Opinion
DOCKET NO. A-4408-12T4
06-27-2014
VALLEY NATIONAL BANK, Plaintiff-Respondent/Cross-Appellant, v. RICHARD F. ENDERLEY, ELLEN ENDERLEY and R.F. ENDERLEY, CO., INC., Defendants-Appellants/Cross-Respondents.
Kevin Barber argued the cause for appellants/cross-respondents (Niedweske Barber Hager, LLC, attorneys; Mr. Barber, on the brief). Michael A. Saffer argued the cause for respondent/cross-appellant (Mandelbaum Salsburg, Lazris & Discenza, P.C., attorneys; Mr. Saffer, of counsel and on the brief; Arla D. Cahill, on the brief).
RECORD IMPOUNDED
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Ashrafi and Haas.
On appeal from the Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-0018-04.
Kevin Barber argued the cause for appellants/cross-respondents (Niedweske Barber Hager, LLC, attorneys; Mr. Barber, on the brief).
Michael A. Saffer argued the cause for respondent/cross-appellant (Mandelbaum Salsburg, Lazris & Discenza, P.C., attorneys; Mr. Saffer, of counsel and on the brief; Arla D. Cahill, on the brief). PER CURIAM
In this post-settlement dispute, defendants Richard F. Enderley, Ellen Enderley, and R.F. Enderley, Co., Inc. (collectively defendants) appeal from the April 5, 2013 order of the Law Division denying their application for attorney's fees. Plaintiff Valley National Bank has filed a cross-appeal from the portion of the order that denied its request for fees. We affirm.
We derive the following relevant facts from the record. In 1991, defendants purchased property from Peoples Bank, N.A., which also financed the purchase. At the time of the transaction, Peoples Bank represented that the property did not have any environmental contamination. However, the property was contaminated and, in 1991, the New Jersey Department of Environmental Protection (NJDEP) had opened a case file involving the property, bearing Case No. 91-09-11-1110-16, for the purpose of ensuring that the contamination was remediated. Defendants used the property to conduct commercial painting operations and alleged they did not learn of the contamination until years later.
In June 1993, plaintiff acquired Peoples Bank and, as a result, became the owner of defendants' loan. In November 2003, plaintiff declared defendants to be in default of their loan obligations and it instituted an action in the Law Division to collect on the note and to foreclose on the property. In response, defendants filed a three-count counterclaim alleging that plaintiff, as the successor to Peoples Bank, had knowingly misrepresented that the property had no environmental contamination. Defendants alleged violations of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -195 (count one); fraudulent concealment (count two); and breach of contract (count three).
On November 30, 2006, the parties entered into a written settlement agreement. Section 5.1 of the agreement stated:
[Plaintiff] agrees to bear all future cleanup costs and fees (including expert fees and filing fees) in order for [defendants'] Property to receive an unconditional No Further Action letter from the NJDEP with respect to the Open NJDEP Case (the "NFA"). Such agreement by [plaintiff] shall not prevent [plaintiff] from seeking contribution for such costs from third parties other than [defendants].In pertinent part, Section 6 of the agreement stated: "In full satisfaction of [defendants'] claims for money damages against [plaintiff] in the Note Action, [plaintiff] shall pay to [defendants' attorneys], simultaneous with the execution of the Settlement Agreement, the sum [$360,000] in attorneys' fees and costs."
In Section 8.2 of the agreement, defendants released plaintiff from all claims other than its obligation to comply with the agreement. In addition, Section 9 of the agreement stated that "[n]either party admits any liability toward the other as set forth in either the Note Action or in the Foreclosure Action. The parties are settling those actions in order to avoid future time and expense."
Plaintiff promptly paid defendants the amount due under the settlement and it thereafter retained GZA Environmental Services, Inc. (GZA) to remediate the contamination covered by the parties' agreement. According to GZA, when it began the remediation process, the testing it conducted did not reveal the presence of toluene, "a solvent . . . commonly contained in paint thinners." In May 2011, GZA detected toluene in the groundwater, but it was well below NJDEP actionable levels. In July 2011, however, testing revealed there had been a dramatic spike in the amount of toluene found in the groundwater and GZA reported its findings to the NJDEP.
NJDEP opened a new case file, bearing Case No. 11-08-18-1113-02, and advised defendants they had "an affirmative obligation to remediate this discharge."
After receiving GZA's report, plaintiff sent a letter to defendants asserting that toluene was not included in the 1991 NJDEP case and had not been present on the property at the time of the parties' settlement agreement. Plaintiff believed defendants, or their tenant, had recently contaminated the site with this chemical. Therefore, plaintiff stated it was not responsible for cleaning up the toluene. Plaintiff never refused to clean up the other contamination at the site, although it indicated that portions of the project might take longer to complete due to the discovery of the toluene.
Defendants denied plaintiff's allegations. They asserted they were not responsible for the discharge and that toluene had been present on the property prior to the 2006 settlement. Defendants insisted that plaintiff was breaching the agreement by refusing to remediate the toluene.
When the parties could not resolve their dispute over whether toluene was covered by their settlement agreement, defendants filed a motion to enforce the settlement. Both parties retained experts, who prepared reports supporting their respective positions as to when the toluene was discharged onto the site. The trial court scheduled an evidentiary hearing to determine whether a new spill had occurred or whether the toluene was part of the contamination plaintiff agreed to remediate in the 2006 agreement.
Before the hearing occurred, new testing revealed that toluene levels at the property had fallen below actionable levels. Thus, no clean up of this chemical was required. Plaintiff sought a voluntary dismissal of the enforcement motion and hearing, but defendants declined this request because they intended to seek attorney's fees. Plaintiff then filed a motion to dismiss the enforcement action and it also sought attorney's fees.
After hearing oral argument on January 25, 2013 and March 4, 2013, the judge granted plaintiff's motion to dismiss the enforcement action, cancelled the evidentiary hearing, and denied each party's application for attorney's fees. With regard to defendants' request for fees, the judge rejected defendants' argument that they were entitled to fees under the CFA. The court found that defendants' CFA claim against plaintiff, together with the two other claims they raised in the original litigation, had been settled in 2006 and could not now be "revive[d]." The court explained that the present dispute concerned the "enforcement of a settlement agreement and there is no provision in [the 2006] settlement agreement that if a party has to sue to enforce its obligations they can collect legal fees." Thus, the judge concluded defendants had no statutory or contract right to fees. Defendants did not allege they were entitled to fees under any court rule. Finally, because the judge found that neither party had acted in bad faith in their dispute over the toluene, he ruled that the assessment of attorney's fees as a sanction was not warranted.
The judge also denied plaintiff's request for attorney's fees. The judge found that no statute, court rule, or contract required the imposition of fees, and there was no other reason to require defendants to pay them.
Finally, the judge ordered the parties to enter into an agreement under which plaintiff would arrange to have a third party "effectuate the administrative closure" of NJDEP Case No. 11-08-18-1113-02. The parties complied with this directive. This appeal and cross-appeal followed.
On appeal, defendants argue the judge erred in denying their application for attorney's fees. They assert they had "a statutory right to attorneys' fees for their post-settlement enforcement efforts based on their underlying settlement of the CFA claim." We disagree.
The principles guiding our review are well-settled. "New Jersey strictly adheres to the 'American rule' in regards to attorney's fees[,]" under which each party bears its own legal fees and costs. First Atl. Fed. Credit Union v. Perez, 391 N.J. Super. 419, 425 (App. Div. 2007) (citing Van Horn v. City of Trenton, 80 N.J. 528, 538 (1979)). "Consistent with this policy, attorney's fees are not recoverable absent express authorization by statute, court rule or contract. Ibid. (citing State, Dep't of Envtl. Prot. v. Ventron Corp., 94 N.J. 473, 505 (1983)). In addition, "a court has inherent power to require a party to reimburse another litigant for its litigation expenses, including counsel fees." Oliviero v. Porter Hayden Co., 241 N.J. Super. 381, 387 (App. Div. 1990) (citing Vargas v. A.H. Bull Steamship Co., 25 N.J. 293, 296 (1957)). Attorney "'fee determinations by trial courts will be disturbed only on the rarest of occasions, and then only because of a clear abuse of discretion.'" Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001) (quoting Rendine v. Pantzer, 141 N.J. 292, 317 (1995)).
Defendants assert they are entitled to attorney's fees under the CFA, specifically N.J.S.A. 56:8-19. This statute provides:
Any person who suffers any ascertainable loss of moneys or property, real or personal, as a result of the use or employment by another person of any method, act, or practice declared unlawful under [the CFA] may bring an action or assert a counterclaim therefor in any court of competent jurisdiction. In any action under this section, the court shall, in addition to any other appropriate legal or equitable relief, award threefold the damages sustained by any person in interest. In all actions under this section, including those brought by the Attorney General, the court shall also award reasonable attorneys' fees, filing fees and reasonable costs of suit.
Defendants argue they were successful on their CFA claim in the litigation that led to the 2006 settlement and that the CFA claim formed the sole basis for requiring plaintiff to pay them $360,000 under the settlement. In their brief, they state:
As a result of that CFA Claim, which was the only claim that mandated prevailing attorneys' fees and costs in the underlying action, Section 6 of the Settlement Agreement provided that [plaintiff] agreed to pay "[defendants'] claims for money damages against [plaintiff] in the Note Action" and paid [defendants' attorney] $360,000 "in attorneys' fees and costs[.]"Relying upon our decision in Tanksley v. Cook, 360 N.J. Super.63 (App. Div. 2003), defendants assert that, "[w]here, as here, a party prevails in connection with a CFA claim, all post-judgment enforcement activities that are reasonably related to the goal of gaining or ensuring compliance with the settlement are compensable." Thus, defendants argue that, because they filed a motion to enforce the terms of the settlement they obtained after filing a CFA claim and receiving an award of attorney's fees in the original litigation, plaintiff must also pay the attorney's fees they incurred in the enforcement action. This argument lacks merit.
[(Emphasis added).]
Although defendants contend they were entitled to attorney's fees as part of their original CFA claim, there was never an adjudication or admission of a CFA violation by plaintiff as part of the 2006 settlement agreement. Therefore, the record does not support defendants' assertion that the $360,000 plaintiff paid in 2006 represented fees required to be paid to defendants under N.J.S.A. 56:8-19.
Moreover, our decision in Tanksley, is readily distinguishable from this case. There, the plaintiff obtained a successful verdict under the CFA. Tanksley, supra, 360 N.J. Super. at 65. The defendant was unresponsive to requests for voluntary satisfaction of the judgment and did so only in the face of the plaintiff obtaining a writ of execution to seize the defendant's assets. Ibid. Under those circumstances, we held that the mandatory award of attorney's fees and costs under N.J.S.A. 56:8-19 should include those incurred in satisfying the judgment. Id. at 66.
Here, on the other hand, there was no finding or acknowledgment of a violation of the CFA by plaintiff and it promptly paid the $360,000 due defendants under the terms of the 2006 settlement. It never refused to perform its obligations under the agreement, but merely questioned whether a specific chemical was covered by the settlement. In short, the present controversy was a contract dispute, not a CFA claim. Therefore, we discern no abuse of discretion in the trial judge's determination that defendants had no right to attorney's fees under N.J.S.A. 56:8-19.
Similarly, the judge did not err in finding that defendants were not entitled to attorney's fees as a sanction against plaintiff for questioning whether toluene was covered by the settlement. Defendants argue there was no basis for plaintiff's contention that toluene had only recently been found on the site or its assertion that defendants were responsible for causing the spike in toluene contamination. However, the source of the toluene was highly disputed by the parties and their experts. Without an evidentiary hearing, followed by a determination by the trial court that plaintiff acted in bad faith or violated the terms of the settlement by refusing to clean up the toluene, there was simply no basis to sanction plaintiff by requiring it to pay defendants' attorney's fees.
On appeal, defendants do not challenge the judge's decision dismissing the enforcement action and canceling the evidentiary hearing.
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We also agree with the judge that defendants had no contractual right to attorney's fees. The 2006 settlement agreement did not require plaintiff to pay fees if there was a future dispute as to the applicability of the settlement to a particular source of contamination found on the property. Finally, defendants never asserted they were entitled to attorney's fees pursuant to a court rule. Therefore, we affirm the portion of the April 5, 2013 order denying defendants' application for attorney's fees.
Turning to the cross-appeal, we affirm the judge's denial of plaintiff's request for fees. As was the case with defendants' application, there is no statute, court rule, or contract provision that requires the payment of fees to plaintiff. Similarly, we discern no basis to second-guess the judge's determination that fees were not warranted as a sanction or for any other reason.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION