ROBERT MINAKAWA v. E. BRUCE DIDONATO

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6329-03T56329-03T5

ROBERT MINAKAWA,

Plaintiff-Respondent,

vs.

E. BRUCE DIDONATO,

Defendant/Third-

Party Plaintiff/

Respondent,

vs.

JOHN SIMONE REALTY, INC.

Defendant/Third-

Party Defendant/

Appellant.

__________________________________

 

Argued: June 5, 2006 - Decided June 26, 2006

Before Judges Cuff and Holston, Jr.

On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-3454-01.

Edward M. Bernstein argued the cause for appellant (Bernstein & Manahan, attorneys; Mr. Bernstein, on the brief).

Richard B. Gelade argued the cause for respondent Robert Minakawa.

Glenn R. Cochran argued the cause for respondent E. Bruce DiDonato.

PER CURIAM

In this appeal, we review an order denying the application of defendant John Simone Realty, Inc. (Simone) for attorney fees pursuant to N.J.S.A. 2A:15-59.1. We affirm.

Plaintiff Robert Minakawa owned two units in a commercial condominium complex in Hamilton Township, Mercer County. He conducted his medical practice in one unit and leased and eventually sold the adjoining unit to defendant E. Bruce DiDonato, an optometrist. Defendant Simone was involved in the initial development and sale of the units and the sale of one of the units owned by Minakawa to defendant DiDonato in 2001. Following the sale, DiDonato realized that the unit he purchased was smaller than the listed size of 1300 square feet. Upon notice of the discrepancy, Minakawa filed a complaint seeking rescission of the sale. DiDonato filed a third-party complaint against Simone in which he asserted that Simone misrepresented the dimensions of the unit and sought relief pursuant to the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20. Minakawa filed an amended complaint to assert a claim of breach of fiduciary duty against Simone, which filed a counterclaim for indemnification. At the commencement of trial, Minakawa dismissed his complaint against Simone.

Following trial, Judge Ostrer entered a judgment in favor of DiDonato and against Minakawa in the amount of $24,023.70 plus pre-judgment interest. He also entered a judgment of no cause of action in favor of Simone and against DiDonato and a judgment of no cause of action against Simone and in favor of Minakawa on Simone's claim for indemnification. Thereafter, Simone filed an application for attorney fees pursuant to N.J.S.A. 15-59.1, which was denied.

On appeal, Simone argues that the denial of its application for attorney fees is contrary to the factual and credibility findings of the trial judge and that the trial judge abused his discretion when he denied the requested fees. We disagree.

In order to place the trial judge's fee decision in context, it is necessary to first review in detail his findings of fact. In his April 15, 2004 opinion, Judge Ostrer found that DiDonato did not sustain his burden of proof on the consumer fraud claim against Simone on the breach of warranty of title and legal fraud claim against Minakawa. He also found that Simone could not prevail on its indemnification claim against Minakawa because the indemnification agreement that accompanied the listing agreement was not sufficiently clear to allow Simone to shift to Minakawa the burden of reimbursing Simone for its attorney fees.

On the other hand, Judge Ostrer found that it was improbable that John Simone did not know that the initial contract purchaser of the unit, who assigned his contract to Minakawa, intended to purchase two units without a dividing wall. He also found that John Simone referred Minakawa to an architect to prepare plans to finish the interior in conformity with the needs of Minakawa's practice. The judge found that "it was more likely than not that Mr. Simone knew in 1985 that the common dividing wall between the North and South Spaces was placed at a point different from that shown in the master deed." He also found that "[i]t is more likely than not that Mr. Simone - who was a partner of [Hamilton Office Campus] and in charge of marketing the units - would have known about it." Yet, he found that Minakawa probably did not know that the wall was placed at a different point than described in the master deed and that the space he occupied was larger than the space he rented and subsequently sold to DiDonato. The judge eventually found that a wall between the two units was never constructed at the point described in the master deed, which would have created two units identical in size.

The judge then proceeded to examine the circumstances at the time Minakawa decided to sell the second unit. He found that Minakawa retained the services of Simone and presented the original architect's plans for the units to Pearl Capes, the agent assigned by Simone to market the unit. Judge Ostrer found that a careful examination of the drawings would have informed the reader that the unit to be sold was smaller than the other unit. He found that Minakawa, not Capes, was the source of the information that each unit contained 1300 square feet of space. The judge also found that DiDonato did not realize that he had initially rented, occupied, and subsequently purchased a unit that was less than 1300 square feet. The judge found that the space acquired would have been adequate for DiDonato's contemplated needs but that DiDonato would have bargained for a lower price and probably would have secured a lower purchase price, if he knew that the space was not identical in size to the other unit.

Ultimately, the trial judge found that he was not convinced by clear and convincing evidence that Simone committed consumer fraud. Although he found that Simone knew or should have known that the unit purchased by Minakawa was not finished in conformity with the master deed when it was completed in 1985, the judge found that DiDonato purchased the unit based on his knowledge of the space and his impression of its size. The judge also found that the Commercial Property Data Sheet specifically noted that the data presented in the sheet was subject to errors. Therefore, the judge found that the purchase was not influenced by any omission of fact or representation made by Simone or its agents, including John Simone. In short, he found that John Simone knew or should have known that the units were dissimilar in size and that the unit purchased by DiDonato was smaller in size than the typical unit and smaller than it was thought to be by DiDonato, but that no action by Simone caused any injury to DiDonato.

In denying Simone's motion for attorney fees pursuant to N.J.S.A. 2A:15-59.1, Judge Ostrer observed that Simone should have known and should have remembered that the wall between the units was constructed at variance from the master deed. Although he ultimately concluded that Simone was not liable to DiDonato or Minakawa, he held that none of the claims that required a trial to resolve could be considered frivolous. He also held that the facts, as developed at trial, did not allow him to conclude that the breach of fiduciary duty claim asserted by Minakawa against Simone was frivolous, despite its withdrawal at the commencement of trial.

"Sound judicial administration is best advanced by having each litigant bear his or her counsel fees." Belfer v. Merling, 322 N.J. Super. 124, 141 (App. Div.), certif. denied, 162 N.J. 196 (1999). N.J.S.A. 2A:15-59.1a(1), however, provides:

A party who prevails in a civil action, either as plaintiff or defendant, against any other party may be awarded all reasonable litigation costs and reasonable attorney fees, if the judge finds at any time during the proceedings or upon judgment that a complaint, counterclaim, cross-claim or defense of the nonprevailing person was frivolous.

To find frivolity, the judge must find:

(1) The complaint, counterclaim, cross-claim or defense was commenced, used or continued in bad faith, solely for the purpose of harassment, delay or malicious injury; or

(2) The nonprevailing party knew, or should have known, that the complaint, counterclaim, cross-claim or defense was without any 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:15-59.1b(1),(2).]

There are two purposes behind N.J.S.A. 2A:15-59.1. The first is punitive; the statute seeks to deter frivolous litigation. Deutch & Shur, P.C. v. Roth, 284 N.J. Super. 133, 141 (Law Div. 1995). The second is to compensate the party "victimized" by the frivolous litigation. Ibid.

The decision whether to award attorney fees rests within the discretion of the trial judge and must be reviewed using an abuse of discretion standard. Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 443-44 (2001). There has been an "abuse of discretion" when "a decision is 'made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" Flagg v. Essex County Prosecutor, 171 N.J. 561, 571 (2002)(quoting Achacoso-Sanchez v. Immigration and Naturalization Serv., 779 F.2d 1260, 1265 (7th Cir. 1985)).

It is well-accepted that credibility is for the factfinder to determine. Ferdinand v. Agric. Ins. Co. of Watertown, N.Y., 22 N.J. 482, 492 (1956). The trial judge, who has had the opportunity to observe witnesses and hear live testimony, is in the best position to make credibility determinations. Pascale v. Pascale, 113 N.J. 20, 33 (1988). In this case, Judge Ostrer had the opportunity to observe the witnesses and to make credibility determinations. Notably, the claims could not have been resolved without a trial and the required credibility determinations. He determined that Minakawa was "generally a credible, believable witness." The judge "was unpersuaded that Dr. Minakawa intended to deceive anyone about the configuration of unit B-2; or that he knew that he had inaccurately or incompletely described the unit." The court found that DiDonato did not possess an intent to deceive. Judge Ostrer concluded that John Simone, as a partner of the Hamilton Office Campus and "in charge of marketing the units", would have known and should have known that the location of the dividing wall did not match the placement as shown on the master deed. Judge Ostrer also found that a "significant part" of Simone's legal expenses were incurred because of "its own independent failure to disclose the placement of the wall."

Because of Simone's position as the exclusive listing agent for the initial sale of the units in the complex, John Simone's own position as a partner in the firm which developed the complex and oversaw the units' construction, and Simone's representation of Minakawa in the sale of the unit, it was not unreasonable for Simone to have claims raised against it in this situation. Simone fails to provide evidence of bad faith, harassing purpose or malicious intent. The fact that Minakawa withdrew the claim is not evidence that it was without basis in fact or law.

Simone also contends that the claims asserted by Minakawa and DiDonato were frivolous because they failed to mitigate their damages. This argument is without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

 
Finding no abuse of the considerable discretion conferred on the judge, we affirm the June 25, 2004 order denying Simone's application for attorney fees pursuant to N.J.S.A. 2A:15-59.1.

Affirmed.

(continued)

(continued)

9

A-6329-03T5

June 26, 2006