GEORGE ABRAMS v. ESTATE OF JOHN SANTOPIETRO

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

GEORGE ABRAMS,

Plaintiff-Respondent,

v.

ESTATE OF JOHN SANTOPIETRO;

MARGARET ABRAMS AS

CO-ADMINISTRATOR OF THE ESTATE

OF JOHN SANTOPIETRO;

BAYONNE MUNICIPAL UTILITIES

AUTHORITY; and STATE OF NEW JERSEY

DIVISION OF PENSIONS AND

BENEFITS,

Defendants,

and

ROCCO SANTOPIETRO AS

CO-ADMINISTRATOR OF THE ESTATE

OF JOHN SANTOPIETRO,

Defendant-Appellant.

______________________________________

July 22, 2014

Submitted July 14, 2014 Decided

Before Judges Harris and Fasciale.

On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-3645-12.

Lawrence A. Leven, attorney for appellant.

Respondent has not filed a brief.

PER CURIAM

Defendant Rocco Santopietro, as co-administrator of the Estate of John Santopietro,1 appeals from the April 5, 2013 Law Division order denying the Estate's application for reallocation of counsel fees under the frivolous litigation rule, Rule 1:4-8. We reverse and remand for further proceedings.

I.

The operative facts are brief, uncomplicated, and not disputed. Appellant's son, twenty-one-year-old John Santopietro, was employed by the Bayonne Municipal Utilities Authority (the BMUA) when he died on March 16, 2012, as a result of an accident. In an April 4, 2012 letter to the BMUA's attorney, a representative of the New Jersey Division of Pensions and Benefits (the Division) wrote that the decedent was advised by the Division prior to his death that "[John Santopietro's] estate was the beneficiary of his Group Life Insurance and Pension Benefit." Whether this advice was factually or legally correct is not material to this appeal. The Division's letter, however, indicated that if there were disagreement with "this determination, you have the right of appeal to the Board of Trustees of the PERS." This letter was available to plaintiff before litigation commenced.

In July 2012, the present declaratory judgment action was filed in the Law Division by plaintiff George Abrams, who is married to Margaret Abrams, John Santopietro's mother. The remedy sought in the complaint was a declaration that the proper beneficiaries of decedent's life insurance and pension were plaintiff and his wife,2 and the proceeds of same do not belong to the intestate estate.

On September 12, 2012, an answer was filed on behalf of only two defendants: Rocco Santopietro and the Estate.3 One of the affirmative defenses presented in the answer stated the following: "Plaintiff has not exhausted administrative remedies to contest or appeal denial of plaintiff's claim by the Division of Pensions."

On October 26, 2012, the attorney for Rocco Santopietro and the Estate wrote to plaintiff's lawyer, demanding that the complaint be dismissed within twenty-eight days. The letter contended that the lawsuit was frivolous because the claim "has not been warranted by the facts or by any existing case law." Further, the letter set forth plaintiff's failure to exhaust administrative remedies.

On January 25, 2013, the Law Division entered an order dismissing the complaint "against Defendants, Margaret Abrams and Rocco Santopietro as co-administrators of the estate of John Santopietro and The Estate of John Santopietro . . . with prejudice because the Law Division, Hudson County lacks jurisdiction to hear the subject matter." No papers were filed in opposition to the motion to dismiss, and the order was endorsed with the handwritten notation, "unopposed."

On February 8, 2013, the Estate filed a motion for the reallocation of counsel fees pursuant to Rule 1:4-8. Plaintiff's opposition to the motion was based upon the contention that an administrative appeal would be futile, and the true controversy was between the decedent's father and stepfather over decedent's true intention with respect to his beneficiaries. Thus, plaintiff commenced the Law Division action rather than expend resources in a fool's errand in the administrative arena.

On April 5, 2013, after considering the parties' positions, the motion court declared,

The defense [sic] argues a theory, without much legal support, quite frankly, that they oppose the motion on the basis of the Doctrine of Futility provided a reasonable basis for Plaintiff to forego [exhaustion of] administrative remedies.

I really don't know what that means. There's no support of that in any record developed that it would be futile under the existing regulations or otherwise.

Notwithstanding the foregoing, the motion court then stated, "The fact that the plaintiff[']s complaint was dismissed for failure to exhaust administrative remedies does not mean that it was completely untenable and frivolous as required under Rule 1:4-8." Finding that the gravamen of the complaint actually asserted "an equitable theory," the court held,

So for purposes of determining whether the action is tru[ly] frivolous, if you will, that is to mean that it was completely untenable, the Court believes there was a [colorable] claim to assert this equitable theory and where the administrative remedies exhaustion requirement is not enforced, again, where the interest of justice requires. And that's all related to the equitable theory.

So for those reasons, the Court finds sufficient basis for this claim for attorney fees against the Plaintiff firm, pursuant to Rule 1:4-8 to be denied.

This appeal followed.

II.

Our scope of review is narrow. We follow the well-established rule of deference to a motion court's decision on a motion for reallocation of counsel fees. See McDaniel v. Man Wei Lee, 419 N.J. Super. 482, 498 (App. Div. 2011). We will disturb the motion court's determination only for abuse of discretion and where we find "'a clear error in judgment.'" Ibid. (quoting Masone v. Levine, 382 N.J. Super. 181, 193 (App. Div. 2005)). Such circumstances exist here.

An action is considered frivolous when no rational argument can be advanced in its support, it is not supported by any credible evidence, a reasonable person could not have expected its success, or it is completely untenable. Belfer v. Merling, 322 N.J. Super. 124, 144 (App. Div.), certif. denied, 162 N.J. 196 (1999). A motion for sanctions under Rule 1:4-8 will be denied where the pleading attorney had a reasonable and good faith belief in the merits of the claim. Wyche v. Unsatisfied Claim & Judgment Fund of N.J., 383 N.J. Super. 554, 561 (App. Div. 2006). Moreover, honest and creative advocacy should not be discouraged. Ibid.

The litigation in this case was clearly frivolous because plaintiff's demanded remedy "[d]irecting the State of New Jersey Division of Pensions and Benefits, to deliver to Plaintiff George Abrams and Margaret Abrams the full amount of John Santopietro's [life insurance] and pension benefits, as primary beneficiaries" was jurisdictionally beyond the Law Division. Simply calling the action as one for a "declaratory judgment" does not change the essential nature of what is a monetary grievance, which was actionable through an administrative appeal in the Division or to the Trustees of the Public Employees' Retirement System.

The motion judge well appreciated the lack of any reasonable basis to proceed in court, and commented that plaintiff's futility argument was "without much legal support." We go farther than that and express our disdain for the commencement of litigation where a clear avenue for administrative relief, as outlined in the pre-litigation letter to the BMUA's attorney, was available to vindicate plaintiff's rights. The motion judge's concoction of an "equitable theory" came out of thin air, and was neither argued nor supported by any allegations in the case. Indeed, without predicting the outcome of any administrative appeal, plaintiff's claims were, at least, fully cognizable if they had been commenced in the proper forum. Racing to court was plainly an unsupportable course of action, which was proven by the swift dismissal of the complaint. Because the Estate properly prevailed, and incurred expenses in doing so, reallocation of reasonable counsel fees and costs is appropriate.

The motion court's decision represents a clear error in judgment. Accordingly, we reverse and remand the matter to the Law Division for reallocation of counsel fees and costs under Rule 1:4-8. The Estate shall be permitted to amend its initial request for reallocation, and may seek amounts to which it believes it is entitled due to this appeal. The Law Division shall have full authority to award reasonable amounts necessary to deter future violations of the rule. See R. 1:4-8(d).

Reversed and remanded for further proceedings. We do not retain jurisdiction.

1 We treat the appellant as Rocco Santopietro because he, alone, is identified as such in the Notice of Appeal. We observe, however, that appellant's brief and appendix claim to be submitted on behalf of all defendants. To further confuse the issue, we note that the order under appeal identifies the sole moving (and aggrieved) party as defendant Estate of John Santopietro.

2 According to the complaint, Margaret Abrams and plaintiff were married in May 1994. Margaret Abrams and Rocco Santopietro never married and never resided together. Furthermore, the decedent resided with his mother and stepfather "for virtually John's entire life."

3 Appellant's appellate appendix does not contain the answers, if any, filed by either the BMUA or the Division. However, on October 18, 2012 (and again on January 25, 2013) the Law Division dismissed the complaint against the Division "without prejudice for failure to exhaust administrative remedies." We do not know what happened to plaintiff's claims against the BMUA.