Source: https://njlitigationblog.com/winning-attorneys-fees-filing-frivolous-lawsuits/
Timestamp: 2019-04-26 04:24:04+00:00

Document:
While the Courts of the State of New Jersey have been hesitant to impose sanctions upon parties and counsel for frivolous lawsuits, in any but the most extreme of circumstances, in the appropriate circumstance, sanctions can be obtained, so long as strict compliance with the Rules of Court can be established. N.J.S.A. 2A:15-59.1 governs sanctions against a party, and Rule 1:4-8 governs sanctions against an attorney. Sanctions consist of reasonable attorneys’ fees and costs.
There has been a significant amount of case law interpreting N.J.S.A. 2A:15-59.1 and Rule 1:4-8. The Courts of New Jersey have been cautioned to interpret the statute and rule restrictively “to ensure that our citizens are not dissuaded from accessing the courts.” McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 561-562 (1993). Conversely, however, Courts must also deter baseless litigation, without discouraging honest, creative advocacy. Ellison v. Evergreen Cemetery, 266 N.J. Super. 74, 85 (App. Div. 1993). Very significantly, in doing so, the case record is to be reviewed to determine whether a party’s actions were objectively reasonable under the circumstances.
In Toll Brothers, Inc. v. Township of Windsor et al., 190 N.J. 61, 67 (2007), our New Jersey Supreme Court recognized that the statute “serves a dual purpose. On the one hand, the statute serves a punitive purpose, seeking to deter frivolous litigation. On the other hand, the statute serves a compensatory purpose, seeking to reimburse the party that has been victimized by the party bringing the frivolous litigation.” “While it is clear that Rule 1:4-8 has a punitive purpose in seeking to deter frivolous litigation, it also seeks to compensate a party that has been victimized by another party bringing frivolous litigation.” Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510 (App. Div. 2009).
Rule 1:4-8 was “designed to ensure that attorneys do not initiate or pursue litigation that is frivolous.” LoBiondo v. Schwartz, 199 N.J. 62, 98 (2009). The explicit language of the rule specifically obliges an attorney to certify that their client’s position has merit, or will be withdrawn based upon investigation and discovery. There is a time limitation to the recovery of sanctions, which is the point in the litigation at which it becomes clear that the action is frivolous.
“A claim will be deemed frivolous or groundless when no rational argument can be advanced in its support, when it is not supported by any credible evidence, when a reasonable person could not have expected its success, or when it is completely untenable.” Belfer v. Merling, 322 N.J. Super. 124, 144 (App. Div. 1999), citing Fagas v. Scott, 251 N.J. Super. 169, 189 (Law Div. 1991).
“The sanction consists of reasonable counsel fees and litigation costs.” Ferolito v. Park Hill Assoc., Inc., 408 N.J. Super. 401, 407 (App. Div. 2009).
To pursue a claim for sanctions under either the Rule or the Statute, a prerequisite is to send a very specific and detailed letter to an opposing counsel explaining how and why the action is frivolous under the Rules. See R. 1:4-8(b)(1).
The adversary then has 28 days to respond. See R. 1:4-8(b)(1).
If they do not, the motion for sanctions must be filed within twenty days after final judgment is entered. See R. 1:4-8(b)(2).
Given all of the foregoing, if each and every one of the requirements of the statute and/or rule are strictly satisfied, then it is possible to secure the entry of an award of significant sanctions. However, in pursuing sanctions, a party must be aware that opposing counsel and the Court will seize upon even the slightest failure to comply in order to deny or significantly minimize an award of sanctions. In the appropriate case though, one should not be dissuaded from filing a motion for sanctions because of the state court judiciary’s reluctance to award fees.
N.J.S.A. 2A:15-59.1 as to Sanctions Against A Party.
Rule 1:4-8 as to Sanctions Against Counsel.
(4) the denials of factual allegations are warranted on the evidence or, as to specifically identified denials, they are reasonably based on a lack of information or belief or they will be withdrawn or corrected if a reasonable opportunity for further investigation or discovery indicates insufficient evidentiary support.
(1) Contents of Motion, Certification. An application for sanctions under this rule shall be by motion made separately from other applications and shall describe the specific conduct alleged to have violated this rule. No such motion shall be filed unless it includes a certification that the applicant served written notice and demand pursuant to R. 1:5-2 to the attorney or pro se party who signed or filed the paper objected to. The certification shall have annexed a copy of that notice and demand, which shall (i) state that the paper is believed to violate the provisions of this rule, (ii) set forth the basis for that belief with specificity, (iii) include a demand that the paper be withdrawn, and (iv) give notice, except as otherwise provided herein, that an application for sanctions will be made within a reasonable time thereafter if the offending paper is not withdrawn within 28 days of service of the written demand. If, however, the subject of the application for sanctions is a motion whose return date precedes the expiration of the 28-day period, the demand shall give the movant the option of either consenting to an adjournment of the return date or waiving the balance of the 28-day period then remaining. A movant who does not request an adjournment of the return date as provided herein shall be deemed to have elected the waiver. The certification shall also certify that the paper objected to has not been withdrawn or corrected within the appropriate time period provided herein following service of the written notice and demand.
(2) Time for Filing; Attorney’s Fees. A motion for sanctions shall be filed with the court no later than 20 days following the entry of final judgment.
(3) Scope of Responsibility. Except in extraordinary circumstances, a law firm shall be jointly responsible for violations committed by its partners, shareholders, associates and employees.
(d) Order for Sanctions. A sanction imposed for violation of paragraph (a) of this rule shall be limited to a sum sufficient to deter repetition of such conduct. The sanction may consist of (1) an order to pay a penalty into court, or (2) an order directing payment to the movant of some or all of the reasonable attorneys’ fees and other expenses incurred as a direct result of the violation, or both.
Among the factors to be considered by the court in imposing a sanction under (2) is the timeliness of the movant’s filing of the motion therefor. In the order imposing sanctions, the court shall describe the conduct determined to be a violation of this rule and explain the basis for the sanction imposed.
(f) Applicability to Parties. To the extent practicable, the procedures prescribed by this rule shall apply to the assertion of costs and fees against a party other than a pro se party pursuant to N.J.S.A. 2A:15-59.1 (emphasis added).

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