Fagas v. Scott

CourtSuperior Court of New Jersey
Citation251 N.J.Super. 169,597 A.2d 571
PartiesIrma FAGAS, Plaintiff, v. Peter J. SCOTT, Defendant-Counterclaimant Third Party Plaintiff, v. BENE NEW HOPE, INC., Third Party Defendant.
Decision Date11 June 1991

Margaret Dee Hellring, for plaintiff (Hellring, Lindeman, Goldstein & Siegal, attorneys; Jonathan L. Goldstein, Newark, of counsel).

Morris M. Schnitzer, Roseland, for defendant.


After plaintiff instituted a complaint solely to eject defendant from her home, defendant filed an answer, a ten-count counterclaim and a third-party complaint. Plaintiff prevailed on all issues 1 at the trial and now seeks to be reimbursed for her legal fees and litigation expenses under N.J.S.A. 2A:15-59.1, the so-called frivolous litigation statute (the "act"). Defendant denies that plaintiff is entitled to recovery under the act and contends that the act is unconstitutional because it violates the Supreme Court's exclusive rule-making power over procedure under the New Jersey Constitution. Defendant also contends that the act is void for vagueness and violates due process.

The Court holds that plaintiff is entitled to recover her reasonable attorneys fees and litigation costs under the act, which is constitutional. Procedural History and Preliminary Statement.

Plaintiff Irma Fagas and defendant Peter J. Scott lived together in Fagas' solely-owned home in a non-marital, fully informed, intimate social relationship. For almost five years plaintiff permitted defendant to live with her in her home, which she supported almost exclusively. Defendant voluntarily paid for substantial improvements to the home and paid considerably less of the expenses than plaintiff paid. When the relationship ended in September 1989, plaintiff asked defendant to leave her home, but he refused to do so.

In order to eject defendant from her home plaintiff was required to apply to the court. On November 16, 1989, plaintiff, upon notice to defendant, applied for an order to show cause with temporary restraints. The sole relief she sought was to eject defendant immediately from her home. Plaintiff sought no money, no property and no airing of the parties' problems and affairs.

When defendant received plaintiff's complaint and demand for ejectment, he filed defenses and counterclaims to prevent his removal from her home.

On the presentation of her proposed order to show cause plaintiff showed that she was the sole owner of her house, she had a probability of success on the merits, she would suffer immediate and irreparable harm unless defendant was removed from her home and defendant, a man of enormous wealth 2 who had the financial ability to relocate from plaintiff's home at any moment, would suffer no hardship if ordered to vacate. Despite the above showings, the judge refused to grant plaintiff's application for interim relief on the sole ground that he did not have the authority to make a ruling of ejectment, pendente lite in an emergent application and in the absence of a plenary hearing.

Plaintiff, believing that she was entitled to an order of ejectment immediately, sought leave to appeal to obtain accelerated relief pursuant to R.2:9-8. The matter was heard on an emergent basis by the Appellate Division, which granted leave to appeal and held that the trial court did have authority to make an emergent ruling for ejectment. The trial court was ordered to hold a hearing to determine whether a preliminary injunction should be issued to eject defendant from plaintiff's home. On December 6, 1989, the matter was heard by a Law Division judge, but he refused to grant relief to plaintiff.

In the first count of his counterclaim defendant-counterclaimant alleges that plaintiff agreed with him to jointly purchase 495 Longview Road, South Orange, where they would cohabit. He alleges a joint-expense agreement by which he incurred numerous expenses including paying for improvements to the home. He seeks a one-half interest in the home and an accounting and reimbursement for half of the joint expenses during their relationship.

The second count alleges estoppel and seeks specific performance of the alleged agreement to be a one-half owner of plaintiff's house.

The third count alleges fraud and seeks to have a constructive trust imposed on the house.

The fourth count is for unjust enrichment and quasi -contract.

The fifth count seeks a partition of the property.

Four counts were for notes totalling $105,376.25 executed by Bene New Hope, Inc., plaintiff's corporation, which were not signed individually by plaintiff nor endorsed by her.

The third-party complaint against plaintiff's corporation dealt solely with these notes. Defendant obtained partial summary judgment against the corporation for the principal with the determination of interest, if any, to await a final hearing.

Plaintiff was compelled to amend her complaint to respond affirmatively to meet defendant's allegations. R.4:7-1. Plaintiff claims that if there were a joint-expense agreement, she is entitled to: reimbursement (not defendant, as he claimed in his accountings); quantum merit and/or unjust enrichment to meet defendant's similar claim; the value of securities wrongfully withheld by defendant; funds from a jointly-held corporation, Salbin & Sachsel, claimed by defendant; and the fair market rental value of the space defendant occupied in plaintiff's house against her will.

At the 12-day trial, the court found that defendant had malicious motives, was unfair, desired to destroy plaintiff, stole from plaintiff, and had a plan to get from the court system, which he knew that he was improperly burdening, what he had not been able to get from plaintiff by contract. The court found that defendant never believed that he owned one-half of the home, defendant's statements that there was an agreement to share or reimburse expenses were false, defendant purposely harassed and humiliated plaintiff during the litigation and he kept the litigation going for the purpose of remaining in rent-free premises.

The court evicted defendant from plaintiff's home, ruled in plaintiff's favor on all other claims and awarded her damages of $42,640.75 ($8,533.75 for rent and $34,107 for the stock dividend reinvestment program), plus interest. The court awarded defendant $4,948.98 interest against Bene New Hope, Inc. on the third-party complaint. The court reserved decision on plaintiff's application for relief under the act. Plaintiff claims that defendant's defense of her action for ejection was frivolous, was continued in bad faith and was asserted solely for the purpose of harassment, delay and malicious injury and that all other defenses and counterclaims were frivolous.

Although defendant gave the Attorney General notice of his motion to declare the act unconstitutional, pursuant to R.4:28-4, the Attorney General declined to intervene at this stage.

Defendant-Counterclaimant's Contentions.

In response to plaintiff's motion for reimbursement of legal fees and litigation expenses, defendant-counterclaimant raises the following issues: (1) in the exercise of sound discretion, the court should deny any award under the act; (2) none of his claims or defenses were legally or equitably insufficient; (3) the case was litigated by him in good faith believing that the facts and law were as set forth by his attorney in the trial brief and proposed findings of fact and conclusions of law; (4) since plaintiff was not the prevailing party, she does not qualify for counsel fees under the act; (5) plaintiff's affidavit of services is not sufficiently detailed to allow an allocation; (6) plaintiff can recover only for those services which were reasonably necessary because of frivolous claims or defenses and only for a period after defendant's appearance in court; (7) the attorneys' fees sought are not reasonable; (8) counsel fees must be reasonably proportionate to the matters involved; (9) court-awarded counsel fees may not exceed the amount agreed upon between claimant and her attorney; (10) attorneys' fees incurred in preparing motion for attorneys' fees and litigating the propriety and quantum of the fees are not recoverable; (11) "reasonable litigation costs" are limited to transcript expenses and statutory witness and filing fees; and (12) the act is unconstitutional because it: (a) infringes upon the Supreme Court's constitutionally exclusive power to define and regulate the standards for reasonable legal fees; (b) denies due process of law under both the United States and New Jersey Constitutions because counsel fees are awarded on grounds never pleaded, confronted or tried; and (c) is void for vagueness.


Plaintiff is Entitled to Recover Reasonable Attorneys' Fees

and Litigation Costs Pursuant to N.J.S.A. 2A:15-59.1.


The Act.

The act, N.J.S.A. 2A:59-1 3 provides:

a. A party who prevails in a civil action, either as a 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.

b. In order to find that a complaint counterclaim, cross-claim or defense of the nonprevailing party was frivolous, the judge shall find on the basis of the pleadings, discovery, or the evidence presented that either:

(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 argument for an extension, modification or reversal of existing law.

c. A party seeking an award under this section shall make...

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    ...restrictively. DeBrango, 328 N.J. Super. at 226, 745 A.2d 561. Sanctions should be awarded only in exceptional cases. Fagas v. Scott, 251 N.J. Super. 169, 181, 597 A.2d 571 (Law Div. 1991)." ‘[T]he burden of proving that the non-prevailing party acted in bad faith’ is on the party who seeks......
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