MARIO VALENZUELA v. BLANCA RESTREPO

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

MARIO VALENZUELA,

Plaintiff-Appellant,

v.

BLANCA RESTREPO, PATRICIA

CRISSIEN AND CARLOS HENAO,

Defendants-Respondents.

____________________________________

September 14, 2016

Submitted June 22, 2016 Decided

Before Judges Fuentes and Koblitz.

On appeal from Superior Court of New Jersey, Chancery Division, Passaic County, Docket No. C-0102-13.

Lazaro Carvajal, attorney for appellant.

Respondents have not filed a brief.

PER CURIAM

Plaintiff Mario Valenzuela appeals from an order entered by the Passaic County Chancery Division, General Equity Part that denied plaintiff's motion for reconsideration. The court's original order awarded defendant Patricia Crissien $8456 in counsel fees as a Rule 1:4-8 sanction against plaintiff for naming her as a defendant in this case without an evidentiary basis. Plaintiff argues that the trial court erred in denying his motion for reconsideration because at the time the court granted Crissien's motion for counsel fees, the parties had entered into a stipulation of dismissal covering all claims. We reverse and vacate the award of counsel fees based on a lack of evidentiary support.

These are the salient facts. On June 3, 2003, plaintiff and his former paramour, Blanca Restrepo, purchased a three-family1 house in Clifton. Restrepo's two adult children, Patricia Crissien and Carlos Henao, were not involved in this real estate venture. Although Restrepo did not contribute any funds toward the initial down payment, her name was on the deed as a tenant in common. Plaintiff and Restrepo agreed to reside together in one of the apartments, share equally in the rental income generated by the other two apartments, and be equally responsible for the property's operational expenses.

On May 31, 2011, plaintiff claims Restrepo convinced him to refinance the loan on the property and execute a new deed to add her two children as tenants in common, with each owning a twenty-five percent interest in the property. On January 4, 2012, Restrepo and Crissien refinanced the property, netting $52,462.44. Plaintiff alleged that Restrepo and Crissien distributed the net proceeds of the refinanced loan amongst themselves, without his knowledge or consent. As proof of this alleged embezzlement, plaintiff attached a copy of a check for $52,462.44 that was issued by National Financial Services, LLC to "Blanca Pulido Restrepo and Mario J. Valenzula" on January 4, 2012. Plaintiff also submitted a $50,000 PNC Bank withdrawal slip in the name of Blanca Restrepo; this document was dated January 31, 2012. Although the withdrawal slip is signed only by Blanca Restrepo, the names of Patricia Crissien and Blanca Restrepo are both handwritten at the bottom right-hand corner of the document.

On October 1, 2013, plaintiff filed a four-count complaint in the Passaic County Chancery Division, General Equity Part, naming Restrepo, Crissien, and Henao as defendants. Plaintiff also alleged that Restrepo no longer resided on the property. The first count of the complaint prepared by plaintiff's counsel sought primarily equitable relief against all four defendants in the form of a judicial decree "restoring title solely in Plaintiff's name." In the second count, plaintiff sought a partition by sale and an injunction prohibiting defendants from dissipating the asset. The third count sought contribution from defendants for the monthly mortgage payments and operating expenses. The fourth count alleged that Restrepo and Crissien engaged in conversion of the net proceeds from the refinanced loan.

On December 20, 2013, an attorney representing Crissien filed a responsive pleading containing a general denial of plaintiff's factual allegations, four affirmative defenses (including allegations of "bad faith for the purpose of exacting a nuisance settlement, entitling Crissien to damages pursuant to N.J.S.A. 2A:15-59.1"), and a counterclaim demanding dismissal of the complaint "due to the lack of Defendant's involvement in any of Plaintiff's claims." The record also contains a copy of a letter dated December 20, 2013, in which Crissien's counsel notified plaintiff's counsel that the allegations in the complaint were frivolous under Rule 1:4-8. Crissien's counsel demanded that "you withdraw your Complaint (an agreement may be drafted to this effect)."

On August 29, 2014, Crissien's counsel filed a motion with the General Equity Judge seeking frivolous litigation sanctions against plaintiff. In support of her motion, Crissien's counsel submitted a two-page certification, consisting of six paragraphs which chronicled the procedural history we have described. The certification ended with the following two paragraphs

5. Despite nearly ten (10) months and many extensions of time between the parties so that Plaintiff would have an opportunity to procure the evidentiary support he needed to pursue this claim against Crissien, he has been unable to do so. To date, Crissien has expended $8,456.00 on the defense of this litigation. As a courtesy to Ms. Crissien, I reduced my fee by $25.00 per hour during the course of the litigation. A true copy of Ms. Crissien's bill including all charges is attached hereto as Exhibit C.

6. On Wednesday, August 27, 2014, Plaintiff's attorney informed me that he would be filing a voluntary dismissal in this matter for lack of evidentiary support.

Plaintiff's counsel did not oppose Crissien's counsel's motion for sanctions under Rule 1:4-8. We emphasize that Crissien's counsel's motion was dated August 29, 2014. On September 8, 2014, ten days after Crissien's attorney submitted this certification to the court, the attorneys representing plaintiff and Crissien signed a stipulation of dismissal which stated: "This matter having been amicably resolved between the parties only as to Mario Valenzuela and Patricia Crissien, these two parties have agreed that all claims by and between these two parties are hereby dismissed without prejudice and without costs." The only claim Crissien had against plaintiff was reflected in her counterclaim based on Rule 1:4-8. The stipulation was filed with the Passaic County Superior Court on September 25, 2014. The trial judge granted Crissien's attorney's motion and awarded her $8456 in counsel fees in an order dated October 28, 2014 -- fifty days after the defense counsel signed a stipulation dismissing her client's counterclaim against plaintiff.

In the statement attached to the order denying plaintiff's motion for reconsideration, the judge noted

In support of [his]2 Motion for Reconsideration, the Plaintiff reasons that it is fundamentally unfair to enforce the dismissal but to ignore the fact that the defendant dismissed her claims as part of the same stipulation. However, in support of this position, the [Plaintiff]3 has failed to attach a copy of the stipulation of dismissal to [his] own motion papers. Setting aside Plaintiff's Counsel's brief, there is no evidence that a stipulation of dismissal was actually entered into between the parties. Furthermore, it must be noted that the Plaintiff simply refused to file any opposition to the Defendant's prior motion. The fact that a settlement agreement may or may not have been entered into does not excuse the Plaintiff from opposing the original motion.

We conclude the judge's findings were significantly affected by plaintiff's counsel's failure to attach a copy of the stipulation of dismissal to his motion for reconsideration. However, there are two critically important factors that provide a rational explanation for plaintiff's counsel's failure to oppose defendant's motion. First, the stipulation of dismissal that was signed by both of the attorneys in this case was filed with the Chancery Division, General Equity Part of Passaic County on September 25, 2014.4 Second, defense counsel was ethically obligated to apprise the motion judge that she had signed the stipulation on September 8, 2014, thus dismissing her client's counterclaim against plaintiff. Under these circumstances, defense counsel's omission was far more egregious than plaintiff's failure to respond to a motion for counsel fees that should have been withdrawn immediately after the attorneys signed the stipulation of dismissal.

R.P.C. 3.3 describes an attorney's ethical duty of candor to a tribunal. The following subsections of R.P.C. 3.3 are particularly relevant here

(a) A lawyer shall not knowingly

(1) make a false statement of material fact or law to a tribunal;

. . . .

(4) offer evidence that the lawyer knows to be false. If a lawyer has offered material evidence and comes to know of its falsity, the lawyer shall take reasonable remedial measures; or

(5) fail to disclose to the tribunal a material fact knowing that the omission is reasonably certain to mislead the tribunal, except that it shall not be a breach of this rule if the disclosure is protected by a recognized privilege or is otherwise prohibited by law.

[R.P.C. 3.3.]

By signing the stipulation of dismissal, defense counsel waived her right to seek counsel fees under Rule 1:4-8. Defense counsel's failure to inform the motion judge that her client had voluntarily agreed to dismiss the counterclaim predicated on Rule 1:4-8 was a material omission of fact that directly influenced the trial judge's decision. As the Supreme Court has made emphatically clear, the duty of candor that an attorney owes to a tribunal under R.P.C. 3.3 is "not limited to affirmative misstatements of fact or law by an attorney. Indeed, we have recognized that, depending upon the circumstances, 'silence can be no less a misrepresentation than words.'" Brundage v. Estate of Carambio, 195 N.J. 575, 591 (2008) (quoting Crispin v. Volkswagenwerk, A.G., 96 N.J. 336, 347 (1984)).

We thus vacate the order dated October 28, 2014, awarding counsel fees to defendant under Rule 1:4-8.

Reversed.

1 In the brief filed in this appeal, plaintiff's counsel described the property as a three-family house. In the complaint filed in the Chancery Division, counsel describes the property as both a "three-family house" and a "two-family house." Although this discrepancy is, in and of itself, not material for purposes of this appeal, it is emblematic of plaintiff's counsel's performance in this case.

2

The judge wrote "its" instead of "his." We made this minor correction to reflect that plaintiff in this case is a man, not a legal entity.

3 The judge actually wrote "Defendant." However, given the context of the sentence, we infer that the judge inadvertently misidentified the party involved.

4 The appellate record includes a copy of the stipulation of dismissal stamped by the court as "filed September 25, 2014."