Raise All Related Claims During a Foreclosure Action

In an unpublished decision issued by the Honorable Renee Marie Bumb of the United States District Court for the District of New Jersey, the court held that New Jersey’s entire controversy doctrine precluded the borrowers’ action against the lender and its servicer for their alleged improper business practices arising out of an alleged overcharge of the debt pay-off amount. The action against the lender and servicer was instituted after the lender’s foreclosure action had concluded. In a victory for mortgage lenders and servicers, the court found that such claims were barred because they should and could have been raised in the earlier foreclosure action. Napoli v. HSBC Mortg. Servs., No. 12-CV-222, 2012 U.S. Dist. LEXIS 121204 (D.N.J. Aug. 27, 2012).

By way of background, the entire controversy doctrine is a New Jersey procedural rule that stems from the long-established practice of, and preference for, a complete resolution of all related claims between parties in a single action, rather than in “separate, successive, fragmented, or piecemeal litigation.” Kent Motor Cars v. Reynolds & Reynolds, 207 N.J. 428, 443 (2011). It mandates joinder of “virtually all causes, claims, and defenses relating to a controversy between the parties” by allowing courts to dismiss successive suits involving omitted claims that should have been joined in the prior action. Cogdell v. Hosp. Ctr. at Orange, 116 N.J. 7, 16 (1989). It is not the commonality of legal issues that governs the applicability of the entire controversy doctrine, but “whether distinct claims are aspects of a single larger controversy because they arise from interrelated facts.” Ditrolio v. Antiles, 142 N.J. 253, 271 (1995). “The ultimate goals to be advanced by the entire controversy doctrine are judicial economy, administrative efficiency, fairness to litigants, and the just resolution of disputes.” Crispin v. Volkswagenwerk, 96 N.J. 336, 352 (1984).