On appeal from the Superior Court, Chancery Division, Camden County.
Bischoff, J. H. Coleman and Gaulkin. The opinion of the court was delivered by Gaulkin, J.A.D.
[187 NJSuper Page 142] Defendant Planning Board of the Township of Pennsauken (Planning Board) was granted final judgment in its favor on its cross-claim against defendant John Tocco (Tocco). The judgment declared, however, "no damages sustained." The Planning Board appeals.
The action was brought by plaintiffs Harry and Ellen M. Dorofee seeking damages and other relief arising out of their purchase from Tocco and his wife of an unimproved lot adjoining the Dorofees' home. The Dorofees alleged that the lot was represented by Tocco as "a corner lot" and "a building lot" when in fact it was "a landlocked parcel" and that their purchase resulted from Tocco's misrepresentations. The fourth and fifth counts of the complaint asserted that the Planning Board had approved a minor subdivision of a larger tract owned by the Toccos so as to permit the sale, and that the Planning Board had participated in the alleged "scheme to misrepresent" the nature of the lot. The Dorofees sought damages against Tocco and the Planning Board and also demanded judgment compelling the Planning Board to make the lot buildable. The Planning Board in turn cross-claimed against Tocco, alleging that it had approved the subdivision of the landlocked lot based upon his fraudulent misrepresentations that the Dorofees wanted only to merge the new lot with their original lot and not to build on the new lot. The Planning Board demanded compensatory and punitive damages, together with counsel fees, against Tocco.*fn1
At the conclusion of the trial the judge found that Tocco had induced the Dorofees to purchase the lot by fraudulent misrepresentations and that he had obtained the subdivision by misrepresentations made to the Planning Board concerning the Dorofees' intentions. The judge awarded the Dorofees compensatory damages of $2,000 against Tocco, which he found to be "the diminution in the value of the property because it was not a building lot." On the Planning Board's cross-claim, the judge entered judgment against Tocco but found the Planning Board had sustained no recoverable damages. It is from that determination that the Planning Board now appeals.
The only compensable loss which the Planning Board claims is the counsel fees and expenses incurred by it in this litigation. Acknowledging the limitations on the award of counsel fees imposed by R. 4:42-9, the Planning Board nevertheless urges that such litigation expenses are properly recoverable as a traditional form of damages arising out of the tortious acts which Tocco was found to have committed.
New Jersey case law does support the proposition that, although attorneys fees are not ordinarily included as damages in a fraud action, one who is forced into litigation with a third party as a result of another's fraud may recover from the tortfeasor the expenses of that litigation, including counsel fees, as damages flowing from the tort. See Hagen v. Gallerano, 66 N.J. Super. 319 (App.Div.1961); Feldmesser v. Lemberger, 101 N.J.L. 184 (E. & A. 1925). These authorities are in accord with the principle stated in Restatement, Torts 2d, § 914:
(1) The damages in a tort action do not ordinarily include compensation for attorney fees or other expenses of the litigation.
(2) One who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover reasonable compensation for loss of time, attorney fees and other expenditures thereby suffered or incurred in the earlier action.
See, generally, Annotation, "Right to recover as damages attorneys' fees incurred in earlier litigation with a third person because of involvement therein through a tortious act of present adversary," 45 A.L.R. 2d 1183 (1956).
Our cases state similar principles with respect to the recovery of counsel fees arising out of breach of contract (e.g., Verhagen v. Platt, 1 N.J. 85 (1948); Gerhardt v. Continental Ins. Cos., 48 N.J. 291 (1966)) and arising out of malicious prosecution (e.g., Penwag Property Co., Inc. v. Landau, 76 N.J. 595 (1978)). The award of counsel fees as traditional damages in such settings is not precluded by R. 4:42-9. See Cohen v. Fair Lawn Dairies, Inc., 86 ...