Reargued March 15, 1993. On certification to the Superior Court, Appellate Division.
Pollock, Wilentz, Clifford, Handler, O'Hern, Garibaldi, Stein
The opinion of the court was delivered by
POLLOCK, J. [132 NJ Page 548] This case, like its companion case, Lewis v. Lewis, N.J.(1993), also decided today, requires that we review N.J.S.A. 2A:15-59.1. In general, that statute allows the award of attorney's fees to a prevailing party in a lawsuit if the non-prevailing party asserts a claim or defense "in bad faith, solely for the purpose of harassment, delay or malicious injury," N.J.S.A. 2:15-59.1b(1), or if "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:15-59.1b(2). Because the statute implicates both the regulation of practice and procedure and also the discipline of attorneys, a question arises whether it breaches the separation of powers between the judicial and legislative branches of government.
The Law Division held that the complaint violated the statute by failing to state a cause of action that had a reasonable basis in law or equity. In an unreported opinion, the Appellate Division affirmed. We granted the petition for certification of plaintiff, Nancy McKeown-Brand, 127 N.J. 566 (1992), and hold that to the extent that N.J.S.A. 2A:15-59.1 applies to parties, the statute, as interpreted in this opinion, is valid. We decline to extend the statute to apply to the award of counsel fees and costs against attorneys. A contrary interpretation would raise questions whether the statute impinges on this Court's exclusive power to discipline attorneys. N.J. Const. art. VI, § 2, P 3. Finally, we hold that plaintiff did not act in bad faith in asserting her claim. Consequently, we reverse the judgment of the Appellate Division.
Like the Legislature, we are concerned about the role of lawyers in frivolous lawsuits. Because we share the Legislature's concern, we request our Committee on Civil Practice to review the matter and consider appropriate amendments to the Rules of Court.
From January 1986 through January 1987, plaintiff worked for defendant, Trump Castle Hotel & Casino, first as a front-desk supervisor and then, after a promotion, as a reservations manager. When hired, she signed both an employment-application release and an acknowledgment in the employee handbook. The acknowledgment confirmed that plaintiff's employment was at-will and was subject to termination by defendant at any
time. On January 22, 1987, plaintiff took a leave of absence due to medical complications arising from her pregnancy.
Although her maternity leave ended on May 4, 1987, plaintiff requested, and defendant granted, an extension until May 30, 1987. She then requested a personal leave of absence until June 30, 1987, and a further extension until July 30. Defendant granted the requests, but required each time that plaintiff sign a "Request for Leave of Absence," which provided:
I understand and will comply with the following:
1. I will be reinstated to my same, or similar job provided
(a) my job has not been permanently filled or eliminated because of business requirements, or
(b) my job duties and responsibilities do not change significantly during my absence, and upon my return I am still qualified to perform such changed responsibilities, and
(c) I return before this leave expires.
Plaintiff asserts that her supervisor orally assured her that she could return to her position as a reservations manager. In her deposition, however, plaintiff testified that at the time of her initial leave of absence, the supervisor merely had identified the person who would "run" or "take care of [her] department" until plaintiff's return.
When plaintiff returned to work on July 30, 1987, her supervisor stated that her position had been permanently filled. The supervisor sent plaintiff to personnel to discuss comparable positions. The record is unclear whether no such positions were available or whether plaintiff failed to pursue them. Plaintiff asserts that the personnel department promised to inform her of suitable positions, but never did so.
On July 19, 1989, plaintiff filed a two-count complaint. In the first count, she alleged that defendant had breached her employment contract, the conditions set forth in the employee handbook, and defendant's oral guarantees of reinstatement. The second count, which was based on promissory estoppel, alleged that defendant had assured plaintiff that she would have continued employment and that plaintiff had relied on those representations to her detriment.
Defendant served plaintiff's counsel with a demand for service of documents, a request for production of documents, interrogatories, and a notice of depositions. Plaintiff did not respond. Defendant thereupon moved for summary judgment. Plaintiff did not file any answering papers, and her attorney did not appear on the return date of the motion. The Law Division granted defendant's motion in December 1989. Plaintiff did not appeal.
In January 1990, plaintiff finally answered defendant's interrogatories and moved to reinstate her complaint. The Law Division granted her motion. During her subsequent deposition, plaintiff admitted that she had read and understood the acknowledgments in both her employment application and in the handbook. She admitted further that she had not foregone any job opportunities because of defendant's representations. At some point everyone recognized that plaintiff's claimed damages did not exceed $2,000.
The parties dispute certain events that transpired after plaintiff's deposition. Plaintiff's attorney contends that she forwarded an offer to defendant's attorney to settle for $2,000, and that defendant's only response was its motion for summary judgment. The attorney explains her failure to respond to the motion by asserting that the damages were too insignificant to justify a response. She argues further that her failure to respond does not indicate that the complaint lacked legal merit.
Defendant's attorney, in contrast, claims that he twice asked plaintiff's counsel to file a voluntary dismissal of the complaint. He also informed her that he would move for summary judgment and counsel fees under N.J.S.A. 2A:15-59.1. Because plaintiff's counsel refused to file a voluntary dismissal, he was forced to prepare the summary-judgment motion.
On January 10, 1991, defendant moved for counsel fees under N.J.S.A. 2A:15-59.1, which provides:
a. A party who prevails in a civil action, either as plaintiff or defendant, against any other party 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 ...