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Keiser v. West Bergen Mental Healthcare


December 8, 2008


On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-7442-02.

Per curiam.


Argued November 12, 2008

Before Judges Wefing, Parker and Yannotti.

Defendant David F. Bolger, individually and as sole trustee of the David F. Bolger Revocable Trust, appeals from an order entered by the Law Division on December 7, 2007, imposing sanctions against respondents Barry W. Sirota and Jay Joseph Friedrich pursuant to the frivolous litigation rule, Rule 1:4-8. For the reasons that follow, we affirm.

In July 2000, the County of Bergen and West Bergen Mental Healthcare entered into a one-year agreement, which provided that West Bergen would acquire a two-family residence to house individuals with a history of mental illness, and the County would pay West Bergen $240,000 with monies obtained in a federal grant. Initially, West Bergen planned to acquire property in Ridgewood but later identified another property located at 190 Madison Avenue in Midland Park. The Bolger Trust apparently owned both properties. The County approved the change in August 2001, and extended the contract through December 31, 2001. West Bergen thereafter purchased the Midland Park property.

In September 2002, plaintiff filed an action in the Law Division seeking a declaratory judgment and damages against West Bergen; Bolger, individually and as trustee of the Bolger Trust; the Borough of Midland Park; and the New Jersey Department of Human Services (DHS). Plaintiff alleged that the Midland Park property was located in a zone for single-family residences and was a non-conforming two-family house. Plaintiff claimed that West Bergen's acquisition of the property was a change of use that required municipal approval and a certificate of occupancy (CO). Plaintiff demanded a judgment requiring West Bergen to seek municipal approvals and a CO.

Plaintiff also alleged that Bolger made improper use of the Bolger Trust, "thereby denying the beneficiaries of the Trust true earnings on its assets by wrongfully purchasing and selling" the property for his own purposes. Plaintiff asserted that he believed "said purchase was ultra-vires the power of the Trust." Plaintiff sought an order compelling, among other things, Bolger to produce the trust agreement for inspection and comply with applicable municipal law.

By letter dated September 30, 2002, Bolger's counsel provided Sirota, who was then plaintiff's attorney, notice that plaintiff's claims against Bolger were frivolous. Counsel stated that if the complaint was not withdrawn as to Bolger, he would seek sanctions, attorneys' fees and costs against plaintiff pursuant to N.J.S.A. 2A:15-59.1 and against Sirota pursuant to Rule 1:4-8. Plaintiff did not withdraw his claims.

On November 6, 2002, the trial court entered a case management order that, among other things, dismissed the claims against the DHS without prejudice. On that same date, Bolger filed a motion to dismiss the claims against him pursuant to Rule 4:6-2(e). Bolger also moved for the imposition of sanctions, attorneys' fees and costs pursuant to Rule 1:4-8 and N.J.S.A. 2A:15-59.1.

By order entered on November 22, 2002, the court dismissed the claims against Bolger without prejudice for failure to state a claim upon which relief can be granted and for lack of standing. On that date, the court entered an order denying, without prejudice, the motion by Bolger for the imposition of sanctions, attorneys' fees and costs.

On December 31, 2002, plaintiff filed a motion for leave to file an amended complaint. The court granted the motion by order entered on January 10, 2003. Plaintiff filed an amended complaint asserting claims against West Bergen, the Borough, Bolger, and the Attorney General of New Jersey.

In the second count of the amended complaint, plaintiff alleged that Bolger "aided and facilitated" West Bergen's purchase and use of the property in defiance of state and local law. Plaintiff asserted "upon information and belief" that Bolger "used his influence with local officials" to permit West Bergen's "improper use" of the property.

Bolger's counsel sent a letter dated January 23, 2003 to Sirota stating that the claims against his client in the amended complaint were frivolous and if the claims were not withdrawn, he would seek sanctions, attorneys' fees and costs pursuant to N.J.S.A. 2A:15-59.1 and Rule 1:4-8. The claims were not withdrawn.

On February 5, 2003, Bolger again moved to dismiss the claims against him pursuant to Rule 4:6-2(e). The court denied the motion by order entered on February 21, 2003. The trial court entered an order on June 6, 2003 dismissing the claims against the Attorney General. On September 9, 2003, Bolger filed a motion for summary judgment. The motion was withdrawn because discovery was not complete. In October 2003, Sirota withdrew as plaintiff's attorney, apparently due to health problems, and Friedrich assumed responsibility for representation of plaintiff.

On March 2, 2004, Bolger filed another motion for summary judgment. West Bergen and the Borough also moved for summary judgment. The court placed its decision on the record on April 2, 2004, and determined that defendants were entitled to summary judgment. The court found that plaintiff failed to establish that West Bergen violated any statute or regulation in its acquisition or use of the property. As to the claims against Bolger, the court stated that "no rational fact-finder could conclude" that Bolger had acted in a conspiracy with the municipal officials or aided and abetted some unlawful activity.

On April 14, 2004, Bolger filed a motion for the imposition of sanctions, attorneys' fees and costs upon Sirota and Friedrich pursuant to Rule 1:4-8 and upon plaintiff pursuant to N.J.S.A. 2A:15-59.1. By order entered on June 11, 2004, the court denied the motion. The court found that the claims asserted against Bolger were not frivolous and had not been asserted with malice or in bad faith.

Bolger appealed from the June 11, 2004 order and we reversed. Harold Keiser, Jr. v. West Bergen Mental Healthcare, et al., No. A-6050-03 (App. Div. June 30, 2005)(slip op. at 14-15). We stated: There can be no reasonable dispute but that plaintiff was not entitled to the relief sought in the original complaint--obtaining a copy of the trust instrument, and that plaintiff's failure to dismiss his complaint was without justification or excuse. The relief sought against the Bolger defendants in the amended complaint was equally without basis. The discovery revealed that plaintiff had no basis or evidence for his accusation that the Bolger defendants had influenced municipal officials to allow the project to proceed. The fact that the Bolger defendants had previously held an interest in the subject property and ensured that it would be conveyed to West Bergen did not suggest or establish any wrongdoing. We find nothing objectively reasonable in plaintiff asserting the claims contained in the original complaint or [in] the amended complaint against the Bolger defendants.

In these circumstances, the suit against the Bolger defendants was filed in bad faith in that the harm was inflicted intentionally and without justification or excuse. Accordingly, we reverse the June 11, 2004 order, and remand the matter to the Law Division for imposition of sanctions after resolution of factual issues as to the liability of litigation counsel and/or plaintiff. [Ibid.]

On remand, the trial court filed a written opinion dated March 9, 2006, in which it found that the total "sanctionable" amount was $63,091. That sum represented the $65,041 billed by Bolger's attorneys for work performed through August 23, 2005, less $1,950 for work related to the September 2003 motion for summary judgment that was withdrawn. The court found that plaintiff was responsible for the entire "sanctionable" amount because plaintiff:

never provided the factual basis for his claims against the Bolger defendants other than conjecture and speculation, and he failed to address any factual or legal considerations that would otherwise absolve him of responsibility for maintaining this frivolous action.

As to plaintiff's attorneys, the court found that Sirota "originally engineered the litigation and steered it to its inevitable demise." The court noted that Sirota had withdrawn from the matter in October 2003 and Friedrich "emerged on the scene" in December 2003. The court found that Sirota and Friedrich shared responsibility for allowing the action to "fester" against Bolger until summary judgment was granted in his favor in April 2004. The court stated:

It is of no moment that plaintiff was an insistent client who convinced himself that he had a colorable claim. It has been conclusively determined that plaintiff and his legal advisors had no objective basis to pursue the matter against the Bolger defendants, and fault lies not just at the feet of the client. The Appellate Division has already determined the lack of merit of plaintiff's cause; I simply find that the lawyers purposefully contributed to and enabled an unreasonable client's pursuit of this litigation misadventure.

The court found that plaintiff, Sirota, and Friedrich were jointly and severally obligated to pay Bolger the following amounts: plaintiff, $63,091; Sirota, $49,600; and Friedrich, $36,255. On March 21, 2006, the court entered judgment for Bolger in accordance with its opinion. The order stated that Bolger could not receive more than a total aggregate sum of $63,091.

Sirota and Friedrich appealed from the court's March 21, 2006 order. Again, we reversed. Harold Keiser, Jr. v. West Bergen Mental Healthcare, et al., No. A-4458-05 (App. Div. Oct. 23, 2007)(slip op. at 3-4). We reaffirmed our earlier determination that plaintiff's claims against Bolger were filed in bad faith. Id. at 2-3. We noted that, although the trial court's order required plaintiff to pay Bolger $63,091, plaintiff had not appealed from the order. Id. at 3.

Turning to the sanctions imposed upon Sirota and Friedrich, we noted that when an attorney is sanctioned for a violation of Rule 1:4-8(a), the court may order the payment of "some or all" of the "reasonable attorneys' fees and other expenses incurred as a direct result of the violation[.]" Ibid. (quoting R. 1:4-8(d)). We added, however, that the rule provides that the sanctions must "be limited to a sum sufficient to deter repetition of such conduct." Ibid. (quoting R. 1:4-8(d)). We stated that, in our earlier opinion, we had not ordered that the amount of the sanction was to make defendants whole in terms of their counsel fees. There is no indication in the record before us that consideration was given to imposition of a lesser sanction, and there is no explanation as to why a partial award of fees would not be "sufficient to deter repetition." [Id. at 4.]

We remanded the matter to the trial court for further proceedings.

The trial court considered the matter on November 16, 2007. Sirota argued that the purpose of Rule 1:4-8 would not be served by imposing any sanctions upon him. Sirota said that he had withdrawn from the matter before discovery was complete, and that he never got to the point where he could determine that the suit was groundless. Friedrich also argued that he should not be sanctioned. He maintained that, when he entered the case, he had relied in good faith upon the past history of the action, including the trial court's prior decisions that allowed the case to proceed. Friedrich asserted that he had made a decision that plaintiff "deserved his day in court" and went forward based on "the history of the case."

The trial court placed its decision on the record. The court reaffirmed its earlier finding that plaintiff's attorneys had purposely contributed to the assertion and continuation of frivolous claims against Bolger. The court stated that the amount of fees it had previously assessed against Sirota and Friedrich were reasonable and necessary. The court noted, however, that its previous order had been reversed because it had not made a finding that those sanctions were necessary to deter future violations of the rule.

The court found that sanctions in the amount of $1,000 for both Sirota and Friedrich are "the appropriate amount[s] necessary to deter repetition of such conduct[.]" The court noted that plaintiff remained obligated for $63,091 and that was the "aggregate amount" that Bolger could collect. The court entered an order dated December 7, 2007, which memorialized its findings.

Bolger appeals. He argues that the trial court misapplied Rule 1:4-8(d) and abused its discretion by imposing what he claims is a de minimus sum that "amounts to just a few hours of an attorney's billable time." Bolger asserts that, to deter future violations of the rule, sanctions in a greater amount should be imposed, taking into account the full amount of the legal fees that Bolger paid to his attorneys as well as the "ill-gotten fees" earned by plaintiff's attorneys.

The award of sanctions pursuant to Rule 1:4-8 is a matter committed to the sound discretion of the trial court. Masone v. Levine, 382 N.J. Super. 181, 193 (App. Div. 2005). We may not disturb such an award unless the trial court failed to consider all relevant factors, based its decision on irrelevant or inappropriate considerations, or rendered a determination that reflects "a clear error in judgment." Ibid. (citing Flagg v. Essex County Prosecutor, 171 N.J. 561, 571 (2002)).

Notwithstanding Bolger's arguments to the contrary, we are convinced that the trial court did not abuse its discretion by imposing sanctions of $1,000 upon both Sirota and Friedrich. Here, the trial court was familiar with the action, having managed the case from its inception. The court also was aware of our previous decision in which we held that plaintiff and his attorneys filed groundless claims against Bolger in violation of Rule 1:4-8(a).

Based on its careful consideration of the entire record, the trial court found that sanctions of $1,000 were sufficient to deter Sirota and Friedrich from future violations of Rule 1:4-8(a). We cannot say that the sanctions imposed by the trial court represent the sort of "clear error in judgment" that would justify our intervention.



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