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Debrango v. Summit Bancorp.

February 10, 2000

JOHN DEBRANGO AND CATHERINE DEBRANGO,
PLAINTIFFS-APPELLANTS/CROSS-RESPONDENTS,
V.
SUMMIT BANCORP.,
DEFENDANT-RESPONDENT/CROSS-APPELLANT,
AND
ALEJANDRO G. ALONSO, A/K/A ALEX G. ALONSO, WILLIAM MENDEL, PROVIDENT MUTUAL LIFE & ANNUITY COMPANY OF AMERICA, BANK OF NEW YORK, STANLEY ROLNICK, JOHN HANCOCK DISTRIBUTORS, INC., JOHN HANCOCK MUTUAL LIFE INSURANCE CO.,
DEFENDANTS.



The opinion of the court was delivered by: Lefelt, J.S.C. (temporarily assigned).

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 12, 2000

Before Judges King and Lefelt.

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

Plaintiffs John and Catherine DeBrango ("plaintiffs" or "DeBrangos") were defrauded by their son-in-law Alejandro Alonso, who claimed to be acting as their financial advisor. Seeking to recover their misappropriated funds, plaintiffs sued Alonso, Summit Bank, the Bank of New York and several other entities, based on theories of fraud, wrongful misappropriation, unjust enrichment, and respondeat superior. Plaintiffs appeal from the trial judge's award of $19,590.86 in counsel fees and litigation costs, pursuant to the frivolous litigation statute, N.J.S.A. 2A:15-59.1, entered against plaintiffs and their counsel in favor of Summit Bank. Summit Bank cross-appealed seeking the full amount of its attorneys' fees and costs. We affirm summary judgment in favor of Summit Bank, but reverse, and reduce the amount of counsel fees and costs awarded.

In July 1991, the DeBrangos loaned Alonso approximately $90,000 to assist Alonso with start-up costs associated with his business, AGM Financial Planning Inc. Sometime in 1992, plaintiffs asked Alonso what happened to their money. Alonso represented that he had invested the funds in a guaranteed life annuity with Guardian Insurance Company. Alonso began employment on August 30, 1993, as a financial representative with United Jersey Bank (currently Summit Bank) and remained in the bank's employ until October 1994. In 1994, while Alonso was still employed by United Jersey Bank, Mrs. DeBrango again inquired about the loan. This time, Alonso stated that although their money had earned interest, he advised transferring the funds to a sounder investment with his present employer, United Jersey Bank. On May 23, 1994, the DeBrangos received a letter, purportedly from "Daniel P. Louis, Vice President, United Jersey Bank," thanking them for "purchasing a Provident Mutual Annuity from United Jersey Bank." Based upon this letter, the DeBrangos also thought that their $90,000 investment had grown to almost $114,000.

Sometime thereafter, when it became clear that Alonso had stolen the DeBrangos' money, plaintiffs contacted the prosecutor. Alonso admitted guilt, and in 1996, he was permitted to enter the pre-trial intervention program. As part of that program, Alonso agreed to pay restitution of approximately $500 to $1,000 per-month over a three-year period to the DeBrangos.

On September 2, 1997, plaintiffs filed the seventeen count civil complaint that led to this appeal. On October 23, 1997, in lieu of answer, Summit Bank filed a motion for summary judgment. On December 5, 1997, the motion judge indicated that "there are several issues of fact here that must be left to the jury with regard[] to whether there was a fraudulent act and what was the scope of Alonso's employment." The judge denied the motion without prejudice because he did not "know which way it's going to go. [He wanted] to see how all the discovery goes." Summit Bank then answered plaintiffs' complaint, and discovery between and among the parties began.

On March 11, 1998, the parties took Alonso's deposition. At that deposition, Alonso testified that the fraudulent transactions with plaintiffs occurred before his employment with United Jersey Bank. Besides using United Jersey Bank's Provident Mutual Annuity application and bank letter head, Alonso also indicated that he had acted entirely on his own. He confessed to replacing the bank's vice president's signature on the May 23, 1994 letter with the fictitious name "Daniel P. Louis." Alonso further testified that no benefit accrued to United Jersey Bank or Summit Bank from any of his fraudulent transactions.

Shortly after Alonso's deposition, on March 17, 1998, pursuant to R. 1:4-8, Summit Bank advised plaintiffs' counsel that the complaint against Summit Bank should be dismissed. Plaintiffs did not respond. On May 29, 1998, Summit's counsel further informed plaintiffs' counsel that "the funds in question . . . were depleted prior to Mr. Alonso's employment at Summit" and "[r]ecords obtained from Mr. Alonso and Hudson United Bank, where the funds were deposited, confirm this fact."

On June 1, 1998, an arbitrator found that there was "no cause" for plaintiffs to proceed against Summit Bank. Plaintiffs rejected the arbitration and applied for trial de novo. On July 10, 1998, Summit, pursuant to R. 4:58-1, forwarded an offer of judgment to plaintiffs for five-cents. Plaintiffs, again, did not release Summit Bank from the action. Subsequently, plaintiffs either settled with or voluntarily dismissed their action against all other defendants.

On July 23, 1998, Summit Bank refiled its summary judgment motion and also requested litigation costs and attorneys' fees. On September 11, 1998, the trial court granted Summit Bank's motion for summary judgment and dismissed plaintiffs' complaint against it. The judge advised Summit Bank to refile its application for fees and costs so that the matter could be fully briefed and orally argued. R. 4:42-9(a)(8), - 9(b) and -9(c).

On October 23, 1998, after briefing and oral argument, the trial court granted Summit Bank's application for litigation fees and costs, found the litigation against Summit Bank frivolous, and awarded the bank a $19,590.86 judgment to be paid by plaintiffs and their counsel. McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546 (1993); N.J.S.A. 2A:15-59.1; R. 1:4-8.

Summit Bank had claimed that the total amount of services rendered and costs incurred by the bank from the inception of this matter through July 31, 1998, was $18,340.86. In its motion, Summit Bank's counsel estimated that August 1998 fees and costs would total $1,250. The motion judge, therefore, added the bank's August 1998 estimate to the total fees incurred, and derived the $19,590.86 judgment. On ...


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