GARDEN STATE HIGHWAY PRODUCTS, INC v. VINELAND COOPERATIVE PRODUCE AUCTION ASSOCIATION INC

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

GARDEN STATE HIGHWAY

PRODUCTS, INC.,

Plaintiff-Appellant,

v.

VINELAND COOPERATIVE PRODUCE

AUCTION ASSOCIATION, INC.,

Defendant-Respondent.

_______________________________

September 1, 2016

Before Judges Lihotz and Nugent.

On appeal from Superior Court of New Jersey, Chancery Division, Cumberland County, Docket No. C-8-13.

Ned P. Rogovoy, attorney for appellant.

Tedesco, Gruccio & Reuss, attorneys for respondent (Michael J. Gruccio, on the brief).

PER CURIAM

Plaintiff Garden State Highway Products, Inc. appeals from an order awarding attorneys' fees and costs to defendant Vineland Cooperative Produce Auction Association, Inc. The Chancery judge found plaintiff's complaint frivolous and lacked legal basis. She awarded attorneys' fees and costs to defendant pursuant to N.J.S.A. 2A:15-59.1(a)(1) and Rule 1:4-8.

On appeal, plaintiff argues the award was erroneously entered because the judge's factual findings were not supported and she misapplied the law. We disagree and affirm.

Plaintiff significantly expanded its business operations after receiving site plan approval for a 4,858 square foot addition to its facility. Plaintiff's application to the municipal planning board included documentation showing plaintiff, with defendant's consent, received an accommodation to access a buffer encroachment on the east side of its property to allow truck vehicles entering defendant's property to maneuver and back into plaintiff's loading dock. The five foot vegetative strip along plaintiff's border with defendant's property was required by the municipal zoning ordinances. Defendant's agreement to allow disturbance of the buffer on plaintiff's property specifically denied permission to plaintiff and any of its employees or customers to "cross-over or onto" defendant's property to reach access roads.

In 2012, the understanding was confirmed, noting the buffer area opening, which was now asphalted, could "remain in place solely to allow sufficient maneuver area for trucks picking up or unloading product . . . on the easterly side of [plaintiff]'s building." Access to defendant's property was denied. These facts were unequivocally recited in the planning board resolution approving plaintiff's 2012 application for development.

Defendant confirmed plaintiff repeatedly exceeded the limited use of the buffer area and instead encroached on defendant's private drive, accessed as plaintiff's "principal means of access" to its property. Defendant had never granted such access and notified plaintiff it intended to install fencing on its site at the opening between the parties' properties to prevent further use of its property.

Plaintiff filed its two-count verified complaint to enjoin installation of the proposed fencing, asserting it blocked plaintiff's permitted use of the buffer and precluded plaintiff's truck deliveries. Plaintiff, in the second count, maintained its access to defendant's private drive resulted through adverse possession, requesting the court grant a permanent easement for ingress and egress.

Following some discovery, defendant sent a letter to plaintiff on September 13, 2013. The correspondence demanded plaintiff dismiss its complaint, which had no legal basis to support a claim for equitable relief, and provided notice of defendant's intention to seek sanctions pursuant to Rule 1:4-8(b)(2). Thereafter, defendant moved for summary judgment dismissal of the complaint.

Plaintiff did not withdraw its complaint. However, during the January 17, 2014 summary judgment hearing, plaintiff conceded there was no basis to support this claim. The judge granted summary judgment in part. The parties settled the remaining issue, filing a stipulation of settlement in lieu of trial. The stipulation reserved defendant's right to seek frivolous litigation sanctions.

Relying on its prior demand letter, defendant moved for an award of counsel fees and costs, asserting plaintiff initiated frivolous litigation, and arguing: its complaint was "presented for an improper purpose"; its claims "were not warranted by existing caselaw or by a non-frivolous argument for the extension modification or reversal of existing case law"; and plaintiff's claims for equitable relief, asserting an easement and adverse possession, had no evidentiary support. Plaintiff opposed the motion and the judge, following argument, issued a written statement of reasons and ordered plaintiff to pay attorney fees of $16,397.50, plus $2,278.71 in litigation costs. Plaintiff appealed from the order.

N.J.S.A. 2A:15-59.1 addresses the frivolous conduct of litigants, stating a party which prevails in a case "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." N.J.S.A. 2A:15-59.1(a)(1). "[O]n the basis of the pleadings, discovery, or the evidence presented," a court 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:15-59.1(b).]

"Where a party has [a] reasonable and good faith belief in the merit of the cause, attorney's fees will not be awarded." First Atl. Fed. Credit Union v. Perez, 391 N.J. Super. 419, 432 (App. Div. 2007) (citing DeBrango v. Summit Bancorp., 328 N.J. Super. 219, 227 (App. Div. 2000)); see also J.W. v. L.R., 325 N.J. Super. 543, 548 (App. Div. 1999) (holding the imposition of sanctions in the form of attorneys' fees "is not warranted where the [party] has a reasonable good faith belief in the merits of [the] action"). Sanctions are warranted "only when the pleading as a whole is frivolous or of a harassing nature[.]" Iannone v. McHale, 245 N.J. Super. 17, 32 (App. Div. 1990) (citations omitted). "We must interpret this statute strictly to ensure that our citizens are not dissuaded from accessing the courts." DeBrango, supra, 328 N.J. Super. at 226 (citing McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 561-62 (1993)).1

The legislative intent in adopting N.J.S.A. 2A:15-59.1 reflect a need to exercise judicial discretion when reviewing whether and in what amount sanctions should be awarded. DeBrango, supra, 328 N.J. Super. at 229; Masone v. Levine, 382 N.J. Super. 181, 192-93 (App. Div. 2005). Accordingly, our review of an order granting an award when a judge concluded litigation was frivolous, examines whether a motion judge reasonably exercised the authorized discretion. See Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444, 447 (2001) (stating a trial court is "in the best position to weigh the equities and arguments of the parties" requiring a "deferential standard of review").

It is clear that an "abuse of discretion is demonstrated if the discretionary act was not premised upon considerations of all relevant factors, was based upon consideration of irrelevant or inappropriate factors, or amounts to a clear error in judgment." Masone, supra, 382 N.J. Super. at 193 (citing Flagg v. Essex Cty. Prosecutor, 171 N.J. 561, 571 (2002)). Reversal is necessary "only when the exercise of discretion was 'manifestly unjust' under the circumstances." Newark Morning Ledger Co. v. N.J. Sports & Exposition Auth., 423 N.J. Super. 140, 174-75 (App. Div. 2011) (quoting Union Cty. Improvement Auth. v. Artok, LLC, 392 N.J. Super. 141, 149 (App. Div. 2007)). See also Flagg, supra, 171 N.J. at 572 (holding an abuse of discretion arises when a decision is "made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis" (quoting Achacoso-Sanchez v. I.N.S., 779 F.2d 1260, 1265 (7th Cir. 1985))).

Plaintiff argues it effectively abandoned the second count of the complaint, which alleged adverse possession, prior to summary judgment and "never burdened the [c]ourt with any substantive argument" or prosecution of the second count of its complaint as plaintiff did not respond to defendant's September 13, 2013 demand letter, and considering counsel's statement during the summary judgment motion argument; the record contains no facts to support such an assertion.

Moreover, the record reveals from the complaint's filing plaintiff knew the evidence could not support a claim of easement or adverse possession. Adverse possession, governed by N.J.S.A.2A:14-30 and -31, requires the adverse possessor to have "actual possession" of the real estate for an uninterrupted period of thirty or sixty years, depending on the character of the land. J & M Land Co. v. First Union Nat'l Bank ex rel. Meyer, 166 N.J.493, 500, 507 (2001); O'Brien v. Bilow, 121 N.J.L.576, 577-78 (E. & A. 1939). A similar thirty or sixty-year period is required to establish a prescriptive easement. Randolph Town Ctr., L.P. v. Cty. of Morris, 186 N.J.78, 79 (2006) (citing J & M Land Co., supra, 166 N.J.at 518-19).

Plaintiff offered no evidence to support its burden of establishing the elements of adverse possession or prescriptive easement, including the requisite lapse of time. Indeed, as plaintiff was very aware from 2001, defendant's accommodation was limited and defendant repeatedly denied plaintiff, its employees and customers from the "general right or privilege to cross over or onto [defendant]'s property to access either Oak Road or Main Road." Thus, plaintiff could never establish open, uninterrupted possession of defendant's property.

Plaintiff's act of ignoring defendant's specific directives denying permission to "cross-over or onto" defendant's property to reach access roads did not create a legal or equitable right of use or possession. The law establishing the requirements for such rights in another's property is clear. Plaintiff's suggestion its reasonable and good faith belief in the legal merits of these claims was dispelled only after discovery is specious.

We further reject plaintiff's argument suggesting the judge could not enter a fee award without testimony. The undisputed record establishes the complaint was frivolous. Our detailed discussion above addresses the second count of the complaint. As to the first count, the lack of merit apparent in the allegation defendant's conduct caused plaintiff "irreparable injury" was equally unfounded. Defendant had only consented to allow plaintiff access to the buffer on plaintiff's property for regular business operations; defendant's unwavering position always denied plaintiff complete access to its private property. Certainly, defendant could have filed an action to curb plaintiff's abuses of entering defendant's property for ingress and egress; however, we cannot agree defendant's choice to fence its own property is actionable. Under the circumstances, plaintiff's suit was not objectively reasonable as it offered no legal basis upon which to prevail. Ellison v. Evergreen Cemetery, 266 N.J. Super. 74, 85-86 (App. Div. 1993).

We conclude the judge appropriately applied her discretion in awarding defendant attorney's fees and costs of defending plaintiff's suit. The facts fully support the finding plaintiff "knew, or should have known, that the complaint . . . was without any reasonable basis in law or equity and could not be supported by a good faith argument for the extension, modification or reversal of existing law." N.J.S.A. 2A:15-59.1(b)(2). The award follows the statutory purpose designed "to compensate the party that has been victimized by the party bringing the frivolous litigation." Deutch & Shur, P.C. v. Roth, 284 N.J. Super. 133, 141 (Law. Div. 1995) (citing legislative history to determine purpose of the statute).

Affirmed.

1 Rule 1:4-8 supplements the statute, McDaniel v. Man Wai Lee, 419 N.J. Super. 482, 498 (App. Div. 2011), and permits sanctions imposed against counsel for asserting frivolous claims on behalf of a client. A judge may impose sanctions upon counsel who files a pleading that does not conform to the requirements of Rule 1:4-8(a) and fails to withdraw the pleading within twenty-eight days of service of a demand for its withdrawal. R. 1:4-8(b)(1). Here, the Chancery judge limited her conclusions to sanctions pursuant to N.J.S.A. 2A:15-59.1.