McKeown-Brand v. Trump Castle Hotel & Casino

• Decision Date: 01 July 1993
• Docket Number: KEOWN-BRAN,P
• Citation: 132 N.J. 546,626 A.2d 425
• Parties: , 127 Lab.Cas. P 57,663 Nancy Mclaintiff-Appellant, v. TRUMP CASTLE HOTEL & CASINO, Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 546

132 N.J. 546

626 A.2d 425, 127 Lab.Cas. P 57,663

Nancy McKEOWN-BRAND, Plaintiff-Appellant, v. TRUMP CASTLE HOTEL & CASINO, Defendant-Respondent.

Supreme Court of New Jersey.

Argued Nov. 10, 1992.

Reargued March 15, 1993.

Decided July 1, 1993.

Mary J. Maudsley, Linwood, for plaintiff-appellant (April & Maudsley, attorneys).

Paul A. Tufano, Philadelphia, PA, for defendant-respondent (Blank, Rome, Comisky & McCauley, attorneys; Mr. Tufano and Rachel S. Miller, on the brief).

The opinion of the Court was delivered by

POLLOCK, J.

This case, like its companion case, Lewis v. Lewis, 132 N.J. 541, 626 A.2d 422 (1993), also decided today, requires that we review N.J.S.A. 2A:15-59.1. In general, that statute allows the award of attorney's fees to a prevailing party in a lawsuit if the non-prevailing party asserts a claim or defense "in bad faith, solely for the purpose of harassment, delay or malicious injury," N.J.S.A. 2A:15-59.1b(1), or 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:15-59.1b(2). Because the statute implicates both the regulation of practice and procedure and also the discipline of attorneys, a question arises whether it breaches the separation of powers between the judicial and legislative branches of government.

The Law Division held that the complaint violated the statute by failing to state a cause of action that had a reasonable basis in law or equity. In an unreported opinion, the Appellate Division affirmed. We granted the petition for certification of plaintiff, Nancy McKeown-Brand, 127 N.J. 566, 606 A.2d 376 (1992), and hold that to the extent that N.J.S.A. 2A:15-59.1 applies to parties, the statute, as interpreted in this opinion, is valid. We decline to extend the statute to apply to the award of counsel fees and costs against attorneys. A contrary interpretation would raise questions whether the statute impinges on this Court's exclusive power to discipline attorneys. N.J. Const. art. VI, § 2, p 3. Finally, we hold that plaintiff did not act in bad faith in asserting her claim. Consequently, we reverse the judgment of the Appellate Division.

Like the Legislature, we are concerned about the role of lawyers in frivolous lawsuits. Because we share the Legislature's concern, we request our Committee on Civil Practice to review the matter and consider appropriate amendments to the Rules of Court.

-I-

From January 1986 through January 1987, plaintiff worked for defendant, Trump Castle Hotel & Casino, first as a front-desk supervisor and then, after a promotion, as a reservations manager. When hired, she signed both an employment-application release and an acknowledgment in the employee handbook. The acknowledgment confirmed that plaintiff's employment was at-will and was subject to termination by defendant at any time. On January 22, 1987, plaintiff took a leave of absence due to medical complications arising from her pregnancy.

Although her maternity leave ended on May 4, 1987, plaintiff requested, and defendant granted, an extension until May 30, 1987. She then requested a personal leave of absence until June 30, 1987, and a further extension until July 30. Defendant granted the requests, but required each time that plaintiff sign a "Request for Leave of Absence," which provided:

I understand and will comply with the following:

1. I will be reinstated to my same, or similar job provided

(a) my job has not been permanently filled or eliminated because of business requirements, or

(b) my job duties and responsibilities do not change significantly during my absence, and upon my return I am still qualified to perform such changed responsibilities, and

(c) I return before this leave expires.

Plaintiff asserts that her supervisor orally assured her that she could return to her position as a reservations manager. In her deposition, however, plaintiff testified that at the time of her initial leave of absence, the supervisor merely had identified the person who would "run" or "take care of [her] department" until plaintiff's return.

When plaintiff returned to work on July 30, 1987, her supervisor stated that her position had been permanently filled. The supervisor sent plaintiff to personnel to discuss comparable positions. The record is unclear whether no such positions were available or whether plaintiff failed to pursue them. Plaintiff asserts that the personnel department promised to inform her of suitable positions, but never did so.

On July 19, 1989, plaintiff filed a two-count complaint. In the first count, she alleged that defendant had breached her employment contract, the conditions set forth in the employee handbook, and defendant's oral guarantees of reinstatement. The second count, which was based on promissory estoppel, alleged that defendant had assured plaintiff that she would have continued employment and that plaintiff had relied on those representations to her detriment.

Defendant served plaintiff's counsel with a demand for service of documents, a request for production of documents, interrogatories, and a notice of depositions. Plaintiff did not respond. Defendant thereupon moved for summary judgment. Plaintiff did not file any answering papers, and her attorney did not appear on the return date of the motion. The Law Division granted defendant's motion in December 1989. Plaintiff did not appeal.

In January 1990, plaintiff finally answered defendant's interrogatories and moved to reinstate her complaint. The Law Division granted her motion. During her subsequent deposition, plaintiff admitted that she had read and understood the acknowledgments in both her employment application and in the handbook. She admitted further that she had not foregone any job opportunities because of defendant's representations. At some point everyone recognized that plaintiff's claimed damages did not exceed $2,000.

The parties dispute certain events that transpired after plaintiff's deposition. Plaintiff's attorney contends that she forwarded an offer to defendant's attorney to settle for $2,000, and that defendant's only response was its motion for summary judgment. The attorney explains her failure to respond to the motion by asserting that the damages were too insignificant to justify a response. She argues further that her failure to respond does not indicate that the complaint lacked legal merit.

Defendant's attorney, in contrast, claims that he twice asked plaintiff's counsel to file a voluntary dismissal of the complaint. He also informed her that he would move for summary judgment and counsel fees under N.J.S.A. 2A:15-59.1. Because plaintiff's counsel refused to file a voluntary dismissal, he was forced to prepare the summary-judgment motion.

On January 10, 1991, defendant moved for counsel fees under N.J.S.A. 2A:15-59.1, which provides:

a. A party who prevails in a civil action, either as 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 application to the court which heard the matter. The application shall be supported by an affidavit stating in detail

1. The nature of the services rendered, the responsibility assumed, the results obtained, the amount of time spent by the attorney, any particular novelty or difficulty, the time spent and services rendered by secretaries and staff, other factors pertinent in the evaluation of the services rendered, the amount of the allowance applied for, an itemization of the disbursements for which reimbursement is sought, and any other factors relevant in evaluating fees and costs; and

2. How much has been paid to the attorney and what provision, if any, has been made for the payment of these fees in the future.

The Law Division held that the complaint was frivolous under subsection b(2) because it was "without any reasonable basis in law or equity." It found that the employment application and employee-handbook acknowledgment, both of which plaintiff had signed, precluded her breach-of-contract claim. It further found that the handbook's warning that it did not create an enforceable promise precluded any claim of promissory estoppel. The court stated:

Plaintiff filed this lawsuit against the defendant despite the very clear contractual provisions between the parties, which contractual provisions clearly indicated that there was no cause of action. Plaintiff was lackadaisical with respect to her prosecution of this lawsuit, i.e. the dismissal, and did not even see fit to oppose the Motion for Summary Judgment despite the fact that the return date was postponed in order to give plaintiff an opportunity to respond thereto.

I am satisfied that this lawsuit was a frivolous lawsuit within the meaning of N.J.S.A. 2A:15-59.1b(2) [because] it was filed without any reasonable basis in law or equity.

Consequently, the court ass...