Appellate Division affirmed. Judge Vanek noted that review of “the law guiding the trial court’s determination as to the entire controversy doctrine” was de novo. But she stated that “the decision to apply the doctrine, as an equitable principle, is left to judicial discretion,” citing a number of cases. The panel found that the Law Division “did not abuse its discretion in applying the entire controversy doctrine to dismiss the Essex County litigation where the substantive defenses raised here could have been pursued in the Bergen County litigation.”
Ms. Francavilla contended that the equitable nature of the entire controversy doctrine meant that the Law Division should have declined to apply the doctrine in favor of Absolute, whom she argued had unclean hands because it had violated the CFLA. Judge Vanek rejected that idea, “as a circular attempt to use belatedly raised substantive defenses to justify plaintiff’s own violation of the principles of finality, fairness and judicial economy in proceeding with a second suit on the same debt.”
The panel also found inapplicable cases from the highest state court in Maryland and from the Third Circuit. Likewise, Ms. Francavilla’s argument that the panel should “expand upon a line of cases where the [New Jersey Supreme] Court held the entire controversy doctrine inapplicable to certain legal malpractice claims” did not succeed. Judge Vanek said that “[u]nlike a legal malpractice case, in which a client may only become aware of the attorney’s actionable conduct through the judicial process, plaintiff’s claim on appeal is directly tied to the precise monetary exposure that was the subject of the Bergen County litigation.”
Finally, the panel upheld the Law Division’s denial of class certification, citing Rule 4:32-1(a)(3), which requires that a named plaintiff be typical of the putative class. “[T]he non-viability of plaintiff’s claims as an individual precludes her ability to be a class representative.” The opinion went on to say that “in order to bring a class action lawsuit, the named representative must individually have standing to bring their claims.” That mistakenly conflated standing with typicality, which are two different concepts. But that did not undercut the denial of class certification, which itself was likely unnecessary as Ms. Francavilla could not proceed with the case even individually.