On appeal from Superior Court of New Jersey, Law Division, Camden County, No. L-5008-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Wefing and LeWinn.
Melissa Hoffman, Esq., an attorney admitted to the practice of law in the State of New Jersey, appeals from a trial court order entered May 8, 2009, directing her to pay defendants $6,500 as a sanction for filing a frivolous pleading. After reviewing the record in light of the contentions advanced on appeal, we have concluded we are constrained to reverse.
This appeal had its genesis in litigation filed in Pennsylvania by defendant 76 Carriage Company, Inc. ("76") against plaintiff Torgro Limousine Service, Inc. ("Torgro") for breach of contract. In May 2007, 76 obtained a default judgment in Pennsylvania against Torgro for $51,277.30. 76 later had that judgment docketed in New Jersey.
Torgro, through counsel, attempted to reopen the default judgment in Pennsylvania, but those efforts were unsuccessful. Torgro then, through the same counsel, filed suit in New Jersey in December 2007 against 76 for breach of that same contract, and 76 moved to dismiss on the basis of res judicata. Torgro then retained Ms. Hoffman, who submitted a certification opposing the motion to dismiss. She outlined the procedural missteps taken by her predecessor and requested that Torgro have the opportunity to litigate its contract dispute with 76. Her certification was unavailing and Torgro's complaint was dismissed on September 12, 2008.
On October 2, 2008, Torgro, through Ms. Hoffman, filed another complaint against 76. This complaint contained seven counts; it again alleged breach of the same contract, as well as breach of the covenant of good faith and fair dealing, and consumer fraud. It also named two individual defendants. Torgro also filed an order to show cause, seeking to restrain 76 from enforcing a discovery order it had obtained in conjunction with its efforts to execute upon the judgment it had obtained against Torgro.
76 responded by filing a "Notice & Demand Pursuant to R. 1:4-8." It asserted that the October complaint was filed in disregard of the Pennyslvania judgment and the order entered several weeks earlier dismissing Torgro's complaint. It also asserted that various allegations contained within the most recent complaint were false and known by Torgro to be false. It demanded that the complaint and application for restraints be withdrawn and stated that if they were not withdrawn within twenty-eight days, sanctions would be sought.
Ms. Hoffman responded to this notification by advising the attorney for 76 that Torgro had just filed a petition with the Bankruptcy Court and that until a trustee was appointed, it could not withdraw the pending litigation. She also outlined her legal theories as to why this litigation could not properly be deemed frivolous.
76, in turn, filed a motion to dismiss. The trial court, after considering Torgro's opposition, granted the motion in December 2008. 76 followed up by filing a motion for sanctions pursuant to Rule 1:4-8; in its moving papers, it requested a sanction of $5,000. Ms. Hoffman opposed the motion, noting that she had advised 76's attorney of the bankruptcy filing, which precluded the complaint being withdrawn without court approval. She also noted that the October order dismissing Torgro's complaint did not state that it had been dismissed with prejudice, thus leading her to conclude that she could refile. She also contended that 76 had not strictly complied with the time limits of Rule 1:4-8. She also stressed her own financial limitations, which precluded her from satisfying such a sanction order.
After hearing oral argument, the trial court granted the motion and ordered the attorney for 76 to submit a certification of services. A further hearing was held after the attorney for 76 submitted a certification of services which indicated that he had billed his client more than $8,000 for his services in this matter. Following that hearing, the trial court settled on $6,500 as the amount to be awarded, and this appeal followed.
Rule 1:4-8 provides in pertinent part that an attorney who signs or files a pleading "certifies that to the best of his or her knowledge . . . [it] is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation . . . [and] the factual allegations have evidentiary support . . . ." Subsection (d) of the rule limits the award of sanctions "to a sum sufficient to deter repetition of such conduct."
Case law has amplified the rule. An award of sanctions under the rule is dependent upon a finding that the attorney filed the offending pleading in bad faith. Port-O-San Corp. v. Teamsters, Local Union No. 863 Welfare & Pension Funds, 363 N.J. Super. 431, 437 (App. Div. 2003) (noting that "[w]e have construed . . . that rule to authorize sanctions in instances in which the rule has been violated in bad faith.") Further, we have explained that the concept of bad faith in relation to an application for sanctions under Rule 1:4-8 means "that the harm was inflicted intentionally and without justification or excuse." Id. at 438 (quoting Printing Mart-Morristown v. Sharp Elecs., 116 N.J. 739, 751 (1989). In addition, we have stressed the necessity of a trial court making ...