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Luis Perez v. Zagami

July 12, 2012


On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-1248-10.

Per curiam.


Argued March 6, 2012

Before Judges Carchman, Baxter and Maven.

This appeal, in this self-characterized "SLAPP*fn1 -back" action, requires us to review the propriety of an order of the Law Division (1) granting defendant Zagami, LLC's motion to dismiss plaintiff Luis Perez's complaint alleging malicious use of process for failure to state a cause of action, R. 4:6-2(e); and (2) denying plaintiff's motion to amend his complaint to add parties, additional facts, and a second count alleging violation of the New Jersey Civil Rights Act (CRA), N.J.S.A. 10:6-1 to -2. Plaintiff appeals. We reverse as to both issues and remand for further proceedings.


The current dispute between Perez and Zagami represents a continuum of litigation between these parties, including an action wherein Zagami sued Perez for defamation and other related allegations. In a reported decision, which sets forth the genesis of the present dispute, we briefly described the relationship between these parties. See Zagami, LLC v. Cottrell, 403 N.J. Super. 98 (App. Div. 2008), certif. denied, 198 N.J. 309 (2009).

In 2006, Zagami, the owner of a restaurant, bar and grill, and night club in Glassboro, applied for renewal of its liquor license. Id. at 101-02. Perez wrote to Glassboro's Borough Council opposing that renewal. Id. at 102.*fn2 As a result, the Borough Council scheduled a hearing, provided Perez and Zagami written notice of the hearing, and invited both to testify and submit evidence with respect to the renewal application. Ibid. Both Perez and Zagami participated in the hearing, which was presided over by the mayor and was recorded. Ibid. Perez presented his arguments as to why Zagami's liquor license should not be renewed, including concerns that Zagami had violated municipal fire codes, alcohol beverage control (ABC) regulations, and criminal laws. Ibid. Zagami, who was represented by counsel, disputed these allegations. Ibid. Afterward, the Borough Council authorized renewal of Zagami's liquor license. Ibid.

One year later, Zagami filed a defamation complaint against Perez based upon the statements made by Perez in connection with his opposition of the license renewal and the ensuing hearing. Id. at 103. Perez, who has characterized Zagami's litigation as a SLAPP suit, moved to dismiss, arguing that his statements were entitled to absolute immunity as made in the course of a quasi-judicial proceeding. Ibid. The trial judge denied the motion as premature. Ibid. Following our denial of Perez's motion for leave for interlocutory appeal, the Supreme Court reversed and summarily remanded the issue to us for consideration on the merits. Ibid.

Ultimately, we held that the litigation privilege applied to Perez's statements. Id. at 112. We noted that past New Jersey courts had expanded the privilege "beyond strictly judicial proceedings to encompass so-called 'quasi-judicial' proceedings[,]" id. at 105 (quoting Hawkins v. Harris, 141 N.J. 207, 216 (1995)), so long as those proceedings had "attendant safeguards similar to those in strictly judicial proceedings" such as "notice and hearing; neutral oversight; availability of review on appeal; and presence of 'retarding influences[,]'" ibid. (quoting Rainier's Dairies v. Raritan Valley Farms, Inc., 19 N.J. 552, 562 (1955)).

We also recognized that "[t]he absence of any one or more of the conventional safeguards . . . is not fatal to the application of the absolute privilege." Id. at 106. For example, "the privilege [is not] limited necessarily to statements made under oath." Id. at 107 (citing as examples Hawkins, supra, 141 N.J. 207; Pollinger v. Loigman, 256 N.J. Super. 257 (App. Div. 1992); and DeSantis v. Employees Passaic Cnty. Welfare Ass'n, 237 N.J. Super. 550 (App. Div.), certif. denied, 122 N.J. 164 (1990)). In DeSantis, we emphasized that as long as the allegedly defamatory matter would not have been published except to inform the legislative body, and the material is relevant to the legislative proceeding, the privilege attaches regardless of whether the material is solicited or subpoenaed and regardless of whether it is given under oath. [DeSantis, supra, 237 N.J. Super. at 554.]

After noting this State's "strong public policy . . . '[t]o strictly regulate alcoholic beverages to protect the health, safety and welfare of the people of this State[,]'" Zagami, supra, 403 N.J. Super. at 109 (citing N.J.S.A. 33:1-3.1(b)(1)); the "comprehensive[] . . . procedures and standards for the renewal of municipal ABC licenses[,]" ibid. (citing N.J.A.C. 13:2-2.6 to -2.11 and N.J.A.C. 13:2-17.1); and the fact that Perez's allegedly defamatory statements "all dealt with the manner in which plaintiff operates its licensed liquor establishment and business," id. at 111; we held that "extension [of the litigation privilege] in the present situation w[ould] help promote the development and exchange of information and foster proper resolution of the licensure issue[,]" id. at 112. As a result, we ordered that Zagami's complaint be dismissed with prejudice. Ibid.

On July 26, 2010, Perez filed a complaint against Zagami for malicious use of process. This complaint, which is the subject of this appeal, alleged that Zagami's defamation complaint lacked probable cause, was actuated by malice, was resolved in Perez's favor, caused Perez to incur substantial attorney's fees, and discouraged Perez from participating in future public proceedings.

Zagami moved to dismiss this complaint pursuant to Rule 4:6-2(e), arguing that Zagami's defamation allegations were made with probable cause, were not actuated by malice, and were absolutely privileged based on advice of counsel. Perez opposed the motion, and cross-moved to amend the complaint naming Zagami's attorney in the defamation suit as a defendant, stating additional facts, and adding a second count alleging violation of the CRA.

The Law Division granted Zagami's motion to dismiss and denied Perez's cross-motion to amend the complaint. In so doing, the court concluded, as a matter of law, that Zagami "had probable cause" for filing its defamation complaint. In particular, the court reviewed "the leading reported [absolute immunity] cases before June 27, 2007" and found that "the applicable law in this area was [neither] clear [nor] well-settled at the time Zagami filed its lawsuit." The judge focused on the analysis in Rainier's Dairies, supra, 19 N.J. 552, and Hawkins, supra, 141 N.J. 207. He opined that it was "far from clear that the alleged defamatory statements of Mr. Perez would be entitled to . . . absolute immunity" because "[t]he subject liquor license renewal ...

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