HI-WAY BLOCK PATIO INC v. JOHN JOHNSTON

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NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1457-18T4

HI-WAY BLOCK & PATIO INC.,

Plaintiff-Appellant/
Cross-Respondent,

JOHN JOHNSTON, individually
and trading as CJL LANDSCAPING,
LLC,

Defendant-Respondent/
Cross-Appellant/Third-
Party Plaintiff,

CJL DESIGN & CONSTRUCTION,
LLC,

Third-Party Defendant.
_______________________________

Argued October 15, 2019 – Decided October 29, 2019

Before Judges Geiger and Natali.

On appeal from the Superior Court of New Jersey, Law
Division, Bergen County, Docket No. L-3772-17.
Andrew R. Turner argued the cause for appellant/cross
respondent (Turner Law Firm, LLC, attorneys; Andrew
R. Turner, of counsel and on the brief).

Gary S. Newman argued the cause for respondent/cross
appellant (Newman & Denburg, LLC, attorneys; Gary
S. Newman on the brief).

PER CURIAM

Plaintiff Hi-Way Block & Patio Inc. appeals from Law Division orders

entered following a bench trial dismissing plaintiff's complaint and denying

reconsideration. Defendant John Johnston, individually and trading as CJL

Landscaping, LLC, cross-appeals from an order denying an award of frivolous

litigation sanctions under Rule 1:4-8 and N.J.S.A. 2A:15-59.1. We affirm in

part and vacate and remand in part.

Plaintiff sells paving stones and other products to contractors.

Commencing in or about 2011, defendant purchased materials from plaintiff.

Plaintiff claimed defendant owed it an unpaid balance on a book account for

materials supplied. At issue in this case is the enforceability of a purported

settlement agreement (the Agreement) dated March 25, 2015, acknowledging

CJL Landscaping owed plaintiff an outstanding balance of $35,658. The

signature line was allegedly signed by John Johnston as "Guarantor" on a

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signature line for "John Johnson." Paragraphs two and three of the Agreement

relating to payment terms were left blank. The Agreement states the guarantor

"is liable for all cost[s] not excluding (interest and fees) associated with

collection of this debt." It does not state the applicable interest rate. The

Agreement contains no witness signatures and is not notarized. Defendant

denied that he signed or agreed to the terms of the Agreement. This litigation

followed.

On May 31, 2017, plaintiff filed a complaint to enforce the Agreement.

Count one alleged breach of the Agreement, acceptance of goods without

payment, unjust enrichment, and demanded judgment for "$38,219.06, plus

interest, costs, and such other relief as the court deems fair, just, and equitable."

Count two alleged defendant was "liable for all costs associated with collection"

and that "[p]laintiff's costs of collection will be at least twenty (20%) percent of

the amount due," and demanded judgment for "$7,643.81, plus interest, costs,

and such other relief as the court deems fair, just, and equitable."

After defendant did not file a timely responsive pleading, default and

default judgment were entered against defendant. Defendant successfully

moved to vacate default and the default judgment, and was granted leave to file

a responsive pleading. Defendant filled an answer, affirmative defense,

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counterclaim, and third-party complaint. Defendant alleged he did not

personally purchase goods from, or owe any monies to, plaintiff. He contended

the goods were sold to third-party defendant CJL Design & Construction, LLC,

not defendant. Defendant alleged his signature on the Agreement was forged.

He demanded judgment for compensatory, consequential, and punitive damages,

attorney's fees, and costs of suit.

Following the completion of expedited discovery, plaintiff moved to

preclude defendant from using two checks not produced in discovery.

Defendant moved to: (1) bar plaintiff from introducing any documents at trial

that were not produced in discovery; (2) bar admission of the Agreement; and

(3) dismiss plaintiff's complaint with prejudice for lack of proofs . Defendant

asserted plaintiff did not provide requested discovery, including any invoices,

bills of lading, or executed contracts. The trial court denied plaintiff's motion

and granted defendant's motion in part. The court barred plaintiff from

producing any documents at trial that were not provided in discovery as of June

25, 2018.

The case proceeded to a one-day bench trial. Plaintiff did not proceed on

the book account. Instead, it asserted the Agreement as the sole basis for

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liability.1 Mark Woitscheck, Stephen Sapio, and Steven Woitscheck testified

for plaintiff. Plaintiff did not utilize a handwriting expert. Defendant testified

on his own behalf.

The parties submitted post-trial proposed findings of fact and conclusions

of law. The trial court issued a September 17, 2018 written trial decision and

order ruling in defendant's favor and dismissing plaintiff's complaint with

prejudice.

In its written decision, the trial court noted plaintiff "postured this

litigation as one simply to determine whether or not the Agreement was entered

into by the parties." Each of plaintiff's witnesses "testified as to their knowledge

concerning the surrounding circumstances and business relationship with the

defendant as well as the circumstances surrounding the execution of the alleged

Agreement." Sapio and Woitscheck testified "they were physically present

when the Agreement was executed between the parties." They testified that

Woitscheck had a brief conversation with Johnston, he signed the Agreement,

and "hurriedly left the facility."

1
During oral argument, plaintiff acknowledged its claims on the book account
were barred by the applicable statute of limitations. Hence, at trial, its claim
was limited to enforcing the Agreement.
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Woitscheck, the owner of the company and in charge of accounts

receivable and payable, "testified that the purpose of the Agreement was to put

the 'debt on the record.'" He indicated that over time, defendant "had

accumulated a sizable debt for goods received but not paid for." It was plaintiff's

practice to send monthly billing statements to customers listing the invoices and

amounts due and owing. Woitscheck testified the monthly statements

eliminated the need for maintaining individualized invoices and point-of-service

tickets.

Woitscheck was confronted on cross-examination with checks issued by

defendant totaling more than $58,000 for payment of goods supplied by

plaintiff. Woitscheck did not dispute those payments were made but claimed

defendant had ordered goods well in excess of that amount as reflected by a

monthly statement admitted as an exhibit. According to Woitscheck, the

monthly statement only reflected goods not paid for.

Johnston testified that he did not execute the Agreement. He further

testified he never received monthly statements from plaintiff indicating any

outstanding invoices. He asserted that he first learned plaintiff claimed a large

balance was owed when Woitscheck confronted him in late 2014 or early 2015.

The trial court stated:

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The testimony revealed that the practice was for Mr.
Johnston to leave checks with the plaintiff. The checks
were from the business account of CJL Design &
Construction, LLC. It was understood that [plaintiff]
would fill out the checks in the amount due and owing
from CJL as necessary. Marked as Exhibit 4 were a
large grouping of checks running from check number
5177 and inclusive of check number 6317 showing
payments made to the plaintiff by the defendant.

Describing the dispute as a classic "he said/she said" scenario, the trial

court found all of the witnesses "appeared credible." The trial court engaged in

the following analysis:

A number of factors lead this [c]ourt to conclude that
plaintiff has failed to meet this standard. Other than the
Agreement and the Monthly History marked as Exhibit
P2 there are no further documents to demonstrate the
existence of the debt. It is recognized that plaintiff's
counsel advocates that the only issue is whether the
Agreement was executed. Given the sharply divergent
testimony by equally credible witnesses extrinsic
evidence is of assistance in the analysis.

Testimony revealed that the practice was for Mr.
Johnston to leave checks with his representatives who
were free, based upon custom and practice, to fill in the
amounts on the checks for purchases made by Mr.
Johnston. Defendant presented checks in excess of
$58,000 for payments made from August 9, 2011
through November 11, 2014. The Agreement was
allegedly executed as of March 25, 2015 for what were
characterized as long outstanding debt. An analysis of
the Monthly Statements submitted indicates a balance
of $29,287.67 as July 27, 2013 yet Exhibit D-1 shows
many payments well after that. Plaintiff failed to

A-1457-18T4
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present invoices or any other documentary evidence to
substantiate the amount of the debt. The Monthly
History is inadequate to permit the [c]ourt as factfinder
to accurately determine the debt. (This appears to
explain why counsel for plaintiff proceeded to try this
case on the Agreement rather than on the debt itself.)

Counsel for plaintiff submits that the signature on
the Agreement is similar to signatures on checks
admitted by Mr. Johnston to have been signed by him.
However, Mr. Johnston denied signing certain other
checks and without a handwriting expert this court is
unable to determine with any degree of certainty that it
is Mr. Johnston's signature. Also of note is that the
signature line on the Agreement has defendant's name
misspelled. Defendant testified he would not have
signed a document where his name was misspelled.

Based on all the factors noted herein, this [c]ourt
as factfinder determines that the plaintiff has failed to
prove by a preponderance of the evidence that Mr.
Johnston executed the Agreement. Plaintiff has also
failed to prove by a preponderance of evidence the
amount of the debt. Plaintiff's complaint is hereby
dismissed with prejudice.

Plaintiff moved for reconsideration. Defendant's counsel wrote to

plaintiff's counsel demanding that plaintiff withdraw its motion for

reconsideration or defendant would seek frivolous litigation sanctions pursuant

to N.J.S.A. 2A:15-59.1 and Rule 1:4-8. Plaintiff did not withdraw its motion.

Plaintiff contended the trial court overlooked the fact that the checks presented

by defendant were issued before the date of the Agreement and the purpose of

A-1457-18T4
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the Agreement was to demonstrate that as of March 25, 2015, the amount set

forth in the Agreement was the amount owed by defendant to plaintiff. Plaintiff

argued the Agreement was an enforceable contract and "the [c]ourt should not

look beyond [its] four corners for enforcement or what was behind the

agreement." Plaintiff asserted the focus should have been whether there was an

enforceable contract, not whether the underlying debt existed. Plaintiff further

asserted that every check presented by defendant had been accounted for.

Therefore, if the Agreement is valid, the amount of the Agreement speaks for

itself and plaintiff does not have the burden of establishing how the amount was

derived. Further, extrinsic evidence should not have been permitted.

Defendant opposed reconsideration and filed a cross-motion for frivolous

litigation sanctions. Defendant argued plaintiff cannot present evidence in

support of reconsideration that was not produced at trial. At trial, defendant

testified he never signed the Agreement, and even if he had, plaintiff could not

prove the underlying debt. Plaintiff elected to limit its evidence to the

Agreement and did not introduce evidence regarding the underlying book

account or pursue a quantum meruit claim. Defendant contended the trial

decision was supported by credible evidence in the record, plaintiff failed to cite

A-1457-18T4
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any law, or show any facts that were raised at trial that the court overlooked.

Defendant contended plaintiff's motion was frivolous.

The trial court denied reconsideration. The court noted plaintiff was

"attempting to narrow the focus inappropriately in the sense of not permitting

the defense to present relevant evidence to cast doubt on the validity of [the

Agreement]." As the factfinder, the court determined plaintiff had failed to

prove by a preponderance of the evidence that defendant executed the

Agreement. "Therefore there was no agreement." The court stated it permitted

the extrinsic evidence "because when there was an issue as to whether there was

an agreement . . . the background circumstances that allegedly led to execution

of the [A]greement were directly relevant to determining whether there was an

agreement."

With the two sides taking completely divergent positions, "the background

circumstances and attendant facts were important to the [c]ourt to determine

whether in fact the agreement was executed." The court reiterated its original

analysis that it found for defendant "based upon the inability of the plaintiff to

demonstrate through invoices or other proofs that the numbers made sense

coupled with [defendant's] testimony that he never would have signed a

document with his name misspelled and other things."

A-1457-18T4
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The court also denied defendant's application for frivolous litigation

sanctions, cryptically stating: "Each party bears the burden of defending their

case through trial and even on a motion for reconsideration so I'm not going to

award fees on that."

This appeal followed. Plaintiff argues the trial court erred by failing to

make express conclusions of law and abused its discretion when assessing

credibility without regard to evidence. On the cross-appeal, defendant argues

he should have been awarded attorney's fees and costs for opposing the

reconsideration motion.

II.

"Final determinations made by the trial court sitting in a non-jury case are

subject to a limited and well-established scope of review . . . ." D'Agostino v.

Maldonado, 216 N.J. 168, 182 (2013) (citations omitted). "[F]indings by the

trial court are binding on appeal when supported by adequate, substantial,

credible evidence. Deference is especially appropriate when the evidence is

largely testimonial and involves questions of credibility." Seidman v. Clifton

Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011) (quoting Cesare v. Cesare, 154 N.J.
394, 411-12 (1998)). "[W]e do not disturb the factual findings and legal

conclusions of the trial judge unless we are convinced that they are so manifestly

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unsupported by or inconsistent with the competent, relevant and reasonably

credible evidence as to offend the interests of justice[.]" Ibid. (alteration in

original) (quoting In re Tr. Created By Agreement Dated Dec. 20, 1961, ex rel.

Johnson, 194 N.J. 276, 284 (2008)). We review the trial court’s interpretation

of law de novo. Manalapan Realty, LP v. Twp. Comm. of Manalapan, 140 N.J.
366, 378 (1995). We see no basis to disturb the result here. The record

adequately supports the trial court's finding and conclusions. We discern no

error or abuse of discretion by the trial court. Plaintiff's argument lacks

sufficient merit to warrant further discussion in a written opinion. R. 2:11-

3(e)(1)(E).

III.

We next address the denial of plaintiff's motion for reconsideration.

Under Rule 4:49-2, a party may move for "rehearing or reconsideration" of an

order or judgment within twenty days of its entry. The motion must include "a

statement of the matters or controlling decisions which counsel believes the

court has overlooked or as to which it has erred." Ibid.

"Reconsideration is a matter within the sound discretion of the court , to

be exercised in the interest of justice." D’Atria v. D’Atria, 242 N.J. Super. 392,

401 (Ch. Div. 1990). "A litigant should not seek reconsideration merely because

A-1457-18T4
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of dissatisfaction with a decision of the [c]ourt." Ibid. Rather, the preferred

course would be to look to the Appellate Division for relief. Palumbo v. Twp.

of Old Bridge, 243 N.J. Super. 142, 147, n.3 (App. Div. 1990). "Reconsideration

should be used only for those cases which fall into that narrow corridor in which

either (1) the [c]ourt has expressed its decision based upon a palpably incorrect

or irrational basis, or (2) it is obvious that the [c]ourt either did not consider, or

failed to appreciate the significance of probative, competent evidence." Fusco

v. Bd. of Educ. of Newark, 349 N.J. Super. 455, 462 (App. Div. 2002) (quoting

D'Atria, 242 N.J. Super. at 401). The proper object of a motion for

reconsideration is to correct a court's error or oversight, and not to "re-argue [a]

motion that has already been heard for the purpose of taking the proverbial

second bite of the apple." State v. Fitzsimmons, 286 N.J. Super. 141, 147 (App.

Div. 1995), certif. granted, remanded on other grounds, 143 N.J. 482 (1996).

The basis for the motion for reconsideration focuses on "what was before the

court in the first instance." Lahue v. Pio Costa, 263 N.J. Super. 575, 598 (App.

Div. 1993). We review the denial of a motion for reconsideration for abuse of

discretion.

Plaintiff relied, in part, on documents or other evidence that was available

to plaintiff but not introduced at trial. The trial court properly restricted its

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analysis to the trial record. See Cummings v. Bahr, 295 N.J. Super. 374, 384

(App. Div. 1996) (limiting consideration of new or additional information to

that "which it could not have provided" previously) (quoting D'Atria, 242 N.J.

Super. at 401).

We discern no abuse of discretion by the trial court. Plaintiff did not

demonstrate that the trial court "expressed its decision based upon a palpably

incorrect or irrational basis, or . . . either did not consider, or failed to appreciate

the significance of probative, competent evidence" introduced at trial. Ibid.

(quoting D'Atria, 242 N.J. Super. at 401).

IV.

Finally, we address the denial of defendant's motion for frivolous

litigation sanctions. We review the judge’s decision on a motion for frivolous

lawsuit sanctions under an abuse of discretion standard. McDaniel v. Man Wai

Lee, 419 N.J. Super. 482, 498 (App. Div. 2011). Reversal is warranted "only if

[the decision] '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.'" Ibid. (quoting Masone v. Levine, 382 N.J. Super. 181,

193 (App. Div. 2005)). We discern no abuse of discretion here.

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Sanctions against an attorney under Rule 1:4-8 "are specifically designed

to deter the filing or pursuit of frivolous litigation." LoBiondo v. Schwartz, 199 N.J. 62, 98 (2009). A second purpose of the rule is to compensate the opposing

party in defending against frivolous litigation. Toll Bros., Inc. v. Twp. of W.

Windsor, 190 N.J. 61, 71 (2007). The rule provides for the imposition of

sanctions where the attorney or pro se party filed a pleading or a motion with an

"improper purpose, such as to harass or to cause unnecessary delay or needless

increase in the cost of litigation," Rule 1:4-8(a)(1), or by asserting a claim or

defense that lacks the legal or evidential support required by Rule 1:4-8(a)(2),

(3) and (4). See State v. Franklin Sav. Account No. 2067, 389 N.J. Super. 272,

281 (App. Div. 2006) (noting these factors under the rule). "For purposes of

imposing sanctions under Rule 1:4-8, an assertion is deemed 'frivolous' when

'no rational argument can be advanced in its support, or it is not supported by

any credible evidence, or it is completely untenable.'" United Hearts, LLC v.

Zahabian, 407 N.J. Super. 379, 389 (App. Div. 2009) (quoting First Atl. Fed.

Credit Union v. Perez, 391 N.J. Super. 419, 432 (App. Div. 2007)).

"The nature of litigation conduct warranting sanction under [Rule 1:4-8]

has been strictly construed." Pressler & Verniero, Current N.J. Court Rules,

cmt. 2 on R. 1:4-8 (2020). Accordingly, Rule 1:4-8 sanctions will not be

A-1457-18T4
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imposed against an attorney who mistakenly files a claim in good faith.

Horowitz v. Weishoff, 346 N.J. Super. 165, 166-67 (App. Div. 2001); see also

First Atl. Fed. Credit Union, 391 N.J. Super. at 432 (holding that an objectively

reasonable belief in the merits of a claim precludes an attorney fee award); K.D.

v. Bozarth, 313 N.J. Super. 561, 574-75 (App. Div. 1998) (declining to award

attorney’s fees where there is no showing the attorney acted in bad faith).

N.J.S.A. 2A:15-59.1(a)(1), which governs frivolous litigation sanctions

against parties, provides:

[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 person was frivolous.

A finding that the pleading is "frivolous" must be based upon a finding

that:

(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

A-1457-18T4
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argument for an extension, modification or reversal of
existing law.

[N.J.S.A. 2A:15-59.1(b).]

The frivolous litigation statute is interpreted restrictively. DeBrango v.

Summit Bancorp, 328 N.J. Super. 219, 226 (App. Div. 2000). Sanctions should

be awarded only in exceptional cases. Fagas v. Scott, 251 N.J. Super. 169, 181

(Law Div. 1991).

"'[T]he burden of proving that the non-prevailing party acted in bad faith'

is on the party who seeks fees and costs pursuant to N.J.S.A. 2A:15-59.1."

Ferolito v. Park Hill Ass'n, 408 N.J. Super. 401, 408 (App. Div. 2009) (alteration

in original) (quoting McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 559 (1993)). When a prevailing party's allegation is based on an

assertion that the non-prevailing party’s claim lacked "a reasonable basis in law

or equity," and the non-prevailing party is represented by an attorney, "an award

cannot be sustained if the '[nonprevailing party] did not act in bad faith in

asserting' or pursuing the claim." Ibid. (quoting McKeown-Brand, 132 N.J. at
549).

"When the [non-prevailing party'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 v. Merling, 322 N.J.

A-1457-18T4
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Even the granting summary judgment in favor of a prevailing party, "without

more, does not support a finding that the [non-prevailing party] filed or pursued

the claim in bad faith." Ferolito, 408 N.J. Super. at 408 (citing McKeown-

Brand, 132 N.J. at 563).

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);

Foley, Inc. v. Fevco, Inc., 379 N.J. Super. 574, 589 (App. Div. 2005). The trial

judge made no findings and stated no conclusions for denying frivolous

litigation sanctions.

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," Masone, 382 N.J. Super. at 193, we are constrained to vacate

the order denying frivolous litigation sanctions. We remand for the trial court

to render explicit findings and conclusions. See R.M. v. Supreme Court of N.J.,

190 N.J. 1, 12-13 (2007) (vacating and remanding counsel fee award where

judge failed to explain how or why he arrived at award); City of Englewood v.

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Exxon Mobile Corp., 406 N.J. Super. 110, 125–26 (App. Div. 2009) (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).

On remand, the judge must consider the submissions and identify whether

defendant had demonstrated the presence of actionable conduct and then

evaluate plaintiff and counsel's claimed defense to such charge. See First Atl.

Federal Credit Union, 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.") (citations omitted)). If sanctions are shown to be appropriate, the

judge's decision 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, 406 N.J. Super. at 125.

Affirmed in part, vacated and remanded in part. We do not retain

jurisdiction.

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