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Evans v. Prudential Property and Casualty Insurance Co.

Decided: May 5, 1989.

JAN R. EVANS AND MICHAELYN P. EVANS, H/W, PLAINTIFFS,
v.
THE PRUDENTIAL PROPERTY AND CASUALTY INSURANCE COMPANY, PAUL WIGAND, AND "DAVID DOLES," SAID NAME(S) BEING FICTITIOUS AND UNKNOWN; JOINTLY, SEVERALLY AND/OR IN THE ALTERNATIVE, DEFENDANTS



Gottlieb, J.s.c.

Gottlieb

[233 NJSuper Page 653] Plaintiffs have moved to dismiss the counterclaim asserted by defendants The Prudential Property & Casualty Insurance

Company ("Prudential") and Paul Wigand ("Wigand"). Plaintiffs contend, under R. 4:6-2(e), that the counterclaim fails to set forth a claim upon which relief can be granted. They seek, additionally, reasonable attorney fees under N.J.S.A. 2A:15-59.1. This legislation is popularly called "the frivolous claims statute." Defendants argue that the counterclaim itself asserts their rights under N.J.S.A. 2A:15-59.1. The issues presented are: one, whether defendants may assert a right to an award of reasonable litigation costs and attorney fees under the frivolous claims statute in a counterclaim; and, two, if not, whether the court in this case should award attorney fees to plaintiffs.

THE PROCEDURAL BACKGROUND:

According to the complaint, a fire occurred at plaintiffs' residence on January 14, 1988. The structure, its contents and necessary alternative living expenses were insured under a homeowner's policy issued by Prudential. Wigand was Prudential's claims adjuster responsible for investigating and adjusting plaintiffs' fire loss.

In the complaint, plaintiffs have asserted eight causes of action arising out of the events concerning the investigation and adjustment of the loss. They contend that: one, Prudential breached the insurance contract by not living up to its responsibility to adjust the loss with plaintiffs and, additionally, violated the implied covenants of good faith and fair dealing; two, Prudential acted in bad faith and maliciously in its dealings with plaintiffs; three, Prudential infringed upon a fiduciary duty it owed to plaintiffs as the custodian of monies attributable to the policy benefits; four, Prudential and Wigand made fraudulent misrepresentations or negligently made false representations in inducing plaintiffs to purchase a Prudential home-owners insurance policy; five, Prudential violated the provisions of N.J.S.A. 56:8-1 et seq. (commonly called the Consumer Fraud Act) in the sale of the insurance policy and in adjusting the loss claim; six, Prudential's and Wigand's improper conduct

in adjusting the loss resulted in the intentional infliction of emotional distress; seven, Wigand tortiously interfered with plaintiffs' contractual rights with Prudential; and, eight, Prudential and Wigand violated this State's public policy, as memorialized in N.J.S.A. 17:29B-1 et seq. (commonly referred to as the Unfair Claims Settlement Practice Act).

The answer contends that, after plaintiffs and Prudential were unable to agree upon the amount of plaintiffs' loss, they followed the appraisal provisions of the insurance policy; and that when the appraisal awards were made, Prudential paid plaintiffs those awards. Moreover, the answer denies the validity of plaintiffs' claims and causes of action and insists that Prudential and Wigand fully complied with all of their contractual responsibilities. Additionally, the answer advances other separate defenses.

The counterclaim asserts that after payment of the appraisal award, plaintiff Jan Evans demanded a payment by Prudential of an additional $45,000 or he would file suit against it, but that Prudential determined not to pay the extra money. It goes on to claim that that plaintiff was or should have been aware that the appraisal procedure was binding, that he filed the complaint "for the improper purpose of extracting additional funds" from Prudential and that, as a result of the suit, Prudential has been compelled to expend monies in its defense. The counterclaim concludes by "request[ing] reimbursement for all fees and costs associated with the defense of this matter, and punitive damages as the court may deem just."

Both the complaint and the answer and counterclaim demand a trial of all issues by a jury.

CLARIFYING THE ISSUES:

In their motion to dismiss, plaintiffs argue that the counterclaim can be viewed as asserting a cause of action either for abuse of process or for malicious prosecution. Viewed either way, plaintiffs urge that no cognizable cause of action has been pleaded. Plaintiffs are correct in that position.

If the counterclaim is viewed as asserting a cause of action for abuse of process, that cause of action requires "some further act after the issuance of process representing the perversion of the legitimate use of the process." Fielder Agency v. Eldan Constr. Corp., 152 N.J. Super. 344, 348 (Law Div.1977). The counterclaim specifies conduct which is said to have taken place before, but not after, the issuance of process: that Jan Evans attempted to extract an additional $45,000 from Prudential by using the intimidation of a future law suit.

In Gambocz v. Apel, 102 N.J. Super. 123 (App.Div.1968), certif. den. 52 N.J. 485 (1968), the Appellate Division was presented with an argument "whether the requirement of further acts is or should continue to be the law of this State." 102 N.J. Super. at 131. However, that court found it unnecessary to make that decision. This court, as well, need not address the issue, for a reason to be expressed shortly.

If, on the other hand, the counterclaim is classified as one asserting a cause of action for malicious prosecution, it too must fail since neither the underlying claim upon which it is grounded-the complaint -- has been terminated in Prudential's favor, Penwag Prop. Co. v. Landau, 76 N.J. 595, 598 (1978), nor has a special grievance been alleged. Counsel fees and costs in defending an action do not constitute a special grievance. Id.

Defendants, however, contend that categorizing the counterclaim as one asserting a cause of action for either abuse of process or malicious prosecution is a mischaracterization. To the contrary, they deny it is either, but rather that it is one asserting defendants' rights under N.J.S.A. 2A:15-59.1. The court will proceed on the assumption that defendants are correct, even though plaintiffs disagree. This is the reason why this court, like the Gambocz court, need not decide whether the requirement of further acts is or remains an element of a cause of action for abuse of process.

Therefore, the first issue is whether defendants may assert in a counterclaim their rights to litigation costs and attorney fees, pursuant to N.J.S.A. 2A:15-59.1. The court concludes that they may not. Accordingly, the second issue is whether the court should afford plaintiffs relief under N.J.S.A. 2A:15-59.1. Under the particular circumstances presented in this case, the court again answers in the negative.

THE COURT'S REASONING:

N.J.S.A. 2A:15-59.1 ...


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