On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-1095-11.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted August 13, 2012
Before Judges Ashrafi and Hayden.
Defendants appeal the April 15, 2011 order denying their application for counsel fees and costs pursuant to N.J.S.A. 2A:15-59.1 and Rule 1:4-8. For the reasons that follow, we affirm.
The record reflects the following facts. An ongoing bitter dispute between two factions concerned about the treatment of stray and lost companion animals in Jersey City led to contentious litigation. Plaintiffs New Jersey Animal Advocates and New Jersey Animal Rescue purported to be non-profit corporations with a purpose to provide humane and caring services to cats and dogs and individual plaintiffs were former volunteers with defendant Liberty Humane Society (LHS). LHS was a non-profit corporation dedicated to compassionate care of companion animals that had a contract to run the municipal animal shelter in Jersey City. The individual defendants were LHS's current or past board members and employees. A difference of opinion arose among these concerned parties regarding the municipal shelter's euthanasia policy, specifically, whether the shelter should have a strict "no kill" policy or a more liberal policy of euthanasia in order to prevent overcrowding. It appears that people on both sides of this issue were very passionate and vocal.
Sometime in 2010, LHS and some of its board members filed a suit against some of the plaintiffs,*fn1 for invasion of privacy, defamation, civil conspiracy, tortious interference, and intentional and negligent infliction of emotional distress. The defendants in that suit in turn filed counterclaims. While that suit was pending in the Law Division, plaintiffs filed a new complaint on November 23, 2010, in Chancery Division, for injunctive relief and damages on a number of legal theories. On January 17, 2011, plaintiffs filed an order to show cause seeking a temporary restraining order and appointment of a receiver. That same day, defendants' attorney sent a letter to plaintiffs' attorney, advising that the complaint was frivolous and that defendants would seek sanctions against plaintiffs if the complaint was not withdrawn. Judge Olivieri denied the request for temporary restraints two days later and set the matter down for a hearing on the injunctive relief issue in six weeks.
At the injunctive relief hearing, plaintiffs' attorney informed the judge that most of the injunctive relief requested was no longer necessary as it appeared that LHS's contract with Jersey City was due to expire in a few weeks and probably would not be renewed. Plaintiffs narrowed the requested emergent relief, asking only that a receiver be appointed for the interim period. After hearing argument, Judge Olivieri denied the request for injunctive relief. Initially, he observed that while the State Department of Health had jurisdiction to enforce laws and regulations concerning animal shelters, other interested persons such as plaintiffs could bring matters concerning the welfare of animals in shelters to court. However, the judge found that the plaintiffs' certifications, particularly those from two attorneys reciting what their clients reported, were not based upon firsthand knowledge and were "devoid of any specifics" necessary to obtain injunctive relief. After denying relief on the injunctive relief count, Judge Olivieri ordered the complaint to be transferred to the Law Division as the remaining counts sought only damages.
Defendants brought a motion for sanctions and attorneys fees under N.J.S.A. 2A:15-59.1 and Rule 1:4-8 against plaintiffs and their attorneys, Donald Larsen and Francis P. Crotty. Defendants argued that plaintiffs' complaint was frivolous as they were motivated by a plan to take over the animal shelter and did not have a sufficient legal basis for their complaint. Plaintiffs contend that they had acted in good faith and had relied on the State Department of Health inspection report, which described horrific conditions at the shelter, a letter from the shelter's former staff veterinarian, and firsthand reports from former volunteers and employees.
In declining to order sanctions, Judge Olivieri held that defendants had not presented any evidence to support their claims that plaintiffs brought the suit in bad faith with improper motives. Further, he noted that, while the evidence plaintiffs presented in support of their claims might have been hearsay, nothing in the record demonstrated that plaintiffs' evidence and claims were not credible. After concluding that defendants failed to meet their burden to prove the litigation was frivolous, the judge denied the motion. This appeal followed.*fn2
We review a judge's decision on an application for frivolous lawsuit sanctions under an abuse of discretion standard. United Hearts, L.L.C. v. Zahabian, 407 N.J. Super. 379, 390 (App. Div.), certif. denied, 200 N.J. 367 (2009). We will reverse a decision only when "the discretionary act was not premised upon consideration of all relevant factors, was based upon consideration of irrelevant or inappropriate factors, or amounts to a clear error in judgment." Masone v. Levine, 382 N.J. Super. 181, 193 (App. Div. 2005) (citing Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002)).
A claim is frivolous if it is filed or pursued "in bad faith, solely for the purpose of harassment, delay or malicious injury," N.J.S.A. 2A:15-59.1(b)(1), or if "[t]he non-prevailing party knew or should have known that the [claim or defense] was without reasonable basis in law or equity and could not be supported by a good faith argument for an extension, modification or reversal of existing law," N.J.S.A. 2A:15-59.1(b)(2). However, a claim that a party did not have a "reasonable basis in law or equity" when the party was represented by counsel cannot be sustained in the absence of a showing of bad faith. McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 549 (1993). The party seeking sanctions has the burden of proving that the non-prevailing party acted in bad faith. Ferolito v. Park Hill Ass'n, Inc., 408 N.J. Super. 401, 408 (App. Div. 2009) (citing McKeown-Brand, supra, 132 N.J. at 559).
Moreover, the frivolous litigation statute must be interpreted strictly. DeBrango v. Summit Bancorp, 328 N.J. Super. 219, 226 (App. Div. 2000). Sanctions should be awarded only in exceptional cases, not for every litigation infraction.
Iannone v. McHale, 245 N.J. Super. 17, 28 (App. Div. 1990). The mere fact that a party prevails in summary judgment does not support a finding that the non-prevailing party acted in bad faith. Ferolito, supra, 408 N.J. Super. at 408. "When the [non-prevailing party's] conduct bespeaks an honest attempt to press a perceived, though ill-founded and perhaps misguided, claim, he or she should not be found to have acted in ...