HERMANN VORHAND v. DAVID GUINAN

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

HERMANN VORHAND,

Plaintiff-Appellant,

v.

DAVID GUINAN and DENIESE

GUINAN and PRECISION INSPECTION

SERVICES, INC.,

Defendants-Respondents.

_______________________________

Before Judges Lihotz and Nugent.

On appeal from Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-425-14.

Larry S. Loigman argued the cause for appellant.

Arnold R. Schlisserman argued the cause for respondents David Guinan and Deniese Guinan.

Joseph W. Denneler argued the cause for respondent Precision Inspection Services, Inc. (Salmon, Ricchezza, Singer & Turchi, LLP, attorneys; Mr. Denneler, on the brief).

PER CURIAM

Plaintiff Hermann Vorhand appeals from a September 5, 2014 order granting summary judgment in favor of defendant Precision Inspection Services, Inc. (Precision) and a February 6, 2015 order awarding Precision $3146.54 in counsel fees, pursuant to Rule 1:4-8(d).1 The dispute involved an alleged breach of contract for the sale of residential real estate between plaintiff and defendants David and Deniese Guinan (the buyers). Plaintiff asserts Precision's negligent home inspection of the property on behalf of the buyers caused them to improperly exercise a contingency clause and terminate the contract. Following our review, we affirm the grant of summary judgment to Precision. However, we reverse the order imposing sanctions because the determination is unaccompanied by the mandated factual findings underpinning the legal conclusion. R. 1:7-4(a); R. 1:4-8(d). Consequently, the propriety of the order cannot withstand scrutiny and must be vacated. We are constrained to remand the matter to the trial judge for a written statement of the factual findings and legal conclusions supporting his determination.

We recite the facts taken from the summary judgment record. On June 20, 2013, plaintiff, a real estate investor, entered into a contract with the buyers to sell residential property located in Toms River for $420,000. The contract included an "Inspection Contingency Clause," enabling the buyers to conduct a standard residential home inspection2 prior to closing. Under the home inspection clause, the buyers, at their sole expense, were afforded the opportunity to hire a qualified inspector to examine the property for physical defects. The plaintiff would be advised of any revealed defects and granted the opportunity to cure, although he was under no obligation to do so. If plaintiff declined to cure the defects, the buyers were given the option "to void th[e c]ontract by notifying the [s]eller."

The buyers retained Precision to perform a home inspection. Precision's inspection report identified "significant structural" defects in the home, including cracks in the building's foundation, as well as termite and water damage to subflooring, all of which Precision estimated would cost approximately $83,000 to repair. As provided by the contract, the buyers informed plaintiff and, apparently, the inspection report was sent to his attorney. The buyers sought to terminate the agreement of sale and requested return of their $6000 deposit.

Plaintiff refused to release the buyers from the contract, advising he was "committed to reasonably addressing all of the buyer's concerns." The buyers transmitted a detailed list of repair requests to plaintiff. However, when plaintiff failed to act, the buyers sent a written notice of rescission of the agreement of sale.

Thereafter, plaintiff secured his own evaluation of the home, performed by KBA Engineering Services, LLC, which opined the cracks in the foundation were neither "remarkable" nor likely to "affect the structural integrity of the foundation." The buyers rejected the report as not addressing other significant defects they identified as in need of repair and correction, such as the inward movement of the basement and sloping of the kitchen ceiling and upstairs bathroom floor. Plaintiff declined to remediate these purported defects. The buyers declined to purchase the property.

Plaintiff sold the property to a third party for $390,000. He filed a complaint against the buyers and Precision. He alleged the buyers breached the agreement of sale and as a result of their "wrongful cancellation," they were responsible for compensatory damages representing his "actual pecuniary loss" of $30,000. Plaintiff alleged Precision's "incompetent and negligent inspection," as demonstrated by a report prepared by an "unqualified inspector," "falsely, inaccurately and erroneously described . . . the property," and listed "defects which were not present and exaggerating minor deficiencies," causing the buyers to withdraw from the agreement of sale.

On July 1, 2014, Precision contacted plaintiff, informing him the cause of action alleged was without legal basis.3 Precision asserted it owed no legal duty to plaintiff as its contract was solely with the buyers and urged plaintiff to voluntarily dismiss the negligence claim as frivolous. Plaintiff disagreed with the analysis and did not withdraw his complaint.

In response to Precision's motion seeking summary judgment, plaintiff filed a certification.4 Plaintiff contended he "reasonably relied" on Precision's home inspection report findings noting the agreement of sale required any inspection report, if obtained by the buyers, to be provided to him to consider remedying identified defects or allow the parties to negotiate a price reduction.

At oral argument, the trial judge found the unambiguous contract terms did not permit plaintiff to rely on his own inspector to challenge the buyer's inspection report, stating the agreement "says the buyer has the right to retain an expert. If the buyer has trust in this expert and says the house is going to crumble and fall down, they have the right to walk away, or you have the right to cure the defect. But [plaintiff] did neither."

In response, plaintiff insisted even though no expressed provisions of the contract stated as much, the "general practice in the industry" allowed the parties to use competing home inspection reports to renegotiate and possibly amend the agreement of sale. The motion judge also rejected this assertion, stating: "That's not the standard, and you have no expert to say that." The judge appeared to adopt Precision's arguments as his own and rejected plaintiff arguments, stating, "I agree with you I disagree with you." He granted Precision's motion for summary judgment without further written or oral opinion.

Precision next moved for sanctions pursuant to Rule 1:4-8(b), seeking an award of reasonable counsel fees incurred to defend plaintiff's purported frivolous claim. The judge reserved entry of a final order pending plaintiff's review of and challenge to the fee amount sought in Precision's certification of services. On February 6, 2015, without additional written or oral findings, the judge issued an order awarding Precision $3146.54 in counsel fees, to be paid by "plaintiff or his counsel." This appeal followed.

"We review the trial court's summary judgment order de novo, applying the same standard that governs the trial court." Globe Motor Co. v. Igdalev, 436 N.J. Super. 594, 600 (App. Div. 2014). We "must review the competent evidential materials submitted by the parties to identify whether there are genuine issues of material fact and, if not, whether the moving party is entitled to summary judgment as a matter of law." Bhagat v. Bhagat, 217 N.J. 22, 38 (2014). All facts must be viewed in a light most favorable to the non-moving party, "keeping in mind '[a]n issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion . . . would require submission of the issue to the trier of fact.'" Schiavo v. Marina Dist. Dev. Co., 442 N.J. Super. 346, 366 (App. Div. 2015) (alteration in original) (quoting R. 4:46-2(c)), certif. denied, 224 N.J. 124 (2016).

"The practical effect of this rule is that neither the motion court nor an appellate court can ignore the elements of the cause of action . . . ." Bhagat, supra, 217 N.J. at 38. It is only "when the evidence 'is so one-sided that one party must prevail as a matter of law,' the trial court should not hesitate to grant summary judgment." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995) (citation omitted) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202, 214 (1986)). If no genuinely disputed fact exists, we must "then decide whether the trial court's ruling on the law was correct," W.J.A. v. D.A., 210 N.J. 229, 238 (2012) (quoting Henry v. N.J. Dept. of Human Servs., 204 N.J. 320, 330 (2010)), a determination which is reviewed de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

In challenging the grant of summary judgment to Precision, for the first time plaintiff argues Precision had a duty to properly perform the inspection and the lack of contractual relationship or privity of contract would not necessarily defeat his claim. We note the trial judge did not address the issue because it was never raised before him.

"It is a well-settled principle that [we] will decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available 'unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest.'" Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973) (quoting Reynolds Offset Co., Inc. v. Summer, 58 N.J. Super. 542, 548 (App. Div. 1959), certif. denied, 31 N.J. 554 (1960)); see also Solondz v. Kornmehl, 317 N.J. Super. 16, 22 (App. Div. 1998) ("Appellate courts rightly decline to consider questions or issues not presented to the trial court when an opportunity to do so was available unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest.").

Plaintiff's shift in legal theory to now advocate Precision held a legal duty to him based on a claim of foreseeable reliance and injury will not be considered. The question does not concern jurisdiction or a matter of great public interest. Furthermore, plaintiff has neither marshalled facts nor legal authority to support such a proposition. There is no evidence of plaintiff's reliance, rather, the facts show the buyers alone relied on Precision's report, as they were entitled by the specific and clear terms of the agreement of sale.

Considering the totality of the motion judge's comments reflected in the transcript of the summary judgment hearing, we are satisfied there were no material factual disputes identified by either party, including the rights and obligations stated in the agreement of sale. The judge considered Precision's legal argument and plaintiff's response thereto. He adopted Precision's view of the law, and rejected plaintiff's claim to interpret the contract's provisions as influenced by generally accepted industry practices, a claim which also was unsupported. Shelcusky v. Garjulio, 172 N.J. 185, 200-01 (2002); Heyert v. Taddese, 431 N.J. Super. 388, 413-14 (App. Div. 2013).

Although we determine the limited remarks by the motion judge were adequate to allow our review, we remind trial judges of their obligation, required by Rule 1:7-4, to provide more specific factual findings supporting the stated legal conclusions.

Rule 1:7-4(a) requires trial judges to make specific findings of fact and conclusions of law, either in writing or orally, on all motions decided by written orders appealable as of right. Curtis v. Finneran, 83 N.J. 563, 569-70 (1980); Cameco, Inc. v. Gedicke, 157 N.J. 504, 509-10 (1999); Ronan v. Adely, 182 N.J. 103, 110-11 (2004); Foley, Inc. v. Fevco, Inc., 379 N.J. Super. 574, 588-89 (App. Div. 2005). This is especially true for matters summarily dismissed.

In support of an order granting summary judgment, a judge is required to detail the findings of fact and conclusions of law in a written or oral opinion. R. 1:7-4(a); R. 4:46-2(c). A motion judge is obligated "to set forth factual findings and correlate them to legal conclusions. Those findings and conclusions must then be measured against the standards set forth in [Brill, supra, 142 N.J. at 540.]" Great Atl. & Pac. Tea Co. v. Checchio, 335 N.J. Super. 495, 498 (App. Div. 2000). Neither the parties nor the appellate court is "well-served by an opinion devoid of analysis or citation to even a single case." Ibid.

. . . .

The trial judge may satisfy the court rules by relying on the facts or reasons advanced by a party; however, the court is obligated to make the fact of such reliance "explicit." Pressler, Current N.J. Court Rules, comment 1 on R. 1:7-4 (2009).

[Allstate Ins. Co. v. Fisher, 408 N.J. Super. 289, 299-301 (App. Div. 2009).]

See also Pardo v. Dominguez, 382 N.J. Super. 489, 492 (App. Div. 2006) (finding although the trial judge made comments and asked questions during oral argument, reversal of the grant of summary judgment was warranted because the judge's reasons for the decision could not be ascertained from the record).

Litigation is an expensive and time consuming undertaking for parties advancing and defending claims. When a matter is fully presented to a court for disposition, members of the judiciary are unquestionably charged with the unyielding obligation to inform all parties of the factual and legal rationale for every order entered. Lapses in this regard, which deprive parties from understanding why an order was entered, increase conflict and are counter to the court's role.

Following our review of the entire record, we are not persuaded by plaintiff's argument the judge merely provided "[n]aked conclusions" in violation of Rule 1:7-4. Rather, support for the judge's conclusion on the very narrow issue presented can be gleaned from the record. The judge based his decision on the contract's language, which did not permit plaintiff to attack Precision's report, a fact plaintiff acknowledged. Also, the judge identified plaintiff provided no expert evidence of a claimed industry standard. Finally, the judge expressly adopted Precision's legal argument and rejected plaintiff's. Although limited and terse, the judge's statements are sufficient to save the summary judgment order from reversal and remand.

Turning to the February 6, 2015 order, plaintiff asserts the judge erred in ordering he and counsel pay Precision counsel fees, arguing plaintiff advanced a reasonable good faith belief as to the merits of the claim against Precision. Plaintiff further argues the judge failed to state specific findings as required by Rules 1:4-8(d) and 1:7-4(a), requiring reversal.

As a general rule, we review "[a] trial judge's decision to award attorney's fees pursuant to Rule 1:4-8" under an abuse of discretion standard. McDaniel v. Man Wai Lee, 419 N.J. Super. 482, 498 (App. Div. 2011); United Hearts, L.L.C. v. Zahabian, 407 N.J. Super. 379, 390 (App. Div.), certif. denied, 200 N.J. 367 (2009). "Reversal is warranted when 'the discretionary act was not premised upon consideration of all relevant factors, was based upon consideration of irrelevant or inappropriate factors, or amounts to a clear error in judgment.'" Ferolito v. Park Hill Condo Ass'n, 408 N.J. Super. 401, 407 (App. Div.) (quoting Masone v. Levine, 382 N.J. Super. 181, 193 (App. Div. 2005)), certif. denied, 200 N.J. 502 (2009).

Rule 1:4-8(d) authorizes a sanction against an attorney and pro se party for violating Rule 1:4-8(a), which requires an attorney to certify, based on "knowledge, information, and belief" after reasonable inquiry, that, among other things: "the claims, defenses, and other legal contentions therein are warranted by existing law or by a non-frivolous argument for the extension, modification, or reversal of existing law or the establishment of new law[.]" R. 1:4-8(a)(2); see also Toll Bros., Inc. v. Twp. of W. Windsor, 190 N.J. 61, 68 (2007) (stating Rule 1:4-8 outlines the motion procedure for a party seeking attorney's fees directly incurred from the suit); N.J.S.A. 2A:15-59.1(a)5 (authorizing sanctions for the prevailing party when the underlying litigation is deemed frivolous).

The statute and the rule must be interpreted strictly against the applicant seeking an award of fees. LoBiondo v. Schwartz, 199 N.J. 62, 99 (2009); DeBrango v. Summit Bancorp, 328 N.J. Super. 219, 226 (App. Div. 2000). This strict interpretation is grounded in "the principle that citizens should have ready access to . . . the judiciary." Belfer v. Merling, 322 N.J. Super. 124, 144 (App. Div.), certif. denied, 162 N.J. 196 (1999). "The statute should not be allowed to be a counterbalance to the general rule that each litigant bears his or her own litigation costs, even when there is litigation of 'marginal merit.'" Ibid. (quoting Venner v. Allstate, 306 N.J. Super. 106, 113 (App. Div. 1997)). Sanctions should be awarded only in exceptional cases. See Iannone, supra, 245 N.J. Super. at 28. "When the plaintiff's conduct bespeaks an honest attempt to press a perceived, though ill-founded and perhaps misguided, claim, he or she should not be found to have acted in bad faith." Belfer, supra, 322 N.J. Super. at 144-45. The party seeking sanctions bears the burden to prove bad faith. Ferolito, supra, 408 N.J. Super. at 408.

Included among its provisions, Rule 1:4-8(a) places an affirmative burden on an attorney who signs a pleading to certify "to the best of his or her knowledge, information, and belief, formed after an inquiry reasonable under the circumstances" that the pleading is not "presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation," the assertions "are warranted by existing law or by a non-frivolous argument for the extension, modification, or reversal of existing law or the establishment of new law," and there is "evidentiary support" for the allegations being made. See LoBiondo, supra, 199 N.J. at 98. Additionally, Rule 1:4-8(d) specifically stipulates

[a] sanction imposed for a violation of paragraph (a) of this rule shall be limited to a sum sufficient to deter repetition of such conduct. The sanction may consist of . . . an order directing payment to the movant of some or all of the reasonable attorneys' fees and other expenses incurred as a direct result of a violation . . . . In the order imposing sanctions, the court shall describe the conduct determined to be a violation of this rule and explain the basis for the sanction imposed.

Here, Precision's motion for sanctions was premised on its initial request plaintiff withdraw his claims after identifying (1) there was no privity of contract between it and plaintiff and (2) no factual or legal basis supports its legal liability to plaintiff. During oral argument on the motion, the judge asked plaintiff to support the basis of the claimed right to reject or challenge the provisions of Precision's report to the buyers, in light of the express contract provisions

THE COURT: Where does it say that in the contract that you have the right to dispute the allegations set forth in report by the inspector that was selected by the [buyers]?

[PLAINTIFF'S COUNSEL]: I don t know that that's the specific language of the contract.

THE COURT: It's not in there.

[PLAINTIFF'S COUNSEL]: But we did provide a certification from my client who says that there is the practice in the buying and selling of real estate that not everything that's in a report is automatically accepted and done.

And it is common for the parties to negotiate about what's in the report, what repairs are necessary, what credits will be given, if any.

THE COURT: That's a negotiated resolution.

[PLAINTIFF'S COUNSEL]: Yes.

THE COURT: The contract language permits the buyer to walk unless the deficiencies as set forth in the [buyer]'s inspection report are satisfied by the seller. That's the language of the contract.

[PLAINTIFF'S COUNSEL]: That's the contract language, but that language is at variance with what the practice is in the industry in which questions often arise as to whether or not certain defects have to be remedied or

THE COURT: Well is there any language in the contract that says that the parties aren't bound by the language of this contract[?] And if they choose to, they will be bound by the practice as each party interprets, but isn't written or set forth here in any language?

[PLAINTIFF'S COUNSEL]: I certainly don't think there's any such language in the contract.

THE COURT: So you are compelled to meet the standards as set forth in the written contract.

Certainly, the judge considered the contract terms significant along with plaintiff's understanding that his position was not supported by the terms of the contract. The only theory of liability advanced by plaintiff to countermand the contractual provisions regarded the purported industry standards. However, no evidence was proffered to support the asserted industry standards, an intention by the parties to follow the yet undefined industry standards, or the parties' agreement to disregard the express contract terms in favor of some other standard. Consequently, plaintiff's argument, advanced in an effort to defeat summary judgment, was properly rejected as erroneous.

However, the grant of the dispositive motion, without more, is insufficient to establish an unsuccessful party's bad faith and cannot substitute for the mandated factfinding required by Rule 1:4-8(d). Neither the parties nor this court should be required to extrapolate from minimal remarks the judge's justification for a sanction award. The order must be clear not only to support the conclusion, R. 1:7-4(a), but also to identify the conduct sanctions are designed to deter, R. 1:4-8(d). Accord Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510, 543-47 (App. Div. 2009) (reversing and remanding award of attorney's fees where trial judge failed to describe the conduct determined to violate Rule 1:4-8(a) and to make "findings of fact and conclusions of law in the record required pursuant to Rule 1:7-4(a)"), certif. denied, 203 N.J. 93 (2010).

Because we cannot evaluate whether the judge's exercised discretion was "premised upon consideration of all relevant factors, was based upon consideration of irrelevant or inappropriate factors, or amount[ed] to a clear error in judgment," Ferolito, supra, 408 N.J. Super. at 407 (quoting Masone, supra, 382 N.J. Super. at 193), we are constrained to vacate the February 6, 2015 order awarding Precision $3146.54 in counsel fees. We remand the matter for explicit findings and conclusions. See R.M. v. Supreme Court of N.J., 190 N.J. 1, 13-14 (2007) (vacating and remanding counsel fee award where judge failed to explain how or why he arrived at award); City of Englewood v. Exxon Mobile Corp., 406 N.J. Super. 110, 125-26 (App. Div.) (vacating and remanding attorney fee award where record was devoid of analysis of relevant considerations outlined in RPC 1.5(a) or explanation for the fee award), certif. denied, 199 N.J. 515 (2009).

On remand, the judge must consider the submissions and identify whether Precision had demonstrated the presence of actionable conduct and then evaluate plaintiff and counsel's claimed defense to such charge. See Perez, supra, 391 N.J. Super. at 432 ("Where a party has reasonable and good faith belief in the merit of the cause, attorney's fees will not be awarded."). If sanctions are shown to be appropriate, the judge's opinion must fully explain the basis for imposing sanctions along with who is responsible and why. N.J.S.A. 2A:15-59.1(b); R. 1:4-8(d). Finally, an analysis of the reasonableness of the fees awarded as a sanction must be stated. City of Englewood, supra, 406 N.J. Super. at 125. Remand shall be concluded within thirty days.

Affirmed in part. Reversed and remanded in part. We retain jurisdiction.

1 Initially, plaintiff also appealed from the summary judgment dismissal of his claims against the buyers and a subsequent order awarding the buyers a counsel fee award. During oral argument before the panel, counsel advised all differences between plaintiff and the buyers had been resolved. They later filed a notice of dismissal of the March 6, 2015 order. Accordingly, our review is limited to plaintiff's challenges to the September 5, 2014 summary judgment order and the February 6, 2015 counsel fee award granted in favor of Precision.

2 See N.J.A.C. 13:40-15.2 (defining "home inspection").

3 Both plaintiff and Precision were represented by counsel and the mentioned correspondence was between counsel. For ease in presentation, we continue to reference these transactions as between plaintiff and Precision.

4 The record contains only the attachments to Precision's summary judgment motion and plaintiff's certification.

5 The statute provides a complaint is frivolous when "commenced, used or continued in bad faith, solely for the purpose of harassment, delay or malicious injury[,]" N.J.S.A. 2A:15-59.1(b)(1), or if "[t]he nonprevailing party 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 an extension, modification or reversal of existing law," N.J.S.A. 2A:15-59.1(b)(2). First Atl. Fed. Credit Union v. Perez, 391 N.J. Super. 419, 432 (App. Div. 2007); Iannone v. McHale, 245 N.J. Super. 17, 32 (App. Div. 1990).