July 17, 2009
BOROUGH OF SEASIDE PARK, A MUNICIPAL CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
JESSE AND CARLA SADEJ, DEFENDANTS-APPELLANTS/ CROSS-RESPONDENTS/ THIRD-PARTY PLAINTIFFS-APPELLANTS,
MAYOR AND COUNCIL OF THE BOROUGH OF SEASIDE PARK, INDIVIDUALLY AND AS MUNICIPAL OFFICIALS; JAMES ERDMAN, INDIVIDUALLY AND AS A MUNICIPAL OFFICIAL; MICHAEL MARCINCZYK, INDIVIDUALLY AND AS A MUNICIPAL OFFICIAL; AND JOSEPH JAY DELANEY, JR., INDIVIDUALLY AND AS A MUNICIPAL OFFICIAL, THIRD-PARTY DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Chancery Division, Ocean County, C-128-02, and Law Division, Ocean County, Docket No. L-2412-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 4, 2009
Before Judges Lisa, Sapp-Peterson and Alvarez.
Jesse and Carla Sadej owned a single-family home in the Borough of Seaside Park (Borough). They filed building plans with the Borough for construction of improvements. After most of the construction was completed, the Borough issued stop work orders, asserting that the construction was not in compliance with the filed plans and that zoning violations occurred. It turned out that the plans on file with the Borough (Borough plans) differed from those possessed by the Sadejs (Sadej plans). According to the Sadejs, the Borough plans reflected fraudulent alterations of the plans they had filed.
The Borough initiated this litigation in the Chancery Division, seeking to prevent further construction and require removal of the construction that had been accomplished. The Sadejs counterclaimed, alleging fraud by the Borough's construction code official and zoning officer, as well as a claim against the Borough for violation of 42 U.S.C.A. § 1983. The Sadejs later filed an amended counterclaim and third-party complaint against the Borough, its mayor and council, the construction code official, zoning officer, and Borough administrator, asserting claims for estoppel and malicious prosecution.*fn1
Over several years of the litigation, a series of orders were entered, first by the Chancery judge, and then, after the case was transferred to the Law Division, by two different Law Division judges. Various orders dismissed the Borough's claims of zoning violations and also dismissed the Sadejs' tort claims, because the Sadejs failed to satisfy the timing and notice requirements of the New Jersey Tort Claims Act (TCA), N.J.S.A. 59:1-1 to 12-3, because the claims were time-barred, and on substantive grounds. The trial court also denied the Sadejs' application for counsel fees under the Frivolous Litigation Statute (FLS), N.J.S.A. 2A:15-59.1. The Sadejs appeal and the Borough cross-appeals.
The Sadejs contend that (1) the trial court erred in dismissing their malicious use of process claims on the basis that they were time-barred and on the alternate basis that the record was insufficient to allow those claims to survive summary judgment; (2) the trial court erred in determining that their fraud claims against the individual third-party defendants did not relate back to their original counterclaim pursuant to Rule 4:9-3; (3) their letters of May 1 and 9, 2002 to a Borough official should have been deemed sufficient notice of their fraud claims under the TCA; (4) the trial court erred in determining that improvements to their property resulted in a building coverage zoning violation; (5) they should have been permitted to depose attorneys representing the Borough; and (6) the trial court erred in determining that the Borough is immune from an award of legal fees under the FLS.
On its cross-appeal, the Borough argues that the trial court erred in determining that the Sadejs' improvements to their property did not result in various setback and building height zoning violations.
We agree with the Sadejs that their malicious use of process claim was improperly dismissed. We accordingly reverse on that issue. With respect to counsel fees under the FLS, we remand for further proceedings. In all other respects we affirm on the Sadejs' appeal and the Borough's cross-appeal.
In August 2001, the Sadejs filed five pages of building plans with the Borough, showing expansion of their house, expansion of the frame garage and connection of the expanded garage to the house, and construction of an in-ground pool. On August 21, 2001, the Borough zoning official, Michael G. Marcinczyk, issued a zoning approval. On August 23, 2001, the Borough construction code official, James Erdman, reviewed and approved the plans, and issued a construction permit. He initialed and dated each of the five pages of the plans, wrote the words "Inspector Job Copy" in red ink on the first page of one set of plans, attached a red digging warning sticker to that set of plans, and gave that set of plans to the Sadejs. He retained a duplicate set for the Borough. The Sadejs retained contractors and began construction.
On April 17 and 18, 2002, Erdman issued stop work orders to the Sadejs on behalf of the Borough, ostensibly because the construction "substantially deviated" from the filed building plans. On April 18, 2002, Erdman and Marcinczyk appeared at the site with a police officer, and ordered the contractors off the site. Jesse Sadej (Sadej) unsuccessfully attempted to contact Borough officials regarding the stop work order, and he attempted to address the matter at a Borough council meeting on May 1, 2002, but was prevented from doing so by the Borough attorney.
On May 2, 2002, Borough administrator Joseph J. Delaney, Jr., met with Sadej. Delaney displayed the Borough plans, and Sadej informed him that those plans were not the same as the ones he had filed. Delaney later testified that, upon hearing this information, he expressed surprise to Sadej. According to Sadej, Delaney threatened him by pointing to an undeveloped location on a Borough map, and noting that the prospective builder had gone bankrupt litigating with the Borough about a proposed construction project there. Delaney acknowledged making such a comment, but said it was in response to Sadej's statement that he was prepared to litigate the dispute.
The Borough plans differed from the Sadej plans in several respects. The second, third, fourth and fifth pages of the Borough plans did not have Erdman's initials and date notations on them, while those pages in the Sadej plans did. Most importantly, the fifth page of the Sadej plans had wording and a drawing indicating that the frame garage would be expanded in size and connected to the house, while the wording and drawing on the Borough plans had been altered to eliminate any such expansion or connection. Also, on the fifth page of the Borough plans, the rear yard border behind the frame garage had been altered to reflect a five-foot setback, while the Sadej plans included no such alteration.
On May 8, 2002, the Borough filed its complaint, based upon the allegations in Erdman's certification, which in turn relied upon the Borough plans as support for the alleged zoning and building violations. At their depositions, neither Erdman nor Delaney could explain the discrepancies between the two sets of plans.
On May 9, 2002, Sadej sent a letter to Delaney and to the mayor, council, and police chief, alleging that his building plans had been "fraudulently" altered to support the Borough's position that the Sadejs' construction activities constituted building code and zoning violations. At his deposition, Delaney stated that the mayor and council were made aware of Sadej's allegation of fraud after the May 1, 2002 council meeting.
On July 1, 2002, a planning expert retained by the Borough, John Maczuga, issued a report in support of the Borough's lawsuit, specifying certain zoning violations resulting from the improvements to the Sadejs' property. The Sadejs later countered that report with a certification from their engineering expert, Stephen P. Eid, who concluded there were no violations.
As we stated, the initial filing was in the Chancery Division. The Chancery judge issued an order on May 9, 2002 temporarily restraining further construction. The Sadejs moved to dissolve the temporary restraints, asserting at a hearing on May 16, 2002 that their approved plans differed from those relied upon by the Borough as a basis for the restraints. The judge lifted the restraints, allowing the Sadejs to resume construction, but at their peril.
On May 28, 2003, the Sadejs filed an answer and counterclaim against the Borough based upon allegedly malicious actions performed by its officials. The counterclaim alleged promissory estoppel/detrimental reliance and fraud, and sought a declaration that no further municipal action was required to allow them to complete their improvements and that the Borough, through its officials, had been malicious.
In mid-2003, the Sadejs moved for an order to depose the mayor and council, chief of police, and two members of the law firm representing the Borough.*fn2 Following the July 8, 2003 hearing, the Chancery judge entered an order directing that the mayor and council could be initially deposed through written interrogatories, after which further consideration could be given to oral deposition of specific officials if warranted. The judge denied without prejudice the Sadejs' application to depose the Borough attorneys, subject to further argument concerning the issue of attorney-client privilege.
On October 3, 2003, the Sadejs filed an amended answer, affirmative defenses, and counterclaim, reasserting their claims for declaratory judgment and for estoppel, dropping their fraud claim, and asserting a claim against the Borough under 42 U.S.C.A. § 1983 for the malicious deprivation of their property rights by the Borough's employees.
On May 3, 2004, the Borough moved for partial summary judgment on its claims against the Sadejs. On that date, the Sadejs moved for summary judgment and dismissal of the Borough's complaint, the severance of their counterclaim for trial or transfer of the entire matter to the Law Division, and the production by the Borough of the original building plans they filed. After hearing argument on May 10, 2004, the Chancery judge entered seven orders. The judge granted summary judgment for the Sadejs and entered orders dismissing the Borough's claims regarding building height, rear yard setback and side yard setback zoning violations. The judge also granted partial summary judgment in favor of the Borough, finding that there was a building coverage zoning violation. In its order, the court specifically noted that the issue of the Borough's enforcement action concerning the building coverage violation would proceed to trial where it would be considered "along with defendants' counterclaim, answer and affirmative defenses, including estoppel."
Another order entered on May 10, 2004 directed the Borough to produce the building plans it claimed to have been filed by the Sadejs; the order also reflected that the Borough had withdrawn its claim that the Sadejs were guilty of a front yard setback violation.
On May 13, 2004, the Sadejs filed a second amended counterclaim against the Borough and a third-party complaint against the mayor and council, Erdman, Marcinczyk, and Delaney, "individually and asmunicipal official[s]." In their second amended counterclaim and the third-party complaint, the Sadejs again sought a declaratory judgment and also asserted claims based on estoppel, violation of 42 U.S.C.A. § 1983, fraud, malicious use of process, and "legal process maliciously abused."
The Sadejs moved for reconsideration by the Chancery judge of the order granting partial summary judgment against them on the building coverage zoning violation. After a hearing on June 25, 2004, the judge entered an order on July 16, 2004 denying the motion.
On June 10, 2004, the Borough and individual defendants moved for dismissal of the Sadejs' second amended counterclaim and third-party complaint based, in part, on the alleged failure of the Sadejs to satisfy the notice requirements of the TCA. On July 9, 2004, the Sadejs served a comprehensive TCA notice on Delaney, specifying their claims against the Borough, as well as their claims against the mayor and council, Erdman, Marcinczyk, and Delaney, individually and as municipal officials.
On July 16, 2004, the Chancery judge entered an order transferring the entire matter to the Law Division for a jury trial on all issues.
On October 22, 2004, the Law Division judge, after hearing argument, granted the motion of the Borough and individual third-party defendants dismissing the Sadejs' second amended counterclaim and third-party complaint. The judge determined that these causes of action accrued prior to May 9, 2002, and, consequently, the amended counterclaim and third-party complaint, which was filed on May 13, 2004, was filed beyond the two-year limitations period. The judge also determined that the Sadejs failed to satisfy the TCA notice requirements. The judge entered an order accordingly on November 30, 2004. On January 28, 2005, the judge denied the Sadejs' reconsideration motion. In doing so, the judge added an additional basis for granting summary judgment to the Borough, namely that the Sadejs had not "established a prima facie case of malicious prosecution." Thus, according to the judge, the only remaining issue for trial was whether the Borough was estopped from enforcing the building coverage zoning violation against the Sadejs.
On July 12, 2005, the Sadejs moved to dismiss the Borough's complaint because of its continuing failure to comply with the Chancery judge's order to produce the building plans it claimed to have been filed by the Sadejs. The motion also requested that the court compel the depositions of the two attorneys representing the Borough at the time the complaint was filed.
At a motion hearing on September 16, 2005, the Borough produced the building plans, and that aspect of the Sadejs' motion was "marked settled." Then, after hearing argument, the judge denied the Sadejs' motion to depose the Borough attorneys. The judge entered an order accordingly on September 28, 2005.
On April 2, 2007, the Sadejs moved for summary judgment to estop the Borough from enforcing the building coverage violation previously found by the Chancery judge. On May 3, 2007, the Sadejs filed a motion to recover their counsel fees and costs from the Borough, alleging that the Borough filed its complaint despite knowing the fraudulent nature of the building plans upon which the complaint was based, thus violating the FLS.
That same day, May 3, 2007, the matter came before the second Law Division judge, who, after hearing argument, granted the Sadejs' summary judgment motion, determining that the Borough was estopped from enforcing the violation against the Sadejs. A conforming order was entered on July 9, 2007. The order also directed the Borough to reissue the Sadejs' building permit and zoning approval and authorized the Sadejs to complete their planned improvements without further permits or approvals from the Borough.
On June 22, 2007, the second Law Division judge, after hearing argument on the Sadejs' counsel fee motion, denied the motion. The basis for denial was that municipalities are not subject to liability under the FLS. The judge entered an order accordingly on July 25, 2007. On September 7, 2007, the judge entered a further order denying the Sadejs' reconsideration motion.
The Sadejs appeal from the orders entered on May 9, 2002, July 8, 2003, May 10, 2004, November 30, 2004, September 28, 2005, July 25, 2007, and September 7, 2007.
The Borough cross-appeals from the Chancery judge's order of May 10, 2004, granting partial summary judgment to the Sadejs and finding no violations of the rear yard, side yard, or building height zoning provisions, and from the order of the second Law Division judge on July 9, 2007, granting summary judgment to the Sadejs on estoppel grounds.
We first address the Sadejs' argument that their malicious use of process claims were improperly dismissed. The first Law Division judge dismissed the claims as time-barred and then, on the Sadejs' reconsideration motion, further held that the claims were also subject to dismissal under the summary judgment standard because of failure of the Sadejs to make out a prima facie case. We address those holdings in turn.
The judge reasoned that because Sadej met with Delaney on May 2, 2002 and was shown the allegedly false building plans, and because Sadej wrote a letter on May 9, 2002, in which he flatly asserted that the building plans in the Borough's files had been "fraudulently" altered, all of the Sadejs' claims against the Borough and third-party defendants accrued no later than May 8, 2002, when the Borough filed its complaint against them. The judge was satisfied that the Sadejs then were aware of their "potential claims" against the Borough and third-party defendants, and that the two-year limitations period for tort-based claims began to run. See N.J.S.A. 2A:14-2; N.J.S.A. 59:8-9. Thus, because the Sadejs filed their second amended counterclaim and third-party complaint on May 13, 2004, it was barred by the statute of limitations.
A plaintiff pressing a claim for malicious use of process "must prove that the original action complained of was brought without probable cause and was actuated by malice, that it terminated favorably to plaintiff and that plaintiff suffered a special grievance." LoBiondo, supra, 323 N.J. Super. at 423; Penwag Prop. Co., Inc. v. Landau, 76 N.J. 595, 598 (1978). The problem in this case concerns the elemental requirement that the "original action," as embodied in the Borough's complaint against the Sadejs, had not "terminated favorably" to them by the time the judge dismissed their malicious use of process claims on November 30, 2004.
Rather, as the judge appears to have recognized, the Chancery judge had previously granted partial summary judgment for the Borough and determined that the Sadejs' disputed improvements to their property resulted in a building coverage zoning violation. In doing so, the Chancery judge ordered that the Borough's ongoing enforcement action concerning the building coverage violation would proceed to trial, where the Sadejs' could interpose their estoppel defense. The Borough's claim was therefore still alive, as was the Sadejs' estoppel defense, until the second Law Division judge entered an order on July 9, 2007 granting summary judgment for the Sadejs on estoppel grounds.
While a tort action normally accrues for limitations period purposes when the injured party learns of an actionable act or omission, Martinez v. Cooper Hospital-Medical Center, 163 N.J. 45, 51-52 (2000), the situation is different for a malicious use of process claim because one of the elements requires that a previously brought action be terminated in favor of the party who files the claim. Such claims "must await a favorable termination," and the limitations period for such an action "does not begin until such termination." Muller Fuel Oil Co. v. Ins. Co. of N. Am., 95 N.J. Super. 564, 577 (App. Div. 1967) (discussing a malicious prosecution claim); see also, LoBiondo, supra, 323 N.J. Super. at 417 n.7 ("Clearly defendants were precluded from filing a malicious use of process claim until favorable termination of plaintiffs' action against them").
"It is not appropriate to institute a suit or file a counterclaim until the litigation has terminated in favor of the party who asserts the malicious prosecution cause of action." Penwag Prop. Co., supra, 76 N.J. at 598. In LoBiondo, we "urge[d] that consideration be given by our Supreme Court to relaxing the Penwag two-suit rule in SLAPP-back malicious use of process situations" because such sequential litigation visited a "second and gratuitous injury upon the SLAPP defendants" and "unduly burden[ed] the courts with duplicative litigation."*fn3
LoBiondo, supra, 323 N.J. Super. at 425. However, the Supreme Court has not modified the Penwag two-suit rule. Thus, although the Sadejs' malicious use of process claims were filed prematurely, they were not subject to dismissal. Indeed, because the Borough filed a cross-appeal contesting the dismissal by the Chancery judge of its claims for rear setback, side yard setback, and building height zoning violations, the Borough's action against the Sadejs is still ongoing and, at least until our disposition of this appeal, it has not yet been finally terminated in favor of the Sadejs.
However, although the malicious use of process claim was not subject to dismissal as time-barred, the viability of the claim against the Borough faces a different problem for the Sadejs. A public entity is not liable for its employees' acts that constitute fraud, malice, or willful misconduct. N.J.S.A. 59:2-10. A municipality "cannot entertain malice" as a public corporation. O'Connor v. Harms, 111 N.J. Super. 22, 26 (App. Div.), certif. denied, 57 N.J. 137 (1970). Therefore, because malice is an element of the malicious use of process tort, the Borough cannot be directly liable for that tort. Thus, dismissal of the malicious use of process claim as to the Borough was proper, although for a different reason than expressed by the trial judge.
In finding a lack of a prima facie case of malicious use of process, the first Law Division judge concluded that the record did not satisfy the probable cause, malice, and favorable termination elements of the cause of action. We disagree.
The judge reasoned that because the Chancery judge had found that there was a building coverage zoning violation*fn4
resulting from the Sadejs' improvements, the Borough had probable cause to file the zoning enforcement action against them. However, the Borough did not assert in its complaint that there was a building coverage violation. It alleged that the work being performed "may violate Borough setback, height, area and lot coverage requirements." The Borough zoning ordinance makes a distinction between "Building Coverage" and "Lot Coverage." Thus, a building coverage violation is not the same as a lot coverage violation.
The issue of a building coverage violation did not arise until at least July 1, 2002, about eight weeks after the Borough filed its complaint. On that date, the Borough's planning expert issued a report noting a possible building coverage violation. There is nothing in the record to suggest that the Borough was aware of this alleged building coverage violation before it received its expert's report.
The sequence of events is important to the probable cause issue, for it is the facts existing at the time of the other party's filing of its original action that control. Lind v. Schmid, 67 N.J. 255, 263 (1975). If the Borough was not aware of a building coverage violation when it filed its complaint, it could not have relied upon such a violation as a basis for the complaint.
The judge also determined that the Sadejs failed to present "a scintilla of evidence" beyond "b[a]ld assertions or allegations of fraud" to support the malice element. "Malice" is the "intentional doing of a wrongful act without just cause or excuse." Jobes v. Evangelista, 369 N.J. Super. 384, 398 (App. Div.), certif. denied, 180 N.J. 457 (2004). In an affidavit, Sadej alleged that Delaney told him that Erdman and Marcinczyk had "made a mistake" in issuing the building permit and zoning approval to him. In their second amended counterclaim and third-party complaint, the Sadejs alleged that, to rectify that mistake, the Borough and its officials fraudulently altered the building plans filed by the Sadejs to make it appear that the Sadejs' improvements did not conform to plans and constituted zoning violations.
Although the altered building plans were finally produced by the Borough after a long passage of time, the Borough did not attempt to explain the alterations, all of which were damaging to the Sadejs. Despite that lack of explanation, the judge apparently did not assign any significance to the altered plans.
In our view, the altered building plans amounted to more than a mere "scintilla of evidence" or an unjustifiable bald assertion of fraud. The altered plans formed the basis for the Borough's complaint, and the Borough was aware of the questions concerning the validity of those altered plans when it filed that complaint.
The judge also found insufficient evidence on the favorable termination element. In doing so, the judge ascribed pivotal importance to the Chancery judge's grant of partial summary judgment for the Borough on its building coverage zoning violation claim, even though that judge specifically provided in his order that the Borough's enforcement action concerning that violation would proceed to trial and would be subject to consideration of the Sadejs' estoppel defense. It was clear, therefore, that the building coverage violation issue was still pending. It was not a final determination against the Sadejs. Indeed, it later resulted in favorable termination of that aspect of the litigation for the Sadejs.
Although not mentioned by the Law Division judge, we also note that the Sadejs presented sufficient proof to withstand summary judgment on the "special grievance" element of their claim. A "[s]pecial grievance consists of interference with one's liberty or property." Penwag Prop. Co., supra, 76 N.J. at 598. The Borough's complaint interfered with the Sadejs' ability to improve their property.
Applying the Brill*fn5 standard, and viewing the evidence in the light most favorable to the Sadejs, and affording them all favorable inferences to be drawn from the evidence, the Sadejs presented a prima facie case of malicious use of process. It was error to grant summary judgment dismissing this claim.
Accordingly, the order dismissing the Sadejs' malicious use of process claim is reversed in part, to allow the claim against the mayor and council, Erdman, Marcinczyk, and Delaney to proceed. However, dismissal of this claim against the Borough is affirmed.
The first Law Division judge dismissed the Sadejs' fraud-based claims against the individual third-party defendants because they were brought after expiration of the two-year limitations period. The judge rejected the Sadejs' argument that those claims were viable pursuant to the relation back doctrine set out in Rule 4:9-3. We agree with the trial judge.
The Borough filed its complaint on May 8, 2002, and on May 9, 2002, Sadej wrote to Delaney, plainly implying that Erdman, Marcinczyk, and Delaney, as well as the mayor and council, were active or passive actors in a fraudulent scheme to thwart the Sadejs' efforts to improve their property. In their answer and counterclaim, filed on May 28, 2003, the Sadejs mentioned these individuals and described the roles they played in the allegedly fraudulent scheme. However, the Sadejs sought relief only against the Borough on all claims, including the fraud claim. On October 3, 2003, the Sadejs filed an amended counterclaim, dropping the fraud claim against the Borough and seeking relief against only the Borough on all other claims.
On May 13, 2004, five days after the two-year limitations period for such claims had expired, the Sadejs filed a second amended counterclaim and third-party complaint, asserting a fraud claim against the Borough and the individual defendants.
The Sadejs argue that because these individual defendants were aware of the lawsuit against the Borough and of the specific allegations involving them, the relation back doctrine should apply. However, until these individuals were personally named, they were aware only that they were accused of participating in conduct for which the Borough was the target of the litigation. They had no reason to believe they were targets. Indeed, they testified at depositions as witnesses, not parties. Certainly, there was no mistake as to who the mayor and members of council were or who the zoning officer, construction code official and borough administrator were.
The relation back doctrine requires more than knowledge of alleged wrongdoing. It also requires that the party against whom the belated claim is brought "knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party to be brought in by amendment." R. 4:9-3. Our Supreme Court has reasoned as follows:
When a plaintiff knows or has reason to know that he has a cause of action against an identifiable defendant and voluntarily sleeps on his rights so long as to permit the customary period of limitations to expire, the pertinent considerations of individual justice as well as the broader considerations of repose, coincide to bar his action. [Farrell v. Votator Div. of Chemetron Corp., 62 N.J. 111, 115 (1973).]
This case falls squarely within the ambit of that reasoning. The judge correctly refused to apply the relation back doctrine.
We next consider the Sadejs' argument that the first Law Division judge erred in dismissing their claims because of failure to comply with the notice requirements of the TCA. They argue that their letters of May 1 and 9, 2002 provided substantial and sufficient notice of their fraud claims. We do not agree.
After the stop work orders were issued on April 17 and 18, 2002, Sadej prepared a letter dated May 1, 2002. He apparently attempted to read it publicly at a Borough council meeting, but was precluded from doing so by the Borough's attorney. He apparently sent the letter to Delaney. He complained in the letter of the untruthfulness of Erdman and Marcinczyk and recommended that the mayor and council investigate and replace them. He said he would "not put up with any more harassment and abuse of police powers," but stopped short of threatening litigation, instead stating that "I have no interest or need to persue [sic] legal action against my community." This letter clearly did not put the Borough on notice of a claim; instead, it stated the Sadejs would not file a claim.
The Borough filed its complaint on May 8, 2002. Sadej was apparently unaware of the commencement of the litigation when he wrote a second letter on May 9, 2002, addressed to the Borough, with copies to Delaney, the mayor, the police chief and the Ocean County Prosecutor's Office. He again complained about Erdman and Marcinczyk, asserting that someone in the Borough had been "fraudulently altering my [building] plans." He stated that he had filed a fraud complaint, apparently with the police department. He said the Borough's attorney had threatened him with an injunction, and stated that the Borough should [s]top threatening me with your estopels [sic], police power, and legal actions and do the wright [sic] thing for yourself, your community and mine and for the cause of people of Seaside Park. If you want a town hall filled with angry taxpayers and voters, keep it up and this will mushroom into a major political issue besides a law suit that will go well beyond your local governing body and small town politics.
As is apparent, Sadej's second letter indicated that a "law suit" with unspecified claims may be filed, presumably by the Sadejs but possibly by "angry taxpayers and voters," if the Borough continued to "keep . . . up" its threats, "estopels, police power, and legal actions" against him. Tellingly, however, the letter did not explicitly state that the Sadejs then had a viable claim or that they definitely expected to file a claim against the Borough or its officials.
More than a year later, on May 28, 2003, the Sadejs filed their counterclaim against the Borough, followed by an amended counterclaim on October 3, 2003, and by a second amended counterclaim, along with the third-party complaint, on May 13, 2004. The Borough and the third-party defendants filed a motion for summary judgment on June 10, 2004, based, in part at least, on the Sadejs' failure to satisfy the notice requirements of the TCA, evidently triggering the filing by the Sadejs of a comprehensive notice of claim upon the Borough on July 9, 2004.
The judge dismissed the Sadejs' second amended counterclaim and third-party complaint, in part because of failure to comply with the TCA notice requirements. The Sadejs argue that this was error because their May 1 and 9, 2002 letters constituted substantial compliance with the TCA's notice requirements.
One of the purposes underlying the notice requirement is to provide a public entity with prompt notification of a claim to enable it to adequately investigate the facts and prepare a defense. Beauchamp v. Amedio, 164 N.J. 111, 121-22 (2000). Thus, the notice requirement demands that a public entity at least be informed that there is a claim being asserted against it.
"Substantial compliance . . . is based on the notion that substantially all of the required information has been given to those to whom the notice should be given and that it has been given in a form which should alert the recipient to the fact that a claim is being asserted against the sovereign." Lameiro v. W. N.Y. Bd. of Educ., 136 N.J. Super. 585, 588 (Law Div. 1975). Neither of Sadej's letters would have plainly alerted the Borough that a claim was being asserted against it. Therefore, the substantial compliance doctrine does not apply, and the judge correctly found that the Sadejs failed to comply with the TCA notice requirements.
The Sadejs argue that the Chancery judge erred in determining that their construction resulted in a building coverage zoning violation. The dispute on this issue revolves around whether or not a porch attached to the home should be included in the calculation. The lot is 10,000 square feet. The ordinance allows building coverage of 30%, which, in this case, is 3000 square feet. The porch is 565 square feet. With the porch included, the overall size of the improvements is 3539 square feet. Without the porch, the coverage is just under the allowable 3000 square feet.
Neither Erdman nor Marcinczyk counted the porch in their calculations, and they each testified in depositions that because the porch does not constitute habitable area it should not be included. In their view, there was no building coverage violation.
As we have previously stated, when the Borough filed its initial complaint on May 8, 2002, it asserted several zoning violations, but not a building coverage violation. That issue first arose after the Borough received the July 1, 2002 report of the planning expert it engaged. That expert opined that the porch should be included. The Sadejs responded with a report of their expert, opining to the contrary.
The Chancery judge was of the view that the court should interpret the ordinance according to its terms. The judge rejected any reliance on the opinions of Erdman and Marcinczyk, stating that their interpretation as municipal officials had relevance only with respect to the remaining issue of estoppel. As we have also previously stated, it was later determined that the Borough was estopped from enforcing any building coverage violation. The Borough has not cross-appealed from that ruling.
Zoning ordinances should be interpreted to effectuate the legislative intent underlying them. State of N.J., Twp. of Pennsauken v. Schad, 160 N.J. 156, 170 (1999). The first step requires an examination of the language of the ordinance, which controls if it is clear and unambiguous. Ibid. Unless other definitions appear within the ordinance, the "language used must be given its ordinary meaning." Fin. Servs., L.L.C. v. Zoning Bd. of Adjust. of Little Ferry, 326 N.J. Super. 265, 273 (App. Div. 1999).
The ordinance defines "Building Coverage" as the "area of a lot covered by buildings measured around the periphery of the foundation(s)." "Building" is defined in the ordinance as "[a]ny structure or extension thereof or addition thereto consisting of a combination of materials to form a construction having a roof, supported by such things as columns, posts, piers or walls and adapted to permanent, temporary, or continuous occupancy intended for the shelter, business, housing or enclosing of persons, animals, or property."
The Sadejs concede that their porch fits within the first portion of this definition, because it is a structure with a roof and is supported by walls and columns. They argue, however, that the second portion of the definition is not satisfied because this open porch has not been "adapted" to any form of occupancy. They urge that the word "adapted" connotes some form of modification of a structure's original state.
The word "adapt" is not defined in the ordinance. The term is generally defined as "to make fit (as for a specific or new use or situation) often by modification." Webster's Ninth New Collegiate Dictionary 55 (1983). Thus, a "modification" is not required in order to "adapt" something to a specific use.
Accordingly, we find no error in the Chancery judge's determination that the porch was adapted for temporary occupancy of persons while outside of the house, providing shelter to those persons from the elements, because it has a roof and thus has been made "fit" for that specific use. Accordingly, the judge did not err in determining that the porch should be included in the building coverage calculation, thus resulting in a zoning violation.
We next address the Sadejs' argument that the first Law Division judge erred in refusing to allow the deposition of the Borough's attorneys. The deposition request was based on the fact that attorneys from the Hiering firm, which was then representing the Borough and which prepared the initial filing on May 8, 2002, had participated in the preparation of Erdman's certification. Erdman certified that the Sadejs deviated from the building plans on file with the Borough, and attached to the certification were "the plans submitted as part of the original construction permit." Those plans, however, were alterations of those filed by the Sadejs. When later deposed, Erdman testified that the altered plans attached to his certification were not those he had earlier approved, and he could not explain the alterations. He acknowledged signing the certification that had been prepared by the Borough's attorneys but said he did not attach the altered plans to the certification.
The Sadejs sought to depose the attorney "who attached the altered plans" to Erdman's certification. They contended this might shed light on who provided the altered plans to counsel and, ultimately, on who altered the plans.
At oral argument on the Sadejs' motion, Thomas Gannon of the Hiering firm acknowledged that he had prepared Erdman's certification. Gannon offered to provide "a certification that says this is what was handed to me" by the Borough. Gannon's statement suggested that Marcinczyk was the person who provided the building plans that he attached to Erdman's certification.
The judge denied the motion, noting that there was no indication that Gannon or any other attorney for the Borough was involved in any fraudulent activity and that the Sadejs' motion was "limited to the issue of how did counsel obtain these plans that were the . . . 'altered plans,'" attached to Erdman's certification. The judge determined that anything beyond Gannon's representation that he attached the documentation provided to him by the Borough would invade the work-product privilege.
"[T]here is no general prohibition against obtaining the deposition of opposing counsel regarding relevant, non- privileged information." Kerr v. Able Sanitary & Envtl. Servs., Inc., 295 N.J. Super. 147, 154 (App. Div. 1996). However, because such depositions are disfavored by courts, "in situations involving a request to depose an opposing party's attorney, there are good reasons for shifting the burden to the proponent of the deposition to demonstrate the propriety and need for the deposition." Id. at 155-56. Thus, the party opposing the deposition of its counsel is presumed to have "good cause" to support the issuance of a protective order, while "the party requesting the deposition must show that the information sought is relevant to the underlying action and is unlikely to be available by other less oppressive means." Id. at 158-59.
We said in Kerr:
In evaluating the propriety and need for the deposition of the opposing attorney, the court should consider the following factors:
(1) the relative quality of the information purportedly in the attorney's knowledge, and the extent to which the proponent of the deposition can demonstrate the attorney possesses such information; (2) the availability of the information from other sources that are less intrusive into the adversarial process, i.e., the extent to which all other reasonable alternatives have been pursued to no avail; (3) the extent to which the deposition may invade work product immunity or attorney-client privilege; and (4) the possible harm to the party's representational rights by its attorney if called upon to give deposition testimony, i.e., the extent to which the deposition will affect attorney preparation or participation on behalf of the client. Consideration of these or any other relevant factors, either singly or in combination, will determine in a particular case whether the party seeking the deposition of opposing counsel has overcome the presumptive "good cause" for the protective order. If such a showing is not made, a protective order should issue. [Id. at 159 (footnote omitted).]
We are satisfied that the judge correctly applied these principles here. There is nothing in this record to suggest that anything within the knowledge of the Borough's attorneys would have led to discovery of the person involved in or circumstances surrounding the alteration of the filed building plans. Thus, the "relative quality of the information" purportedly possessed by counsel was attenuated at best. Concerning the source of the attached plans, Gannon offered to furnish a certification stating all he knew. This provided "other less oppressive means" by which the information could be provided.
The denial of the Sadejs' motion to depose counsel was guided by the correct legal principles, and there was no mistaken exercise of discretion in the manner in which the judge applied those principles.
The Sadejs' final argument is that the trial court erred in determining that the Borough is immune from a claim for counsel fees under the FLS. Immunity of a public entity was the sole basis upon which the second Law Division judge denied the Sadejs' motion, which sought counsel fees and costs of $280,839.35 from the Borough pursuant to the FLS, essentially asserting that the Borough filed its complaint and continued this litigation despite knowing the fraudulent nature of the building plans upon which the action was based.
In the course of the motion proceedings under the FLS, the Borough also asserted that, in addition to immunity, the Sadejs were barred from FLS recovery because of their failure to comply with the "safe harbor" notice and demand provision of Rule 1:4-8(b)(1), which has been judicially engrafted upon the FLS. See R. 1:4-8(f); Toll Bros., Inc. v. Twp. of W. Windsor, 190 N.J. 61, 65 (2007). The judge declined to consider the Borough's argument on this point because it was belatedly submitted. The purpose of the safe harbor provision is to serve fair warning on an opposing litigant that counsel fees will be sought based upon alleged frivolous litigation positions, "if the offending paper is not withdrawn within 28 days of service of the written demand." Id. at 69. The purpose of the time frames fashioned by the Court is to enable the allegedly offending party to promptly correct its behavior. Id. at 71. In this way, litigants "are spurred to give prompt warning to those engaged in frivolous litigation activity. Early notice furthers the legislative purposes by providing all opportunity for remediation." Id. at 72.
From the record before us, it appears that the Sadejs never served on the Borough a written notice and demand setting forth with specificity the basis upon which the Borough's position allegedly fell within the statutory definition of "frivolous" and demanding withdrawal of the offending pleadings within twenty-eight days. Subject to the practicability analysis required by Rule 1:4-8(f), see Toll Bros., supra, 190 N.J. at 72, the failure to serve such notice and demand may prove fatal to the Sadejs' FLS claim.
We are aware that the Sadejs included in their original pleading and in two subsequent pleadings a separate defense setting forth a general notice of intention to claim counsel fees because of alleged frivolous conduct by the Borough. With some slight variation in the three pleadings, the separate defense was substantially as follows:
Plaintiff's actions in instituting this litigation and issuing stop-work orders to Defendants, which stop-work orders have since been rescinded by the Court, are frivolous, arbitrary, unreasonable and capricious and not based upon existing law.
As such, Defendants reserve the right to seek an award of attorney's fees against Plaintiff at or before the time of the trial of this matter.
The trial judge noted that these provisions in the Sadejs' pleadings placed the Borough on notice early in the litigation that the Sadejs believed the Borough's litigation position was frivolous and that they would seek attorney's fees. However, "reserving the right" to seek attorney's fees may not necessarily constitute compliance with the very specific requirements of the notice and demand provisions of Rule 1:4-8(b)(1).
In ruling on the immunity issue, the judge relied on the Chancery Division decision in Division of Youth & Family Services v. P.M., 301 N.J. Super. 80 (Ch. Div. 1997). That decision conflicts with another Chancery Division decision, In the Matter of K.L.F., 275 N.J. Super. 507 (Ch. Div. 1993). No published appellate level opinion has ruled on the immunity issue. That issue, therefore, remains unsettled.
In an unpublished opinion earlier this term, this panel decided an FLS attorney's fee claim against a municipality. Robert J. Pacilli Homes, LLC v. Pilesgrove Twp. Planning Bd., Nos. A-3271-06 and A-4226-06 (App. Div. February 13, 2009). After conducting an in-depth practicability analysis, we concluded that it was practicable for the prevailing parties to have complied with the safe harbor notice and demand requirement, and their failure to do so was fatal to their FLS claim. Id., slip op. at 54-62. Alternatively, and without extended discussion or analysis, we further found no FLS liability against a municipality based upon immunity, relying on P.M. Id., slip op. at 62-63.
In consideration of the arguments regarding immunity advanced by the Sadejs in this case, and upon a deeper consideration of P.M., we have some misgivings about relying upon P.M. to resolve the issue. We note several aspects of the P.M. rationale that raise some concerns in our minds.
For example, in P.M., the court relied upon the distinction between a "party" and "person" in N.J.S.A. 2A:15-59.1a(1). P.M., supra, 301 N.J. Super. at 84-87. The court noted that under that provision "[a] party who prevails . . . against any other party . . . [who is a] non-prevailing person" may be awarded fees. Id. at 85. The court viewed the distinction between the two terms as significant, noting that a "person" is statutorily defined to include "corporations, companies, associations, societies, firms, partnership and joint stock companies as well as individuals," but "does not include the State of New Jersey unless the word 'person' is used 'to designate the owner of property.'" Id. at 86-87. We have some doubt about the use of the distinction between these terms for interpretative purposes because, in other portions of the statute the FLS, by its express terms, appears to allow recovery of fees against a "non-prevailing party" whose litigation conduct was frivolous. N.J.S.A. 2A:15-59.1a(2); N.J.S.A. 2A:15-59.1b; N.J.S.A. 2A:15-59.1b(2) (emphasis added).
In P.M., the court also attributed substantial significance to the 1995 amendments to the FLS. Id. at 87-89. In those amendments, the Legislature added a new section, designated as N.J.S.A. 2A:15-59.1a(2), which provides:
When a public entity is required or authorized by law to provide for the defense of a present or former employee, the public entity may be awarded all reasonable litigation costs and reasonable attorney fees if the individual for whom the defense was provided is the prevailing party in a civil action, and if there is a judicial determination at any time during the proceedings or upon judgment that a complaint, counterclaim, cross-claim, or defense of the non-prevailing party was frivolous.
The amendments further modified N.J.S.A. 2A:15-59.1c by adding the following underlined words: "A party or public entity seeking an award under this section shall make application to the court which heard the matter. . . ." The P.M. court reasoned that the Legislature would not have added these provisions if "the terms used in the pre-existing statute were intended to include the State and its agencies." Id. at 87.
We do not share this view. By their terms, the 1995 amendments added a new category of FLS claimants, namely public entities which are not parties to the litigation, but which are required or authorized by law to provide a defense to their employees who are parties. Thus, in addition to parties, the amendments authorized public entities which are not parties to also apply for FLS attorney's fees if their employee prevails and the non-prevailing party was frivolous. This legislative purpose, in addition to being evident on the face of the statutory provisions, is further made clear by the legislative history. See Sen. Community Affairs Comm., Statement to Sen. Comm. Substitute for A.1012, S.1399 & S.1290 (October 13, 1994).
Further, the court reasoned in P.M. that immunity is presumed in the absence of a clear legislative statement to contrary, and that no such statement has been rendered in the context of an award of attorney's fees for maintaining a frivolous litigation position. Id. at 90-93. The court specifically relied on a provision in the Environmental Rights Act, N.J.S.A. 2A:35A-1 to -14, which permits a counsel fee award in certain prescribed circumstances, subject to a limit, see N.J.S.A. 2A:35A-10, as an example of an express legislative undertaking to create liability within that limit. Id. at 92-93. We note that a provision in the TCA, N.J.S.A. 59:9-5, allows a discretionary award of counsel fees in favor of a successful claimant against a public entity or public employee in all cases except those where damages are awarded for pain and suffering. This may be significant for two reasons. First, this provision may well provide a basis for a counsel fee application in this case, on a discretionary basis, even in the absence of a showing of "frivolous" conduct under the FLS. Second, this provision may be viewed as constituting a legislative pronouncement of a waiver of immunity from counsel fee awards against public entities, if they are otherwise authorized by legislative enactment.
We do not decide these issues in this case. We merely point out some of the underlying considerations that will direct an ultimate resolution of the immunity issue, if that becomes necessary in the final determination of the Sadejs' counsel fee claim.
We note that in Toll Bros., the Supreme Court chose not to decide the immunity issue until a practicability analysis was conducted, although it extended to this court the option of deciding whether the public entity was immune from FLS liability. Toll Bros., supra, 190 N.J. at 73. Similarly, in deciding an FLS issue where fees were sought against a public entity, this court avoided the immunity issue and decided the case on other grounds. In re Farnkopf, 363 N.J. Super. 382 (App. Div. 2003). We noted that the FLS allows an award of counsel fees if the non-prevailing "person" was frivolous. Id. at 402 n.10. We then stated: "We note but need not resolve the conflict between [K.L.F.] and [P.M.] as to whether a public body (in those cases, the Division of Youth and Family Services) may be found to be a non-prevailing 'person.'" Ibid.
We decline to decide the FLS issue on immunity grounds, considering the procedural posture of this case and the record before us. We deem it more appropriate that other aspects of the FLS application be considered in the first instance in the trial court. This would include, but not necessarily be limited to, whether the Sadejs complied with the safe harbor provision, a practicability analysis, and whether the Borough's conduct fell within the statutory definition of frivolous.
If, upon a consideration of all other relevant issues, it is determined that the Sadejs would be entitled to an FLS counsel fee award against the Borough, the trial court should revisit the immunity issue and decide it, taking into consideration some of the comments contained in this opinion and all arguments of counsel. In that manner, a complete record will be made on all relevant issues if it is necessary for an appellate court to determine the immunity issue in order to resolve the FLS issue in this case.
Therefore, we remand for further proceedings regarding the counsel fee issue.
In its cross-appeal, the Borough argues that the trial court erred in finding that various setback and building height violations did not occur. We do not agree.
The Chancery judge granted partial summary judgment in the Sadejs' favor on May 10, 2004, dismissing the Borough's claims regarding front yard, rear yard and building height violations. With respect to the front yard setback issue, we note that the Borough stipulated before the Chancery judge that it withdrew that claim because it "recognized that the front setback is a pre-existing nonconformity." Thus, the Chancery judge's order stated that the front yard setback zoning violation allegation had been withdrawn. There is no basis for us to review this determination.
The rear yard setback issue suffers from the same problem. The disputed rear yard setback dimension is about two feet, while the current version of the Borough's zoning ordinance provides for a minimum setback of five feet or twenty feet, depending upon lot size. However, the ordinance also provides a "grandfather" provision for structures "legally existing as of August 1, 1987." It is undisputed that the basic structures on the Sadejs' property existed prior to August 1, 1987. Therefore, by the terms of the Borough's ordinance, this was a "pre-existing non-conforming structure," and there is no basis for reversal on this point.
The Borough's final contention regards the building height requirements. The Borough argues that the measurements it has set forth are supported by those contained in its planning expert's report. In our view, the Borough has misread the report.
The house is 37.2 feet high at its highest point. It then contains a cupola that is 8.6 feet high, raising the total building height to 45.8 feet. The current maximum height permitted is thirty-five feet, although an exception exists for certain roof structures, including "cupolas," which "may be erected above the height limits prescribed in this ordinance but in no case more than twenty-five percent (25%) more than the maximum height permitted in the district." The Chancery judge noted that the height of 37.2 feet constituted a "pre-existing nonconforming structure" under the "grandfather" provision in the zoning ordinance. Under the cupola exception to the thirty- five foot building height requirement, a cupola addition could extend the roofline by as much as 8.75 feet (35 feet X .25 = 8.75 feet). The judge then calculated that the maximum permitted height with the cupola would be 45.95 feet (37.2 feet 8.75 feet = 45.95 feet). Thus, because the actual overall height was 45.8 feet, there was no violation.
The Borough appears to dispute the judge's calculation by tacitly asserting that the 8.75 foot cupola height should be added to the thirty-five foot maximum height permitted under the ordinance, and not added to the actual building height of 37.2 feet, to yield a permitted building height of 43.75 feet and not 45.95 feet. This would mean that the Sadejs' 45.8 foot high house, including the cupola, would exceed the 43.75 foot maximum, resulting in a zoning violation.
The flaw in the Borough's contention is that the cupola exception provision of the zoning ordinance, § 25-706(A), permits cupolas and other roof structures to be built up to twenty-five percent above the "maximum height permitted in the district." As applied to the Sadejs' house, the "maximum height permitted in the district" under the grandfather provision, § 25-616, is the actual height of the house: 37.2 feet. Thus, the judge did not err in adding the cupola height to the 37.2 foot actual building height.
Affirmed in part. Reversed and remanded in part for further proceedings in accordance with this opinion. Jurisdiction is not retained.