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Neumeister v. Baldwin Well Drilling, Inc.

A-321-03T2, (N.J. Super. App. Div. 2004) (Unpublished)

DEEDS; COVENANTS—A deed covenant concerning the future price of water to be sold by a grantor water company to its grantee was held to be personal in nature and a subsequent property owner’s failure to join the named grantee left the new owner without a remedy when the successor water company raised prices.

A property owner sued the water company that provided well water to his property, claiming it was being overcharged in violation of a deed covenant. The covenant was between the prior owner of the property and the water company’s predecessor. It provided that the property owner was to pay a certain amount of money for well water and both parties had to mutually agree to price increases. When the new water company took over the water supply, it refused to abide by the deed covenant and it raised the price of the water without conferring with the property owner.

The lower court dismissed the compliant, holding that the deed covenant was personal in nature and therefore did not run with the land. Instead of appealing this ruling, the property owner filed suit against the prior owner of the land, the one who had entered into the deed covenant. The prior owner then filed a third-party complaint against the new water company. The trial judge dismissed the complaint against the prior property owner based on the entire-controversy doctrine and the present property owner appealed.

The Appellate Division affirmed the lower court’s dismissal of the complaint based on the entire-controversy doctrine. The Court found that the property owner failed to provide a reason for not joining the prior property owner in the first action against the water company. It held that the water company and the prior land owner were severely prejudiced by the failure to include all of the parties in the prior action. Litigants are obligated to join all parties to an action without whom litigation cannot proceed.

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