Opinion
DOCKET NO. A-5271-12T1
07-23-2014
KENNETH WACHSMAN, Plaintiff-Appellant, v. KATHY J. TOBIAS, Defendant-Respondent
Kenneth K. Lehn argued the cause for appellant (Winne, Banta, Hetherington, Basralian & Kahn, P.C., attorneys; Dennis G. Harraka and Arthur I. Goldberg, on the briefs). Kathy J. Tobias, respondent, argued the cause pro se.
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Ashrafi and St. John.
On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5828-12.
Kenneth K. Lehn argued the cause for appellant (Winne, Banta, Hetherington, Basralian & Kahn, P.C., attorneys; Dennis G. Harraka and Arthur I. Goldberg, on the briefs).
Kathy J. Tobias, respondent, argued the cause pro se. PER CURIAM
Plaintiff Kenneth Wachsman appeals the May 24, 2013 order of the Chancery Division denying his request for the award of attorney's fees pursuant to the Frivolous Litigation Statute, N.J.S.A. 2A:15-59.1. Wachsman contends that the court's decision that "there is no prevailing party in this matter as the parties settled the case[,]" was in error. After reviewing the record in light of the contentions advanced on appeal, we reverse and remand.
This appeal arises as the result of a contentious personal relationship between the parties. Plaintiff gifted a very expensive, 2.1 carat diamond ring and other items to defendant. Plaintiff contended that the ring was an engagement ring, given in contemplation of marriage, and defendant asserted it was simply a gift. The motion judge found, and the record overwhelmingly supported, that the ring was given in contemplation of marriage.
After their relationship soured, plaintiff unsuccessfully sought the return of the ring. He commenced an action in the Chancery Division to compel the return of the ring as well as other personal property. Defendant represented, after filing her answer, that she lost the ring some five weeks before the filing, although that fact was not set forth in her answer. Defendant filed a counseled, amended answer and counterclaim, dated May 7, 2012, in which she represented that she lost the ring on March 24, 2012, while on a business trip.
In her counterclaim, defendant alleged that, as a result of plaintiff's physical and emotional abuse, she suffered certain injuries, as well as property damage. Additionally, defendant contended that plaintiff owed his share of certain living expenses that they agreed to pay equally. She also raised the issue of a final restraining order that was entered against plaintiff, and the alleged violation of that order. The matter was then transferred to the Law Division.
Plaintiff filed an order to show cause seeking protections not germane to this appeal. Shortly thereafter, defendant's counsel withdrew and defendant proceeded pro se. At defendant's deposition on October 3, 2012, defendant acknowledged she had the ring and stated that, "I'm not just going to hand it back. We need to do a settlement."
On the scheduled trial date, the parties appeared and entered a settlement on the record. The agreement required defendant to return the diamond engagement ring, as well as other items to plaintiff. Plaintiff agreed to dismiss his complaint and defendant agreed to dismiss her counterclaim. However, plaintiff reserved the right to bring a motion for his legal fees, and the parties agreed that the "decision would be made by the judge on the papers, no testimony, no other proceedings in court[.]"
On May 3, 2013, plaintiff made a motion pursuant to N.J.S.A. 2A:15-59.1, for his counsel fees. The motion was unopposed by defendant. On May 24, 2013, the court denied the motion. The court stated that "the parties ultimately reached a settlement agreement on March 26, 2013, whereby defendant returned the diamond engagement ring as well as other items to plaintiff. Pursuant to the statutory provisions, there is no prevailing party in this matter as the parties settled the case." The court further determined that "plaintiff claims the defenses in this matter were patently frivolous. The court finds the defendant was merely defending the claim against her, and was not putting forth frivolous defenses. Thus, the award of fees is not warranted." It is from that decision that plaintiff appeals.
Plaintiff argues that the court erred in determining that he did not have a statutory right to the award of counsel fees. Further, the plaintiff claims that the court erred in determining that he was not the prevailing party in the litigation, and that the underlying litigation was in fact frivolous, thereby warranting a fee award.
A trial court's determination granting or denying fees and costs for frivolous litigation is reviewed for abuse of discretion. Ferolito v. Park Hill Ass'n, 408 N.J. Super. 401, 407 (App. Div.), certif. denied, 200 N.J. 502 (2009); see also McDaniel v. Man Wai Lee, 419 N.J. Super. 482, 498 (App. Div. 2011). To the extent that the trial court's decision implicates legal principles, we independently evaluate those legal assessments de novo. See Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995); Finderne Mgmt. Co., Inc. v. Barrett, 402 N.J. Super. 546, 573 (App. Div. 2008), certif. denied, 199 N.J. 542 (2009).
N.J.S.A. 2A:15-59.1 addresses the frivolous conduct of litigants and provides that a plaintiff or defendant who prevails in a case "may be awarded all reasonable litigation costs and reasonable attorney fees . . . if the judge finds at any time during the proceedings or upon judgment that a complaint, counterclaim, cross-claim or defense of the non-prevailing person was frivolous." N.J.S.A. 2A:15-59.1(a)(1). Frivolous conduct exists where the trial judge finds "on the basis of the pleadings, discovery, or the evidence presented" that either:
(1) The complaint, counterclaim, cross-claim or defense was commenced, used or continued in bad faith, solely for the purpose of harassment, delay or malicious injury; or
(2) the nonprevailing party knew, or should have known, that the complaint, counterclaim, cross-claim or defense was without any reasonable basis in law or equity and could not be supported by a good
faith argument for an extension, modification or reversal of existing law.
[N.J.S.A. 2A:15-59.1(b).]
In order to determine whether a party has prevailed in litigation, it is not necessary that the matter be tried to its conclusion. Indeed, the statute itself provides that such a determination can be made "at any time during the proceedings" or upon judgment. See also Evans v. Prudential Prop. & Cas. Ins. Co., 233 N.J. Super. 652, 658-59 (Law Div. 1989) (recognizing that the frivolity of a position taken by a litigant can be determined at the time the position is adjudicated, prior to the conclusion of the litigation).
Further, parties have been recognized to be "prevailing" when they have settled actions as a "face-saving device." Iannone v. McHale, 236 N.J. Super. 227, 230-31 (Law Div. 1989) (finding settlement, whereby plaintiff withdrew petition contesting election as a face-saving device, rendered the defendants the prevailing parties), rev'd on other grounds, 245 N.J. Super. 17 (App. Div. 1990); see also Fagas v. Scott, 251 N.J. Super. 169, 192 (Law Div. 1991) ("Even where a settlement is reached, the facts can be interpreted to demonstrate that one party has 'prevailed' for purposes of the act.").
When a complaint has been dismissed or claim withdrawn as the result of its lack of merit, the targeted party is deemed to have prevailed and may recover attorneys' fees under the statute, assuming other conditions are met. First Atl. Fed. Credit Union v. Perez, 391 N.J. Super. 419, 432 (App. Div. 2007) (stating principle); Ibelli v. Maloof, 257 N.J. Super. 324, 33436 (Ch. Div. 1992) (finding withdrawal of a motion seeking dismissal for lack of personal jurisdiction after the responding party uncovered substantial sales in New Jersey was, in the circumstances, involuntary and rendered movant liable for attorneys' fees); Chernin v. Mardan Corp., 244 N.J. Super. 379, 383 (Ch. Div. 1990) (motion to amend complaint to delete defendant after becoming convinced that no cause of action could properly be asserted rendered defendant the prevailing party).
Therefore, the court erred in its determination that "there is no prevailing party in this matter as the parties settled the case" and we are constrained to reverse the decision and remand to the motion court. As the parties agreed in their settlement that the legal fees' "decision would be made by the judge on the papers, no testimony, no other proceedings in court," the motion court shall base its decision on the submissions of the parties.
The court shall first determine if plaintiff is a prevailing party and, if so, then has he met his burden to prove the bad faith of the defendant. Ferolito, supra, 408 N.J. Super. at 408. We note a claim is frivolous "when no rational argument can be advanced in its support, when it is not supported by any credible evidence, when a reasonable person could not have expected its success, or when it is completely untenable." Belfer v. Merling, 322 N.J. Super. 124, 144 (App. Div.), certif. denied, 162 N.J. 196 (1999). Our Supreme Court has observed that even "false allegations of fact will not justify a fee award unless they are made in bad faith, for the purpose of harassment, delay, or malicious injury." McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 561 (1993)(internal citations omitted).
However, defending against a claim is no excuse for knowingly making false factual statements in a pleading. Therefore, on remand the judge should evaluate defendant's factual assertions that the ring was not given to her in contemplation of marriage and that she lost the ring, through the prism of whether the assertions were in fact false and made in bad faith, for the purpose of harassment, delay, or malicious injury. That same principle should be applied with regard to defendant's factual contentions in her counterclaim.
Reversed and remanded for further proceedings in conformity with our opinion. We do not retain jurisdiction.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF APPELLATE DIVIDION