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Festa and Ingenito, LLC v. Open Mri and Imaging of Rochelle Park

December 23, 2010


On appeal from Superior Court of New Jersey, Law Division, Special Civil Part, Bergen County, Docket No. DC-018863-09.

Per curiam.


Submitted November 16, 2010 - Decided Before Judges Wefing and Payne.

Defendant, Open MRI and Imaging of Rochelle Park (Open MRI), appeals from a January 8, 2010 order denying, upon reconsideration, defendant's motion for imposition of sanctions against the law firm of plaintiff, Festa and Ingenito, LLC, pursuant to the frivolous litigation provisions of Rule 1:4-8(b). We reverse.


The history of this matter is significant to our resolution of this appeal. The record reflects that Open MRI retained Charles Ingenito, a partner in the plaintiff law firm, to pursue through arbitration assignments of claims for reimbursement of medical diagnostic fees incurred by Open MRI's patients from the patients' automobile insurance carriers in accordance with the personal injury protection (PIP) coverage afforded by their auto insurance policies. However, no retainer agreement between Open MRI and Ingenito or his firm was signed, and no agreement was reached regarding the reimbursement of costs incurred in connection with the arbitrations.

Among the matters referred to Ingenito by Open MRI was a claim for benefits from State Farm Insurance Company (State Farm) resulting from services provided to a patient named Edib Djakovac. An arbitration was instituted against State Farm, and a filing fee of $250 was paid by Ingenito's firm in connection with that arbitration. Thereafter, under circumstances that are not explained in the record, the claim was paid in full by a different carrier, Electric Insurance Company (Electric).

While the arbitration action remained pending, Ingenito's firm filed suit, under its name and the name of Open MRI, against State Farm and Electric in the Special Civil Part of the Law Division, ostensibly to recover the filing fees incurred in instituting the arbitration. Electric sought summary judgment in that action, and State Farm moved for an order vacating a default judgment entered against it. Ingenito, likewise, sought summary judgment.

The motions were argued on January 23, 2009, at which time it became apparent to the judge that the arbitration remained pending, and that an arbitration hearing was scheduled before the National Arbitration Forum on April 28, 2009. As a consequence, in an order dated February 13, 2009, the judge dismissed the Superior Court action, finding jurisdiction to have been improperly assumed. Additionally the judge awarded attorney's fees to the two defendant insurers, granting Electric fees of $2163 and costs of $146.25 and granting State Farm fees of $1468.50 and no costs. After each award, the judge hand wrote on the order the following: "Client is not to pay for attorney's fees." A motion by Ingenito's firm for reconsideration of the attorney's fee award was denied by order dated March 5, 2009.

According to the certification of Stephen Conte, the Administrator of Open MRI and the person responsible for retaining attorneys to file PIP arbitrations, on two occasions during March 2009, Ingenito appeared at Conte's office and advised him that a Superior Court judge had ordered Open MRI to pay counsel fees to the defendant insurers incurred in an action against them. However, Ingenito did not produce the order imposing those sanctions, despite Conte's requests. Conte refused payment, indicating that he had not authorized the institution of a Superior Court action.

By letter dated March 25, 2009, one day after Ingenito's second visit, Ingenito wrote to Conte to advise him of his right to an appeal from the Superior Court's order and to inform him that the sanctions were awarded for "pursuing billing and arbitration proceedings against the incorrect insurance company and never appropriately billing Electric Insurance Company." Although Conte denies authorizing such an appeal, one was filed by Ingenito's firm in the name of Festa and Ingenito LLC and Open MRI.

Following the March incidents, Conte directed Open MRI's general counsel, Joseph Ariyan, to investigate the matter. On April 6, 2009, Ariyan advised Conte of the true contents of the Superior Court's sanctions order.

On April 9, 2009, a motion was filed by Electric to dismiss the appeal. The motion was granted on May 8, 2009. The order of dismissal stated:

The motion and allegations therein are uncontested. See also the trial judge's letter of April 8, 2009. The appeal is dismissed as neither the complaint nor appeal were authorized by plaintiff, and in any event, based on the failure of appellant to order the transcript of January 23, 2009. An application for counsel ...

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