Court Opinion

ID: 4533777
Source: CourtListenerOpinion
Date Created: 2020-05-13 14:07:45.343458+00
Date Added: 2024-06-11T12:38:56.774077
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-2781-18T2

VALERIE KONEFAL,
ANTHONY J. D'ARTIGLIO,
ESQ., and ANSELL GRIMM
& AARON, P.C.,

          Plaintiffs-Appellants,

v.

HOWARD LANDAU,

          Defendant-Respondent,

and

EILEEN LANDAU a/k/a
MARIE LANDAU, an
Incapacitated Person, and
EILEEN LANDAU BY HER
COURT APPOINTED GUARDIAN,
DENISE BLIND,

     Defendants.
________________________________

                    Argued telephonically February 4, 2020 -
                    Decided May 13, 2020

                    Before Judges Rothstadt and Moynihan.
            On appeal from the Superior Court of New Jersey, Law
            Division, Bergen County, Docket No. L-0407-17.

            Anthony Joseph D'Artiglio argued the cause for
            appellants (Ansell Grimm & Aaron, PC, attorneys;
            Joshua S. Bauchner and Anthony Joseph D'Artiglio, on
            the briefs).

            Ronald P. Groseibl argued the cause for respondent.

PER CURIAM

      Plaintiff Valerie Konefal and her attorney appeal from the Law Division's

order, awarding $39,391.60 in frivolous litigation attorney's fees under Rule 1:4-

8 and N.J.S.A. 2A:15-59.1 to defendant Howard Landau. 1 The parties, who are

related by marriage, engaged in a dispute over Howard's alleged management of

funds left to plaintiff and her sister, Howard's wife, defendant Eileen Landau. 2

After a bench trial, the trial judge dismissed plaintiff's complaint and later

awarded the fees, because plaintiff provided insufficient evidence to support her

contentions at trial.   We vacate the award and remand for reconsideration

1
  In the body of the order, it stated that the $39,391.60 in fees was awarded
under Rule 1:4-8 and N.J.S.A. 2A:15-59.1. However, in additional language
appended to the order it stated that the award was being made under Rule 1:4-8.
2
  We shall refer to the Landau defendants by their first names for clarity and to
avoid any confusion created by their common surnames.
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because the trial judge did not provide a complete analysis of the motion seeking

fees under the Rule and statute.

      Plaintiff and Eileen, who is known as "Marie," are the daughters of the

late Marjorie E. Morrison, who died in 1995. After her death, plaintiff raised

questions about her share of her mother's money.              It was plaintiff's

understanding that Howard was managing the money initially for her mother and

later on behalf of plaintiff and Marie. When plaintiff demanded her share,

Howard denied ever managing any of the funds and asserted that he did not hold

any money on behalf of plaintiff. According to Howard, he was not even sure

his mother-in-law, who had been living in a nursing home, had any money when

she died.

      On January 13, 2017, plaintiff filed a complaint against Howard alleging

breach of fiduciary duty, fraud, conversion, and unjust enrichment. On February

3, 2017, Howard's counsel sent plaintiff's attorney a notice and demand to

withdraw the complaint only under Rule 1:4-8. When he did not comply,

Howard filed responsive pleadings and later plaintiff amended her complaint,

naming Marie as a defendant, and alleging constructive trust, disgorgement, and

accounting. After Howard and Marie filed responsive pleadings, on December

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11, 2018, in a separate proceeding, another judge declared Marie incapacitated

and appointed a guardian for her.

      After the close of discovery, neither party moved for summary judgment.

The trial judge conducted a bench trial on November 28 and 29, 2018. The next

day, the judge entered an order dismissing plaintiff's complaint with prejudice

and issued a written decision setting forth credibility findings, findings of fact,

and reasons for dismissing plaintiff's complaint.

      In her comprehensive, twenty-two page decision, the trial judge found

Howard more credible than plaintiff, and rejected plaintiff's contentions about

Howard managing or investing his late mother-in-law's money, having access to

any such funds or that plaintiff was owed any money from him.3 The judge

specifically found that, contrary to plaintiff's contentions, there was no proof

that plaintiff's mother made an inter vivos gift to Marie. Rather, she found that

Marie was handling her mother's funds under a power of attorney, which expired

upon death and that the mother's will reflected her intent to leave her estate to

both her daughters. Since plaintiff offered no evidence of how much money was

left at the time of her mother's death, other than her own testimony about

3
   In reaching her decision, the trial judge applied the "clear and convincing
standard" to plaintiff's proofs about her conversations with the incapacitated
Marie, who did not testify at trial.
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                                        4
conversations with Marie, and the evidence demonstrated that she never asserted

a claim for an accounting until 2012 at the earliest, the judge did not find her

testimony credible "on a preponderance of the evidence standard, let alone a

clear and convincing standard."

      On December 20, 2018, Howard filed a motion for legal fees under Rule

1:4-8 and N.J.S.A. 2A:15-59.1.4 In support of his motion, Howard's attorney

filed a certification of services under Rule 4:42-9(b). Plaintiff filed opposition.

On January 25, 2019, the trial judge entered the order granting Howard's motion.

      The trial judge entered the order awarding counsel fees to Howard under

Rule 1:4-8 and N.J.S.A. 2A:15-59.1. In supplemental language added to the

order, the judge stated she was awarding the fees only under the Rule. She also

stated that she found Howard's attorney's fees were reasonable given his

experience and geographical location.       The judge concluded that plaintiff's

claims against Howard were frivolous given that plaintiff failed to prove her

mother had any money at the time of her death, plaintiff took no action to pursue

4
  Although Howard requested oral argument as part of this motion, it does not
appear from the record that oral argument was ever heard, as we have not been
provided with a transcript. According to plaintiff, the trial judge "refused to
grant oral argument." Contributing to the confusion, the trial judge's January
25, 2019 order awarded fees after "having heard and considered the arguments
of counsel."
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                                        5
her claim for approximately seventeen years, and never hired an expert to prove

the value of her mother's investments, if any. The trial judge stated that plaintiff

failed to produce "anything other [than] bare allegations." This appeal followed.

      On appeal, plaintiff and her attorney contend:          that the trial judge

"abdicated [her] role as an impartial fact finder"; plaintiff's action was not

frivolous; fees were improperly awarded because Howard could not have

prevailed on summary judgment; the judge "improperly shifted the burden to

[plaintiff and her attorney] to prove the complaint was not frivolous"; Howard's

"Rule 1:4-8 notice [was] insufficient"; and the fees awarded were excessive.

      We review for an abuse of discretion a trial judge's decision to sanction a

party under N.J.S.A. 2A:15-59.1 or an attorney under Rule 1:4-8 for filing and

pursuing frivolous claims.     "An abuse of discretion is demonstrated if 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 of judgment." In re Estate of Ehrlich, 427 N.J. Super. 64, 76

(App. Div. 2012) (quoting United Hearts, L.L.C. v. Zahabian, 407 N.J. Super.
379, 390 (App. Div. 2009)). We review a trial judge's legal conclusions de novo.

Occhifinto v. Olivo Constr. Co., 221 N.J. 443, 453 (2015).

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      We conclude from our review of the record and the applicable principles

of law that the trial judge did not conduct the required analysis of Howard's

claim for fees and did not adequately set forth her reasons for granting the

motion. Specifically, the judge only relied upon her finding that Howard was

more credible than plaintiff, who for that reason, could not prove her claim. This

was not a sufficient basis to award fees. Also, the judge did not provide any

analysis of the separate claims against plaintiff and her attorney.

      A party may recover legal fees if permitted by, among other authorities, a

statute or court rule. See R. 4:42-9; Litton Indus., Inc. v. IMO Indus., Inc., 200
N.J. 372, 385 (2009). N.J.S.A. 2A:15-59.1 and Rule 1:4-8 permit a judge to

award attorney's fees as sanctions against a litigant or an attorney for pursuing

a frivolous complaint. Rule 1:4-8 applies only to attorneys or self-represented

parties, and N.J.S.A. 2A:15-59.1 applies to represented parties. See Toll Bros.

v. Township of W. Windsor, 190 N.J. 61, 67-69 (2007); see also Trocki Plastic

Surgery Ctr. v. Bartkowski, 344 N.J. Super. 399, 404-05 (App. Div. 2001).

      Both the Rule and the statute require that the prevailing party seeking the

sanction prove that the non-prevailing party acted in bad faith, McKeown-Brand

v. Trump Castle Hotel & Casino, 132 N.J. 546, 549 (1993), "for the purpose of

harassment, delay or malicious injury," or pursued the action "without any

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                                        7
reasonable basis in law or equity and could not . . . support [its actions] by a

good faith argument for an extension, modification or reversal of existing law."

N.J.S.A. 2A:15-59.1(b)(1) to (2); see also R. 1:4-8; Tagayun v. AmeriChoice of

N.J., Inc., 446 N.J. Super. 570, 580 (App. Div. 2016) ("The party seeking

sanctions bears the burden to prove bad faith."); Ferolito v. Park Hill Ass'n, Inc.,

408 N.J. Super. 401, 408 (App. Div. 2009) ("[A]n award cannot be sustained if

the 'plaintiff did not act in bad faith in asserting' or pursuing the claim." (quoting

McKeown-Brand, 132 N.J. at 549)); United Hearts, L.L.C., 407 N.J. Super. at

389 ("Where a party has [a] reasonable and good faith belief in the merit of the

cause, attorney's fees will not be awarded." (quoting First Atl. Fed. Credit Union

v. Perez, 391 N.J. Super. 419, 432 (App. Div. 2007))).

             [T]he Legislature has not defined "bad faith" as used in
             N.J.S.A. 2A:15-59.1. "An act in bad faith is an act by
             one person or entity that affects another, failing to
             accord a reasonable duty of care toward the other,
             unjustifiably harming the other's interests by an act of
             a quality or form that would not occur if the person or
             entity had acted with good faith." Stephen Michael
             Shepherd, The Wolters Kluwer Bouvier Law
             Dictionary Desk Edition, 2012. Other New Jersey
             courts have noted sister state definitions that "[b]ad
             faith is not simply bad judgment or negligence, rather
             it implies the conscious doing of a wrong because of
             dishonest purpose or moral obliquity. It is different
             from the negative idea of negligence in that it
             contemplates a state of mind affirmatively operating
             with furtive design or ill will." Borzillo v. Borzillo, 259

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                                          8
N.J. Super. 286, 292 (Ch. Div. 1992) (citations
            omitted). While the court is not bound by these
            definitions, case law and the absence of a statutory
            definition support the view that the court is required to
            make a determination of whether bad faith exists on a
            case-by-case basis.      The statutory language and
            relevant case law make clear that a claim lacking a legal
            basis, coupled with a finding of bad faith, may warrant
            sanctions against a non-prevailing party.

            [Wolosky v. Fredon Township, 31 N.J. Tax 373, 392-
            93 (2019) (emphasis added).]

      "The court must strictly interpret the frivolous litigation statute and Rule

1:4-8 against the applicant seeking attorney's fees and/or sanctions." Id. at 390

(citing LoBiondo v. Schwartz, 199 N.J. 62, 99 (2009)). Courts should exercise

restraint in awarding frivolous litigation sanctions. See McDaniel v. Man Wai

Lee, 419 N.J. Super. 482, 499 (App. Div. 2011) ("Sanctions are not to be issued

lightly."). The goal of the statute is to "deter baseless litigation," but "without

discouraging honest, creative advocacy," and "keep[ing] in mind our significant

policy that litigants should usually bear their own litigation costs." DeBrango

v. Summit Bancorp, 328 N.J. Super. 219, 226-27 (App. Div. 2000). Accord

Iannone v. McHale, 245 N.J. Super. 17, 26-28 (App. Div. 1990). A judge should

only award sanctions for frivolous litigation in exceptional cases. See id. at 28.

      Sanctions imposed under Rule 1:4-8 "are specifically designed to deter

the filing or pursuit of frivolous litigation." LoBiondo, 199 N.J. at 98. They

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                                        9
"will not be imposed against an attorney who mistakenly files a claim in good

faith." Bove v. AkPharma Inc., 460 N.J. Super. 123, 148 (App. Div. 2019); see

also First Atl. Fed. Credit Union, 391 N.J. Super. at 432 (holding that where an

"objectively reasonable belief" in the merits of the case exists, attorney's fees

will not be awarded). And, they should not be "imposed because a party is

wrong about the law and loses his or her case." Tagayun, 446 N.J. Super. at

580. Rather, "[a] claim will be deemed frivolous or groundless [only] 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).        Even then, "[w]hen a prevailing defendant's

allegation is based on the absence of 'a reasonable basis in law or equity' for the

plaintiff's claim and the plaintiff is represented by an attorney, an award cannot

be sustained if the 'plaintiff did not act in bad faith in asserting' or pursuing the

claim." Wolosky, 31 N.J. Tax at 391 (quoting Ferolito, 408 N.J. Super. at 408).

      Moreover, clients are entitled to rely upon their attorneys for an analysis

of the merits of their case. "[A] client who relies in good faith on the advice of

counsel cannot be found to have known that his or her claim or defense was

baseless." McKeown-Brand, 132 N.J. at 558. "Although the advice of counsel

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                                        10
will not necessarily provide a defense to a bad-faith litigant, in many cases, it

may constitute an adequate explanation for the assertion of a claim or defe nse."
Id. at 559.

     In addition, "[f]alse allegations of fact will not justify a fee award unless

they are made in bad faith, for the purpose of harassment, delay, or malicious

injury." Belfer, 322 N.J. Super. at 144. "When the plaintiff'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 bad faith." Id.

at 144-45; see also DeBrango, 328 N.J. Super. at 227 (holding that counsel fee

sanction not warranted when plaintiff had reasonable good faith belief in merits

of claim); Ellison v. Evergreen Cemetery, 266 N.J. Super. 74, 86 (App. Div.

1993) ("The most that can be said is that plaintiffs were perhaps overly

optimistic in seeking a remedy, but this does not mean that the litigation was

essentially frivolous.").

     Before deciding whether a party or an attorney pursued "frivolous

litigation," by acting in bad faith, the trial judge must determine whether the

moving party served the requisite written notice and demand that the frivolous

claim be withdrawn. See R. 1:4-8(b)(1); Bove, 460 N.J. Super. at 150. "The

notice must 'set [] forth "with specificity" the basis for his or her belief that the

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                                        11
pleading is frivolous. The notice must be sufficiently specific and detailed to

provide an opportunity to "withdraw the assertedly offending pleadings."'" Ibid.

(alteration in original) (quoting Ferolito, 408 N.J. Super. at 408). The required

notice "furthers the legislative purposes by providing all opportunity for

remediation.    Noncompliance places the applicant at risk of forfeiting

recompense for defending against allegedly frivolous litigation conduct for

which the offending person was not put on notice." Toll Bros., 190 N.J. at 72.

      When a prevailing party seeks sanctions against an attorney under Rule

1:4-8 and against a party under N.J.S.A. 2A:15-59.1, it is incumbent upon the

trial judge to consider the respective responsibility of each.       Savona v. Di

Giorgio Corp., 360 N.J. Super. 55, 63 (App. Div. 2003). And, under Rule 1:7-

4(a), the trial judge is required to make specific findings of facts and conclusions

of law as to each claim. A trial judge's "failure . . . to set forth findings" to

support an award of attorney's fees is grounds for remand. Alpert, Goldberg,

Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510, 547 (App. Div.

2009).   Neither the parties nor an appellate court should be required to

extrapolate, from minimal remarks, the judge's justification for a sanction

award. The order must be clear not only to support the conclusion, but also to

identify the conduct the sanctions are designed to deter. R. 1:4-8(d). Moreover,

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                                        12
an analysis of the reasonableness of the fees awarded as a sanction must be

stated. City of Englewood v. Exxon Mobile Corp., 406 N.J. Super. 110, 125

(App. Div. 2009).

      Applying these guiding principles to the trial judge's decision here, we are

constrained to remand the matter to her for reconsideration. The judge's decision

as it stands is devoid of any consideration of the sufficiency of the notice sent

by Howard, and whether that notice was adequate to satisfy Howard's obligation

under the statute as well as the Rule. Also, although the judge concluded that

the case "turned upon the facts and the credibility of the witnesses," and that

plaintiff failed to prove her claims by "clear and convincing evidence" or "by a

preponderance of the evidence," the judge never analyzed whether plaintiff or

her attorney acted in bad faith. In addition, the judge's conclusory remarks about

the reasonableness of the fees claimed fell short of what Rule 1:7-4 requires, if

fees are to be awarded. See R.M. v. Supreme Court of N.J., 190 N.J. 1, 12-13

(2007) (vacating and remanding counsel fee award where judge failed to explain

how or why he arrived at award); City of Englewood, 406 N.J. Super. at 125-26

(vacating and remanding attorney fee award where record was devoid of

explanation for the fee award); Feliciano v. Faldetta, 434 N.J. Super. 543, 549

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                                       13
(App. Div. 2014) (requiring courts to make findings on each element of the

lodestar fee).

      On remand, the trial judge must consider Howard's application anew and

issue a new decision setting forth her specific findings as to each element of

Howard's claim for fees under Rule 1:4-8 and N.J.S.A. 2A:15-59.1, and explain

her reasons for awarding them, or not, as to plaintiff and her attorney. By

remanding this matter, we do not infer one way or the other how the trial judge

should decide the application.

     On remand, the trial judge need not revisit plaintiff's argument that her

claims were not frivolous because she would have survived a summary judgment

motion if Howard had filed one. We agree with the trial judge that the argument

is "not persuasive" and conclude that it lacks any merit. We find plaintiff's

reliance on our opinion in United Hearts, L.L.C., 407 N.J. Super. at 393-94,

(holding that a matter cannot be deemed frivolous nor litigated in bad faith

where summary judgment is not granted and the matter is permitted to proceed

to trial), to be inapposite because there was never a summary judgment motion

filed by any party. See also Ferolito, 408 N.J. Super. at 408 (stating that a court

may not rely solely on the fact that defendant was entitled to summary judgment

to find that the non-prevailing party's claims were frivolous).

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                                       14
     Affirmed in part; vacated and remanded in part for further proceedings

consistent with our opinion. We do not retain jurisdiction.

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                                      15