Opinion
00-CV-591 (WGB).
March 29, 2001
Robert C. Shea, Esq., Stacie A. Brustman, Esq., SHEA NOVY, Toms River, N.J., Attorneys for Plaintiffs.
John P. Lacey, Esq., CONNELL FOLEY LLP, Roseland, N.J., Attorneys for Defendant Labor Management Concepts, Inc.
Michael L. Demody, First Assistant County Counsel, OFFICE OF THE HUDSON COUNTY COUNSEL, Administration Building Annex, Jersey City, N.J., Attorneys for Defendants Board of Chosen Freeholders for the County of Hudson, Neil Carroll, Vincent Ascolese, Neptalia Cruz, Nidia Davila-Colon, William O'Dea, Albert Cifelli, Silverio Vega, Maurice Fitzgibbons, and Edward J. Florio.
O P I N I O N
Plaintiffs Eileen Gilgallon, Ronald Gilgallon, and Mary Henning, (collectively "Plaintiffs"), who are suing in their capacity as taxpayers in Hudson County, New Jersey, move for reconsideration of this Court's Opinion and Order filed January 31, 2001 ("January 31 Opinion") granting Defendants' motion to dismiss. Plaintiff's motion for reconsideration is denied.
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1331 .
Defendant Labor Management Concepts, Inc. ("LMC") moves for sanctions pursuant to Fed.R.Civ.P. 11. Defendant's motion for sanctions is granted.
I. BACKGROUND
A. State Court Proceedings
The parties are referred to the January 31 Opinion for further background. Plaintiff Eileen Gilgallon ("Eileen") is the President and owner of CFS Services, Inc. ("CFS"), a licensed private detective agency. She is married to Plaintiff Ronald Gilgallon ("Ronald").
In 1995 and in 1996, CFS, LMC, and others, submitted bids to Hudson County ("the County") to provide security services at many of Hudson County's public buildings. Although CFS was the lowest bidder, it was disqualified by the County based on its suspected ties to Ronald, who had been convicted of insurance fraud. Thereafter, LMC was deemed the lowest responsible bidder in both 1995 and 1996. CFS denied that it had any connection to Ronald and sued the County and LMC in state court, seeking to obtain the bids. The County filed a cross-claim against LMC to recover the cost of unauthorized telephone charges that were incurred at a location where LMC provided security services.
On December 22, 1997, at a regular meeting of the Hudson County Board of Chosen Freeholders, the Board passed a Resolution authorizing Hudson County's Counsel to accept $30,000 from LMC to settle "any and all cross-claims" between the Hudson County Board of Chosen Freeholders and LMC, "including the cost of the unauthorized telephone calls." (Board Resolution attached to Plaintiffs' Cert. in Support of Motion for Reargument ("Pls.' Cert.") as Ex. H. (emphasis added)). Pursuant to the Board's Resolution, the County and LMC entered into a Settlement Agreement and Release ("Settlement Agreement") that resolved all claims between them. (Settlement Agreement attached to Pls.' Cert. as Ex. G.) The parties also executed a Stipulation of Dismissal With Prejudice.
As for the suit between CFS and LMC, pursuant to an order by the Law Division judge, the County conducted a hearing to determine whether CFS was a responsible bidder and therefore eligible to bid on the 1995 and 1996 contracts. After ten days of testimony, the hearing officer found that CFS was not a responsible bidder for either the 1995 or 1996 contract because of Ronald's continued involvement with CFS. The Board adopted the hearing officer's findings and retroactively awarded both the 1995 and 1996 contracts to LMC.
After reviewing the transcripts of the responsibility hearing, the Law Division upheld the County's decision. Further, the court denied CFS's motion to amend its complaint to allow Plaintiff or a taxpayer of Hudson County to sue LMC to recover on behalf of the County money allegedly owed as a result of unauthorized telephone charges and alleged supervisory personnel overpayments.
The New Jersey Appellate Division affirmed the lower court and agreed that there was sufficient credible evidence in the record to support the finding that CFS was not a responsible bidder. The appellate court also affirmed the validity of the Settlement Agreement and held that the trial court did not err in denying leave to amend the complaint "to assert taxpayer claims through Eileen Gilgallon against LMC for excessive managerial and telephone costs under other contracts with the County of Hudson."
B. Federal Court Proceeding
On February 4, 2000, Plaintiffs filed an eight count complaint before this Court alleging that LMC intentionally violated its contract with the County by: (1) using the County telephones without authorization; (2) failing to provide staff required under the contract and improperly submitting requests for payment when the required staff were not on site; and (3) being paid ultra vires without an appropriately executed contract for services rendered beginning in July 1995 to date.
By Opinion and Order dated January 31, 2001, the Court granted Defendants' motion to dismiss the Complaint because the County had settled all claims that it had against LMC.
II. DISCUSSION
A. Admissibility of Affidavits
Local Rule 7.2(a) requires that:
[a]ffidavits shall be restricted to statements of fact within the personal knowledge of the affiant. Argument of the facts and the law shall be not be contained in affidavits. Legal arguments and summations in affidavits will be disregarded by the Court and may subject the affiant to appropriate censure, sanctions or both.See also Fed.R.Civ.P. 56(e) ("[s]upporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.")
Courts have enforced such directives by making their own determinations of whether the contents of an affidavit are permissible facts within the affiant's personal knowledge or are impermissible factual and legal arguments, conclusions, or beliefs. See San Filippo v. Bongiovanni, 743 F. Supp. 327, 332 n. 3 (D.N.J. 1990), rev'd on other grounds, 961 F.2d 1125 (3d Cir.), cert. denied 506 U.S. 908 (1992) (striking inadmissible elements of affidavit but permitting remainder); see also Lombardi v. Cosgrove, 7 F. Supp.2d 481, 492 (D.N.J. 1997) (denying motion to strike but ignoring conclusions, beliefs, and misstatements, and using the assertions based on personal knowledge).
Here, the Certification in Support of Plaintiffs' Motion for Reargument as well as the Certification of John P. Lacey contain legal arguments and conclusions. Therefore, the Court ignored those portions that are not based on the personal knowledge of the respective affiants.
B. Standard Governing Local Rule 7.1(g)
A motion for reconsideration under Local Civil Rule 7.1(g) must set forth "the matters or controlling decisions which counsel believes the Judge or Magistrate has overlooked." A court may grant a motion for reconsideration based upon an intervening change in the law or new, previously unavailable evidence. Natural Resources Defense Council v. U.S.E.P.A., 705 F. Supp. 698, 702 (D.D.C. 1989) (citations omitted). A party seeking reconsideration under Local Rule 7.1(g) must do more than disagree with the Court's decision. Mere "recapitulation of the cases and arguments considered by the Court before rendering its original decision fails to carry the moving party's burden." G-69 v. Degnan, 748 F. Supp. 274, 275 (D.N.J. 1990); see also Fontenot v. Mesa Petroleum Co., 791 F.2d 1207, 1219 (5th Cir. 1986); Youmans v. Simon, 791 F.2d 341, 349 (5th Cir. 1986).
A motion for reconsideration is improper when it is used "to ask the Court to rethink what it has already thought through — rightly or wrongly." Oritani Sav. Loan Ass'n v. Fidelity Deposit Co. of Md., 744 F. Supp. 1311, 1314 (D.N.J. 1990) (citations omitted), rev'd on other grounds, 989 F.2d 635 (3d Cir. 1993). Additionally, reconsideration motions may not be used to relitigate old matters or raise arguments or present evidence that could have been raised prior to entry of judgment.Polizzi Meats, Inc. v. Aetna Life Casualty Co., 931 F. Supp. 328, 339-39 n. 2 (D.N.J. 1996); see also Resorts Intern. V. Great Bay Hotel and Casino, 830 F. Supp. 826, 831 (D.N.J. 1992) (noting that Local Rule 7.1(g) invites counsel to draw the court's attention to decisions that may have been overlooked by the court, not those overlooked by counsel). Finally, "only if the matters which were overlooked, if considered by the Court, might reasonably have resulted in a different conclusion will the court entertain such a motion." Polizzi Meats, Inc., 931 F. Supp. at 339.
As a threshold issue, Plaintiffs contend that they were unable to explain the complexity of the facts and issues in this matter to the Court because no oral argument was heard. Certification of Robert C. Shea ("Shea Cert."), at ¶ 6. Moreover, they claim that they were unable to file a brief in opposition to Defendants' motion to dismiss in excess of fifteen pages because the Court denied Plaintiffs' motion to file an overlength brief. Id. at ¶¶ 4-5; see Order dated June 6, 2000. While the Court did deny Plaintiff leave to file an overlength brief, it also expressly stated that Plaintiffs comply
with the page requirements set forth in revised L. Civ.R. 7.2(b), which provides that "[a]ny brief shall include a table of contents and a table of authorities and shall not exceed 40 ordinary typed or printed pages (15 pages for any reply brief submitted under L. Civ.R. 7.1(c) and any brief in support of a motion for reargument . . . ."Id. (emphasis added). Although Local Rule 7.2(b) permits the filing of up to a 40 page brief in opposition to a motion to dismiss, Plaintiffs apparently misread Local Rule 7.2(b) to permit the filing of only a fifteen page brief in opposition to a motion to dismiss. Plaintiffs cannot blame the Court for their own misunderstanding of the Local Rules. Further, as set forth in Fed.R.Civ.P. 78, it is well within the Court's authority to decide a motion without oral argument.
In any event, the Court concludes that the issues presented by Plaintiffs in this motion were adequately briefed by the parties and addressed by the Court in its Opinion filed on January 31, 2001. Plaintiffs merely rehash arguments that were or could have been raised previously and essentially ask the Court to rethink what it has already thought through — wrongly, according to Plaintiffs. Therefore, Plaintiffs' motion for reconsideration is denied.
B. Motion for Sanctions
Federal Rule of Civil Procedure 11 authorizes judicial sanctions designed to "discourage plaintiffs from bringing baseless action or making frivolous motions," Bensalem Township v. International Surplus Lines Ins. Co., 38 F.3d 1303, 1314 (3d Cir. 1994), and to prevent misuse of the court's process. Teamsters Local Union No. 430 v. Cement Express, Inc., 841 F.2d 66, 68 (3d Cir.) cert denied, 488 U.S. 848 (1988). Rule 11 motions must not be made routinely, and Rule 11 sanctions are reserved for "exceptional circumstances." Gaiardo v. Ethyl Corp., 835 F.2d 479, 483 (3d Cir. 1987); Morristown Daily Record, Inc. v. Graphic Communications Union, Local 8N, 832 F.2d 31, 32 n. 1 (3d Cir. 1987). Sanctions should not be imposed where the conduct complained of indicates "vigorous advocacy," rather than bad faith or impropriety." Smith v. BIC Corp., 869 F.2d 194, 201 (3d Cir. 1989).
Rule 11 imposes a duty for an attorney or a pro se party whose signature appears on papers submitted to the Court to conduct a "reasonable investigation of the facts and a normally competent level of legal research to support the presentation." Mary Ann Pensiero, Inc. v. Lingle, 847 F.2d 90 (3d Cir. 1990). In short, the rule imposes a duty to "stop, think, investigate and research." Gaiardo, 835 F.2d at 483.
Plaintiffs have engaged in a pattern of vexatious and meritless litigation deserving of Rule 11 sanctions. See Knipe v. United States, 151 F.R.D. 24, 26 (N.D.N.Y. 1993) (party's effort to relitigate many of the same issues already decided along with the fact that counsel's arguments had been rejected by circuit and district courts led court to conclude that complaint was filed with improper purpose). Even if, as Plaintiffs argue, the County thought it was settling only the unauthorized telephone charge claim, Plaintiffs claims are clearly frivolous and legally untenable on several different grounds.
1. Settlement Agreement
First, as more fully articulated in the Court's January 31 Opinion, the County accepted $30,000 in "full and final settlement of all claims and counterclaims that Hudson County has filed, or could have filed, against Labor Management Concepts, Inc. based on conduct that occurred prior to the date of this Settlement Agreement." Pls.' Cert., Ex. G. (emphasis added). The express terms of the Settlement Agreement settling and releasing any and all claims by the County against LMC are nothing short of unambiguous. In such a case, extrinsic evidence to vary the meaning of the Settlement Agreement is barred by the parol evidence rule. Publix Asbury Corp. v. City of Asbury Park, 18 N.J. Super. 286, 295 (Ch.Div. 1951) (noting that generally, a written contract containing the whole agreement of the parties may not be altered by parol evidence).
2. Entire Controversy Doctrine
Second, notwithstanding the Settlement Agreement, the entire controversy doctrine bars Plaintiffs from bringing claims that they knew about during the pendency of the state court litigation and which arose from related facts or the same transaction or series of transactions. See Circle Chevrolet v. Giordano, Halleran Ciesla, 142 N.J. 280, 290, 294 (1995). The entire controversy doctrine seeks to further goals of judicial economy and fairness by requiring, whenever possible, that adjudication of a legal controversy occur in one litigation before one court; accordingly, all parties involved in a litigation should at the very least present in that proceeding all of their claims and defenses, including counterclaims and cross-claims, that are related to the underlying controversy. Id. at 289; Kozyra v. Allen, 973 F.2d 1110, 1111 (3d Cir. 1992); DiTrolio v. Antiles, 142 N.J. 253, 267 (1995).
"A federal court hearing a federal cause of action is bound by New Jersey's Entire Controversy Doctrine, an aspect of the substantive law of New Jersey, by virtue of the Full Faith and Credit Act, 28 U.S.C. § 1738 (1994)." Rycoline Products v. C W Unlimited , 109 F.3d 883, 887 (3d Cir. 1997).
In deciding whether an action is barred by the entire controversy doctrine, the Court must make three inquiries. First, the Court must determine whether the claims arise from related facts or the same transaction or series of transactions. DiTrolio, 142 N.J. at 267. Second, the Court must determine whether application of the doctrine would be fair to the parties. DiTrolio, 142 N.J. at 272-77; Circle Chevrolet, 142 N.J. at 309-10. Finally, the Court must consider whether application of the doctrine would promote judicial economy and efficiency by avoiding the waste and delay occasioned by piecemeal litigation.DiTrolio, 142 N.J. at 277.
Here, there is no question that Plaintiffs' allegations of a violation of the Racketeer Influence and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1964, arise from the same facts or series of transactions involving security services provided by LMC for the County in and around 1995 and 1996. Moreover, Plaintiffs were a party to the prior state court litigation as was LMC.
Next, application of the doctrine is nothing short of fair to the parties. In fact, not applying the doctrine would be grossly unfair to LMC; LMC should not be subjected to the new claims arising out of the same facts, particularly where it paid $30,000 to have any and all claims against it released. LMC is entitled to finality and closure.
Finally, the interests of judicial economy and efficiency compel the Court to apply the entire controversy doctrine. Responding to Plaintiffs' repetitive and legally insufficient claims burdens Defendants and the Court. A "reasonable investigation of the facts and a normally competent level of legal research," Mary Ann Pensiero, Inc., 847 F.2d 90, would have revealed to Plaintiffs' that their claims are entirely without merit.
In view of the fact that Plaintiffs' claims have not only been settled and released by the County, but are also clearly barred by the entire controversy doctrine, such claims are unwarranted by existing law. Accordingly, Rule 11 sanctions will be imposed against Plaintiffs and their counsel for the reasonable expenses and attorneys' fees incurred by LMC in presenting the Rule 11 motion and in opposing Plaintiffs' motion for reconsideration.
III. CONCLUSION
For the reasons noted above, Plaintiffs' motion for reconsideration is denied. LMC's motion for sanctions is granted.
O R D E R
This matter having come before the Court on Plaintiffs' motion for reconsideration pursuant to Local Rule 7.1(g); and Defendant Labor Management Concepts, Inc.'s ("LMC") motion for sanctions pursuant to Fed.R.Civ.P. Rule 11; and
The Court having considered the submissions of the parties; and
The Court having decided this matter without oral argument pursuant to Fed.R.Civ.P. 78; and
For the reasons set forth in the Court's Opinion issued this day; and
For good cause shown;
IT IS on this 29th day of March, 2001, hereby ORDERED that Plaintiffs' motion for reconsideration is DENIED; and
IT IS FURTHER ORDERED that LMC's motion for Rule 11 sanctions is GRANTED; and
IT IS FURTHER ORDERED that Rule 11 sanctions shall be imposed against Plaintiffs and their counsel for the reasonable attorneys' fees and costs incurred by LMC in presenting the Rule 11 motion and in opposing Plaintiffs' motion for reconsideration; and
IT IS FURTHER ORDERED that LMC serve Plaintiffs and submit to the Court its fee application including all affidavit and materials supporting its request for attorneys' fees and costs incurred as set forth in the Opinion entered this date by no later than April 13, 2001; and Plaintiffs shall serve LMC and submit to the Court any objections regarding the reasonableness only of the fees by no later than April 27, 2001.