Court Opinion

ID: 4035164
Source: CourtListenerOpinion
Date Created: 2016-09-20 14:10:11.906417+00
Date Added: 2024-06-11T14:29:34.171045
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
               APPROVAL OF THE APPELLATE DIVISION

                                  SUPERIOR COURT OF NEW JERSEY
                                  APPELLATE DIVISION
                                  DOCKET NO. A-1628-13T1

MYRNA B. TAGAYUN and
ROBERT S. MANDELL,

     Plaintiffs-Appellants,

v.
                                          APPROVED FOR PUBLICATION
AMERICHOICE OF NEW JERSEY, INC.,             SEPTEMBER 20, 2016
a New Jersey corporation, d/b/a
United Healthcare Community Plan;            APPELLATE DIVISION
MICHELE NIELSEN, individually
and as an officer of AmeriChoice
of New Jersey, Inc., d/b/a United
Healthcare Community Plan; STRADLEY
RONON STEVENS & YOUNG, LLP, a
Pennsylvania Limited Liability
Partnership; FRANCIS X. MANNING,
ESQUIRE, an attorney at law, licensed
in the State of New Jersey,
individually and as an officer and/or
employee of Stradley Ronon Stevens &
Young, LLP; MARISSA PARKER, ESQUIRE,
an attorney at law, licensed in the
State of New Jersey, individually and
as an officer or employee of Stradley
Ronon Stevens & Young, LLP; L. JOHN
VASSALOTTI 3, JR., an attorney at law,
licensed in the State of New Jersey,
individually and as an officer and/or
employee of Stradley Ronon Stevens &
Young, LLP,

     Defendants-Respondents.
_______________________________________

         Submitted September 17, 2015 – Decided June 28, 2016
            Before Judges Lihotz, Fasciale and Higbee.

            On appeal from Superior Court of New Jersey,
            Law Division, Essex County, Docket No. L-
            5348-12.

            Myrna B. Tagayun        and       Robert   S.    Mandell,
            appellants pro se.

            Stradley   Ronon   Stevens  &              Young,   LLP,
            attorneys   for   respondents              (Francis   X.
            Manning, on the brief).

    The opinion of the court was delivered by

HIGBEE, J.A.D.

    Plaintiffs, Dr. Myrna B. Tagayun, and Robert S. Mandell,

her husband and office manager, appeal (1) a May 1, 2013 order

awarding defendant, AmeriChoice, counsel fees as a sanction for

pursuing a frivolous claim in their original complaint pursuant

to Rule 1:4-8; (2) a May 9, 2013 order dismissing plaintiffs'

amended complaint and declaring it was also a frivolous pleading

pursuant to N.J.S.A. 2A:15-59.1; and (3) an October 22, 2013

order     granting    defendant's      motion    for    additional       fees   and

amending the May 1, 2016 money judgment against plaintiffs to

include    legal     fees   incurred     in     responding    to   the     amended

complaint.     Plaintiffs state in their brief they are limiting

their appeal only to whether sanctions and fees should have been

awarded against them.

                                        2                                 A-1628-13T1
       For the reasons that follow, we affirm in part and reverse

in part and remand for amendment of the amount of the judgments

against plaintiffs.

       We   first    set   forth    the          germane    facts    and   procedural

history.      Plaintiffs     filed       a       complaint    against      defendants,

AmeriChoice of New Jersey Inc., Michele Nielsen, an officer of

AmeriChoice, and various other associated entities they allege

did business as AmeriChoice, as well as other fictitiously named

defendants.     The dispute concerned a contract entered into by

Tagayun and AmeriChoice whereby Tagayun, a neurologist, became a

participating provider for AmeriChoice HMO members.

       AmeriChoice sent Tagayun notice she would be terminated as

a provider.         Plaintiffs filed their pro se complaint against

defendants and requested an order to show cause for injunctive

relief to prevent Tagayun's termination.                      Defendants' counsel

sent    a   letter     rescinding     the          notice    to     terminate,      thus

plaintiffs     were     temporarily          successful       in    preventing      the

termination.        Defendants     and       plaintiffs      appeared      before    the

court where Mandell argued that defendants would just terminate

Tagayun again in a few months.                    Nonetheless, the judge found

there was no longer a need for injunctive relief.                      Additionally,

defendants had not filed an answer to the original complaint in

a timely fashion and were ordered to file an answer.                         Although

                                             3                                A-1628-13T1
they were ordered to do so, defendants never filed an answer to

the original complaint.                    Nor did they file an answer to the

amended complaint.

       AmeriChoice             did   subsequently          terminate          the    services      of

Tagayun       by    not     renewing       her   contract         and    filed      a     motion    to

dismiss       the     original       complaint            and    transfer       the       matter    to

arbitration.

       Defendants           notified        Tagayun         that        her     complaint          was

frivolous, pursuant to Rule 1:4-8(b)(1), because the contract

required       arbitration           of    all    disputes          between         the    parties.

Defendants, at the same time, also notified Mandell his claim

was    frivolous          as    he   was    not       a    party    to    the       contract       and

therefore, had no standing to enforce the contract.

       When plaintiffs refused to dismiss their claims, defendants

filed     a        motion       to   dismiss.              Defendants         were        ultimately

successful and then filed a motion for sanctions under Rule 1:4-

8(b)(1).

        After oral argument, the judge entered the January 11,

2013 order dismissing the original complaint without prejudice

as to Tagayun and sending her claims to arbitration.                                      The judge

also    dismissed           Mandell's      claims         with     prejudice        for     lack   of

standing.          Plaintiffs filed an amended complaint on January 14,

2013,     which       was        substantively            the    same     as        the    original

                                                  4                                         A-1628-13T1
complaint,      except    the    law   firm   and     individual        attorneys      for

defendants were added as additional named defendants.

      On January 15, 2013, plaintiffs appealed from the January

11, 2013 order dismissing their original complaint.                          The appeal

proceeded despite the filing of the amended complaint.                             While

that appeal was ongoing, the Law Division judge continued to

consider and rule on motions filed by defendants related to the

original     complaint     being       frivolous      and    on       similar   motions

related    to    the   amended    complaint.          We    issued     an    opinion    on

August 30, 2013, affirming the January 11, 2013 order sending

Tagayun's claims to arbitration.1             That final Appellate order may

not be challenged in this subsequent appeal.

      In the interim, defendants moved to have both complaints

declared frivolous and sought an award of attorney fees as a

sanction against plaintiffs.              Oral argument was scheduled for

February, but was adjourned at plaintiffs' request.                          Plaintiffs

claim no hearing was ever held on the motions.                        However, because

plaintiffs filed no opposition to the two motions requesting

sanctions, no oral argument was required.                   In an order dated May

1,   2013,      the    judge     concluded      the    original        complaint       was

frivolous       and    entered    an    order    granting         a    fee    award    of

1
     Mandell's appeal was dismissed as interlocutory.

                                          5                                     A-1628-13T1
$10,073.20 in favor of defendants against plaintiffs jointly,

severally, and in the alternative.2

      On May 9, 2013, the judge dismissed the amended complaint,

found it was frivolous, and ordered defendants to submit an

application for fees related to the amended              complaint.         The

judge made very limited findings simply writing on the May 1 and

May 9 orders that each was granted for the reasons set forth in

defendants' papers.

      Plaintiffs filed an appeal from the May 1 and May 9, 2013

orders.     We granted defendants' motion to remand for entry of a

final judgment with the addition of the fees assessed relating

to the amended complaint and dismissed the appeal by plaintiffs

as interlocutory.

      Judge Stephen Taylor, who did not enter the prior orders,

was assigned to the case and heard oral argument solely on the

issue of the amount of fees to be awarded related to the amended

complaint.       Defendants requested fees in the amount of $6,539.40

and   $60   in   disbursements,   totaling     $6,599.40.     Judge    Taylor

carefully    reviewed    each   invoice   on   the   record   and   required

2
    For the benefit of pro se plaintiffs we note that "jointly,
severally in the alternative" means that the judgment can be
collected from either Tagayun or Mandell or part of the judgment
can be collected from one of them and part from the other,
however the total amount collected from both cannot exceed the
amount awarded.   Defendants cannot collect the amount of the
judgment twice.

                                     6                                A-1628-13T1
defense    counsel     to       explain      the     amounts       billed.3          The   judge

ascertained     the        billing       rate       and    hours       for    each    attorney

involved.      The judge was advised none of the billing involved

time devoted to defending the law firm, but only the amounts

billed to the client relating to the amended complaint.                                      The

judge found both the attorneys' rates and the number of hours

were reasonable.               Tagayun argued plaintiffs' actions were not

frivolous,     but    she       did   not    address        the    amount     of     the   fees.

Judge Taylor awarded the amount of fees requested.                                    Although

Mandell was not given an opportunity to speak at the hearing, he

has presented no argument on appeal that suggests the amount of

the legal fees imposed at the end of the hearing was improper.

      We     review        a     trial      court's        imposition         of     frivolous

litigation fees for an abuse of discretion.                             Masone v. Levine,

382   N.J.    Super.       181,       193   (App.         Div.    2005).        Reversal       is

warranted     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."                  Ibid.

3
   Plaintiffs in their brief state they requested the transcript
for the hearing but had not received it.     Defendants in their
brief argued we should dismiss the appeal of the October 22,
2013 order because no transcript was supplied. On November 12,
2014 the transcript was provided to the Clerk of the Appellate
Division and we review the appeal from that order on its merits.

                                                7                                      A-1628-13T1
    To    begin     our   analysis    of   the    applicable   law    regarding

frivolous litigation, we turn to relevant provisions of Rule

1:4-8(a):

            By signing, filing or advocating a pleading,
            . . . an attorney or pro se party certifies
            that to the best of his or her knowledge,
            information, and belief, formed after an
            inquiry reasonable under the circumstances:

                    (1)   the    paper  is   not   being
                    presented     for    any    improper
                    purpose, such as to harass or to
                    cause     unnecessary    delay    or
                    needless increase in the cost of
                    litigation;

                    (2) the claims, defenses, and
                    other legal contentions therein
                    are warranted by existing law or
                    by a non-frivolous argument for
                    the extension, modification, or
                    reversal of existing law or the
                    establishment of new law[.]

    An award of fees against a party, as opposed to a lawyer or

a self-represented litigant, engaging in frivolous litigation is

governed by N.J.S.A. 2A:15-59.1(a)(1), which requires a judge to

determine whether a pleading filed by a non-prevailing party was

frivolous.     In order to award fees under the statute, the court

must find that a claim or defense was either pursued "in bad

faith, solely for the purpose of harassment, delay or malicious

injury" or that the non-prevailing party knew or should have

known it "was without any reasonable basis in law or equity and

could    not   be    supported   by    a   good    faith   argument    for    an

                                       8                               A-1628-13T1
extension, modification or reversal of existing law."                       N.J.S.A.

2A:15-59.1(b)(1), (2).

       There was no evidence presented that plaintiffs filed their

original      complaint   simply     to    harass      defendants.        Defendants

urged the court to find the original complaint was frivolous

because Mandell lacked standing and Tagayun signed a contract

that    contained     a   provision       that   all    disputes     would      go   to

arbitration.      The judge found these were sufficient reasons to

dismiss the original complaint.                  The dismissal       based on the

arbitration clause was affirmed on appeal.

       Plaintiffs argued before the trial court and on appeal that

Tagayun had not waived her right to a jury trial because this

explicit language or similar language was not in the contract's

arbitration clause.

       When    plaintiffs   filed     their      complaint    there       were    some

appellate decisions enforcing arbitration provisions that did

not    have   explicit    language    waiving       rights   to    access    to      the

courts or juries decided prior to the decision in this case.

See Griffin v. Burlington Volkswagen, Inc., 411 N.J. Super. 515,

518 (App. Div. 2010); EPIX Holdings Corp. v. Marsh & McLennan

Cos.,   410    N.J.   Super.   453,   476,       overruled   in    part    on    other

grounds by Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 192-

93 (2013).

                                          9                                  A-1628-13T1
      However,       the   Supreme      Court,   in    Atalese   v.    U.S.    Legal

Services Group, L.P., 219 N.J. 430 (2014), cert. denied, __ U.S.

__, 135 S. Ct. 2804, 192 L. Ed. 2d 847 (2015), while stressing

that arbitration was favored by the law, explained that even

under prior existing law relating to arbitration provisions in

contracts, a knowing waiver of constitutional rights to a jury

trial    must   be    explicit     in   order    to    enforce   the   arbitration

clause.

        Therefore, we cannot support the trial court's conclusion

that Tagayun's contention that she had not waived her right to

litigate her contract claims in court was frivolous even though

her claim was unsuccessful.               Although Tagayun is bound by the

decision of the Appellate Division affirming the dismissal of

her action, the fact she lost that battle does not mean her

contentions were frivolous.             In light of the holding in Atalese,

her     position     cannot   be     described        as   frivolous   under     the

controlling legal standards set forth above, which apply both to

the rule and statute governing frivolous litigation.

      As to Mandell, it is clear he was not a party to the

contract.       The trial court properly dismissed his claims for

lack of standing.          He was advised by letter from defendant's

counsel that he was not a party to the contract and lacked

standing.       His refusal to accept this fact and to agree to be

                                          10                              A-1628-13T1
dismissed as a party to the action, however, was not frivolous

under the controlling legal standards we set forth below which

apply   to   both   the     rule   and    the    statute      governing     frivolous

litigation.     The primary difference being that the rule governs

awards against attorneys and self-represented litigants while

the statute governs sanctions against parties.

      The    rule   and    statute     must     both   be    interpreted     strictly

against the applicant for an award of fees.                      See LoBiondo v.

Schwartz, 199 N.J. 62, 99 (2009); DeBrango v. Summit Bancorp,

328   N.J.    Super.      219,   226     (App.    Div.      2000).     This     strict

interpretation      is    grounded       in    "the    principle     that    citizens

should have ready access to . . . the judiciary."                           Belfer v.

Merling, 322 N.J. Super. 124, 144 (App. Div.), certif. denied,

162 N.J. 196 (1999).         "The statute should not be allowed to be a

counterbalance to the general rule that each litigant bears his

or her own litigation costs, even when there is litigation of

'marginal merit.'"         Ibid. (citation omitted).             Sanctions should

be awarded only in exceptional cases.                    See Iannone v. McHale,

245 N.J. Super. 17, 28 (App. Div. 1990).                    "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."                    Belfer, supra, 322 N.J.

Super. at 144-45.         The party seeking sanctions bears the burden

                                          11                                  A-1628-13T1
to prove bad faith.           Ferolito v Park Hill Ass'n, 408 N.J. Super.
401,    408    (App.    Div.),    certif.    denied,   200 N.J. 502   (2009).

Moreover, the grant of a dispositive motion, without more, does

not suffice to establish a losing party's bad faith.                Ibid.

       Sanctions for frivolous litigation are not imposed because

a party is wrong about the law and loses their case.                 The nature

of conduct warranting sanction under Rule 1:4-8 and under the

statute has been strictly construed.              The term frivolous should

not be employed broadly or it could limit access to the court

system.       First Atl. Fed. Credit Union v. Perez, 391 N.J. Super.
419,    432-33    (App.    Div.    2007).       Imposing     sanctions    is    not

appropriate where a party "has a reasonable good faith belief in

the merit of his action."             J.W. v. L.R., 325 N.J. Super. 543,

548 (App. Div. 1999).             In discussing the frivolous litigation

statute, the Supreme Court, in McKeown-Brand v. Trump Castle

Hotel   &     Casino,   132 N.J. 546,   561-62    (1993),   explained      the

legislative history as follows:

              The predecessor bill, A. 1086, allowed the
              prevailing party to recover fees from the
              non-prevailing    party    if    that   party's
              pleading was "not substantially justified."
              In the course of the legislative process,
              the    term    "frivolous"     replaced    "not
              substantially justified."     Senate Judiciary
              Committee Statement to Assembly Committee
              Substitute for A. 1086, 2029, 783, and 1260
              (Oct. 2, 1986).       Indeed, the Governor's
              conditional veto message noted the "bill's
              restrictive definition of 'frivolous.'" The

                                        12                                A-1628-13T1
         replacement of "not substantially justified"
         with "frivolous" reflects the legislative
         intent to limit the application of the
         statute. That limitation is consistent with
         the premise that in a democratic society,
         citizens should have ready access to all
         branches   of   government,    including the
         judiciary.    See Iannone, supra, 245 N.J.
         Super. at 27 (stating that limitation on
         award of counsel fees "promotes the goal of
         equal access to the court irrespective of
         economic   status").        In    brief, the
         Legislature resolved the tension between the
         competing goals of equal access to the
         courts and the avoidance of the costs of
         unnecessary litigation by favoring access
         over cost-avoidance.

      Since    we     conclude      the    trial    judge's       finding    that    the

original complaint was frivolous is unsupported, we reverse and

vacate the order of May 1, 2013.                   As to Mandell, we are also

constrained to reverse the order of the trial judge that awarded

sanctions against him in connection with the original complaint.

He presented an argument to the court that he had standing as a

third-party beneficiary of the contract.                     The judge properly

declined to accept that argument, but an award of sanctions was

not warranted simply because Mandell misconstrued the law.

    However,     we    find    the        trial    judge    did     not     abuse    her

discretion in finding the filing of an amended complaint by both

plaintiffs    asserting       the    same       claims     that     had     just    been

dismissed by the court and adding defendants' counsel as parties

was frivolous.        Tagayun had been advised by the court their

                                           13                                 A-1628-13T1
claims had to be arbitrated.               Plaintiffs had a right to appeal

those decisions and in fact they availed themselves of that

right the day after they filed their amended complaint.                                They

had   no    right   to   force       the   defendants     to   defend     an     amended

complaint     asserting       the      same     claims    that     had        just    been

dismissed.     At that point, Mandell had been told by the judge he

had no standing to assert any claims under the contract and he

was not a beneficiary of the contract.                   We therefore affirm the

May 9, 2013 order finding the amended complaint was frivolous

and imposing sanctions.

      We    conclude     Judge    Taylor      properly    limited       his     role    to

determining      the     amount       of   fees    that    should        be     awarded.

Plaintiffs'      first      appeal    of   the    sanctions      was    dismissed        as

interlocutory and remanded for determining the total amount of

the   attorney      fees.      Plaintiffs'        argument     that     Judge        Taylor

should have reconsidered the prior decision of the first judge

lacks sufficient merit to address in a written opinion.                                  R.

2:11-3(e)(1)(E).

      As to the amount of fees awarded by Judge Taylor, we affirm

for the reasons he expressed in his comprehensive oral decision

from the bench on October 22, 2013.

      The    judgment    of    $10,073.20        for   frivolous       filing    of    the

original complaint is vacated as to both plaintiffs.                           We affirm

                                           14                                    A-1628-13T1
the May 9, 2013 order ordering sanctions for frivolous filing of

the amended complaint and affirm the October 30, 2013 order

imposing sanctions in the amount of $6,599.40.         We remand to the

trial judge to reduce and amend the final judgment to $6,599.40

against   both    plaintiffs    jointly,      severally,    and   in    the

alternative.

    Affirmed     in   part,   reversed   in   part,   and   remanded    for

amendment of the amount of the judgment.              We do not retain

jurisdiction.

                                   15                             A-1628-13T1