December 21, 2007
JOSEPH HESS, PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
BOROUGH OF BERGENFIELD, HONORABLE RICHARD BOHAN, MAYOR, COUNCILWOMAN DELORES BUTLER, COUNCILMAN CHRISTOPHER FAUSTINO, COUNCILWOMAN PATRICIA DI RIENZO, COUNCILMAN RAYMOND GORMAN, OF THE BOROUGH OF BERGENFIELD: "JOHN DOES" (1-20) AND "ABC CORPS" (1-20), DEFENDANTS, AND COUNCILMAN DENNIS MULLIGAN AND COUNCILMAN BRUCE CARLSON, DEFENDANTS-APPELLANTS/CROSS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-1385-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 1, 2007
Before Judges Stern and A. A. Rodríguez.
Defendant, Councilmen Mulligan and Carlson ("appellants"), appeal, and plaintiff cross-appeals, from an order of March 16, 2006, based on an oral opinion of January 6, 2006, awarding both appellants $930 in attorneys' fees and costs based on a finding under N.J.S.A. 2A:15-59.1 that the complaint against the individual defendants was frivolous. Defendants contend that "there is no nexus between the trial court's findings and the de minimus award of legal fees," while plaintiff asserts that an award of less than all fees may be awarded as a matter of discretion. On his cross-appeal, plaintiff contends the statute does not apply, and no award should have been granted, because defendants "have refused to be dismissed and have opposed a motion to dismiss them," and that the court did not make, or have a basis for making, the necessary findings of bad faith and "purpose of harassment, delay or malicious injury." Plaintiff also asserts that defendants' attorney "accepted payment of his counsel fees [from] the Borough" and the "appeal became moot."*fn1
On or about March 3, 2005, plaintiff filed a "Verified Complaint for Summary Action," naming the Borough of Bergenfield, its mayor, and six council members as defendants. The complaint sought specific performance of his contract as Borough Administrator, Borough Clerk and Director of Recreation, and an agreement relating to his resignation. On or about March 23, 2005, appellants filed Answers and a Counterclaim to plaintiff's complaint.*fn2 Defendant Councilwoman Dolores Butler also filed an Answer and separate defenses. The remaining council members were represented by the Borough's attorney.*fn3
After their answers were filed, counsel for appellants was advised by a letter, dated March 30, 2005, from plaintiff's attorney that they were not "served . . . personally" or "sued personally or in their individual capacities," and had "no standing to filing a counterclaim." Plaintiff asserted the counterclaim was "frivolous" and "exposed" defendants "to potential liability under the Frivolous Lawsuit Statute."
Following a court ordered mediation and an administrative dismissal of the case for lack of prosecution, plaintiff moved to file an amended complaint which did not include the mayor and council members as defendants. Appellants opposed the motion because: 1) they had moved for discovery only with respect to the original complaint; 2) their involvement was deemed necessary to "protect the interest of the people of the Borough of Bergenfield," in the litigation' and 3) they felt it necessary to protect their counterclaim and an expected request for counsel fees based on the frivolous litigation. Plaintiff's motion was granted on November 18, 2005.
On or about December 2, 2005, plaintiff filed an Amended Complaint, which removed all individuals, including the mayor and the individual council members from the suit. Councilwoman Butler thereafter filed a "Notice of Motion for Litigation Costs and Counsel Fees." On December 20, 2005, appellants filed a "Motion Pursuant to [N.J.S.A. 2A:]15:59.1" (sic), for litigation costs and fees.*fn4
Oral argument on the motions was held on January 6, 2006. The judge concluded that "naming the individual members of the Mayor and Council of the defendant Borough of Bergenfield as defendants, is deemed frivolous, as that term is defined statutorily." He ordered plaintiff to "pay to each of the attorneys for the moving parties the sum of $930.00, representing six hours at $150.00 per hour for legal fees and $30.00 as the cost had there been filing of motions to dismiss with the court." As already noted, defendants seek additional fees and plaintiff insists they are entitled to none. Appellants requested a total of $31,350.23 in legal fees and costs, representing over ninety-five hours of attorney work hours at a price of $300 an hour.
On June 13, 2006, while the appeal was pending, the Borough adopted a resolution that authorized the sum of $45,000.00 to be paid to "Steven T. Muller, Esq. [appellants' attorney] and Carmine R. Alampi, Esq. [Butler's attorney] in full and complete settlement of any and all monies alleged to be due them in respect of the Hess and Eckel matters, and that said attorneys and the Borough execute appropriate instruments designed to achieve full and complete resolution of all such issues." The resolution did not break down the amount by case or attorney. However, on June 20, 2006, the Borough paid Stephen Muller, appellants' counsel, $21,000.00 "for legal services" and $9,000 for "professional services." A municipal purchase order certification and payment record reflects a $21,000 payment to appellants' counsel for this case and $9,000 for a case entitled Eckel v. Mulligan and Carlson. The invoice for this matter was originally in the amount of $31,350.23.
In response to a letter written by plaintiff's attorney asserting that the appeal was rendered moot in light of the resolution and payment, appellants' counsel wrote that he was "still owed $11,950.23 in fees from the Hess case," and that the matter was not moot as he "agreed to reimburse the Borough for any monies in excess of that recovery" from Hess.
The Frivolous Litigation Statute, N.J.S.A. 2A:15-59.1, provides:
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 defense of the non-prevailing person was frivolous.
However, R. 1:48-8(f) provides that "to the extent practicable, the procedures prescribed by [R. 1:48] shall apply to the assertion of fees and costs against a party other than a party pro se pursuant to N.J.S.A. 2A:15-59.1," and R. 1:4-8(b)(1) reads:
An application for sanctions under this rule shall be by motion made separately from other applications and shall describe the specific conduct alleged to have violated this rule. No such motion shall be filed unless it includes a certification that the applicant served written notice and demand pursuant to R. 1:5-2 to the attorney or pro se party who signed or filed the paper objected to. The certification shall have annexed a copy of that notice and demand, which shall (i) state that the paper is believed to violate the provisions of this rule, (ii) set forth the basis for that belief with specificity, (iii) include a demand that the paper be withdrawn, and (iv) give notice, except as otherwise provided herein, that an application for sanctions will be made within a reasonable time thereafter if the offending paper is not withdrawn within 28 days of service of the written demand. If, however, the subject of the application for sanctions is a motion whose return date precedes the expiration of the 28-day period, the demand shall give the movant the option of either consenting to an adjournment of the return date or waiving the balance of the 28-day period then remaining. A movant who does not request an adjournment of the return date as provided herein shall be deemed to have elected the waiver. The certification shall also certify that the paper objected to has not been withdrawn or corrected within the appropriate time period provided herein following service of the written notice and demand.
Therefore, as our Supreme Court recently held, "a litigant moving for counsel fees and costs pursuant to N.J.S.A. 2A:15-59.1 is required to comply with Rule 1:4-8(b)(1)'s safe harbor provision, but only '[t]o the extent practicable.'" Toll Brothers, Inc. v. Twp. Of West Windsor, 190 N.J. 61, 69 (2007). In Toll Brothers, Justice LaVecchia explained that "R. 1:4-8 governs the procedures applicable to an award of frivolous litigation counsel fees and costs," regardless of whether the party is seeking costs and fees from the adversary or from the adversary's attorney, and that to prevail under the Rule, "the litigant is required to serve a written notice and demand on the attorney or pro se party, which must include a request that the allegedly frivolous paper be withdrawn." Toll Brothers, supra, at 64, 69.
During the motion hearing in this case, appellants' attorney admitted that he did not comply with "the safe harbor provision" of R. 1:4-8. He was under the incorrect impression that the Rule did not apply because he did "not sue attorneys."
In Toll Brothers, the Supreme Court also made clear where the "safe harbor" provision of R. 1:4-8 was not honored, "a court should not dismiss an application governed by subsection (f) without making an assessment about the practicability of compliance." Toll Brothers, supra, at 73. Accordingly,
[i]f a court determines that compliance could have occurred earlier, the sanction should be reduced concomitantly. Counsel fees and costs should be calculated from the point when compliance was practicable. If the court determines that compliance was practicable from the time ordinarily required under the Rule, relief may be denied in its entirety.
Id. at 72-73.
The Law Division's decision in this case preceded Toll Brothers by about one and-one-half years and, understandably, did not make an assessment of practicability prior to finding that the appellants did not comply with the procedure of R. 1:4-8.
We agree with the Law Division that the individual defendants should not have been named in their individual capacities, cf. Port-O-San Corp. v. Teamsters, 363 N.J. Super. 431 (App. Div. 2003) (conduct giving rise to frivolous litigation),*fn5 and in their answer, appellants "demand[ed] the complaint be dismiss[ed] and that fees and costs be assessed against the Plaintiff for this frivolous lawsuit." Therefore, it was as early as March 23, 2005, when their answer was filed, that appellants could have proceeded to take action on the basis that the complaint was frivolous. Accordingly, it was undoubtedly practical for appellants to have adhered to R. 1:4-8 and demanded dismissal of the complaint as to them from the outset.
We also agree with the trial judge that in the absence of taking action to dismiss the complaint against the appellants, their counsel could not run up the bill. On the other hand, appellants explained why they opposed the reinstatement of the complaint without naming them as defendants. Accordingly, we believe that the matter should be reassessed under the Toll Brothers criteria, Toll Brothers, supra, 190 N.J. at 73. This is particularly true because the Law Division should be able to assess the impact, if any, of the Borough's post-judgment settlement with, or payment to, defendants' counsel. As already noted, the resolution states that he and Butler's attorney were paid "in full and complete settlement of any and all monies alleged to be due them" with respect to the instant matter.
The matter is remanded to the Law Division for reconsideration in light of the subsequent Toll Brothers opinion. No costs.
We do not retain jurisdiction.