On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket Nos. L-1915-03 and L-1916-03.
The opinion of the court was delivered by: Lyons, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Graves, Sabatino and Lyons.
Plaintiff, Robert J. Triffin, appeals from an order entered on July 1, 2008. The order was entered by Judge Donald S. Goldman and finds that Triffin by clear and convincing evidence committed a fraud on the court. The order goes on to award defendant, Automatic Data Processing, Inc. (ADP), counsel fees and costs in the amount of $44,000 and outlines various sanctions by way of an injunction against Triffin designed to discourage future fraud. The following factual and procedural history is relevant to our consideration of the issues advanced on appeal.
This case arises from our remand in Triffin v. Automatic Data Processing, Inc., 394 N.J. Super. 237 (App. Div. 2007) (Triffin I). We need not set out in detail all of the facts and procedural history surrounding this matter as it is adequately set forth in Triffin I. Suffice it to say that in Triffin I, Triffin had sued ADP on certain dishonored checks. ADP refused to pay on the items and countersued Triffin for fraud, claiming the assignments obtained from holders were fraudulent. Triffin contested the jury's verdict, finding Triffin liable for common law fraud, awarding ADP $132,600 in compensatory damages, and awarding $50,000 in punitive damages. In Triffin I, we determined that the jury's finding of common law fraud could not stand. Id. at 249. While Triffin had knowingly made a material misrepresentation to ADP, thereby causing ADP to sustain damages according to the jury's verdict, we were unable to find that ADP at any point actually relied on the documents at issue.
Though we vacated the jury's verdict on common law fraud, we did find that "[i]n this case, there has been a wrong in our view, a possible fraud on the court." Id. at 251. We explained that a fraud on the court occurs "where it can be demonstrated, clearly and convincingly, that a party has sentiently set in motion some unconscionable scheme calculated to interfere with the judicial system's ability impartially to adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party's claim or defense." Ibid. (quoting Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1118 (1st Cir. 1989); Perna v. Elec. Data Sys. Corp., 916 F. Supp. 388, 397 (D.N.J. 1995)). We further noted that unlike common law fraud on a party, fraud on a court does not require reliance. Ibid. We noted that "[s]eparate and distinct from court rules and statutes, courts possess an inherent power to sanction an individual for committing a fraud on the court." Ibid. Consequently, we remanded the matter to the trial court for further proceedings. We held that, "[f]ollowing a hearing, the trial court may impose sanctions on plaintiff on its own motion or on the application of defendant, or both." Id. at 253.
ADP filed a motion for sanctions with the trial court based on our remand order on December 6, 2007. In that motion, ADP requested all counsel fees associated with the litigation, including those spent on its failed counterclaims at trial. Judge Goldman conducted a proof hearing on February 1, 2008, to determine if Triffin had, in fact, committed a fraud on the court. At that hearing, ADP presented the testimony of three witnesses in order to establish its legal fees and costs associated with uncovering Triffin's fraud and with litigating the underlying trial, appeal, and the motion for sanctions.
Michael Boyle, a private investigator hired by ADP to investigate the circumstances surrounding Triffin's acquisitions of the checks, was the first to testify on ADP's behalf. Boyle had also testified for ADP during the 2004 trial, and Judge Goldman asked that that testimony be incorporated into the record by reference. According to Boyle, the costs associated with his investigation into the legitimacy of the checks and the assignments totaled "$8,407.17."
Joan Ibsen, Esq., in-house counsel for ADP and a witness at the 2004 trial, also testified at the hearing. She was responsible for "review[ing] the legal fees before they're submitted to [defendant's] accounts payable" department. She testified that she reviewed the invoices submitted by Day Pitney, LLP, ADP's counsel, in connection with the litigation and determined that the fees were reasonable.
After ADP's counsel completed his direct examination of Ibsen, Triffin moved to have her testimony stricken from the record because she could not testify that she personally knew "that all of the services that are referenced in these bills were actually performed." Ibsen then testified that she had reviewed the work product that had been billed to ADP, had been present during the 2004 trial, and therefore, had personal knowledge concerning the validity of many of the fees. The trial court denied Triffin's motion to strike Ibsen's testimony, and Triffin had no further questions for Ibsen on cross-examination.
Lastly, Carole Lynn Nowicki, Esq., an attorney at Day Pitney who witnessed events while second-chairing the underlying trial, testified about the legal services Day Pitney performed for ADP in the course of this litigation. She also described Triffin's method of fabricating particular assignment agreements.
Triffin testified in opposition to ADP's motion for sanctions. He stated that he believed the fact that he did not secure the check sellers' signatures on the assignment agreements was immaterial "so long as [he was] authorized to --to put that individual's signature on that document . . . ." Triffin argued that, "at the time these respective documents were filed with this court," he believed the check sellers had given such authorization for every assignment agreement he presented through "oral conversation as well as the course of conduct." Triffin contended that he could not be held liable for fraud on the court because he lacked the "scienter" to commit fraud. He argued that he simply did not discern that cutting and pasting the signatures of the check sellers onto the assignment agreements, without their knowledge or explicit consent, was wrong and that he had a "pure heart [and an] empty head."
At the close of testimony, Judge Goldman requested that ADP submit a modified set of invoices that only included legal services and costs from the inception of the litigation to the order granting summary judgment. The judge also "welcome[d] any additional briefs on any of the issues that were raised during this hearing here, that people feel that is pertinent to raise, as long as it's not duplicative of that which they've already said." The judge then set March 28, 2008, to resume the hearing.
On February 12, 2008, ADP submitted invoices for legal services dated February 2003 to October 2003, representing legal fees from when the action was initially filed up until the motion court entered the order for summary judgment on September 15, 2003. ADP also included an affidavit from Dennis Kearney, Esq., ADP's lead counsel and attorney of record throughout the entirety of the litigation. Kearney's affidavit stated that he "personally reviewed the attached invoices" and calculated the legal fees associated with the pre-summary judgment litigation to equal "$78,630.35."
Triffin filed an additional brief on February 29, 2008, in which he reiterated that ADP had not established by clear and convincing evidence that he had the scienter to commit fraud on the court. Triffin also argued that the pre-summary judgment invoices ADP had submitted to the court on February 12, 2008, along with Kearney's affidavit, were inadmissible because ADP did not submit its original retainer agreement and Kearney did not have personal knowledge of all the work referenced in the invoices. Triffin argued that if the judge chose to consider the invoices and supporting affidavit, he had a right to cross-examine Kearney.
The remand hearing resumed on March 28, 2008, and the parties gave their closing arguments. The trial judge then entered his oral decision in favor of ADP. Judge Goldman found that "[w]hat Mr. Triffin did in this case was terribly wrong, no matter how you slice it. Submitting to the [c]court as true and genuine documents, documents that have been forged, documents who's [sic] signature has been transposed by the . . . equivalent of photo shopping." The trial judge went on to find that:
[w]hen one makes a representation and presents a document to a [c]court, whether it be as -- as an attachment to a pleading and in this case those documents were part of the [c]court proceedings and submitted to the [c]court as legitimate and original or copies of original documents, and they're not.
That is a fraud . . . . . . .
The fact that there is no reliance and no damages doesn't mean that there wasn't a fraud on the court. There was. The Appellate Division found it.
The trial judge then determined that ADP was entitled to damages. However, the judge found that ADP should not be compensated for legal fees and costs associated with "the period of time following the dismissal of the original Special Civil [P]art complaint . . . . [and] for the expenses, costs, legal fees, investigation fees and other fees that they incurred in the prosecuting of their failed RICO complaint." Triffin then reiterated his objection to admitting the subject legal bills into evidence without having the opportunity to first cross-examine Kearney. The trial judge informed Triffin that he did not have a right to cross-examination; however, the judge would accept line-by-line objections to the bills within thirty days. Judge Goldman also requested that ADP submit invoices for the legal fees incurred in connection with the litigation after our remand.
The trial judge further held that "[m]aking [Triffin] pay [money] . . . is not enough." Judge Goldman stated that he intended on entering "an injunction against Mr. Triffin that will require him to include . . . a certification" attached to any document he files with a court "which will certify, under penalties of perjury, that Mr. Triffin has in his possession the original, signed version of that document [which he claims to have] . . . ."
On April 28, 2008, Triffin submitted a four-page document outlining his objections to ADP's pre-summary judgment legal fees and Kearney's affidavit. However, Triffin's objections were generalized and consisted of legal arguments as to why he was entitled to cross-examine Kearney. Triffin did not include any specific objection to any particular billing entry.
On June 4, 2008, Kearney submitted an affidavit and invoices detailing the legal fees associated with the subject litigation after our remand, as requested by the judge. Kearney stated that he "personally reviewed each time entry to ensure that the amount of time listed for each entry is reasonable and necessary for the type of work performed." Triffin submitted line-by-line objections to those invoices, arguing that (1) Kearney lacked personal knowledge of the work reflected in the bills; (2) the legal bills were hearsay and Triffin's due process rights would be violated if he was not permitted to cross-examine Kearney; and (3) the affidavit did not comply with the requirements of R.P.C. 1.5.
On July 14, 2008, Judge Goldman entered a written decision which incorporated his March 28, 2008 oral decision. The judge found that ADP could not establish common law fraud because it did not rely on Triffin's assignment agreements and further found that a "great majority" of its legal fees "were in pursuit of its own failed counterclaims both before and after Triffin's affirmative claims were dismissed." However, the judge found that "[t]here is no question . . . that Triffin committed a fraud on the court" and ADP's "efforts on remand helped prove, by clear and convincing evidence," that Triffin perpetrated that fraud. As such, the judge found that Triffin "well deserves sanctions" and ADP was entitled to some compensation for its legal fees.
Judge Goldman reviewed ADP's affidavit of services "covering only the time period after the remand," which totaled $61,024.50 plus $4,047.57 in costs. The judge found that those hours were reasonable and were often necessitated by Triffin's "dogged fight against the imposition of any sanctions." The judge noted that Triffin objected to the amount of the fees, but also found that he had failed to make any specific objection to any particular bill. However, in order to address ...