JOHN J. LEWANDOWSKI and JUDITH M. LEWANDOWSKI, H/W; LAURENCE P. QUINLAN, and MAUREEN P. QUINLAN, H/W; EDWARD ZAWISZA; and RAYMOND ZAWISZA, Plaintiffs-Appellants,
HI-TECH HOMES, INC.; TERRENCE MOELLER; and CATHERINE MOELLER, Defendants, and FREEDOM TITLE & ABSTRACT, INC. and CATHLEEN MACKIE, Defendants-Respondents.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 17, 2012
On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-3474-09.
Harry J. Levin argued the cause for appellants (Levin Cyphers, attorneys; Mr. Levin and Jarrod M. Miller, on the brief).
Iram P. Valentin argued the cause for respondents (Kaufman, Dolowich, Voluck & Gonzo, L.L.P., attorneys; Mr. Valentin, of counsel and on the brief; Edward Patrick Abbott, on the brief).
Before Judges Axelrad and Sapp-Peterson.
Plaintiffs appeal the trial court order voluntarily dismissing their complaint without prejudice, pursuant to Rule 4:37-1(b), and the award of $24, 418.20 in counsel fees in connection with the action. The court justified the award with its reliance upon Mack Auto Imports, Inc. v. Jaguar Cars, Inc., 224 N.J.Super. 254 (App. Div. 1990), where this court held a court may impose counsel fees as a condition of a voluntary dismissal. We affirm the award of counsel fees but vacate the amount of the award because plaintiffs were not given a meaningful opportunity to challenge the amount and reasonableness of the counsel fees sought, and the court failed to articulate the reasons for the amount of the award.
Plaintiffs, Raymond Zawisza and Edward Zawisza, Laurence Quinlan and Maureen Quinlan, and John Lewandowski and Judith Lewandowski, are homeowners who purchased their homes, located in Little Egg Harbor, from Hi-Tech Homes, Inc. (Hi-Tech), a home building company owned and operated by Terrence Moeller (Moeller). Plaintiffs purchased their homes at different times between 1996 and 2000. Although plaintiffs received deeds to their respective properties and purchased title insurance from defendant, clear title was never conveyed.
In May 2004, Freedom Title & Abstract, Inc. (Freedom Title) conducted a refinance closing between Hi-Tech and TEB Associates (TEB) using the Zawiszas', Quinlans' and Lewandowskis' properties to secure a $900, 000 loan. Freedom Title performed a title search and, on the closing date, issued a title commitment to TEB without disclosing plaintiffs' ownership interests in these properties.
Moeller defaulted on the loan, causing TEB to foreclose on Hi-Tech's mortgage in 2007. On September 21, 2009, plaintiffs filed a complaint against Hi-Tech, Moeller, Catherine Moeller, Freedom Title and its owner, Cathleen Mackie (Mackie),  alleging fraud and related counts. All parties, except Hi-Tech, filed an answer, and default was entered against the company. Moeller answered the complaint and, in his answer, asserted "[n]one of the allegations apply due to filing personal bankruptcy[.]"
Defendants served requests for admissions and initial interrogatories upon plaintiffs. Plaintiffs responded to the requests for admissions and subsequently responded to the initial interrogatories propounded. Plaintiffs also served the first set of interrogatories upon defendants, to which defendants responded in April 2010. In May 2010, defendants responded to plaintiffs' request to produce documents.
By letter dated March 24, 2010, defendants served notices to take the depositions of plaintiffs on April 7, 8 and 9, 2010. Plaintiffs' counsel advised, by letter dated March 26, that co-counsel was unavailable on the requested dates and proposed five alternative dates. Of the dates offered, defendants agreed to April 29, May 10 and May 12. Approximately two weeks later, plaintiffs' counsel indicated she would be unavailable on April 29, May 10 and May 12, and the depositions were again rescheduled for May 12, June 2, and June 3. By letter dated May 10, 2010, plaintiffs' counsel advised that "we are adjourning all the depositions until a time following our application to the Bankruptcy Court to reopen Mr. Moeller's case to file a [c]omplaint for [n]on-[d]ischargeability."
Defendants subsequently advised plaintiffs' counsel that they "[could] not agree to an indefinite and informal stay of discovery" and sought to reschedule discovery for that summer. Plaintiffs' counsel did not respond, resulting in defendants filing a motion to compel discovery. On September 10, 2010, the court entered an order directing plaintiffs to appear for depositions in October and to produce any expert reports by October 1, 2010.
Defendants thereafter served deposition notices scheduling plaintiffs for dates on October 7, 13 and 14, 2010. By letter dated October 6, plaintiffs again cancelled the depositions and "advised that the Moeller bankruptcy matter is in the process of being reopened." On the same date, plaintiffs filed a motion with the bankruptcy court to reopen Moeller's bankruptcy case.
Defendants filed a motion to dismiss or alternatively for summary judgment on October 14, 2010. Plaintiffs filed a motion to extend discovery on November 2, and filed a brief in opposition to defendants' motion to dismiss and in support of their motion to extend discovery on November 23. Defendants filed a reply brief on November 29.
The trial court heard oral arguments on both motions on December 3, 2010. The court delayed its decision on the motion to dismiss until January 21, 2011, but entered an order extending discovery until March 8, 2011. The order provided that depositions of the parties and the witnesses were to be completed by January 15, 2011, and an expert report was to be provided by plaintiffs by February 1, 2011.
Defendants once again served deposition notices on plaintiffs scheduling depositions for January 4, 6, and 11, 2011. Plaintiffs' counsel cancelled the depositions, stating "the depositions in this matter, scheduled for January 4, January 6 and January 11, 2011, will not be moving forward[, ]" offering as an explanation for the cancellation that the bankruptcy court had granted plaintiffs' motion to reopen the bankruptcy proceedings. The next day, plaintiffs filed a complaint for non-dischargeability of debt, asserting the same claims against defendants and Moeller as had been asserted against them in the Law Division.
On January 19, 2011, plaintiffs notified the Law Division of the reopened bankruptcy proceedings, stating that "in light of the U.S. Bankruptcy Court action, the Law Division matter should be dismissed by [the] [c]ourt, thus allowing the Bankruptcy action to continue as the sole legal action." Defendants responded on January 20, 2011, assuring the Law Division that it had jurisdiction but urging that "to the extent the [c]ourt would grant . . . [p]laintiffs' request for a voluntary dismissal, . . . it is respectfully requested that the [c]ourt award . . . [d]efendants their reasonable counsel fees expended in this matter to date as these efforts would need to be duplicated in federal court."
The parties appeared before the court for oral argument seeking voluntary dismissal of their complaint without prejudice. The court advised plaintiffs that if they wanted a voluntary dismissal, "they will have to pay defendants' counsel fees. If not, I'll proceed with counsel's motion for [s]ummary [j]udgment." At the request of plaintiffs' counsel, the trial court directed defendants to provide a ...