KING PLAZA RESIDENTIAL v. TEOFILA SANCHEZ

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5811-10T4

KING PLAZA RESIDENTIAL,

Plaintiff-Respondent,

v.

TEOFILA SANCHEZ and

ALEXANDER SANCHEZ,

Defendants-Appellants.

____________________________________________________

April 10, 2012

Argued February 7, 2012 Decided

Before Judges Messano and Kennedy.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. LT-4242-11.

Ben A. Kaplan argued the cause for appellants.

Erin R. Ehrlich argued the cause for respondent (Levy, Ehrlich & Petriello, attorneys; Ms. Ehrlich, on the brief).

PER CURIAM

Defendant Alexander Sanchez appeals from the order of the Law Division, Special Civil Part, denying his motion for sanctions and attorney's fees that followed the earlier dismissal of plaintiff's complaint at trial.1 We have considered the arguments made in light of the record and applicable legal standards. We reverse and remand for further proceedings consistent with this opinion.

Plaintiff, King Plaza Residential, owns certain residential rental property located in Perth Amboy. Defendant commenced occupancy of one of the units pursuant to a written lease executed on May 9, 2008. A dispute arose concerning charges for water usage and parking spaces. As a result, plaintiff filed an eviction complaint on March 23, 2010. But, on the day of trial, plaintiff withdrew the complaint.

Plaintiff filed a second complaint for eviction on May 28, 2010, again alleging payments due for water charges and parking spaces. Plaintiff again withdrew this complaint on the day of trial.

On September 15, 2010, defendant executed a parking permit agreement with plaintiff. The agreement listed two vehicles and designated two parking spaces "118 and 119." In a space marked "Addtl Space #," the words, "None 119," were handwritten. The agreement was in the name of Teofila Sanchez and provided that "[a]ll parking spaces must be occupied 'only' by the vehicles belonging to resident names that are mentioned in the Lease with [plaintiff]." According to the agreement, monthly charges would be billed for "each additional vehicle."

On January 31, 2011, plaintiff filed another eviction complaint alleging non-payment of rent. The complaint further alleged that defendants owed $673.10 in rent, comprised of the charges previously billed in the prior two complaints, as well as additional water charges and parking fees incurred. The complaint was again withdrawn by plaintiff on the day of trial.

On April 12, 2011, defendants retained counsel. On April 21, plaintiff filed a fourth eviction complaint for non-payment of rent again alleging unpaid water fees and parking charges. On April 26, apparently in response to defense counsel's inquiry, plaintiff's counsel indicated that he would speak to his client and "take no further action regarding [the complaint] until our offices confer."

On May 11, defense counsel served written notice on plaintiff's counsel pursuant to Rule 1:4-8, stating "the complaint appears frivolous." He further advised that if the complaint was not withdrawn, defendant would seek sanctions. Neither plaintiff nor its counsel responded.

The parties appeared for trial with counsel on May 18, 2011. The lease and parking agreement were moved into evidence, but no testimony was taken. Instead, the judge listened to argument, reviewed the documents and concluded that parking charges only applied "for each additional vehicle, that means in addition to the residents . . . ." He determined defendants were entitled to two parking spaces without charge, and, since it was undisputed that defendants had only two vehicles, the judge dismissed the complaint.2

Defense counsel orally moved for sanctions based upon "frivolous litigation." The judge advised counsel to make a formal motion.

On June 7, defendant filed four motions seeking sanctions and attorney's fees. Each alleged various grounds for the relief: Rule 1:4-8; the frivolous litigation statute, N.J.S.A. 2A:15-59.1; punitive damages based upon plaintiff's "wanton and willful disregard of persons harmed"; and the Consumer Fraud Act, N.J.S.A. 56:8-1 to -184 (the CFA). In support of the motion, defense counsel provided a certification setting forth in detail his various communications with plaintiff's representatives, as well as a brief description of the three prior complaints that had been withdrawn. Defendants provided no certifications, and there was no information provided regarding what, if anything, had transpired in court on the three prior trial dates. Defendant sought oral argument of the motions.

Plaintiff filed opposition, including a certification from its counsel in which he argued that the fourth complaint was not frivolous because of a "crucial difference," i.e., defendant's execution of the parking agreement.3 Defense counsel further claimed that the cause of action alleged in the fourth complaint "had merit," and therefore, "was not frivolous or sanctionable."

In a single order dated June 20, 2011, the judge denied defendant's motions. There were no explanations or reasons provided for the decision which was reached without oral argument. On July 26, defense counsel wrote to the judge advising that his clients were considering an appeal, and requesting the judge "provide [him] with the reasons for [his] decision denying the requested relief." The record contains no response from the judge, and we were advised at oral argument that none was provided. This appeal ensued.

Defendant contends that he was entitled to an award of counsel fees as a sanction for plaintiff's pursuit of frivolous litigation. Rule 1:4-8 "permits an attorney to be sanctioned for asserting frivolous claims on behalf of a client." United Hearts, L.L.C. v. Zahabian, 407 N.J. Super. 379, 389 (App. Div.), certif. denied, 200 N.J. 367 (2009). "In reviewing the award [or denial] of sanctions pursuant to Rule 1:4-8, we apply an abuse of discretion standard." Id. at 390 (citing Masone v. Levine, 382 N.J. Super. 181, 193 (App. Div. 2005)).

"Rule 1:4-8 supplements N.J.S.A. 2A:15-59.1, which is the frivolous claim statute." Masone, supra, 382 N.J. Super. at 192. Under the statute,

Only a party "who prevails in a civil action" is entitled to . . . relief. N.J.S.A. 2A:15-59.1(a)(1). And, "imposition of sanctions under the statute [is confined] to parties." McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 560 (1993); see id. at 549. Any responsibility for frivolous litigation must be assigned to attorneys pursuant to Rule 1:4-8.

[Ferolito v. Park Hill Ass'n, 408 N.J. Super. 401, 407 (App. Div.), certif. denied,

200 N.J. 502 (2009) (second alteration in original) (parallel citation omitted.]

"The legislature intended that judicial discretion should be used in determining an award for fees pursuant to N.J.S.A. 2A:15-59.1." Masone, supra, 382 N.J. Super. at 193.

Unfortunately, the judge provided no explanation whatsoever for his decision, leaving us unable to determine whether his denial of defendant's motions was a mistaken exercise of his discretion. Pursuant to Rule 1:7-4(a), "[t]he court shall, by an opinion or memorandum decision, either written or oral, find the facts and state its conclusions of law thereon . . . on every motion decided by a written order that is appealable as of right . . . ." "Failure to perform that duty 'constitutes a disservice to the litigants, the attorneys and the appellate court.'" Curtis v. Finneran, 83 N.J. 563, 569-70 (1980) (quoting Kenwood Assocs. v. Bd. of Adj. Englewood, 141 N.J. Super. 1, 4 (App. Div. 1976)).

We reject plaintiff's argument that the judge implicitly denied defendant's motions on their merits because the complaint was not frivolous. We likewise reject defendant's suggestion that we exercise original jurisdiction and determine the complaint was frivolous and sanctionable. As we recently noted, "Rule 2:10-5 provides that [t]he appellate court may exercise such original jurisdiction as is necessary to the complete determination of any matter on review. However, our original factfinding authority must be exercised only with great frugality and in none but a clear case free of doubt." Allstate Ins. Co. v. Fisher, 408 N.J. Super. 289, 301 (App. Div. 2009) (alteration in original) (citations and internal quotation marks omitted). In this case, defendant's argument that the fourth complaint was frivolous rests substantially upon the course of conduct plaintiff pursued by filing and withdrawing the prior three complaints. As already noted, there is nothing in the record that sheds light upon the withdrawal of the prior complaints, and, therefore, any exercise of original jurisdiction is both imprudent and impossible.

We therefore reverse the order under review and remand the matter to the trial judge for consideration of the merits of defendant's claim for sanctions under Rule 1:4-8 and N.J.S.A. 2A:15-59.1. On remand, defendant is entitled to orally argue his motions. See R. 1:6-2(d) (providing that oral argument when requested "shall be granted as of right"). We otherwise leave the conduct of the remand proceeding to the judge's sound discretion.

For the sake of completeness, defendant's claims for punitive damages and the award of counsel fees pursuant to the CFA are clearly without merit, Rule 2:11-3(e)(1)(E), and need not be considered on remand. Both required a counterclaim to be asserted by defendant. See N.J.S.A. 2A:15-5.11 (requiring a claim for punitive damages to "be specifically prayed for in the complaint"), and N.J.S.A. 2A:15-5.13(c) (providing that punitive damages may be considered only "if compensatory damages have been awarded"); see also N.J.S.A. 56:8-19 (requiring "[a]ny person who suffers any ascertainable loss of moneys or property, . . . as a result of the use or employment by another person of any method, act, or practice declared unlawful under [the CFA] may bring an action or assert a counterclaim therefor in any court of competent jurisdiction"). Defendant never filed a counterclaim nor moved to transfer the action to the Law Division as required by our rules. See R. 6:4-1(g).

R

1 While the appeal was pending and prior to oral argument, defendant Teofila Sanchez withdrew her appeal.

2 It would appear from the brief transcript of the proceedings that plaintiff conceded the complaint was based solely on the parking charges, despite the fact that the complaint also alleged a balance due for water charges. The judge did not address that issue.

3 We note, however, that the third complaint was filed and withdrawn after execution of the parking agreement.