IN THE MATTER OF THE ESTATE OF JOHN GARAY
Annotate this CaseNOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1735-16T1
IN THE MATTER OF THE
ESTATE OF JOHN GARAY.
_______________________
Submitted January 25, 2018 – Decided March 20, 2018
Before Judges Simonelli and Gooden Brown.
On appeal from Superior Court of New Jersey,
Chancery Division, Somerset County, Docket No.
80-73.
Lanza & Lanza, LLP, attorneys for appellants
Dale Garay, D. Michelle Garay and Patricia
Garay (John E. Lanza and Christopher J.
Trofimov, of counsel and on the brief).
Law Office of Raymond A. Grimes, PC, attorneys
for respondents Nancy Garay and Mark Segal.
PER CURIAM
In this matter, plaintiffs Dale Garay (Dale), D. Michelle
Garay (Michelle), and Patricia Garay (Patricia),1 sued their
1
We refer to the parties by their first names to avoid confusion
caused by their common surname. We intend no disrespect. We
shall sometimes collectively refer to Dale, Michelle, and Patricia
as plaintiffs.
sister, defendant Nancy Garay (Nancy), and her husband, defendant
Mark Segal,2 for fraud and unjust enrichment relating to
defendants' purchase of property owned by their mother, Donna
Garay (Donna), and the estate of their deceased father, John Garay
(John). Plaintiffs appeal from the June 17, 2016 order, which
granted summary judgment to defendants and dismissed the amended
complaint with prejudice. Plaintiffs also appeal from the November
17, 2016 order, which imposed frivolous lawsuit sanctions against
them pursuant to
N.J.S.A. 2A:15-59.1 and Rule 1:4-8. We affirm
both orders.
I.
Plaintiffs and Nancy are four of John's and Donna's thirteen
children. John and Donna owned property as joint tenants by the
entirety. When they divorced in 1975, their respective interests
in the property converted to a fifty-percent interest as tenants
in common. Donna resided in the property until it was sold to
defendants in 2013.
John died testate in December 1979. In his Last Will and
Testament, John made monetary bequests to each of his children,
including a $10,000 bequest to Nancy. The Will also made the
children equal residual beneficiaries, and appointed John's sister
2
We shall sometimes collectively refer to Nancy and Mark Segal
as defendants.
2 A-1735-16T1
and son, Mark Garay (Mark), as co-executors of his estate. The
Will authorized and empowered the co-executors to sell any real
property in which John had an interest at the time of his death
and "execute any and all instruments and documents that shall be
necessary and proper for the fulfillment of [that power]."
In March 2011, the property was appraised at $335,000. A
second appraisal valued the property between $239,900 and
$249,900. Patricia acknowledged the property was probably worth
only $250,000, stating: "At first I thought geez, $250K for a
house in that neighborhood? That seems way low. But then you
look at all that's wrong with it, mold, water damage, rotted
subfloors, et cetera, et cetera, and maybe it's not so crazy.
Maybe it is a tear down."
In July 2013, the co-executors and Donna executed a contract
to sell the property to defendants for $335,000. Donna gave
defendants a $90,000 gift equity toward the purchase price, and
defendants obtained a mortgage in the amount of $245,000 for the
balance. The co-executors and Donna approved the gift equity and
sale, and signed a gift letter and the HUD-1 Settlement Statement,
which listed the purchase price at $335,000, as well as the gift
equity. The attorney representing the estate also consented to
the sale and signed the HUD-1 Settlement Statement. Donna and the
3 A-1735-16T1
estate each received $122,500 from the balance of the sale
proceeds.
Plaintiffs filed an amended complaint, asserting claims of
fraud and unjust enrichment, and alleging that:
(1) defendants made material
misrepresentations to the estate and its
attorney about the gift equity and "slipped
the term" into the contract, which defendants
prepared;
(2) Nancy's share of the estate was not
$45,000 in gift equity attributed to the
estate for purposes of reducing the purchase
price. Nancy was entitled to no more than
$10,000 plus her share of the residuary estate
and unjustly enriched herself to the estate's
detriment by over $30,000;
(3) defendants defrauded the estate by taking
advantage of Donna's and Mark's poor health
and failed to provide adequate consideration
for the estate's interest in the property;
(4) defendants defrauded the estate by making
material misrepresentations to the estate's
attorney regarding gifts allegedly owed from
the estate for the purpose of reducing the
purchase price;
(4) the estate and its attorney relied on
those material misrepresentations in
facilitating the closing of title at an
artificially reduced price; and
(5) as a consequence, defendants unjustly
enriched themselves at the expense of the
beneficiaries of the estate and cause the
estate damages.
4 A-1735-16T1
Plaintiffs sought damages in the amount of $45,000, or an order
voiding the sale. Because the co-executors had resigned,
plaintiffs also sought an order appointing Dale and Michelle as
administrators C.T.A. of the estate. No one objected to that
request.3
In their interrogatories to plaintiffs, defendants requested
specific and detailed facts supporting plaintiffs' allegation that
defendants made material misrepresentations to the estate and its
attorney that they were to receive the gift equity and "slipped
the term" into the contract of sale. Plaintiffs responded:
"Defendants' mortgage application, which is under [s]ubpoena, will
confirm these allegations. See also the attached [c]ontract.
Plaintiffs reserve the right to amend this [i]nterrogatory
[a]nswer upon completion of depositions of [d]efendants."
Plaintiffs never produced the mortgage application.
Defendants requested specific and detailed facts supporting
plaintiffs' allegation that Nancy unjustly enriched herself to the
estate's detriment by over $30,000. Plaintiffs responded: "See
the attached Will of John Garay, Deceased. See also attached
mortgage closing documents and notes from [the estate's
3
Because no one objected, the court sua sponte entered an order
on September 26, 2016, appointing Dale and Michelle as
administrators C.T.A.
5 A-1735-16T1
attorney.]" However, plaintiffs did not attach the mortgage
closing documents or the estate's attorney's notes.
Defendants requested specific and detailed facts supporting
plaintiffs' allegation that defendants defrauded the estate by
taking advantage of Donna's and Mark's poor health and failed to
provide adequate consideration for the estate's interest.
Plaintiffs responded: "Plaintiffs intend to develop the factual
basis of these allegations by the way of the deposition of Mark
[]. Plaintiffs also have personal knowledge of [Donna's] dementia,
documentation of which shall be obtained by subpoena." Donna and
Mark were never deposed, they gave no certification or affidavit
supporting this allegation, and plaintiffs never produced
documentation of Donna's alleged dementia or Mark's alleged poor
health.
Defendants requested specific and detailed facts supporting
plaintiffs' allegation that defendants defrauded the estate by
making material misrepresentations to the estate's attorney
regarding gifts allegedly owed from the estate for the purpose of
reducing the purchase price. Plaintiffs responded: "See responses
to Interrogatories 1-6." However, plaintiffs' responses to those
interrogatories did not provide any specific or detailed facts
supporting the allegation.
6 A-1735-16T1
Defendants requested specific and detailed facts supporting
plaintiffs' allegation that the estate and its attorney relied on
defendants' material misrepresentations in facilitating the
closing of title at an artificially reduced price. Plaintiffs
responded: "See all documents produced by [the estate's attorney].
Plaintiffs intend to further develop factual basis of this
allegation via the deposition of [the estate's attorney]."
Plaintiffs did not identify or attach the attorney's documents or
depose him, and he gave no certification or affidavit supporting
this or the prior allegation.
Lastly, defendants requested specific and detailed facts
supporting plaintiffs' allegation that defendants unjustly
enriched themselves at the expense of the beneficiaries of the
estate causing damages. Plaintiffs responded: "see responses to
interrogatories 1-8." However, plaintiffs' responses to these
interrogatories did not provide any specific or detailed facts
supporting this allegation.
On November 5, 2015, defendants' attorney advised plaintiffs'
attorney the interrogatory answers were deficient and demanded
more responsive answers. Plaintiffs did not respond or amend
their interrogatory answers.
Following the close of discovery, defendants filed a motion
for summary judgment to dismiss the complaint with prejudice.
7 A-1735-16T1
Defendants also sought an order compelling the estate to release
$14,104.69 to Nancy,4 and freezing the estate's remaining assets
pending a motion for an order awarding frivolous lawsuit sanctions
against plaintiffs and their attorney.
On June 17, 2016, Judge Margaret Goodzeit entered an order
and written statement of reasons granting the motion for summary
judgment, dismissing the complaint with prejudice, freezing the
estate's remaining assets, and denying defendants' requests to
release $14,104.69 from the estate's funds and for attorney's fees
for the summary judgment motion.5
In dismissing the fraud claim, the judge found plaintiffs
provided no proof that Donna or Mark suffered from any health
problems "let alone those which would have impacted their
judgment." The judge also found plaintiffs' allegations in the
amended complaint failed to set forth with specificity, and the
evidence did not establish, the elements of fraud. The judge
determined that plaintiffs failed to specify in the amended
complaint or provide evidence of what material misrepresentations
defendants made regarding the gift equity; that defendants knew
4
Nancy's share of the residuary estate was calculated at
$4,104.69.
5 On June 30, 2016, the judge entered an amended order permitting
the release of $14,104.69 from the estate's funds.
8 A-1735-16T1
or believed their material misrepresentations were false; how
defendants intended that plaintiffs rely on their material
misrepresentations; and that plaintiffs reasonably relied on the
alleged material misrepresentations. The judge emphasized that
plaintiffs were not parties to the contract or sale transaction,
the individuals involved were not parties to this litigation, and
plaintiffs did not assert any claims on their behalf. The judge
further found that, although plaintiffs pled the co-executors
relied on defendants' misrepresentations, there was no evidence
demonstrating the co-executors or Donna were deprived of the
opportunity to evaluate the misrepresentations before consenting
to the gift equity or sale. Lastly, the judge found defendants
owed no duty to plaintiffs to disclose the gift equity because
there was no fiduciary relationship between them.
In dismissing the unjust enrichment claim, Judge Goodzeit
found there was no genuine issue that: the purchase price was
$335,000; defendants received a $90,000 gift equity and $245,000
mortgage loan; Donna and the co-executors signed a gift letter to
defendants for $90,000; and Donna and the estate each received
fifty percent of the balance of the sale proceeds. The judge
stated the genuine issue was whether the gift equity came from
Donna solely, or from Donna and the estate. The judge concluded
9 A-1735-16T1
this issue was a dispute between plaintiffs and the co-executors
and Donna, not between plaintiffs and defendants.
Judge Goodzeit found the co-executors knew, understood, and
agreed to the gift equity, were permitted to make reasonable
decisions about the estate's assets, including the property, and
the Will authorized and empowered them to sell the property. The
judge emphasized the co-executors were under no obligation to
consent to the gift equity or accept one-half of the sale proceeds,
and concluded:
Plaintiffs' position is that the estate was
provided $45,000 less than what it should have
received had the entire gift equity been
attributed to Donna []. This is not a claim
that plaintiffs have against [defendants] but
against the co-executors' decision to allow
the proceeds to be divided equally between the
estate and Donna [] rather than by attributing
the $90,000 gift to Donna []. Plaintiffs'
claims of improper disbursement of assets are
being asserted against the wrong party.
Plaintiffs' claims do not demonstrate that it
was [defendants] who unjustly enriched
themselves.
II.
On appeal, plaintiffs do not address Judge Goodzeit's
dismissal of the fraud claim for failure to set forth with
specificity, or provide evidence establishing, the elements of
fraud. Rather, they argue that summary judgment was improper
because there are material issues of fact as to whether there was
10 A-1735-16T1
a $45,000 gift equity from the estate to defendants, and there was
no evidence the estate consented to the gift equity. Plaintiffs
also argue defendants never alleged there were necessary parties
not joined in the litigation, and were estopped from making that
argument on summary judgment, but the judge considered it
nonetheless. These arguments lack merit.
Our review of a ruling on summary judgment is de novo,
applying the same legal standard as the trial court. Conley v.
Guerrero,
228 N.J. 339, 346 (2017). Thus, we consider, as the
motion judge did, "whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so
one-sided that one party must prevail as a matter of law." Liberty
Surplus Ins. Corp. v. Nowell Amoroso, PA,
189 N.J. 436, 445-46
(2007) (quoting Brill v. Guardian Life Ins. Co. of Am.,
142 N.J.
520, 536 (1995)). Summary judgment must be granted "if the
pleadings, depositions, answers to interrogatories and admissions
on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact challenged and that the
moving party is entitled to a judgment or order as a matter of
law." Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co.,
224 N.J. 189, 199 (2016) (quoting R. 4:46-2(c)). "To defeat a
motion for summary judgment, the opponent must 'come forward with
evidence that creates a genuine issue of material fact.'" Cortez
11 A-1735-16T1
v. Gindhart,
435 N.J. Super. 589, 605 (App. Div. 2014) (quoting
Horizon Blue Cross Blue Shield of N.J. v. State,
425 N.J. Super.
1, 32 (App. Div. 2012)).
If there is no genuine issue of material fact, we must then
"decide whether the trial court correctly interpreted the law."
DepoLink Court Reporting & Litig. Support Servs. v. Rochman,
430 N.J. Super. 325, 333 (App. Div. 2013) (citation omitted). "When
no issue of fact exists, and only a question of law remains, [we]
afford[] no special deference to the legal determinations of the
trial court." Templo Fuente,
224 N.J. at 199 (citation omitted).
Applying the above standards, we discern no reason to disturb the
grant of summary judgment.
"A complaint sounding in fraud, must on its face, satisfy the
requirements of Rule 4:5-8." State, Dep't of Treasury ex rel.
McCormac v. Qwest Commc'ns Int'l, Inc.,
387 N.J. Super. 469, 484
(App. Div. 2006). "The heightened fraud pleading requirements set
forth in the Rule provide the 'particulars of the wrong, with
dates and items if necessary, shall be stated insofar as
practicable. Malice, intent, knowledge, and other condition of
mind of a person may be alleged generally.'" Ibid. (quoting R.
4:5-8(a)). "A court may dismiss a complaint alleging fraud if
'the allegations do not set forth with specificity, nor do they
constitute as pleaded, satisfaction of the elements of legal or
12 A-1735-16T1
equitable fraud.'" Ibid. (quoting Levinson v. D'Alfonso & Stein,
320 N.J. Super. 312, 315 (App. Div. 1999)).
To state a claim for common law fraud, the
following elements must be pled:
(1) a material misrepresentation of a
presently existing or past fact; (2) knowledge
or belief by the defendant of its falsity; (3)
an intention that the other person rely on it;
(4) reasonable reliance thereon by the other
person; and (5) resulting damages.
[Id. at 485 (citations omitted).]
Stated differently, "legal fraud consists of a material
representation of a presently existing or past fact, made with
knowledge of its falsity and with the intention that the other
party rely thereon, resulting in reliance by that party to his
detriment." Jewish Ctr. of Sussex Cty. v. Whale,
86 N.J. 619, 624
(1981). "Misrepresentation and reliance are the hallmarks of any
fraud claim, and a fraud cause of action fails without them."
Banco Popular N. Am. v. Gandi,
184 N.J. 161, 174 (2005).
"To prove a claim for unjust enrichment, a party must
demonstrate that the opposing party 'received a benefit and that
retention of that benefit without payment would be unjust.'"
Thieme v. Aucoin-Thieme,
227 N.J. 269, 288 (2016) (quoting Iliadis
v. Wal-Mart Stores, Inc.,
191 N.J. 88, 110 (2007)). "Recovery
under [this] doctrine[] requires a determination that defendant
has benefitted from plaintiff's performance." Woodlands Cmty.
13 A-1735-16T1
Ass'n v. Mitchell,
450 N.J. Super. 310, 318 (App. Div. 2017)
(emphasis added).
Plaintiffs' allegations in their amended complaint did not
set forth with specificity, and the evidence did not establish,
the elements of fraud. The record is devoid of evidence that:
defendants made material misrepresentations to Donna, the co-
executors, or the estate's attorney regarding the gift equity;
knew or believed the misrepresentations were false; intended that
these individuals rely on the misrepresentations; and these
individuals relied on the misrepresentations to their detriment.
Jewish Ctr. of Sussex Cty.,
86 N.J. at 624; State, Dep't of
Treasury,
387 N.J. Super. at 485. Accordingly, Judge Goodzeit
properly dismissed the fraud claim with prejudice.
Even if plaintiffs had properly pled or established the
elements of fraud, summary judgment was still proper, as defendants
had no duty to disclose the gift equity to plaintiffs. It is well
settled that "a party has no duty to disclose information to
another party in a business transaction [1] unless a fiduciary
relationship exists between them, [2] unless the transaction
itself is fiduciary in nature, or [3] unless one party 'expressly
reposes a trust and confidence in the other.'" N.J. Econ. Dev.
Auth. v. Pavonia Rest., Inc.,
319 N.J. Super. 435, 446 (App. Div.
1998). Here, no fiduciary relationship existed between plaintiffs
14 A-1735-16T1
and defendants, as defendants were not executors of the estate.
Although the sale transaction was fiduciary in nature, plaintiffs
were not parties to it, and there was no evidence that plaintiffs
or defendants expressly reposed trust and confidence in the other
regarding the sale. The fiduciary relationship existed between
plaintiffs and the co-executors, who consented to the gift equity
and sale, and plaintiffs' dispute was with them, not defendants.
Judge Goodzeit also properly dismissed the unjust enrichment
claim. Plaintiffs were not parties to the contract and sale
transaction, and thus defendants derived no benefit from them.
Woodlands Cmty. Ass'n,
450 N.J. Super. at 318. In addition, the
documentary evidence confirms the purchase price was $335,000 with
a $90,000 gift equity. Defendants paid the balance of $245,000,
which, as Patricia acknowledged, was a fair value for the property
based on its poor condition, and in accord with the second
appraisal. The estate received its one-half share of the balance.
There was no unjust enrichment.
III.
Shortly after service of the amended complaint, defendants'
attorney served a written notice and demand on plaintiffs'
attorney, stating the amended complaint was frivolous and the
basis for that belief, demanding withdrawal, and advising an
application for frivolous lawsuit sanctions pursuant to N.J.S.A.
15 A-1735-16T1
2A:15-59.1 and Rule 1:4-8 would be made if the complaint was not
withdrawn within twenty-eight days. Plaintiffs did not withdraw
the complaint, proceeded with the litigation, and ignored
defendants' attorney's November 15, 2015 demand for more specific
answers to interrogatories.
After the grant of summary judgment, defendants filed a motion
for frivolous lawsuit sanctions against plaintiffs and their
attorney. Defendants sought $20,666.69 for all of their attorney's
fees and costs incurred from the inception of the litigation. In
a supporting certification of services, defendants' attorney
stated:
I am an attorney at law in the State of New
Jersey and have been practicing law since
1988. My hourly rate is $325.00 per hour which
is fair and reasonable in cases such as this
and in this County. I have been representing
these defendants since January 2015 in this
matter. As the court is aware, after all
discovery was complete, I was able to obtain
an order granting summary judgment for the
defendants regarding the claims filed by
plaintiff [a]s is set forth in Exhibit L, the
total amount of attorney's fees and costs
incurred as a result of this litigation is
$20,666.69, which is all broken down into time
spent and disbursements.
The attorney attached invoices for all services rendered. The
invoices described the services rendered and time spent on each
activity, itemized disbursements, and indicated whether the bill
was paid and the date of payment.
16 A-1735-16T1
On November 17, 2016, Judge Goodzeit entered an order and
written statement of reasons, awarding defendants $13,335.20, and
entering judgment against plaintiffs, jointly and severally, in
that amount. The judge declined to assess sanctions against
plaintiffs' attorney, finding that
the vindictive desire of the plaintiffs to
cause the defendants to suffer undoubtedly
directed the instigation of this lawsuit and
its continuation after the [Rule] 1:4-8 letter
and demands for responsive discovery (and
threatened motion for sanctions) were sent.
The [c]ourt does not perceive that
[plaintiffs' attorney] had the ability to
direct the plaintiffs to discontinue the
litigation which was commenced by litigants
who had their own agenda: harm of the
defendants.
This [c]ourt of equity has overseen this
action since September 2015 when I became the
[presiding judge] of Chancery. The [c]ourt
is convinced that while [plaintiffs' attorney]
was aggressively advocating his clients'
positions, he should not bear the consequences
of the plaintiffs' decision to follow the path
they chose.
Judge Goodzeit reviewed defendants' attorney's certification
of services and found it substantially complied with the
requirements of Rule 4:42-9. The judge determined that the
attorney's billing rate was reasonable compared to other
practitioners of his experience in this area of law, the total
time charged for the services rendered was reasonable and
appropriate, and all invoices submitted, except three, were
17 A-1735-16T1
stamped "Paid 07/21/2016." However, the judge only awarded fees
incurred since November 15, 2015, finding as follows:
a substantial portion of [the $20,666.69
sought], but not its entirety, shall be
included in the award. At the outset,
plaintiffs' [c]omplaint also had as a
component a request that [a]dministrators
C.T.A. be appointed, as the [co-e]xecutors
(who approved the real estate transaction in
issue) had both resigned and there were no
estate fiduciaries in place. Ultimately, the
[c]ourt did allow the plaintiffs' suggested
[] Michelle [] and Dale [] to be named as
[a]dministrators C.T.A. as no one objected
thereto. Accordingly, there was at least one
sound reason to file a [c]omplaint, albeit
virtually no time or effort was incurred in
connection with litigation of this request.
Further, defendants did not file a motion
to dismiss the [c]omplaint upon the initiation
of this action. Had they done so, and had the
[c]omplaint been dismissed, a year's worth of
litigation and incurrence of counsel fees may
have been avoided. That is not to say that
defendants should be blamed for this
litigation; clearly that is not the case.
However, as the defendants participated in
this litigation willingly rather than
attempting to have it dismissed at the
beginning, and as there was one request that
was legitimately filed, the [c]ourt finds that
some portion of defendants' fees should be
borne by them. Accordingly, the [c]ourt finds
that starting with the date upon which
[defense counsel] sent plaintiffs a critique
of their unresponsive answers to
interrogatories and a demand for more
responsive answers, to wit: November 5,
[2015], plaintiffs shall be responsible for
defendants' legal fees. The [c]ourt, thus,
finds that defendants' counsel fees starting
on November 5, 2015, through the conclusion
18 A-1735-16T1
of this matter, shall be deemed the sanctions
which will have to be paid. To be specific,
those fees are [in the amount of $13,335.20].
On appeal, plaintiffs argue that frivolous lawsuit sanctions
were not warranted, as there was no showing of bad faith; rather,
they acted in good faith believing defendants had cheated the
estate out of $45,000. Without specifying any deficiencies in
defendants' attorney's certification of services, plaintiffs argue
the certification did not meet the standards of
N.J.S.A. 2A:15-
59.1.
We review a judge's decision on a motion for frivolous lawsuit
sanctions under an abuse-of-discretion standard. United Hearts,
LLC v. Zahabian,
407 N.J. Super. 379, 390 (App. Div. 2009). We
will reverse a decision 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." Masone v. Levine,
382 N.J.
Super. 181, 193 (App. Div. 2005).
N.J.S.A. 2A:15-59.1(a)(1), which governs frivolous lawsuit
claims against parties,6 provides that:
6 Rule 1:4-8 governs frivolous lawsuit claims against attorneys,
which is not the case here. Claims against parties governed by
N.J.S.A. 2A:15-59.1 are affected by the procedural but not the
substantive provisions of Rule 1:4-8. Toll Bros., Inc. v. Twp.
Of W. Windsor,
190 N.J. 61, 69-73 (2007). Plaintiffs do not
19 A-1735-16T1
[a] party who prevails in a civil action,
either as plaintiff or defendant, against any
other party 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 party was frivolous.
The frivolous litigation statute is interpreted restrictively.
DeBrango v. Summit Bancorp,
328 N.J. Super. 219, 226 (App. Div.
2000).
Litigation is considered frivolous when it is "commenced,
used or continued in bad faith, solely for the purpose of
harassment, delay or malicious injury" or if the non-prevailing
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)(1) and (2). Counts of a complaint
may be severed "for purposes of determining whether [the counts
are] 'frivolous.'" Lake Lenore Estates, Assocs. v. Twp. of
Parsippany-Troy Hills Bd. of Ed.,
312 N.J. Super. 409, 421 (App.
Div. 1998).
dispute that defendants complied with the procedural requirements
of Rule 1:4-8.
20 A-1735-16T1
A motion for sanctions under Rule 1:4-8 will be denied where
the pleading party had an objectively reasonable and good faith
belief in the merits of the claim. First Atl. Fed. Credit Union
v. Perez,
391 N.J. Super. 419, 433 (App. Div. 2007). However,
litigation may become frivolous, and therefore sanctionable, by
continued prosecution of a meritless claim, even if the initial
pleading was not frivolous or brought in bad faith. DeBrango,
328 N.J. Super. at 227-28, 230. This is because the "requisite bad
faith or knowledge of lack of well-groundedness may arise during
the conduct of the litigation." United Hearts,
407 N.J. Super.
at 390 (citation omitted). In such cases, the party seeking
sanctions would only be entitled to fees and/or costs incurred
from the time the litigation became frivolous, rather than from
the inception of the litigation. DeBrango,
328 N.J. Super. at
230.
The court may award "reasonable" expenses and attorney's fee
to the prevailing party on a motion for frivolous lawsuit
sanctions. R. 1:4-8(b)(2). In order to establish reasonableness,
the moving party's attorney must submit an affidavit of services,
which shall include the following information:
(1) the time and labor required, the novelty
and difficulty of the questions involved, and
the skill requisite to perform the legal
services properly;
21 A-1735-16T1
(2) the likelihood, if apparent to the
client, that the acceptance of the particular
employment will preclude other employment by
the lawyer;
(3) the fee customarily charged in the
locality for similar legal services;
(4) the amount involved and the results
obtained;
(5) the time limitations imposed by the
client or by the circumstances;
(6) the nature and length of the professional
relationship with the client;
(7) the experience, reputation, and ability
of the lawyer or lawyers performing the
services;
(8) whether the fee is fixed or contingent[.]
[R.P.C. 1.5(a).]
The affidavit of services must also include "a detailed statement
of the time spent and services rendered by paraprofessionals, a
summary of the paraprofessionals' qualifications, and the
attorney's billing rate for paraprofessional services to clients
generally[,]" and a statement as to how much the client had paid,
and "what provision, if any, has been made for the payment of fees
to the attorney in the future." R. 4:42-9(b) and (c).
We agree that defendants' attorney's certification of
services substantially complied with the requirements of Rule
4:42-9, and are satisfied that frivolous lawsuit sanctions were
22 A-1735-16T1
warranted. The litigation was frivolous because the fraud and
unjust enrichment claims were 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). Even if the amended complaint was not frivolous,
the litigation clearly became frivolous, and therefore,
sanctionable, by plaintiffs' continued prosecution of meritless
claims that had no evidential support whatsoever. United Hearts,
407 N.J. Super. at 390; DeBrango,
328 N.J. Super. at 227-28, 230.
Accordingly, Judge Goodzeit did not abuse her discretion in
awarding frivolous lawsuit sanctions, and properly apportioned the
amount awarded from November 15, 2015.
Affirmed.
23 A-1735-16T1
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