On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-177-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Fisher and Grall.
This appeal has its genesis in an agreement, which called for the sale of a pizzeria business and the realty upon which it was conducted by plaintiffs Susan and Dominic Fricano (sellers) to defendants Dominic and Giovanna Pugliese (buyers) for $350,000. The buyers retained defendant Pietro Dilisciandro (defendant), a mortgage broker, to assist in arranging financing for the transaction. By the time of closing, however, the buyers were unable to obtain financing and the transfer was completed by the buyers providing the sellers with an unsecured $218,000 promissory note. Soon thereafter, the buyers were unable to make the payments required by the note, causing a default in the note's terms and, eventually, buyers' filing of a bankruptcy petition.
The sellers commenced this action, which included a claim against defendant, the mortgage broker, alleging he was negligent and made negligent misrepresentations before and at the closing. At the conclusion of a non-jury trial that involved only the claims against defendant, the trial judge made findings in which she described how defendant's role in the settlement expanded. The judge found that defendant advised and convinced sellers that they did not require the services of an attorney and that, if the buyers ever defaulted, they would be able to "take back their business property and even reach [the buyers'] home, if necessary." Those representations were false because, in fact, the debt was unsecured and was discharged in bankruptcy.
Determining that defendant owed the sellers a duty of care, which was breached, the judge held that the sellers were damaged and entered judgment in their favor and against defendant in the amount of $2,646 in compensatory damages and $10,000 in counsel fees. Defendant's motion for reconsideration regarding the counsel fee award was denied, leading to this appeal, in which defendant argues:
I. [SELLERS] HAD NO RIGHT TO RELY ON DEFENDANT'S ALLEGED MISREPRESENTATIONS.
II. [SELLERS'] FAILURE TO OBTAIN LEGAL COUNSEL WAS THE PROXIMATE CAUSE OF THEIR OWN FINANCIAL INJURY.
III. [SELLERS] FAILED TO PROVE ANY DAMAGES AND THE DAMAGES AWARDED BY THE COURT ARE NOT JUSTIFIABLE.
IV. THE COURT BELOW ERRED IN AWARDING COUNSEL FEES TO [SELLERS].
We find insufficient merit in Points I, II and III to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We agree, however, with aspects of defendant's Point IV and reverse the award of counsel fees.
The so-called American rule regarding counsel fees, to which New Jersey adheres, requires that each party bear their own fees unless the shifting of that burden is expressly provided for by statute, court rule or contract. See Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 440 (2001). Here, the trial judge could not identify a legal basis for compelling defendant to bear fees incurred by sellers in prosecuting this case. Instead, in her oral decision denying reconsideration, the trial judge justified the fee award on the fact that "there was an implied breach of an agreement," and because defendant "was evasive in tone and manner . . . [and] contradicted himself" when testifying. These are not circumstances that permit the issuance of an award of counsel fees to a prevailing party.
As a result, we affirm that part of the judgment that awarded the sellers $2,646 in damages, and we reverse that part of the judgment that awarded the sellers $10,000 in counsel fees. The matter is remanded for the ...