Law Lessons from JOHN ZAKLAMA VS. SUSANNE ZIEGLER, ET AL. VS. ESMAT ZAKLAMA, ET AL., App. Div. (A-1253-07T1; Decided July 29, 2009):
The Frivolous Litigation Statute, N.J.S.A. 2A:15-59.1 provides that a plaintiff or defendant who prevails in a case “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.” N.J.S.A. 2A:15-59.1(a)(1). See also Rule 1:4-8 (authorizing similar fee-shifting consequences as to frivolous litigation conduct by attorneys).
N.J.S.A. 2A:15-59.1 and Rule 1:4-8 are limited exceptions to the “American Rule” for civil justice, whereby litigants are expected to bear their own counsel fees. Our courts traditionally have adhered strictly to the American Rule because “sound judicial administration will best be advanced by having each litigant bear his own counsel fees.” First Atlantic Federal Credit Union v. Perez, 391 N.J. Super. 419, 425 (App. Div. 2007) (citing Gerhardt v Continental Ins. Co., 48 N.J. 291, 301 (1966)). As a consequence, the court has approached fee-shifting requests under the Frivolous Litigation Statute and Rule 1:4-8 restrictively, because “the right of access to the court should not be unduly infringed upon, honest and creative advocacy should not be discouraged, and the salutary policy of the litigants bearing, in the main, their own litigation costs, should not be abandoned.” Gooch v. Choice Entertaining Corp., 355 N.J. Super. 14, 18 (App. Div. 2002) (citation omitted); see also Belfer v. Merling, 322 N.J. Super. 124, 144 (App. Div. 1999); Venner v Allstate, 306 N.J. Super. 106, 113 (App. Div. 1997).
A claim is frivolous “if no rational argument can be advanced in its support, when it is unsupported by any credible evidence, when a reasonable person could not have expected its success, or when it is completely untenable.” Belfer, supra, 322 N.J. Super. at 144; see also McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 561 (1993). In general, “[t]he nature of conduct warranting sanction” for litigation said to be frivolous “has been strictly construed.” First Atlantic, supra, 391 N.J. Super. at 432 (citing Wyche v. Unsatisfied Claim & Judgment Fund, 383 N.J. Super. 554, 560 (App. Div. 2006)); see also LoBiondo, supra, 199 N.J. at 99-100 (noting the customary “strict application” of Rule 1:4-8). Where “some of the allegations made at the outset of litigation [are] later proved to be unfounded[, that] does not render frivolous a complaint that contains some non-frivolous claims.” First Atlantic, supra, 391 N.J. Super. at 432 (quoting Iannone v. McHale, 245 N.J. Super. 17, 32 (App. Div. 1990)).
Of particular significance is the language in N.J.S.A. 2A:15-59.1 treating as non-frivolous the taking of a position in litigation that could be supported by a good faith argument “for an extension, modification or reversal of existing law.” The purpose of this exclusionary language is to avoid penalizing a litigant for seeking a judicial ruling on a fairly debatable legal issue within a “developing” area of New Jersey law. Semexant v. MIL Limited-Boston Machinery Div., 252 N.J. Super. 318, 322 (App. Div. 1991).
Fee-shifting under N.J.S.A. 2A:15-59.1 is discretionary, not mandatory. The statute states that “a party may be awarded all reasonable litigation costs” if the requirements of the statute are otherwise met. Ibid.
The safe-harbor provision, originally adopted in Rule 1:4-8 and patterned after Fed. R. Civ. P. 11, also applies to litigants under the Frivolous Litigation Statute, N.J.S.A. 2A:15-59.1, “[t]o the extent practicable.” See R. 1:4-8(f). The law does not automatically excuse non-compliance with the safe-harbor provision just because the moving party believes that any notice and demand would be meaningless and ignored by the offending party. Cf. Toll Brothers, Inc. v. Twp. of West Windsor, 190 N.J. 61, 71-73 (2007) (requiring a “fact-sensitive analysis” of a claim that compliance with the safe-harbor procedure was impracticable).
The safe-harbor procedure is appropriately carried out in the form of a written notice or correspondence to opposing counsel, rather than as an affirmative pleading filed in court that demands a responsive filing under a shorter, twenty-day time frame. See R. 4:6-1(a). The safe-harbor requirement has been “strictly construed” with respect to parties as well as their attorneys. Toll Brothers, supra, 190 N.J. at 69.
The judiciary has an institutional interest in assuring that the safe-harbor prerequisite to fee-shifting is strictly enforced. Such enforcement promotes the withdrawal of frivolous pleadings that might otherwise burden the court, as well as adversaries. Toll Brothers, supra, 190 N.J. at 71 (noting that the safe-harbor mechanism helps preserve, among other things, judicial resources). See also Community Hosp. Group, Inc. v. Blume Goldfaden Berkowitz Donnelly Fried & Forte, P.C., 381 N.J. Super. 119, 127 (App. Div. 2005) (sustaining the denial of a counsel fee award where the prevailing party failed to give the adversary the notice and opportunity to withdraw under the Rule); Trocki Plastic Surgery Ctr. v. Bartkowski, 344 N.J. Super. 399, 406 (App. Div. 2001) (holding that a plaintiff’s failure to give “specific and detailed notice” of the withdrawal provisions required rejection of the plaintiff’s motion for fees pursuant to N.J.S.A. 2A:15-59.1), certif. denied, 171 N.J. 338 (2002).
However, the award of costs to defendant as the prevailing party is authorized, as a matter of course, under Rule 4:42-8, irrespective of the non-applicability of the Frivolous Litigation Statute.
NOTE: Prawnik / Adwokat Pawel Kostro mowi po polsku.