Opinion
DOCKET NO. A-4624-12T1
07-02-2014
ETHEL HUNT, Plaintiff-Appellant, v. NORMAN TAGGERT and NOR CONSTRUCTION, Defendants-Respondents. NORMAN TAGGERT and NOR CONSTRUCTION Third-Party Plaintiffs, v. ALAN HUNT and NANCY HUNT, Third-Party Defendants.
Jerrold Kamensky argued the cause for appellant (Kamensky Cohen & Riechelson, attorneys; Mr. Kamensky, on the brief). Robert D. Bailey argued the cause for respondent Lynette Siragusa (Siragusa Law Firm LLC, attorneys; Mr. Bailey, of counsel and on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Yannotti and Manahan.
On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, Docket No. L-308-10.
Jerrold Kamensky argued the cause for appellant (Kamensky Cohen & Riechelson, attorneys; Mr. Kamensky, on the brief).
Robert D. Bailey argued the cause for respondent Lynette Siragusa (Siragusa Law Firm LLC, attorneys; Mr. Bailey, of counsel and on the brief). PER CURIAM
Ethel Hunt (plaintiff), appeals from an order dismissing a motion for sanctions against Lynette Siragusa (Siragusa) and the Siragusa Law Firm. We affirm.
Norman Taggert conducts a contracting business under the name NOR Construction. Plaintiff is the homeowner of property located in Hampton, New Jersey. Plaintiff and Taggert entered into a contract for home improvement for the property.
Taggert claimed it was Nancy Hunt, daughter of plaintiff, who initiated contact with him to discuss home improvement. According to Taggert, he was unsure who owned the property, but believed it was Nancy. Taggert also claimed that he was told that Nancy's son, Alan Hunt, was "in charge of the projects if [Taggert] was hired."
In the spring of 2009, Taggert provided proposals for the project. On May 31, 2009, Taggert was authorized to commence work which was scheduled for October 2009. The scope of the work included: demolition and rebuilding of steps, construction of a deck, shed repair, and improvement to the main house. While some proposals included payment terms, other proposals did not.
As construction proceeded, the scope of the work changed. "Additional Work Authorization" documents, signed by plaintiff and Taggert provided for additional work on the garage, green house, and horse barn, as well as excavation, wiring and painting. Payment for the additional work was to be made "in full upon completion."
According to Taggert, the excavation work was requested by plaintiff. A final invoice for the excavation was submitted by Taggert in the amount of $44,814.81. Thereafter, the relationship between plaintiff and Taggert turned sour. After submission of the invoice, Taggert was terminated by plaintiff in a handwritten note.
On May 19, 2010, plaintiff filed a complaint against Norman Taggert and NOR Construction. The complaint alleged violations of the Consumer Fraud Act, contrary to N.J.S.A. 56:8-1; violation of the Truth-in-Consumer Contract, Warranty and Notice Act, contrary to N.J.S.A. 56:12-1; breach of contract; and agency and common law fraud.
Taggert filed an answer and counterclaim. Taggert's counterclaim sought monies due on a book account, expectation damages, and claims sounding in misrepresentation and unjust enrichment.
Taggert was originally represented by counsel, Kevin Kilcommons, who filed the answer and counterclaim on Taggert's behalf. In early March 2011, after Kilcommons withdrew as counsel, Taggert proceeded pro se for a short duration. Taggert then retained Siragusa who entered an appearance on March 27, 2011.
No sanctions were sought by appellant against Mr. Kilcommons for filing the answer and counterclaim.
On April 29, 2011, a third-party complaint naming Nancy Hunt and Alan Hunt as third-party defendants was filed with leave of court. An amended third-party complaint was filed on June 25, 2011. The third-party complaint alleged: fraud and misrepresentation; unjust enrichment; intentional interference with prospective economic advantage; defamation; indemnification; contribution; and promissory estoppel/detrimental reliance.
Nancy Hunt and Alan Hunt filed an answer to the third-party complaint and counterclaim on July 8, 2011. The counterclaim alleged: violation of Consumer Fraud Act, contrary to N.J.S.A. 56:8-1; violation of the Truth-in-Consumer Contract, Warranty and Notice Act, contrary to N.J.S.A. 56:12-1; breach of contract; and agency and common law fraud.
The allegations of frivolous litigation began with a letter sent to Siragusa on August 18, 2011, by Jerrold Kamensky, counsel for plaintiff, Nancy Hunt, and Alan Hunt. The letter stated:
It has come time to put an end to the frivolous litigation that you have engaged in since your involvement in this matter. Your efforts on behalf of your client have gone far beyond the bounds of reasonable practice as the allegations contained in your Third Party Complaint are in violation of the standards of fair practice outlined in R. 1:4-8.
Kamensky further demanded that "each count in [the] third-party complaint . . . be withdrawn." On December 20, 2011, Kamensky sent Siragusa a second letter accusing her of frivolous litigation tactics. The letter provided twenty-eight days for Siragusa to withdraw the counterclaim and the third-party complaint. Siragusa did not withdraw the counterclaim and the third-party complaint.
The plaintiff, Nancy Hunt, and Alan Hunt filed a motion for summary judgment on February 21, 2012. Plaintiff sought summary judgment on certain counts of the complaint and on all counts of the counterclaim. Nancy Hunt and Alan Hunt sought summary judgment on the third-party complaint.
On or about the same date, Taggert voluntarily withdrew the defamation and the intentional interference with prospective economic advantage claims, and filed a substitution of counsel, indicating that he would continue without an attorney.
In an order dated April 27, 2012, the court granted plaintiff's motion for summary judgment. The order granted summary judgment on three counts of the complaint. Summary judgment was denied on Count V (indemnification); Count VI (contribution); and Count VII (promissory estoppel/detrimental reliance). Summary judgment was granted in favor of plaintiff with respect to all counts of the counterclaim. The order also granted summary judgment in favor of Nancy Hunt and Alan Hunt with respect to the remaining counts of Taggert's third-party complaint.
On August 8, 2012, a motion pursuant to Rule 1:4-8 was filed by plaintiff, Nancy Hunt, and Alan Hunt seeking sanctions against Siragusa who cross-moved for sanctions and also moved for reconsideration of the summary judgment order.
After oral argument, plaintiff's claim for sanctions was denied without prejudice. The judge held that "the positions taken by Siragusa in the papers were not so off the wall in terms of how consumer fraud cases are litigated that sanctions are warranted." Siragusa's motion for sanctions was denied with prejudice. Siragusa's motion for reconsideration of the order granting summary judgment was denied.
The trial was scheduled for January 22, 2013. Taggert did not appear for trial. The judge entered a default, conducted a proof hearing and requested that counsel submit a summary of damages. Thereafter, Nancy Hunt, and Alan Hunt renewed their motion for sanctions against Siragusa.
In denying the motion, the court held:
[T]he Court has to give parties the right to take positions and represent their clients, even if the Court finds ultimately that there's no basis for the positions taken . . . .
Ms. Siragusa did inherit some allegations which she continued and then was advised they were baseless, but the fact that she didn't initially formulate these allegations and she came into the case and simply decided to continue them.
Second, when the Court ultimately ruled on the matter it decided there were some per se violations, but not of the Consumer Fraud Act, but there were some things which could not be [trebled] because they weren't — they were contract actions and not consumer fraud violations because they didn't involve failure to pull permits.
Third, it is apparent that work was done here. There's at least some basis for some kind of quantum meruit argument since the — and I don't regard the issue as whether quantum meruit can be used in a regulatory violation case as absolutely and completely foreclosed by the Court.
Fourth, there was, in my mind, some indication that the two individuals were actually responsible for what was going on her, that plaintiff, as an elderly person, was relying on them for advice. I might not have liked those allegations and ultimately did not credit them, but there was — I can't say they were made up out of whole cloth in bad faith . . . .
I don't think that Ms. Siragusa's involvement rose to the level of such bad faith that the Court should award sanctions. I think she was trying to deal with a rather difficult client who ultimately decided to go on his own, and I think she can be excused for attempting, at least, to represent that client vigorously . . . .
Though not stated as a basis for the denial, we note that leave to file the third-party complaint was granted by the court despite opposition by appellant. We recognize that motions to amend are considered with "liberality." Even so, the court apparently thought the third-party complaint had sufficient merit to allow its filing.
The judge memorialized the decision in an order dated May 8, 2013, from which plaintiff appeals.
Nancy Hunt and Alan Hunt did not join in the appeal.
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Rule 1:4-8(b)(1) provides that an attorney may be sanctioned for asserting frivolous claims on behalf of a client. Sanctions may be imposed if an attorney files a pleading that violates the Rule's requirements and also fails to withdraw the pleading within the safe harbor period, which is twenty-eight days after service of a demand for its withdrawal. Ibid.
An assertion is "frivolous" for purposes of imposing sanctions under Rule 1:4-8 if "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, L.L.C. v. Zahabian, 407 N.J. Super. 379, 389 (App. Div.) (citation omitted), certif. denied, 200 N.J. 367 (2009). Further, "[R]estrictive interpretation" is given to the term "frivolous" in order to foster access to the court system. Ibid. (citation omitted).
Appellate courts reviewing a motion for sanctions apply an abuse of discretion standard. Masone v. Levine, 382 N.J. Super. 181, 193 (App. Div. 2005). An "abuse of discretion is demonstrated if 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 of judgment." Ibid. (citation omitted).
Plaintiff argues that all the claims contained in the third-party complaint were filed without any merit in law or fact and in violation of Rule 1:4-8. We disagree.
Taggert alleged that both Nancy Hunt and Alan Hunt misrepresented their relationship to the plaintiff's property. According to Taggert, their misrepresentations included a claim of authority to authorize additional work by representing they held an ownership interest in the property. Taggert also alleged that it was plaintiff, along with Nancy Hunt and Alan Hunt, who urged him to refrain from obtaining permits. Taggert claimed these parties told him that work was previously done on the property without necessary permits and "they did not want this fact to be discovered." Taggert asserted that despite this request, Alan Hunt defamed him by reporting Taggert's failure to obtain permits for his work.
The judge found that there was "some indication that the two individuals (Nancy Hunt and Alan Hunt) were actually responsible for what was going on here" and that plaintiff, "was relying on them for advice."
A common thread woven through the tapestry of Taggert's claims was the intimate involvement of Nancy Hunt and Alan Hunt in the work performed on the property. When considering plaintiff's advanced age and the familial relationship among plaintiff, her daughter, Nancy, and her grandson, Alan, it was reasonable for Siragusa to conclude that there was a good faith basis to assert the third-party claims against Nancy Hunt and Alan Hunt. Where a party has a reasonable and good faith belief in the merit of the cause, attorney's fees will not be awarded. See, e.g., DeBrango v. Summit Bancorp, 328 N.J. Super. 219, 227 (App. Div. 2000).
Moreover, although the third-party claims were ultimately disposed of in favor of Nancy and Alan Hunt, that fact alone is not dispositive on the issue of an award of sanctions. We have recognized, "[T]hat some of the allegations made at the outset of litigation later proved to be unfounded does not render frivolous a complaint that also contains some non-frivolous claims." United Hearts, supra, 407 N.J. Super. at 390 (quoting Iannone v. McHale, 245 N.J. Super. 17, 32 (App. Div. 1990)). "Sanctions are warranted 'only when the pleading as a whole is frivolous or of a harassing nature[.]'" Ibid. (quoting Iannone, supra, 245 N.J. Super. at 32) (alteration in original). Upon our review of the record, we are satisfied that the third-party complaint, when viewed as a whole, was not frivolous or of a harassing nature.
Plaintiff also argues that since Taggert undisputedly violated the Consumer Fraud Act, the counterclaims were barred as a matter of law. The trial judge disagreed and found that the counterclaims asserted by Taggert were not frivolous. The judge reasoned that, even if the counterclaims were ultimately found to lack merit, it was appropriate for Siragusa to assert the claims on behalf of her clients. The judge found, "[T]here's at least some basis for some kind of quantum meruit argument since the — and I don't regard the issue as whether quantum meruit can be used in a regulatory violation case as absolutely and completely foreclosed."
For the purpose of our determination, we accept as factual that Taggert violated certain regulatory provisions of the Consumer Fraud Act. Despite these violations, Taggert was not "defenseless." In the counterclaim, Taggert sought a set-off based upon his claim for payment of the final invoice. Taggert's claim of equitable estoppel was asserted based upon allegations of wrongdoing by plaintiff in urging him not to obtain the permits, the very "misconduct" that constituted the regulatory violations. See Cox v. Sears Roebuck & Co., 138 N.J. 2, 24 (1994); D'Egidio Landscaping, Inc., v. Apicella, 337 N.J. Super. 252, 257 (App. Div. 2001).
In sum, we hold that Siragusa had a reasonable and good faith belief that the claims asserted by former counsel in the counterclaim and by her as counsel for Taggert in the third-party complaint were not frivolous as a whole. Notably, certain claims in the complaint were not moved by plaintiff for disposition in the motion for summary judgment. This was a tacit acknowledgment by plaintiff that the defenses to her claims were not frivolous as a matter of law. As such, it cannot be deemed that, in advancing the counterclaims on behalf of her clients, Siragusa litigated the matter in bad faith. See United Hearts, supra, 407 N.J. Super. at 394.
We conclude that the trial court's determination denying plaintiff's request for sanctions for frivolous litigation was consistent with the appropriate exercise of discretion.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION