NORMAN TOWERS PARTNERSHIP, LLC v. PWH CONSULTING, INC

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

NORMAN TOWERS PARTNERSHIP, LLC,

Plaintiff-Respondent/

Cross-Appellant,

v.

PWH CONSULTING, INC.,

PAUL W. HUKKANEN, individually,

KRAFT ROOFING COMPANY, INC.,

TIMOTHY P. KRAFT, individually,

and 2001 COMPANY, INC.,

Defendants,

and

THOMAS L. KELLY,

Defendant-Appellant/

Cross-Respondent.

________________________________________________________________

Argued July 15, 2014 Decided August 1, 2014

Before Judges Yannotti and Maven.

On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-9289-11.

Thomas L. Kelly, appellant/cross-respondent, argued the cause pro se.

Benjamin E. Widener argued the cause for respondent/cross-appellant (Stark & Stark, attorneys; Mr. Widener, on the briefs).

PER CURIAM

Defendant Thomas L. Kelly appeals from a June 7, 2013 trial court order enforcing a settlement agreement (Agreement) between Kelly and plaintiff Norman Towers Partnership, LLC, which dismissed the claims plaintiff had filed against defendants 2001 Company, Inc. (2001) and Kelly, its sole owner, in exchange for 2001 dismissing its counterclaim against plaintiff for outstanding repair invoices. Kelly asserts no such agreement ever existed. Kelly also appeals from an August 30, 2012 order denying his motion for temporary emergent relief to enjoin plaintiff from removing and replacing the defective roof.1

In its cross-appeal, plaintiff challenges that portion of the June 7 order denying its application for attorneys' fees and costs as sanctions under the Frivolous Claims Statute (FLS), N.J.S.A. 2A:15-59.1, and its analog in the Rules of Court, Rule 1:4-8. Plaintiff also seeks leave of court to submit a fee application as sanctions pursuant to the same provisions to recover the reasonable costs incurred associated with this appeal.

For the reasons that follow, we affirm on the appeal, and reverse and remand to the trial court on the cross-appeal. We also deny plaintiff's application for an award of counsel fees and costs for the appeal.

A brief recitation of the relevant facts is in order. This litigation stems from plaintiff's dissatisfaction with a roof replacement project on a building it owns in East Orange. In 2007, plaintiff engaged engineering and project management services from defendants PWH Consulting, Inc. and its sole owner, Paul W. Hukkanen (jointly PWH), to develop and manage its roof replacement construction project. PWH recommended the installation of 2001's roofing system designed by Kelly. Plaintiff hired defendants Kraft Roofing Company, Inc. and its sole owner, Timothy P. Kraft (jointly KRC), as the installation contractor.

The roof replacement project was completed in 2008, and Kelly offered a warranty for the roof system. Some two years later, after experiencing leaks and other problems with the roof system, plaintiff discovered construction defects and poor workmanship in the installation of the roof, as well as a less than optimal performance of the roof system. Plaintiff, in consultation with all defendants, made several attempts to have the roof repaired, albeit unsuccessfully.

In 2011, plaintiff filed a ten-count complaint alleging, among other things, negligence, breach of contract and warranties, and consumer fraud violations against all defendants, including Kelly. The complaint asserted claims of poor roof system design, shoddy construction work, and the failure of 2001's roof system to meet promised performance requirements. In its answer, 2001 filed a counterclaim, as assignee of U.S. Roof Inspection and Maintenance, Inc. (U.S.R.I.M.), demanding payment of $3859.31 for warranty and non-warranty repair work U.S.R.I.M. performed on plaintiff's roof.

Following the filing of this action, plaintiff provided each defendant the opportunity to inspect and evaluate the roof. The inspection, with all parties present, occurred in February 2012. Kelly retained attorney Greg Riley to represent 2001 and himself, individually. After the inspection, plaintiff gave notice of its intent to have 2001 roof system removed and a more suitable roof installed. Kelly objected claiming 2001's system was still under warranty, and offered to make additional repairs.

On August 29, 2012, Kelly filed a motion on short notice for temporary restraints to enjoin the removal of the roof scheduled to occur in September 2012. Kelly argued the motion pro se, having relieved Mr. Riley as his personal counsel. Mr. Riley, however, continued as counsel for 2001. The trial court denied the motion on August 20, 2012. Thereafter, Kelly moved before this court for leave to appeal the August 30 order, and to compel the trial court to either inspect the roof, or to engage an expert to provide the court a recommendation as to the condition of the roof. We denied the motion. Plaintiff subsequently removed and replaced the roof.

During the next several months, plaintiff resolved its claims against PWH and filed a stipulation of dismissal in January 2013. Following an April 1, 2013 settlement conference with the court, plaintiff achieved a settlement with KRC. Through multiple discussions with Mr. Riley, plaintiff extended a settlement offer to the remaining defendants in which plaintiff would dismiss the claims filed against 2001 and Kelly in exchange for 2001 dismissing its counterclaim against plaintiff for outstanding repair invoices. On April 18, 2013, plaintiff received a letter from Mr. Riley confirming he had conferred with Kelly and that he had agreed to a mutual dismissal of the claims. Within days, Mr. Riley expressed to plaintiff that Kelly had refused to sign the Agreement.

On May 20, 2013, plaintiff filed a motion to enforce the Agreement and for attorney's fees for bringing the motion. Mr. Riley, as counsel for 2001, filed a certification in which he confirmed his discussion of the Agreement with Kelly, and that Kelly had given his consent to the mutual dismissals. At the June 7, 2013 hearing on the motion, plaintiff and Mr. Riley presented similar versions of the negotiations culminating in the Agreement. Plaintiff represented that it was "reasonably satisfied with the settlement that was achieved from the other defendants," and, therefore, decided to dismiss all remaining claims against 2001 and Kelly.

Mr. Riley added that Kelly's objection to the Agreement stemmed from his desire to defend against the claims raised in the complaint, and to assert claims against plaintiff for malicious abuse of process, embezzlement, and extortion. Kelly informed the court that his objections to settling the case were based upon moral and ethical grounds. Upon questioning by the court, Kelly admitted initially having an enthusiastic response when Mr. Riley informed him of the offer. Kelly told the court: "I said, oh, wow. I was surprised. Fantastic. They want to settle for nothing. Wow." Kelly then said: "But I didn't tell him to write up papers and settle."

At the conclusion of the hearing, the judge rendered an oral opinion granting the relief sought by plaintiff. The trial court determined the parties had reached a meeting of the minds as to the material terms of the Agreement. The judge found there was an offer made by plaintiff, and an acceptance by Kelly, as evidenced by the correspondence between the parties' counsel and Mr. Riley's certification. The judge also found that Kelly's belated refusal to execute the Agreement was a misguided attempt to continue the case in order to pursue claims against plaintiff, which had not been properly asserted in a counterclaim.

This appeal followed in which Kelly (1) challenges the lower court's denial of temporary restraints enjoining the removal of the roof, (2) denies that he consented to the Agreement, (3) claims he was denied his right to a jury trial, and (4) seeks remand to a different judge. We conclude the arguments raised by Kelly lack merit.

New Jersey public policy favors the settlement of litigation. A settlement agreement is a contract that should be enforced by the courts like other types of contracts. Pascarella v. Bruck, 190 N.J. Super. 118, 124-25 (App. Div.), certif. denied, 94 N.J. 600 (1983). A settlement agreement becomes an enforceable contract when the parties agree upon and manifest their intent to be bound by all of the essential terms of the proposed contract. See Hagrish v. Olson, 254 N.J. Super. 133, 138 (App. Div. 1992).

The court, in finding there had been a meeting of the minds, essentially credited Mr. Riley's version of the events and discussions as set forth in his certification, and found that Kelly had consented to the Agreement. The judge stated that "Mr. Riley would never have written that letter without clearly understanding from you that you were a go." Conversely, the judge found Kelly not credible in denying that he gave his consent, and in his assertion that Mr. Riley did not have the authority to act on his behalf to accept the Agreement. Moreover, the judge found that Kelly's basis for objecting to the Agreement was baseless because, in the absence of any counterclaim against plaintiff on the concerns Kelly asserted, there was no legal basis to force plaintiff to continue in a case it wanted to dismiss. We conclude the judge's determinations on the existence of a settlement agreement are "based on findings of fact which are adequately supported by evidence." R. 2:11 3(e)(1)(A). As such, our intervention is unwarranted. Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483 84 (1974).

Kelly's arguments challenging the denial of temporary injunctive relief have insufficient merit to warrant any discussion beyond that provided in the trial judge's opinion. R. 2:11 3(e)(1)(E). Moreover, the issue is moot, as the roof has been removed and discarded.

In sum, we affirm the June 7, 2013 order enforcing the Agreement, and the August 30, 2012 emergent application order.

We now turn to plaintiff's cross-appeal. A trial court's determination on the availability and amount of fees and costs for frivolous litigation is reviewed under an abuse of discretion standard. Masone v. Levine, 382 N.J. Super. 181, 193 (App. Div. 2005).

Plaintiff submitted an application for attorneys' fees to the trial court pursuant to the FLS and Rule 1:4-8. The FLS "authorizes an award of counsel fees if the judge finds that 'a complaint, counterclaim, cross-claim or defense of the unprevailing person was frivolous.'" Zavodnick v. Leven, 340 N.J. Super. 94, 103 (App. Div. 2001) (quoting N.J.S.A. 2A:15-59.1(a)(1)). Rule 1:4-8(a) sets forth what constitutes frivolous litigation. It includes pursuing litigation that has no legal basis, filing papers to harass or cause unnecessary delay, and it prohibits attorneys and parties, appearing pro se, from engaging in such conduct. When applied together, the FLS and rule are intended to serve a dual purpose: punitive, by seeking to deter frivolous litigation; and compensatory, by seeking to reimburse the party who has been the subject of the frivolous action. Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510, 545 (App. Div. 2009); Ferolito v. Park Hill Ass'n., 408 N.J. Super. 401, 407 (App. Div. 2009). The sanction consists of reasonable counsel fees and litigation costs.

Following the June 7 hearing, the judge entered an order denying plaintiff's request for sanctions. Unfortunately, the judge provided no explanation whatsoever for his decision, leaving us unable to determine whether his denial of plaintiff's motion 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 Associates v. Board of Adjustment, 141 N.J. Super. 1, 4 (App. Div. 1976)). We therefore reverse that provision of the order under review and remand the matter to the trial judge for consideration of the merits of plaintiff's claim for sanctions under N.J.S.A. 2A:15-59.1. We leave the conduct of the remand proceeding to the judge's sound discretion.

After Kelly filed his notice of appeal, plaintiff served notice indicating that the appeal was frivolous, and stated that, if the appeal were not withdrawn, plaintiff would seek sanctions. When Kelly did not withdraw this appeal, plaintiff filed this cross-appeal to which Kelly responded "[d]efendant should not bear sanctions [from] the [c]ourt when he is attempting to litigate this appeal upon non-frivolous claims."

It is well-established that FLS does not apply to frivolous appeals. See Colca v. Anson, 413 N.J. Super. 405, 422 (App. Div. 2010) (confirming well-established principle that N.J.S.A. 2A:15-59.1 does not apply to frivolous appeals); Cmty. Hosp. Grp., Inc. v. Blume Goldfaden Berkowitz Donnelly Fried & Forte, P.C., 381 N.J. Super. 119, 129 (App. Div. 2005) (same). Thus, even if we were to accept plaintiff's argument that Kelly's appeal was frivolous, plaintiff is not entitled to sanctions under the FLS because it does not extend to plaintiff's request.

We affirm on the appeal, and reverse and remand to the trial court on the cross-appeal. We also deny plaintiff's application for an award of counsel fees and costs for the appeal. We do not retain jurisdiction.

1 Following the submission of Kelly's notice of appeal, we entered an order denying Kelly's motion for leave to appeal the August 30, 2012 order.