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Khoudary v. Salem County Board of Social Services

Decided: October 30, 1992.


On appeal from the Superior Court of New Jersey, Law Division, Salem County.

Antell, Dreier and Villanueva. The opinion of the court was delivered by Villanueva, J.s.c. (Temporarily Assigned).


[260 NJSuper Page 80] Defendant appeals from an order denying its motion to be awarded attorneys fees against the plaintiff under the frivolous litigation statute, N.J.S.A. 2A:15-59.1 (the "Act"). We reverse.


Plaintiff's complaint demanded rent of $550 per month for October, November and December of 1990, and $825 as a security deposit against defendant Salem County Board of Social Services (the Welfare Agency) for the rental of an apartment to the defendant's client, Darlene Bundy.

Defendant filed an answer denying liability and setting forth as affirmative defenses that plaintiff's property was uninhabitable, no certificate of occupancy had been issued, the premises had not been occupied by the defendant's client and defendant had not agreed to pay three months rent. Defendant further alleged that the action was fraudulently brought since the plaintiff knew the foregoing facts.

There was no discovery. When the case was heard without a jury the Judge ruled that plaintiff had no cause for action. Immediately after the Judge's ruling, the defendant made an oral motion to recover legal fees under the Act, but the Judge deferred hearing the matter until the defendant filed a written motion.

Such a motion was filed and was supported by an affidavit of services and various exhibits. Defendant's attorney sought $1,912.50 (15.3 hours at $125 per hour) for his services to the time the motion was argued. Plaintiff's opposition brief was filed with no supporting affidavit, but did include various exhibits. The Judge denied the motion because he concluded that, to establish that a claim was frivolous, the prevailing party in the underlying action must establish by clear and convincing evidence that the non-prevailing party's claim fits within the statutory requirements contained in the Act. The Judge found that, since the underlying action was decided on the basis of witness and document credibility, the element of bad faith required by the Act was not satisfied.

With respect to the requirement regarding the non-prevailing party's knowledge that the claim was without a reasonable basis in law or equity, the Judge found that the plaintiff, a

layperson, believed on the basis of past experience that the Welfare Agency's voucher form "developed into" a promissory note and that he would be paid. Therefore, he concluded that plaintiff's prosecution of the claim was based upon a good faith belief that there was a reasonable basis in law or equity to bring the action. The Judge declined to award the defendant any costs or attorneys fees under the Act.


In early October, 1990, when Darlene Bundy's sister, Brenda Bundy, decided not to rent plaintiff's house at 69 Penn Street in Penns Grove, Darlene Bundy became interested in renting the house. Darlene Bundy then applied to the Welfare Agency for the first month's rent and the security deposit. The Welfare Agency gave her a form captioned: "Landlord: Verification of Rent and Utilities" upon which she wrote only her name and the names of her children. This form was ultimately returned to the Welfare Agency with all the data filled in. Plaintiff acknowledged that the bottom portion of the form indicating his name and address was completed in his handwriting. He denied providing the information contained on the form, but acknowledged that the information was accurate. That data was then put on a "Rent Verification" form by a Welfare Agency employee, which data became the basis for the Welfare Agency's preparation of a voucher form for one month's rent of $550 and a security deposit of $825 for a total of $1,375. The Welfare Agency voucher form was then presented to plaintiff who signed it as "Claimant" on October 25, 1990.

Located above the space designated for the Claimant's signature on the voucher form is:

Claimant's Certification and Declaration

I do solemnly declare and certify under the penalties of the law that the within bill is correct in all its particulars; that the articles have been furnished or services rendered as stated therein; that no bonus has been given or received by any person or persons within the knowledge of this claimant in connection with the above claim; that the amount therein stated is justly due

and owing; and that the amount charged is a reasonable one. [emphasis added].

Penns Grove Housing Officer Peter LaSala testified that there was no certificate of occupancy for the subject house from June through December, 1990. Plaintiff acknowledged that since December, 1989 he had no certificate of occupancy. When he advised Darlene Bundy that she could move into the house, there was no certificate of occupancy and the house was uninhabitable. ...

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