ROBERT J. TRIFFIN VS. THETA HOLDING COMPANY, L.P. VS. LUIS PEN~A (L-9027-17, ESSEX COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4946-18
ROBERT J. TRIFFIN,
Plaintiff-Appellant,
v.
THETA HOLDING
COMPANY, L.P.,
EUROPEAN METAL
GROUP, and ARMANDO
PEÑA, individually and
t/a EUROPEAN METAL
GROUP,
Defendants,
and
THETA HOLDING
COMPANY, L.P.,
Third-Party Plaintiff-
Respondent,
v.
LUIS PEÑA,
Third-Party Defendant.
_____________________________
SCARINCI & HOLLENBECK,
LLC,
Respondent.
_____________________________
Argued September 27, 2021 – Decided October 19, 2021
Before Judges Vernoia and Firko.
On appeal from the Superior Court of New Jersey, Law
Division, Essex County, Docket No. L-9027-17.
Robert J. Triffin, appellant, argued the cause pro se.
Robert E. Levy argued the cause for respondent
(Scarinci & Hollenbeck, LLC, attorneys; Peter R.
Yarem, of counsel and on the brief).
PER CURIAM
Plaintiff Robert J. Triffin, an attorney, appeals from a March 1, 2019 order
granting defendant Theta Holding Company, LP (Theta) summary judgment on
his claim that Theta, as drawer of a $15,000 check made payable to defendant
European Metal Group (EMG), is obligated to honor the check under N.J.S.A.
12A:3-414. The check was first presented to 144 Enterprises, LLC, trading as
City Check Cashing, and dishonored because Theta stopped payment on the
check. Plaintiff also appeals from a May 25, 2019 order directing him to pay
$5,262.50 in Rule 1:4-8 sanctions for the counsel fees Theta incurred with its
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counsel Scarinci & Hollenbeck, LLC (the law firm) opposing plaintiff's motion
for reconsideration of the February 5 and 21, 2018 orders denying his motions
to quash deposition subpoenas and a subpoena duces tecum. We affirm both
orders.1
I.
The facts are derived from evidence submitted by the parties in support
of, and in opposition to, the summary judgment motion, viewed in the light most
favorable to plaintiff. H.C. Equities, LP v. Cnty. of Union, 247 N.J. 366, 380
(2021). In 2015, Theta hired EMG to "perform construction services." On Ju ne
17, 2016, Theta issued a $15,000 check to EMG, which was ostensibly left in a
stolen truck. On June 21, 2016, defendant Luis Peña,2 a driver for EMG,
1
At oral argument before us, plaintiff raised the issue of standing to challenge
a statute, relying on Crusco v. Oakland Care Ctr., Inc., 305 N.J. Super. 605 (App.
Div. 1997). In Crusco, we considered the issue of "whether plaintiff may [have]
base[d] a wrongful discharge claim upon the provision in the Ombudsman Act
prohibiting retaliatory acts, N.J.S.A. 52:27G-14(a)." Id. at 614. We held it was
"abundantly clear" there was "no private cause of action for wrongful discharge
under the Ombudsman Act" because the plaintiff was not part of the class that
the statute was intended to benefit, and there was no evidence the Legislature
intended to create a private cause of action under the statute. Id. at 614-15(citing In re State Comm'n of Investigation, 108 N.J. 35 (1987)). After careful
consideration, we conclude the Crusco holding is not germane to our analysis in
the matter under review.
2
Parties who share a last name with other parties are referred to by their first
names for the ease of reference. By doing so, we intend no disrespect.
A-4946-18
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informed Theta that his truck and the check, which was inside, were stolen. That
same day, Luis cashed the check with 144 Enterprises, LLC, trading as City
Check Cashing (Enterprise), on EMG's behalf. Simultaneously, Luis requested
a replacement check from Theta and asked Theta to stop payment on the first
check, which it did. Luis picked up a second $15,000 check from Theta on June
21, 2016.
When Luis cashed the first Theta check with Enterprise, it "had a certified
copy of a corporate resolution [prepared by] EMG" requiring "all members be
present when cashing a check." On June 21, 2016, the president, secretary,
shareholder and director of EMG was defendant Armando Peña, Luis' father.
The record shows Luis was not a member of EMG; he was not mentioned in the
EMG resolution; and Enterprise did not have a separate corporate resolution
authorizing him to present a check on EMG's behalf. Enterprise claimed it was
unaware Theta had stopped payment on its first check and had Enterprise
contacted Theta prior to cashing it, Enterprise would not have completed the
transaction. The record shows Enterprise failed to contact Theta or its bank
before cashing the first Theta check.
On March 3, 2017, plaintiff purchased Enterprise's rights to the first Theta
check, as well as fourteen other checks, for the sum of $4750 by way of an
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assignment agreement. On April 20, 2017, plaintiff filed a complaint against
defendants in the Essex County Special Civil Part seeking to enforce Theta's
dishonored check. On October 13, 2017, the matter was removed to the Law
Division.
On October 26, 2017, Theta filed an answer to the complaint, cross-
claims, and a third-party complaint against Luis. Theta alleged plaintiff lacked
the requisite legal status of a holder in due course to enforce its dishonored
$15,000 check to EMG against itself.
On December 20, 2017, plaintiff moved to quash Theta's subpoena to
depose Lovy Santos, an Enterprise teller working on the day Enterprise cashed
Theta's dishonored check. On February 5, 2018, Judge Annette Scoca denied
plaintiff's motion to quash, and on February 21, 2018, the judge issued an
amended order compelling the deposition of Santos to proceed on March 13,
2018.
On February 26, 2018, plaintiff filed a motion for reconsideration of the
February 5, and 26 orders, which was denied by Judge Scoca on March 16, 2018.
In the interim, the judge denied Theta's initial motion seeking sanctions
premised upon plaintiff's alleged frivolous motion for reconsideration. On April
20, 2018, Theta renewed its motion for sanctions. Relying on its attorney's
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certification, Theta argued it had "strictly complied with all the procedural
requirements of Rule 1:4-8(b)(1)" and plaintiff's motion for reconsideration was
"completely frivolous" because he "did nothing more than attempt to reargue his
[m]otion."
On May 11, 2018, Judge Scoca granted Theta's renewed motion for
sanctions. Before a memorializing order was entered, plaintiff filed opposition,
with the judge's permission, on May 21, 2018, maintaining Theta lacked
standing to pursue discovery. Nonetheless, on May 25, 2018, the judge ordered
plaintiff to pay $5,262.50 in frivolous litigation sanctions in the form of counsel
fees to the law firm.
Following the close of discovery, on November 20, 2018, Theta moved
for summary judgment and to dismiss plaintiff's complaint. Theta argued that
section thirteen, N.J.S.A. 17:15A-47, of the Check Cashers Regulatory Act of
1993 (CCRA), N.J.S.A. 17:15A-30 to -52, barred plaintiff from collecting
payment from Theta on its first issued check because the Uniform Commercial
Code (UCC) limits plaintiff's recovery to Luis under N.J.S.A. 12:3-403(a). On
December 7, 2018, plaintiff filed opposition to Theta's motion and challenged
the court's subject matter jurisdiction over his claim.
A-4946-18
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On March 1, 2019, the parties appeared before Judge Thomas M. Moore
for oral argument. In his comprehensive oral decision, after recognizing the
standards for summary judgment, Judge Moore explained the CCRA applies and
provides:
that no licensee or any person acting on behalf of a
licensee shall cash a check which is made payable to a
payee which is other than a natural person unless the
licensee has on file a corporate resolution or other
appropriate documentation indicating that the
corporation, partnership or other entity has authorized
the presentment of a check on its behalf and the federal
taxpayer identification number of the corporation,
partnership or other entity.
The judge continued his explanation:
[Plaintiff], of course, was involved in the Triffin v.
Liccardi case, 417 N.J. Super. 450 [453] [(App. Div.
2011)]. In that case, in my view, the [c]ourt decided
whether [plaintiff] was a holder in due course after
acquiring a check that was in violation of the CCRA of
1993. In that case, Liccardi Ford issued a check to an
employee, Mr. Stallone, but withheld the check on
suspicion that he was actually embezzling funds from
the company. At [], Mr. Stallone purloined the check
and cashed it at J.C.N.B. Check Cashing, Inc. but upon
discovery that Stallone purloined the check Liccardi
immediately issued a stop payment on the check.
[Plaintiff] acquired the dishonored check from
J.C.N.B., sued Stallone and Liccardi for the amount of
the check. The trial court determined that the check
was post-dated which put J.C.N.B. on notice that there
was a claim against collection and found that J.C.N.B.
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was not a holder in due course. The trial court then
granted summary judgment.
The [c]ourt analyzed the matter and began by laying out
relevant law and explaining that:
"Under the [UCC] Act N.J.S.A. 12A:3-
302A, to be a holder in due course one must
take an instrument for value in good faith
and without notice of dishonor or any
defense against or claim to it on the part of
the person."
Quoting the Triffin v. Quality Urb. House case, 352
N.J. Super. 538 at 541 [(App. Div. 2002),] the [c]ourt
explained:
"[Plaintiff] did not take the Liccardi check
as a holder in due course because he
purchased the instrument with notice that
[it] had been dishonored."
Further, the [c]ourt explained that:
"If J.C.N.B. was a holder in due course
when it obtained the check from Stallone it
could have signed its interest in the check
to [plaintiff] and he could, in turn, enforce
J.C.N.B. rights as it[s] assignee."
The [c]ourt acknowledged that in Triffin v. Pomerantz
Staffing, 370 N.J. Super. 301[] [(App. Div. 20[0]4)]:
"We denied holder in due course status to
an assignor who failed to comply with
instructions on the face of the check to test
whether the ink on the check was heat
sensitive."
A-4946-18
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In that case, the [c]ourt determined that it is reasonable
that the holder be expected to fully examine the front
and back of the instrument and where the instrument
purports to contain a method by which its authenticity
may be tested, that the holder actually utilized the
method for Liccardi at 460-461.
Here, I don't think it's disputed, it's not disputed or I
find no dispute that the first Theta check was made
payable to EMG. EMG has a corporate resolution in
place that requires "all members be present when
cashing a check." Very clear on the document,
Armando . . . was the only member listed on the
corporate resolution and the only member authorized to
cash checks. Armando . . . in fact, no dispute of fact,
did not cash this check and Enterprise, therefore,
violated the CCRA by cashing this check for L[uis]
....
I think there's no doubt in my mind and I think the
[c]ourt has the ability to come to that determination. I
don't think it usurps anyone's banking commission's
authority to make a determination that [Enterprise] was
not a holder in due course. Even by assignment
[plaintiff] cannot assert the rights of a holder in due
course.
In granting Theta's motion for summary judgment, the judge found it was
not liable to plaintiff for payment of the first check. Under the CCRA, the judge
concluded "an unauthorized signature is ineffective except as the signature of
the unauthorized signer in favor of a person who in good faith pays the
instrument or takes it for value . . . ." Since Enterprise was never a holder in
A-4946-18
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due course because it violated the CCRA, likewise the judge determined that
plaintiff could not be a holder in due course either. A memorializing order was
entered. This appeal ensued.
On appeal, plaintiff argues:
(1) Judge Moore erred in granting summary judgment
to Theta and ignored the distribution of powers
provision in Article III of the New Jersey Constitution
and case law, which preempts prior precedent
addressing the CCRA; and
(2) Judge Scoca abused her discretion in awarding
sanctions and denying plaintiff's motion for
reconsideration.
II.
We review an order granting summary judgment under the same standard
that trial courts apply when ruling on a motion for summary judgment. RSI
Bank v. Providence Mut. Fire Ins. Co., 234 N.J. 459, 472 (2018) (citing Bhagat
v. Bhagat, 217 N.J. 22, 38 (2014)); ADP, LLC v. Kusins, 460 N.J. Super. 368,
399 (App. Div. 2019) (citing Davis v. Brickman Landscaping, Ltd., 219 N.J.
395, 405 (2014)). Courts ruling on summary judgment are required to view the
evidence presented in the light most favorable to the non-moving party to
determine whether the materials presented "are sufficient to permit a rational
A-4946-18
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factfinder to resolve the alleged disputed issue in favor of the non-moving
party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).
If "there is no genuine issue as to any material fact challenged and . . . the
moving party is entitled to a judgment . . . as a matter of law," then summary
judgment is appropriate. R. 4:46-2(c). In other words, summary judgment is
properly granted "[w]hen the evidence 'is so one-sided that one party must
prevail as a matter of law.'" Davis v. Brickman Landscaping, Ltd., 219 N.J. 395,
406 (2014) (quoting Brill, 142 N.J. at 540).
The non-moving party bears the affirmative burden "to make a complete
and comprehensive showing why summary judgment should not be entered."
Lombardi v. Masso, 207 N.J. 517, 556 (2011) (Rivera-Soto, J., dissenting). To
satisfy this burden, the non-moving party "must 'demonstrate by competent
evidential material that a genuine issue of fact exists.'" Globe Motor Co. v.
Igdalev, 225 N.J. 469, 479-80 (2016) (quoting Robbins v. Jersey City, 23 N.J.
229, 241 (1957)). The court must then determine "whether a rational factfinder
could resolve the alleged disputed issue in favor of the non-moving party," id.
at 481 (quoting Perez v. Prof'ly Green, LLC, 215 N.J. 388, 405-06 (2013)),
bearing in mind "neither the motion court nor an appellate court can ignore the
A-4946-18
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elements of the cause of action or the evidential standard governing the cause of
action." Bhagat, 217 N.J. at 38.
Plaintiff argues that the distribution of powers clause contained in Article
III of the New Jersey constitution and the holding in Klumb v. Bd. of Educ. of
Manalapan-Englishtown Reg'l High Sch. Dist., Monmouth Cnty., 199 N.J. 14(2009), invalidate the holding in Triffin v. Liccardi Ford, Inc., which Judge
Moore relied on in granting summary judgment to Theta. However, Theta
contends that plaintiff's "reliance on Klumb is misguided" and the well-
established principles in Liccardi Ford give it standing to raise a violation of the
CCRA defense and preclude plaintiff from asserting holder in due course status.
In Klumb, the Court addressed the interpretation of a teacher's pension
statute relative to reinstatement of a teacher previously on disability leave. The
Court held that its goal is to promote the Legislature's intent when interpreting
a statute, and when the plain language produces a "clear and unambiguous
result," the process is concluded. Id. at 23-4 (quoting Richardson v. Bd. of Trs.,
Police & Firemen's Ret. Sys., 192 N.J. 189, 195 (2007)) (citing Bd. of Educ. of
Sea Isle City v. Kennedy, 196 N.J. 1, 12 (2008)). If an ambiguous result should
arise, then a court should look to extrinsic evidence like legislative history to
discern the Legislature's intent. Id. at 24 (citations omitted).
A-4946-18
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Relying on Klumb, plaintiff argues that "this court's holding in [Liccardi
Ford] . . . unconstitutionally modified, or otherwise rewrote by judicial fiat the
plain language of N.J.S.A 12A:3-414 to make a licensed check casher's
compliance [with] the [CCRA] a requirement for a plaintiff to enforce the
dishonored check warranties in N.J.S.A. 12A:3-414." We disagree.
In Liccardi Ford, we did not discuss N.J.S.A. 12A:3-414. See 417 N.J.
Super. 453 (App. Div. 2011). Instead, like the matter under review, we were
faced with determining whether a licensee under the CCRA, who cashes a
dishonored check in violation of the statute gains, and transfers by assignment
of rights to the dishonored check, holder in due course status. Id. at 455.
The first statute relevant to our analysis is N.J.S.A. 12A:3-414, which
deals with the obligation of the drawer 3 when the drawee 4 is a holder in due
course. Whether Enterprise was a holder in due course is purely a legal
determination. Under the UCC, a holder in due course takes the negotiable
instrument free of the obligor's claims and defenses that do not arise from his
3
"Drawer" is defined as "a person who signs or is identified in a draft as a
person ordering payment." N.J.S.A. 12A:3-103(a)(3).
4
"Drawee" is defined as "a person ordered in a draft to make payment."
N.J.S.A. 12A:3-103(a)(2).
A-4946-18
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own behavior. A holder is a person in possession of a negotiable instrument
payable to him or to a bearer. Under the UCC, to qualify as a holder in due
course, the holder of an instrument must have taken "the instrument for value,
in good faith, without notice that the instrument is overdue or has been
dishonored,"5 or "contains an unauthorized signature." N.J.S.A. 12A:3-
302(a)(2). "Good faith" is defined as "honesty in fact and the observance of
reasonable commercial standards of fair dealing." N.J.S.A. 12A:3-103(a)(4). It
is the "without notice that the instrument . . . contains an unauthorized signature"
language that governs our decision. N.J.S.A. 12A:3-302(a)(4).
The second statute relevant to our analysis is the CCRA, N.J.S.A. 17:15A-
30 to -52, which prescribes the responsibilities of check cashers when presented
with a negotiable instrument. Enterprise is licensed by the New Jersey
Department of Banking to cash checks. As such, it is subject to the CCRA.
Under the CCRA, no licensee or person acting on behalf of a licensee is
permitted to,
[c]ash a check which is made payable to a payee which
is other than a natural person unless the licensee has on
5
Whether plaintiff had notice that the first Theta check was dishonored is not
at issue on appeal. Furthermore, the assignment agreement between plaintiff
and Enterprise states, "Seller warrants that at the time it cashed the referenced
checks; it had no notice that the referenced checks had been dishonored."
A-4946-18
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file a corporate resolution or other appropriate
documentation indicating that the corporation,
partnership or other entity has authorized the
presentment of a check on its behalf and the federal
taxpayer identification number of the corporation,
partnership or other entity.
[N.J.S.A. 17:15A-47(a).]
There is no dispute Enterprise did not have on file a corporate resolution
or other appropriate documentation authorizing Luis to cash checks on behalf of
the payee identified on the Theta check. There is equally no dispute Enterprise
was aware of this deficiency and also aware of its obligation under the law to
cash checks made payable to Armando only.
Clearly, a licensee's 6 cashing of a check in violation of the CCRA does
not satisfy the licensee's obligation of "good faith" under the UCC as a matter
of law. In Valley Nat'l Bank v. P.A.Y. Check Cashing, 378 N.J. Super. 234,
234-35, we affirmed the trial court's finding in Valley Nat'l Bank v. P.A.Y.
Check Cashing, 378 N.J. Super. 406, 425 (Law Div. 2004) (citing N.J.S.A.
17:15A-47(a)) that the licensee "cashed a check payable to a corporation without
having a corporate resolution or other appropriate documentation indicating that
6
"Licensee" is defined as "a person who holds, or who should hold, a license
pursuant to" the CCRA. N.J.S.A. 17:15A-31. A license under the CCRA
"authorizes the licensee to cash checks for a fee." Ibid.A-4946-18
15
the presentment was authorized." As a consequence of this failure to comply
with the CCRA and its own internal guidelines, we also concluded the licensee
"did not . . . satisfy [its] obligation of 'good faith' under the UCC." Valley Nat'l
Bank, 378 N.J. Super. at 234-35.
Here, Enterprise similarly violated the CCRA, precluding it from
obtaining holder in due course status. A "natural person" does not include a
"partnership, professional association, company, corporation, or other business
entity" identified as a payee on a check. N.J.S.A. 17:15A-31. Moreover, our
administrative code defines "[a]ppropriate documentation" as "a corporate
resolution filed with the Secretary of State, Federal taxpayer identification
number, filed New Jersey Certificate of Authority, filed trade-name certificate
or other readily verifiable official document." N.J.A.C. 3:24-1.3.
Saliently, if a licensee is not a holder in due course, then it cannot transfer
holder in due course status in a check to an assignee. Liccardi Ford, 417 N.J.
Super. at 457. In Liccardi Ford, we held that examining the face of a check to
discern whether it was postdated was a required, reasonable commercial
standard under the CCRA. Id. at 458. Thus, the licensee violated the "express
terms" of the CCRA when it failed to "examine the face of a [post-dated] check
and refrain from cashing it," precluding holder in due course status. Ibid. Since
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the licensee was not a holder in due course, the assignee was not either and could
not enforce the dishonored check against the drawer. Id. at 461.
Analogous to the licensees in Liccardi Ford and Valley Nat'l Bank,
Enterprise "failed to observe reasonable commercial standards, because it
'violated the [CCRA], which establishes reasonable commercial standards for
check cashing licensees.'" Liccardi Ford, 417 N.J. Super. at 459 (quoting Valley
Nat'l Bank, 378 N.J. Super. at 425). Moreover, Enterprise cashed Theta's check
made payable to a corporation, EMG, without appropriate documentation. 7
There is no genuine issue of material fact that Enterprise did have the EMG
Resolution on file when Luis cashed the first Theta check, and Luis was not
authorized to cash the check on EMG's behalf. As Judge Moore highlighted,
"Armando . . . was the only member listed on the corporate resolution and the
only member authorized to cash checks" and "Armando . . . did not cash this
check." And, Enterprise did not possess a separate corporate resolution
authorizing Luis to cash the check either. As did the licensee in Valley Nat'l
Bank, "Enterprise . . . violated the CCRA by cashing this check for [Luis]." See
N.J.S.A. 17:15A-47(a).
7
As noted above, Luis "also subsequently cashed the second Theta check[,]
which had not been stopped." However, the second Theta check is not in dispute
on appeal.
A-4946-18
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Here, Enterprise failed to meet reasonable commercial standards by
violating the CCRA, thus precluding holder in due course status based on lack
of good faith under the UCC. N.J.S.A. 12A:3-302(a)(2). Consequently,
plaintiff's argument that Liccardi Ford "unconstitutionally modified . . . the plain
language of N.J.S.A. 12A:3-414" is rejected. Based upon our de novo review,
Judge Moore properly granted Theta's motion for summary judgment.
III.
An abuse of discretion arises when a decision is "made without a rational
explanation, inexplicably departed from established policies, or rested on an
impermissible basis." Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002)
(quoting Achacoso-Sanchez v. Immigr. & Naturalization Servs., 779 F.2d 1260,
1265 (7th Cir. 1985)). Our review of a trial court's imposition of sanctions is
similarly reviewed for an abuse of discretion. Masone v. Levine, 382 N.J. Super.
181, 193 (App. Div. 2005) (citing R. 1:4-8). We likewise review a judge's
decision to impose discovery sanctions and award attorney's fees as a discovery
sanction under an abuse of discretion standard. Shore Orthopaedic Grp., LLC
v. Equitable Life Assurance Soc'y of U.S., 397 N.J. Super. 614, 629-30 (App.
Div. 2008); Innes v. Carrascosa, 391 N.J. Super. 453, 496 (App. Div. 2007).
A-4946-18
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A judge, in his or her discretion, has the inherent authority to sanction a
party for behavior that is vexatious, burdensome, and harassing. See Brundage
v. Est. of Carambio, 195 N.J. 575, 610 (2008) (recognizing the inherent power
of courts to sanction parties as means of enforcing ordinary rules of practice);
Abtrax Pharm., Inc. v. Elkins-Sinn, Inc., 139 N.J. 499, 513 (1995) (recognizing
the inherent power to punish for discovery violations); Dziubek v. Schumann,
275 N.J. Super. 428, 440 (App. Div. 1994) (reasoning a court's inherent power
may include awarding attorney's fees in the form of a sanction). Although the
power to sanction should be invoked sparingly, the circumstances presented in
the matter under review support Judge Scoca's award of attorney's fees as the
proper sanction for vexatious and harassing motion practice relative to the
discovery permitted by her February 5 and 21, 2018 orders.
We conclude there is sufficient, credible evidence in the record to support
Judge Scoca's award of attorney's fees as a sanction against plaintiff in
accordance with Rule 1:4-8. Plaintiff's reconsideration motion was founded on
a wholly unsupportable legal argument based on two cases, Valley Nat'l, 378
N.J. Super. 234 (App. Div. 2004), and First Atl. Fed. Credit Union v. Perez, 391
N.J. Super. 419 (App. Div. 2007). These cases provide that the holder of a
dishonored check cannot seek damages against a check casher who violates the
A-4946-18
19
CCRA. And, these cases do not stand for the proposition that a party to an action
to collect on a dishonored check under the CCRA is barred from taking
appropriate discovery. Moreover, Theta did not seek relief against plaintiff
under the CCRA but sought the sanctions under Rule 1:4-8(b)(1).
The frivolous litigation statute permits a court to award reasonable
counsel fees and litigation costs to a prevailing party in a civil action if the court
determines that the complaint, counterclaim, cross-claim, or defense is
frivolous. N.J.S.A. 2A:15-59.1. A claim is considered frivolous when: "no
rational argument can be advanced in its support"; "it is not supported by any
credible evidence"; "a reasonable person could not have expected its success";
or "it is completely untenable." Belfer v. Merling, 322 N.J. Super. 124, 144
(App. Div. 1999). "[F]alse allegations of fact [will] not justify [an] award . . .
unless they are made in bad faith, 'for the purpose of harassment, delay or
malicious injury.'" McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J.
546, 561 (1993) (quoting N.J.S.A. 2A:15-59.1(b)(1)). An honest attempt to
pursue a perceived, though ill-founded, claim is not considered to be frivolous.
Id. at 563. The burden of proving bad faith is on the party who seeks fees and
costs. Id. at 559.
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Rule 1:4-8 supplements N.J.S.A. 2A:15-59.1. A Rule 1:4-8 sanction is
"specifically designed to deter the filing or pursuit of frivolous litigation."
LoBiondo v. Schwartz, 199 N.J. 62, 98 (2009). "For purposes of imposing
sanctions under Rule 1:4-8, an assertion is deemed 'frivolous' when 'no rational
argument can be advanced in its support, or it is not supported by any credible
evidence, or it is completely untenable.'" United Hearts, L.L.C. v. Zahabian,
407 N.J. Super. 379, 389 (App. Div. 2009) (quoting Perez, 391 N.J. Super. at
432). "Where a party has [a] reasonable and good faith belief in the merit of the
cause, attorney's fees will not be awarded." Ibid. (alteration in original).
Theta sought counsel fees, asserting plaintiff moving for reconsideration
did "nothing more than recycle and attempt to reargue his underlying denied
motion." In his motion to quash, motion for reconsideration, and again on
appeal, plaintiff continues to argue that a drawer of a dishonored check cannot
assert a violation of the CCRA as a defense to a check enforcement action and
lacks standing to pursue discovery in support of that defense.
In deciding Theta's motion for sanctions against plaintiff, Judge Scoca
aptly stated:
[t]o the extent that [p]laintiff yet again repeats
previously-rejected arguments regarding Theta's
alleged lack of standing to pursue discovery, the [c]ourt
disregards such arguments in their entirety. Should
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plaintiff continue to ignore this [c]ourt's prior rulings
and burden the [c]ourt with frivolous, previously-
rejected, procedurally improper arguments-rather than
availing himself of the proper procedural remedies (i.e.
a non-frivolous motion for reconsideration or appeal)-
then plaintiff will continue to expose himself to the
possibility that sanctions will be imposed.8
We discern no abuse of discretion in Judge Scoca's decision to sanction
plaintiff by imposing attorney's fees in favor of Theta. The law firm complied
with Rule 1:4-8(b)(1) and timely notified plaintiff that his motion for
reconsideration was frivolous. Nonetheless, he did not withdraw or modify his
motion.
To the extent we have not specifically address any remaining arguments
raised by plaintiff, we conclude they lack sufficient merit to warrant discussion
in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
8
However, the judge agreed with plaintiff that not all of Theta's requested fees
were "reasonable" under RPC 1.5(a)(1) and therefore, reduced the requested fee
by fifty percent from $9750 to $5,212.50. A $50 filing fee was added to the
counsel fee award resulting in the $5,262.50 total amount.
A-4946-18
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