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Colon v. Campo

A-3204-01T5 (N.J. Super. App. Div. 2003) (Unpublished)

LANDLORD-TENANT; EVICTION—When a landlord and tenant chose not to settle a monetary claim as part of the settlement of an eviction matter, that claim is not barred by the entire controversy doctrine.

A residential tenant sued its landlord to recoup rents previously paid, claiming that the landlord breached the implied covenant of habitability. The landlord then filed a complaint to evict the tenant for holding over beyond the expiration date of the lease. The landlord and tenant settled the eviction complaint but did not resolve the tenant’s claims for damages in the recoupment suit. In response, the landlord claimed that the tenants’ action was barred because of the entire controversy doctrine, further claiming that the tenant’s habitability claim should have been raised as a defense to the landlord’s eviction complaint. The lower court agreed, dismissing the tenant’s case for damages and awarding the landlord its counterclaim for rent required to be paid pursuant to the settlement agreement in the eviction case. The Appellate Division reversed, noting that the lower court failed to distinguish between the two types of habitability issues. One was a defense to the obligation to pay rent, which had to be raised as a defense in the eviction trial. The other was a claim to recoup the rent previously paid based on lack of habitability. That claim was beyond the jurisdiction of the landlord-tenant court and had to be raised elsewhere. Further, the Court noted that the damage claim was filed first and was pending when the eviction complaint was filed. The purpose of the entire controversy doctrine is to be fair to the parties by not subjecting them to piecemeal adjudication and to prevent one of them from lulling the other into a sense of security while secretly harboring an agenda to bring another suit. In this case however, the landlord knew about the other action when it negotiated a settlement of the eviction case. The landlord and tenant chose not to resolve that damage claim as part of their settlement of the eviction claim.

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