Appellate Division Remands Frivolous Litigation Attorney Fee Award

Many years after her mother’s death, plaintiff filed litigation against her sister’s husband Howard regarding plaintiff’s late mother’s estate. She claimed that Howard had been managing her mother’s money while she was alive and that, upon her mother’s death, Howard continued to manage that money on behalf of plaintiff and her sister. Plaintiff’s complaint against Howard claimed breach of fiduciary duty, fraud, conversion, and unjust enrichment.

Howard denied ever managing the mother’s funds, and asserted that he did not even know if she had any money left upon her death. His lawyer sent plaintiff’s lawyer a notice and demand to withdraw the complaint under New Jersey Court Rule 1:4-8.

Following discovery and a bench trial, the trial court dismissed the complaint. The judge found that Howard was more credible than plaintiff, and rejected plaintiff’s claims that Howard had managed his later mother-in-law’s assets or even had access to those assets. Plaintiff had offered no evidence regarding the amount of money allegedly left at her mother’s death, other than conversations with her sister, and she had never made a claim for an accounting until many years after her mother’s death.

The trial judge also entered an order granting Howard’s motion for legal fees under Rule 1:4-8 and N.J.S.A. 2A:15-59.1, concluding that plaintiff’s claims were frivolous because plaintiff had failed to produce any evidence “other than bare allegations.”

On appeal, the Appellate Division concluded that, because the trial judge had failed to conduct the required analysis or set forth her reasons for granting the motion, the fee award must be remanded.

In so doing, the appellate court noted the high threshold required to prevail in a frivolous litigation motion: the statute and court rule must be strictly interpreted against the moving party, and “both the Rule and the statute require that the prevailing party seeking the sanction prove that the non-prevailing party acted in bad faith.” As the court continued,

A claim will be deemed frivolous or groundless only when no rational argument can be advanced in its support, when it is not supported by any credible evidence, when a reasonable person could not have expected its success, or when it is completely untenable…. Even then, when a prevailing defendant’s allegation is based on the absence of a reasonable basis in law or equity for the plaintiff’s claim and the plaintiff is represented by an attorney, an award cannot be sustained if the plaintiff did not act in bad faith in asserting or pursuing the claim…. Moreover, clients are entitled to rely upon their attorneys for an analysis of the merits of their case. A client who relies in good faith on the advice of counsel cannot be found to have known that his or her claim or defense was baseless.

Within this context, the appellate court remanded the case to the trial court, with instructions that the trial court render a decision that (1) considers the sufficiency of the frivolous claim notice, and whether it satisfies the statute and court rule; (2) analyzes whether the plaintiff or her attorney acted in bad faith; and (3) analyzes the reasonableness of the fees claimed.

A copy of Konefal v. Landau can be found here – [gview file=””]

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