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Baglini v. Lauletta

March 30, 2001


On appeal from Superior Court of New Jersey, Law Division, Gloucester County, L-1716-92, whose opinion is reported at Before Judges Havey, Wefing and Cuff.

The opinion of the court was delivered by: Havey, P.J.A.D.


Argued January 22, 2001

These are consolidated appeals*fn1 from a judgment entered on a jury verdict in plaintiffs' favor against defendants University Executive Corp., Inc. (UEC), Frank Lauletta (UEC's principal), Jeffrey I. Baron, Esquire, and Baron & Riefberg, P.C.

Plaintiffs protested the development application made by UEC and Lauletta to construct office condominiums in Washington Township, Gloucester County. Displeased with these protests, UEC and Lauletta filed an action against plaintiffs sounding in defamation, interference with business advantage, and malicious use of process (the Lauletta complaint). Baron represented UEC and Lauletta in that action, which was voluntarily dismissed prior to trial. In turn, plaintiffs filed the present action charging all defendants with malicious abuse of process, malicious use of process, and intentional and negligent infliction of emotional distress. The trial court granted defendants summary judgment dismissing the malicious use of process count, concluding that plaintiffs had failed to demonstrate a "special grievance." The court also dismissed the intentional and negligent infliction of emotional distress claims. The jury returned a verdict in favor of plaintiffs on their malicious abuse of process claim, awarding compensatory and punitive damages to plaintiffs.

On appeal, UEC and Lauletta argue that plaintiffs failed to establish a malicious abuse of process cause of action as a matter of law because: (1) defendants did not commit "further acts" after filing the Lauletta complaint; and (2) the statements plaintiffs contend constituted "further acts" were protected by the litigation privilege. We agree with defendants on both points. We therefore reverse and vacate the judgment against defendants.

Plaintiffs cross-appeal, arguing that the trial court erred in granting defendants summary judgment on their malicious use of process claim. We agree and accordingly reverse and remand for further proceedings.

In 1988, UEC contracted to purchase an eleven-and-one-half acre tract in Washington Township, conditioned upon obtaining governmental approvals to construct an office condominium complex. Construction of the complex required a rezoning of the tract from residential to highway/commercial use. After a favorable recommendation by the Planning Board on February 16, 1989, the Township Council rezoned the property to highway/commercial. Thereafter, the Planning Board granted minor subdivision and site plan approvals. UEC obtained financing and began constructing the project in early 1990.

Plaintiffs became aware of UEC's project in early 1990. Thereafter, regular weekly meetings were held by neighbors, including several of the plaintiffs, to discuss the project. The neighbors, including some of the plaintiffs, also attended Council and Planning Board meetings, voicing their concerns about the project. The neighbors learned that Lauletta had "close" ties with the then Mayor of Washington Township, Jerry Luongo. Lauletta and his wife Jacqueline actively campaigned for Luongo in the Mayor's race and had contributed to his campaign. After Luongo was elected, Jacqueline was retained as his aide. At the time of trial, Jacqueline was still the Mayor's aide at an annual salary of $35,000, and was also his chief-of-staff in his Assemblyman capacity at an annual salary of $12,000.

Several plaintiffs contacted various governmental agencies concerning the project, including the Department of Environmental Protection (DEP), the County Soil Conservation Agency, and the United States Army Corps of Engineers (Corps). Plaintiff Bernadine Koren, who had long been politically active in the Township, spoke against the project to individual Council members. In March and April 1990, Lauletta received notice from the DEP and the Corps that the plans for the project might violate fresh water wetlands regulations. Necessary permits were eventually issued.

On March 28, 1990, plaintiff Melanie Parvin and others authored a letter stating that Lauletta had received favorable treatment from the Township on other development applications. The letter implied that the preferential treatment was due to Lauletta's close personal relationship with the Mayor, and mentioned that Lauletta's wife was the Mayor's employee. It also claimed that UEC's condominium project was being built on wetlands and that UEC's engineer was currently under investigation by the State relating to the engineer's work on Lauletta's other projects. The letter was signed by plaintiffs Melanie Parvin, Bernadine Koren, David Parvin and Jo Ann and Thomas Baglini. It is unclear to whom the letter was sent.

In May or June 1990, UEC's then-attorney overheard Bernadine Koren tell an unsuccessful applicant at a Planning Board meeting that "it's too bad your name's not [Lauletta] . . . you could get anything you want . . . ." Others heard Bernadine say "[w]e're going to get those dagos." On another occasion, she stated "I wonder who he paid off for that one" and "[t]hat M F'er is paying everybody off." Bernadine denied making the latter two statements.

In March 1990, plaintiffs and the other neighbors hired John Trimble, Esquire, to represent their interests in opposing UEC's project. In July 1990, plaintiffs Erich Pfisterer, Jo Ann Baglini and Melanie Parvin, filed a prerogative writs action naming the Township, the Mayor, the Council and Planning Board as defendants, challenging the rezoning of the tract. All of the plaintiffs and many neighbors contributed to the payment of Trimble's counsel fees. In response to the complaint, Lauletta met with Baron, his attorney. Lauletta told Baron that he stood to lose over $1 million if plaintiffs prevailed in the suit. It was Baron's view that the prerogative writs complaint was baseless, and suggested that Lauletta compile a list of expenses associated with the project. As a result of the prerogative writs action, UEC's bank froze one construction loan and canceled another. It was necessary for UEC to borrow money from others to continue the project. Lauletta and UEC intervened in the prerogative writs action after submitting to the court a certification stating that UEC had spent $1,185,000 in reliance on the rezoning of the property.

Lauletta testified that Baron told him he and UEC might have a cause of action against plaintiffs for defamation and unlawful interference with prospective economic advantage. Before drafting a complaint against plaintiffs, Baron researched the relevant causes of action and refreshed his recollection regarding the Noerr-Pennington*fn2 doctrine. He concluded that the doctrine did not apply to certain kinds of speech, such as defamation and contacts with governmental agencies on other projects. He was also aware of the sham exception that excludes from the doctrine baseless claims.

On UEC's and Lauletta's behalf, Baron filed an eleven-count complaint against plaintiffs charging defamation, malicious interference with economic advantage and business relations, malicious abuse of process, interference with economic advantage and business relations, fees under the frivolous complaint statute, N.J.S.A. 2A:15-59.1, and civil conspiracy. UEC and Lauletta demanded compensatory damages in excess of $1 million in each count of the complaint, punitive damages, attorneys' fees and costs.

During the course of construction of the project, UEC had hired Anthony Alberto as the construction manager for the project. Also, an agreement dated March 5, 1990, provided for Alberto's purchase of a ten percent interest in UEC for $80,000. In January 1991, Lauletta observed Trimble representing Alberto before the Planning Board on an application to develop a piece of property. Lauletta told Baron about this because Lauletta thought Trimble might be in a possible conflict of interest, since Alberto was an investor in UEC. During a February 1, 1991 deposition given during the Lauletta complaint litigation, Lauletta advised Trimble that Alberto was a stockholder in UEC. Trimble expressed surprise. At that point Baron stated:

Let the record reflect it came to my attention yesterday Mr. Alberto is Mr. Trimble's client, that he is a member of Executive Campus, Inc., and owns ten percent of that entity so that there will be no question within the next ten days we would like some indication [what] Mr. Trimble's position is, or we will make a motion to disqualify Mr. Trimble in these proceedings based on the ground he sued one of his clients.*fn3

Trimble later confirmed with Alberto that Alberto had in fact invested money in UEC. Alberto refused to waive any conflict of interest. Accordingly, Trimble withdrew as plaintiffs' attorney as of February 12, 1991.

However, prior to withdrawing as counsel, Trimble met with Baron to discuss settlement of the prerogative writs suit and the Lauletta action against plaintiffs. Mutual dismissal of the complaints was discussed. Trimble also wanted UEC to increase the buffer between the project and neighboring homes. The settlement discussions were unsuccessful.

In December 1991, the Law Division granted plaintiffs summary judgment in the prerogative writs action, finding that the rezoning ordinance was void due to the Township's failure to revise its master plan. The Township was given until April 15, 1992 to readopt the rezoning ordinance properly, at its discretion. Thereafter, Council members recommended to Lauletta that he drop his lawsuit against plaintiffs as a good will gesture. Lauletta announced his intention to dismiss the suit at a public meeting in March 1992. Thereafter, the Lauletta suit was voluntarily dismissed with prejudice as to any "past claims" against plaintiffs.

In July 1993, the parties settled the rezoning dispute. It was agreed that the front portion of the UEC tract would be zoned highway/commercial, the Baglinis would grant UEC a twenty-foot storm sewer easement and UEC would pay the Baglinis $12,500 in exchange for the Baglinis' dismissal of any claims they had relating to damage to their property.

Plaintiffs, on July 21, 1992, filed the instant action against Lauletta and UEC charging that defendants filed their prior complaint against plaintiffs seeking to silence their objections to the condominium project and to coerce plaintiffs into withdrawing their prerogative writs action challenging the approval. The complaint asserted malicious abuse of process, malicious use of process, intentional and negligent infliction of emotional distress, and the filing of a frivolous lawsuit under N.J.S.A. 2A:15-59.1. Plaintiffs sought punitive and compensatory damages, costs and attorneys' fees. On October 18, 1996, plaintiffs amended their complaint adding Baron and his law firm as party defendants.

The trial court granted defendants summary judgment dismissing plaintiffs' claim of malicious use of process as well as the frivolous lawsuit claims. A consent order was entered dismissing the negligent and intentional infliction of emotional distress claims by all the plaintiffs except Jo Ann Baglini. However, the court denied defendants' summary judgment motion on the malicious abuse of process and punitive damage claims.

After the close of plaintiffs' case during the jury trial, the trial court dismissed the intentional and negligent infliction of emotional distress claim by plaintiff Jo Ann Baglini. The court denied defendants' motion for involuntary dismissal of the malicious abuse of process claim.

The jury found that defendants had abused the legal process and that this abuse had injured each of the eight plaintiffs resulting in ascertainable losses in the amount of $75,000 each, except for Jo Ann Baglini, who was awarded $125,000. The jury also found that defendants' conduct was malicious or that they acted in willful and wanton disregard of plaintiffs' rights. A subsequent hearing on punitive damages was conducted after which plaintiffs were awarded $350,000 collectively in punitive damages against Lauletta, $150,000 against UEC, $200,000 against Baron, and $50,000 against Baron & Riefberg. On ...

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