Twenty Years Later There's No Real Relief From Frivolous
July 21, 2008
New Jersey Law Journal
Statute with very little teeth
We've all heard the following story at the beginning of a case: your client tells you that she's just been served with a Summons and Complaint, but the Plaintiff's claims are utterly without merit The client cannot quite decipher the Complaint because the pleading is difficult to understand and contains allegations that are either nonsense or have no basis in reality. You read the Complaint and realize that the client is right The only way to describe the Complaint is that it is "frivolous." The client, of course, not only wants you to make the Complaint go away, she also wants you to seek attorney's fees from the other side for filing such a worthless action.
Twenty years ago, on June 28, 1988, Governor Thomas Kean signed an act that was designed to permit you to do just that, and was heralded by one of its sponsors as a means to "discourage the use of the courts for purposes of harassment" See "Legal fee liability enacted for filers of frivolous suits," The Star Ledger, June 29, 1988. Twenty years later, the law, commonly known as the Frivolous Claims Act ("FCA") is still on the books, codified at N.J.S.A. 2A: 15-59.1, and it's sometimes a useful tool. However, in most instances, the high standards imposed in the statute for the imposition of sanctions, as well as the reluctance of the Appellate Division and the Supreme Court to use the FCA as a means to rein in all but the most egregious offenders, have rendered the FCA far from effective as a means of doing away with frivolous claims.
The basic framework of the statute is that when a party files a Complaint, or takes a position in a case that is frivolous, courts are free to reject New Jersey's long-held use of the "American Rule" and transfer the costs of the suit to the non prevailing party. Unfortunately, this fee shifting is difficult to obtain and is granted sparingly by New Jersey's courts.
Under the current enforcement mechanism for the FCA, the statute works in conjunction with R. 1:4-8 of the Rules of Court, sets forth a procedure for sanctions not only against litigants who file a frivolous pleading, but also against the attorney who signed the pleading and any frivolous motions. See R. 1:4-8(f) (requiring that FCA application be made in compliance with the rules for attorney sanction); see also McKeown-Brand v. Trump Hotel & Casino, 132 N.J. 546, 563 (1993).
Thus, under the FCA and R. 1:4-8, a party facing a frivolous complaint, counterclaim, motion or other similar "paper" (to use the parlance of the rule), must follow a specific framework before any application for an award of fees or other sanction. See, e.g., Venner v. Allstate, 306 N.J. Super. 106 (App. Div. 1997) (overturning sanction because record did not demonstrate compliance with rule). The procedure under R. 1:4-8 is designed to give litigants and their attorneys the opportunity to correct their error once they are notified by their adversary that they have filed a frivolous paper. Thus, if your client has been served with a Complaint that asks for relief that is not available under New Jersey law, you and your client have the affirmative obligation to send the offending party a letter warning the frivolous litigant that their pleading is without merit, giving the adversary 28 days to withdraw the offending pleading, and stating that you reserve your right to seek sanctions, including an award of attorneys fees pursuant to the FCA or R. l:4-8. This so-called "safe harbor" letter must be included as part of a certification in support of the motion for sanctions and if it is not, the motion will in all probability be denied.
The application of the 28-day safe harbor period is more complicated for motions, which are typically resolved in less than 28 days. Under R. 1:4-8(b), which governs the motion for sanctions, if the frivolous paper is a motion returnable within the 28-day safe harbor period, the safe harbor letter must give the offending litigant the option of either adjourning the motion beyond the 28-day period, or waiving the 28-day safe harbor period. According to the rule, if the offending litigant does not request an adjournment, that litigant is deemed to have. waived the safe harbor period.
Over the last 20 years, the jurisprudence on what kinds of claims violate the FCA or R. 1:4-8 has created a standard which is difficult, although not impossible, to meet. The FCA statute itself sets a very high bar, permitting the award of attorney's fees to the prevailing party if the nonprevailing party asserts a claim either (a) "in bad faith, solely for the purpose of harassment, delay or malicious injury," or (b) if "[t]he 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 argument for an extension, modification or reversal of existing law." N.J.S.A. 2A:15-59.1(b)(1-2).
Courts interpreting that standard have focused on New Jersey's strong public policy of open access to the court and have interpreted the definition of a frivolous claim narrowly, "consistent with the premise that in a democratic society citizens should have ready access to all branches of government, including the judiciary." McKeown-Brand, 132 N.J. at 561-62. Put another way, "even when the litigation is of little merit, if the plaintiff's conduct bespeaks of 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. Super. 124, 144-45 (App. Div.), certif. denied 162 N.J. 196 (1999).
The Appellate Division's decision in Dare v. Freefall Adventures, Inc., 349 N.J. Super. 205 (App. Div.), certif. denied 174 N.J. 43 (2002), is a good example of a case where even a marginal claim escaped sanction. In Dare, the plaintiff had no evidence to support his claim, but the Appellate Division nevertheless affirmed the trial court's denial of sanctions pursuant to the FCA. In that case, the plaintiff was a skydiver injured while attempting a maneuver to avoid colliding with another skydiver. Despite being unable to present any evidence in support of his claim, and the existence of a signed waiver disclaiming the defendants' liability, the plaintiff sued both the other skydiver and the proprietor of the skydiving venue. The Appellate Division held that the plaintiff had "absolutely no evidence" of wrongdoing by the proprietor and also failed to offer an expert on liability. Nevertheless, the Appellate Division affirmed the denial of sanctions under the FCA:
We cannot say that plaintiffs' complaint was filed in bad faith or that plaintiffs knew or should have known that their complaint was without reasonable basis in law or equity, and could not be supported by a good-faith argument under existing law.
There are, of course, instances where the FCA is applied to grant sanctions, but those cases are usually reserved for situations where the suit appears to be spiteful or designed to harass, in addition to being without basis. For example, in Halfond v. County of Bergen, 279 N.J. Super. 149 (App. Div.), certif. denied 141 N.J. 96 (1995), the Plaintiffs' complaint sought to compel Bergen County to disclose the location of a dog being held pending a determination of its purported viciousness in a separate proceeding. The county initially refused to disclose the location of the dog, apparently because it had previously been improperly removed from the county's animal shelter in a manner that led to the criminal prosecution of a member of the Plaintiffs' family.
Nevertheless, the county permitted access to the dog for examination by the Plaintiffs' experts in the viciousness proceeding, provided a certification as to the health and physical condition of the animal and ultimately even provided information about the dog's location. In other words, the Plaintiffs had what they wanted, but continued to prosecute their claims, requiring the filing of two motions for summary judgment. Consequently, the Appellate Division affirmed the trial court's grant of attorney's fees, holding that to deny the motion under such circumstances would render the FCA meaningless: "[t]o conclude defendants are not entitled to an award under N.J.S.A. 2A: 15-59.1 would, in our view, completely eviscerate this statute."
All of this leaves our profession with a very difficult problem. We have a statute with very little teeth, designed to do what is probably an impossible job. Our state has a strong and proud tradition of allowing litigants access to the courthouse, a policy that is likely to stay in place. But then again, we all have a good war story about a terrible case that dragged on and on, resulting in unhappy clients with a legitimate grievance against a judicial system which failed to rein in a frivolous claim that cost them precious resources to defend. The current means to combat the problem provides a remedy that is difficult to obtain, leaving most litigants without recovery.
Daniel D. Barnes is an associate focusing on commercial and general litigation matters at Wolff & Samson PC of West Orange, New Jersey. He can be reached by phone at (973)530-2097 or by email at: firstname.lastname@example.org.
Reprinted with permission from the July 21, 2008, edition of the New Jersey Law Journal. ©2008 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited. For information, call 973-854-2923 or Elissa.Peterson@incisivemedia.com. ALM is now Incisive Media, www.incisivemedia.com.