ANN CORIGLIANO VS. HENRY CORIGLIANO, JR. (C-000049-19, MORRIS 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NOT FOR PUBLICATION WITHOUT THE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-3046-19
ANN CORIGLIANO and
MICHAEL CORIGLIANO,
Plaintiffs-Respondents,
v.
HENRY CORIGLIANO, JR.,
individually, and HENRY
CORIGLIANO, JR., and JANET
M. SANDELLI, as trustees of the
testamentary trust of HENRY
CORIGLIANO f/b/o
HENRY CORIGLIANO, JR., and
trustees of the testamentary trust
of MARGARET V. CORIGLIANO
f/b/o HENRY CORIGLIANO, JR.,
and as executors of the estate of
HENRY CORIGLIANO
and estate of MARGARET V.
CORIGLIANO,
Defendants-Appellants,
and
FLORENCE CORIGLIANO,
individually, CORIGLIANO
MOTOR SERVICES, INC., and
FANNY REALTY COMPANY,
INC.,
Defendants.
______________________________
Submitted March 2, 2021– Decided July 12, 2021
Before Judges Gilson and Gummer.
On appeal from Superior Court of New Jersey,
Chancery Division, Morris County, Docket No.
C-000049-19.
Andrew Rubin and Keith A. McKenna, attorneys for
appellants.
Respondents have not filed briefs.
PER CURIAM
Defendant Henry Corigliano, Jr. (Cory) appeals an order requiring him to
pay the attorneys' fees of his cousins, plaintiffs Ann Corigliano and Michael
Corigliano, incurred in their efforts to enforce a settlement agreement. Because
the trial judge did not follow the required procedures for the imposition of a fee-
award sanction, we reverse.
The parties resolved a property dispute in a mediated settlement
agreement, which required Cory, among other things, to close by June 14, 2019,
on the purchase of five lots and the interests held by others in Corigliano Motor
Services, Inc. and Fanny Realty Company, LLC or, if he failed to close on that
A-3046-19
2
transaction by July 1, 2019, pursuant to a "time of essence closing notice," to
sell his interest in the lots and businesses.1 Asserting Cory had attempted to
change the terms of the settlement agreement in the course of negotiating the
contract of sale drafted by Ann's attorney and had breached the agreement,
plaintiffs on May 28, 2019, filed a verified complaint and an order to show cause
seeking an order enforcing the settlement agreement, finding "the Cory
Defendants"2 had breached and repudiated it, and compelling "the Cory
Defendants" to sell their interests in the lots and businesses. Without issuing an
order to show cause and before defendants filed an answer, the trial judge
scheduled a summary hearing.
1
Plaintiffs in their verified complaint, Cory in his appellate brief, and the trial
judge in the opinion state "Cory" was required to purchase the lots and business
interests. The settlement agreement actually states "Trust to buy LLC, Corp and
5 lots," presumably meaning the "Trust established F/B/O Henry Corigliano, Jr.
under Article Fourth of the Last Will and Testament of Henry Corigliano"
("Henry's Trust") or the "Trust established F/B/O Henry Corigliano, Jr. under
Article Third of the Last Will and Testament of Margaret Corigliano"
("Margaret's Trust"). Cory and his sister defendant Janet M. Sandelli were
trustees of those trusts. According to Cory, the parties, "either individually, as
shareholders, or through the trusts," owned the lots.
2
Plaintiffs defined the "Cory Defendants" as Cory and Janet. Plaintiffs named
Cory and Janet as defendants in their capacity as trustees of Henry's Trust and
Margaret's Trust; they also named Cory individually as a defendant.
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At the beginning of the second day of the hearing, which took place on
July 1, 2019, Cory's counsel stated Cory was prepared to close on the transaction
that afternoon, in compliance with the July 1 deadline set in the settlement
agreement and a time-of-the-essence letter sent by Ann's counsel. The trial
judge nevertheless continued the summary hearing, heard closing arguments,
and rendered an oral decision.
In her decision, the trial judge noted "defendant" had changed positions,
initially arguing the settlement agreement was unenforceable but ultimately
seeking to enforce the agreement. Describing Cory as "largely not credible,"
the trial judge found "three actual breaches of the settlement agreement and two
anticipatory breaches." The trial judge, however, also found plaintiffs had
"repudiated the repudiation by electing to use the time-of-the-essence closing
notice and proceeding" set forth in the settlement agreement and held because
"[d]efendant says he's ready to close today, . . . I have to allow him to attempt
to do that." The judge concluded, "if the [d]efendant can close today and meet
all of the contingencies of the settlement[] agreement, then that's the remedy,
and if not, . . . the alternative relief [of defendants' selling their interest] would
be enforced by the [c]ourt immediately." The closing took place that day.
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The trial judge also stated, "the pattern of behavior suggests bad faith on
the part of the [d]efendant or, at the very least, suggests [d]efendant had no
intention of complying with the time frames when he signed the settlement
agreement," which "may entitle [p]laintiffs to some relief in the terms of
attorney's fees spent because . . . I don't think that he would have been able to
close today but for this litigation." The trial judge stated she "would be inclined
to entertain an application for fees" and set a briefing schedule on "whether
you're entitled to attorney's fees by law."
In a written decision, the trial judge awarded plaintiffs' fees. Noting her
findings that Cory had changed his position regarding the enforceability of the
agreement, was not credible, had breached the settlement agreement, and his
"litigation tactics were the product of bad faith, entirely without merit in law or
fact," the trial judge held plaintiffs were entitled to fees "as a sanction" pursuant
to Rule 1:4-8 because "Cory frivolously defended a meritorious action," relying
on a court's "inherent power to sanction a party" who has acted in bad faith. The
trial judge issued an order requiring defendant to pay Ann's attorney $87,566.77
and Michael's attorney $42,240.50. Cory appeals that order.3
3
Plaintiffs have not submitted a response to Cory's appeal.
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We review for an abuse of discretion a trial judge's decision to award
sanctions pursuant to Rule 1:4-8. United Hearts, L.L.C. v. Zahabian, 407 N.J.
Super. 379, 390 (App. Div. 2009). A fee award based on a mistaken application
of law is not entitled to any special deference; we review de novo legal issues
raised in a fee application. Brunt v. Bd. of Trs., Police & Firemen's Ret. Sys. in
Div. of Pensions & Benefits, 455 N.J. Super. 357, 363 (App. Div. 2018).
Finding "no contractual basis upon which an award of fees may be
premised," the trial judge stated she was ordering defendant to pay plaintiffs'
attorneys' fees "in accordance with [Rule] 1:4-8," which she referred to as "the
frivolous litigation rule." Rule 1:4-8 does not authorize a court to sanction a
represented party, like Cory; instead, it authorizes a court to sanction an
"attorney or pro se party." R. 1:4-8(a) to (c); see also Toll Brothers, Inc. v. Twp.
of W. Windsor, 190 N.J. 61, 69 (2007). "Sanctions for frivolous litigation
against a party are governed by the Frivolous Litigation Statute, N.J.S.A. 2A:15-
59.1," which was not cited by the trial judge. Bove v. AkPharma Inc., 460 N.J.
Super. 123, 147 (App. Div. 2019). Rule 1:4-8 and the Frivolous Litigation
Statute are "interpreted restrictively" with sanctions awarded "only in
exceptional cases." Id. at 151.
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Rule 1:4-8 "governs the procedures applicable to an award of frivolous
litigation counsel fees and costs" under both the rule and the statute. Toll
Brothers, 190 N.J. at 64; see also Bove, 460 N.J. Super. at 150. Because the
judge imposed the sanctions on a represented party, Rule 1:4-8(f) applies. Ibid.;
see also Bove, 460 N.J. Super. at 150. Paragraph (f) requires "'[t]o the extent
practicable,' the procedures governing applications for frivolous litigation
sanctions against attorneys and pro se parties shall apply also to applications
against parties." Ibid. (quoting R. 1:4-8(f)). The procedural safeguards of Rule
1:4-8 are not meaningless hoops through which a court or a moving party must
jump; they are the mechanism that ensures due process is given to the party
potentially subject to a frivolous-lawsuit sanction. See McKeown-Brand v.
Trump Castle Hotel & Casino, 132 N.J. 546, 558-59 (1993) (finding a party
subject to a frivolous-lawsuit sanction is entitled to due process, which means
at a minimum "notice defining the issues and an adequate opportunity prepare
and respond"); see also Toll Brothers, 190 N.J. at 72 (finding "the public policies
underlying N.J.S.A. 2A:15-59.1 militate in favor of requiring that claims against
parties meet [Rule 1:4-8's] procedural requirements to the fullest extent
possible").
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The trial judge raised the issue of a fee award during her oral decision;
plaintiffs had not filed any motion for fees or requested a fee award during their
closing arguments. Consequently, the procedures of paragraph (c), which
addresses sanctions imposed on a court's "own initiative," and not paragraph (b),
which concerns "[m]otions for [s]anctions," of Rule 1:4-8 govern the trial
judge's fee award.4 The trial judge did not follow those required procedures.
Paragraph (c) requires a judge considering the imposition of a frivolous-
litigation sanction to issue "before a voluntary dismissal or settlement of the
claims" an "order describing the specific conduct that appears to violate [Rule
1:4-8] and directing the . . . party to show cause why he or she has not violated
[Rule 1:4-8]." The trial judge never issued the required order to show cause.
We see no practicable reason why the judge could not have issued the order to
show cause before imposing sanctions on Cory.
4
Even if paragraph (b) applied, the result would be the same because the
required procedures of paragraph (b) were not followed. Plaintiffs did not file
a motion for sanctions "separately from other applications" and did not serve the
required twenty-eight-day notice giving defendant an opportunity to withdraw
any allegedly "offending paper." See R. 1:4-8(b)(1); Toll Brothers, 190 N.J. at
69.
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Because the trial judge abused her discretion in awarding fees without first
issuing the required order to show cause, we reverse the award of fees and costs
and vacate the order requiring defendant to pay them.
Reversed.
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