SYLVAN DENTAL, P.A. VS. CATHERINE CHEN (L-8325-16, BERGEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-4544-18
SYLVAN DENTAL, P.A., and
DONG HYUN LEE,
Plaintiffs-Appellants,
v.
CATHERINE CHEN,
Defendant-Respondent.
___________________________
Submitted September 14, 2020 – Decided August 19, 2021
Before Judges Sabatino, Currier, and Gooden Brown.
On appeal from the Superior Court of New Jersey, Law
Division, Bergen County, Docket No. L-8325-16.
Michael S. Kimm, attorney for appellant.
McCusker, Anselmi, Rosen & Carvelli, PC, attorneys
for respondent (Bruce S. Rosen and James Harry
Oliverio, on the brief).
PER CURIAM
In this libel/defamation action, Dr. Dong Hyun Lee and his practice,
Sylvan Dental, PA (collectively, plaintiffs), appeal from several Law Division
orders, culminating in a June 11, 2019 order of final judgment for nominal
damages in the amount of $500 entered in favor of them against defendant Dr.
Catherine Chen. We affirm.
I.
We glean these facts from the record. Chen and Lee are both
dentists. Chen operated her dental practice in office space she rented from Lee
in a commercial building located on Sylvan Avenue in Englewood Cliffs. Lee
operated his practice out of a different suite in the same building. Under their
ten-year lease agreement executed on December 8, 2008, Chen could "cancel
th[e] lease by giving [sixty] day[s] advance notice in writing" to Lee. On April
18, 2013, Chen delivered a written "Notice of Cancellation of Lease" to Lee,
providing the requisite sixty days' notice.
Thereafter, Chen negotiated the sale of her practice to Dr. Jorge Delvalle,
another dentist, and executed a purchase proposal with Delvalle dated April 29,
2013, with a closing date of May 24, 2013. The sale was purportedly contingent
on Delvalle being able to lease the same premises from Lee. However, the
negotiations to lease the premises to Delvalle were upended when Lee
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demanded, among other things, an additional payment of $80,000 to rent the
space. As a result, the sale of Chen's dental practice to Delvalle was never
consummated. Unable to sell her practice, Chen vacated the premises by the
end of June 2013, terminating her lease with Lee in accordance with her prior
notice of cancellation.
Chen continued to practice dentistry at a new location in New Jersey until
she was eventually able to sell her practice in 2014. In 2015, she moved to the
State of Washington. In an apparent attempt to retaliate against Lee for his
perceived role in thwarting the sale of her practice to Delvalle and failing to
reinstate her lease once the sale fell through, in 2016, Chen posted defamatory
and inflammatory statements about Lee and his practice on two different
websites. The statements, which were admittedly false,1 accused Lee of
insurance fraud and disparaged his dental treatment and practice.
The first statement dated January 27, 2016, was posted by a user later
identified as Chen, writing under the pseudonym "QT in Palisades Park." The
post described Lee's dental practice as "the worst dental experience . . . ever
encountered," accused Lee of "insurance fraud" by billing for treatment that was
1
We quote from the statements in this opinion by necessity, with a caveat to
readers that defendant admits they are false.
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never performed, and warned readers to avoid Lee's practice. The post appeared
on www.healthgrades.com.2
On September 28, 2016, a second post appeared on www.yelp.com3 by a
user later identified as Chen, writing under the pseudonym "QT C." The post
gave a "[zero]" rating to Lee's practice, described the dental treatment as a
"painful" and "horrific experience," reported plaintiffs' "bad reputation" "among
Korean communities," and again accused Lee of "insurance fraud" by billing for
treatment that was never performed. The post also relayed a second-hand report
that Lee "was fined $80,000 by [an] insurance company," and warned readers to
avoid Lee's practice and not be "fool[ed]" by the "fancy waiting room."
In response, on November 29, 2016, plaintiffs filed an eight-count
complaint against Chen, alleging libel per se (count one), libel (count two),
2
According to its website, Healthgrades "is the leading online resource for
patients to find and connect with the right doctor or hospital." The site
reportedly helps "about a million people a day find and connect with healthcare
providers" and "search for top-rated doctors or hospitals." Additionally, the site
provides reviews from "patients" and information about "specific condition[s]"
and "procedure[s]." Healthgrades, Healthgrades Frequently Asked Questions,
https://www.healthgrades.com/content/faqs (last visited August 5, 2021).
3
Yelp provides an online directory that allows registered users to post reviews
and rank businesses on a scale of one to five stars. Based on these user rankings,
Yelp then assigns businesses an overall "star" rating. Businesses cannot opt out
of being listed on Yelp. Levitt v. Yelp! Inc., 765 F.3d 1123, 1126 (9th Cir.
2014).
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slander (count three), trade libel (count four), tortious interference (count five,
erroneously denoted as count four), interference with prospective relations
(count six, erroneously denoted as count five), irreparable harm warranting an
injunction (count seven, erroneously denoted as count six), and fraudulent
inducement (count eight, erroneously denoted as count seven).
In the complaint, plaintiffs alleged the content in both posts was conveyed
to Lee by "numerous patients" and confirmed by plaintiffs' subsequent
investigation. Plaintiffs argued Chen's "false assertions were deliberately
intended to cause as much retaliation and negative response against the plaintiffs
as the Internet would spawn, and [Chen] sought actively to promote the false
accusations of professional misconduct and even criminality with her . . .
'insurance fraud' assertion." Further, Chen lacked a "factual basis" for her
claims and was "not even a patient of . . . plaintiffs' practice." As relief,
plaintiffs sought damages, both compensatory and punitive, as well as injunctive
relief, including the removal of the defamatory postings and a retraction notice.
Plaintiffs also demanded a jury trial, pursuant to Rule 4:35-1.
By December 2016, the posts had been removed. In March 2017, Chen
filed an answer admitting to posting the negative reviews but denying Lee's
claims. Chen's answer contained seven counterclaims primarily related to the
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lease agreement with Lee and the failed contract with Delvalle. Specifically,
Chen alleged interference with contract and prospective economic advantage
(count one); breach of the lease agreement (counts two and three); unjust
enrichment (count four); breach of the implied covenant of good faith and fair
dealing (count five); consumer and common law fraud (count six); and libel
(count seven). Chen sought damages, both compensatory and treble, repayment
of her security deposit, and dismissal of plaintiffs' claims.
During discovery, Chen served Lee with interrogatories and document
requests. In the interrogatories, Chen requested Lee to "[i]dentify every patient"
by "name, together with address, email address and telephone number who told
[Lee] about 'negative Internet reviews' on 'multiple sources' as alleged in . . . the
[c]omplaint." Lee objected to the request "as unreasonable," stating "there
[were] too many names to be able to recall with precision of the kind sought by
this . . . request."
Lee further explained:
Plaintiffs' patients and non-patient acquaintances
routinely and generally stated that they had seen the
"derogatory posting on Yelp" and "on [Healthgrades]"
and that they were "shocked to see such nasty review,
by a patient." Because the number of such reaction has
been in the dozens and dozens and probably thousands
of potential patients decided to avoid [plaintiffs]
because of the false, evil attacks, plaintiffs are unable
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to provide specific names . . . in response to this
unreasonable request.
Regarding reputational and financial damages, Chen requested Lee to
"[d]escribe with particularity all reputational and financial damages" allegedly
caused by the "Health Grades" and "Yelp" reviews "as set forth in the
[c]omplaint," and "[e]xplain exactly all calculations as to the alleged damages
caused by each individual publication." Lee responded:
Yelp provides access to [eighty-four] million
unique monthly users as of 2015, according to
https://www.yelp.com/factsheet. In the northeastern
United States, where plaintiffs are based, Yelp provides
access to New York, New Jersey, Connecticut,
Pennsylvania and other areas from which plaintiffs'
patients are solicited and marketed.
Health Grades are less but equally potent for
health[-]related inquiries among consumers and non-
consumers alike.
As a result plaintiffs are entitled to non-
liquidated damages of at least $1 per user/access to the
defamatory postings.
Lee further explained that he suffered "[i]rreparable harm . . . because of
[Chen's] ongoing defamatory attack waged in the social media as shown in the
two postings," entitling him to an injunction.
On August 3, 2018, the trial judge granted Chen's motion to compel Lee
to provide more specific responses to certain interrogatories and to provide
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requested documents. Specifically, the judge stated that "plaintiffs must answer
how [Chen's] actions have affected plaintiffs' reputation" or "plaintiffs will be
limited to those responses in damages proofs." The judge stated further that
plaintiffs would be "limited at trial by the discovery they have provided."
Thereafter, Lee provided the following additional information regarding
reputational damage:
Many patients have since stated that they had seen the
"[Y]elp" review in particular, concerning Dr. Lee and
that they had recommended others to be treated by Dr.
Lee but those others had seen the "[Y]elp" review and
had been turned off due to the negative review posted
by someone with a "very vivid description" of pain and
suffering at the hands of Dr. Lee.
On September 11, 2018, Lee was deposed and testified that he could not
"recall the names" of patients who discontinued treating with him as a result of
the reviews. Additionally, Lee could not "recall the number" or names of
persons who told him they did not want to become his patients because of the
reviews. According to Lee, there were more people who never communicated
with him in person about the reviews than those who did. Lee "believe[d]" that
his "patients decreased [by] about [twenty] percent" for about "[t]hree or four
months" as a result of the reviews. When specifically asked what people told
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him about the negative reviews, Lee responded that "generally . . . they thought
it was false."
On November 2, 2018, Chen moved for summary judgment dismissal of
all the counts in the complaint with the exception of the libel or defamation
count. As to the libel count, Chen sought partial summary judgment limiting
Lee's remedy to nominal damages based on Lee's failure to produce any evidence
of actual damages. Lee opposed the motion and cross-moved for summary
judgment on Chen's counterclaims.
In support of her summary judgment motion, Chen submitted her own
certification, the certification of her attorney, the purchase proposal for
Delvalle's purchase of Chen's practice, an affidavit by Delvalle's attorney, a copy
of the original ten-year lease agreement, a letter from Chen notifying Lee of her
lease cancellation, copies of the offending reviews, Lee's interrogatory
responses, excerpts from Lee's deposition, along with other ancillary documents.
On December 21, 2018, following oral argument, the judge granted
summary judgment to Chen on all but the libel and injunction counts (counts
two and seven). The judge noted that the slander claim (count three) and the
fraudulent inducement claim (count eight) were "[v]oluntarily withdrawn or
conceded" by plaintiffs. Meanwhile, the libel per se claim (count one), was
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dismissed as duplicative of the libel count. As to the trade libel claim (count
four) and the tortious interference claims (counts five and six), the judge
determined the counts could not survive because there was no evidence of
damages.4
In specifically addressing damages, the judge stated that instead of
"produc[ing] books and records that showed" the claimed "[twenty percent]
decline" in profits, Lee had "failed to provide any discovery that would support
damages," and was therefore barred from "present[ing] proof of actual
damages." The judge determined that Lee would not be permitted to testify that
"he lost [twenty percent] of his business . . . because [he] didn't produce any
discovery that would show what that was or wasn't." In so doing, Lee "deprive[d
Chen] of evidence that would allow [her] to impeach that statement." Further,
Lee
would be calling on the jury to speculate as to what that
could possibly translate to in terms of a dollar award
because there [was] no evidence . . . provided as to
whether that [twenty percent] is [twenty percent] of ten
million, a hundred thousand, or anything in between.
4
The judge also determined "that the case law makes clear that the tortious
interference counts cannot survive because they're duplicative of the libel
count."
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According to the judge, because of the absence of any proof of damages, the
surviving libel count would proceed "with no proofs permitted on actual
damages" or "pecuniary harm" and Lee would be limited at trial to recovering
"presumed nominal damages only."
Turning to Lee's cross-motion for summary judgment dismissal of the
counterclaims, the judge granted summary judgment to Lee on count two (one
of the two breach of lease counts) because "defendant had terminated the
[l]ease." The judge denied Lee's motion as to counts one, three, four and five
"without [p]rejudice." Those counts involved allegations pertaining to Lee's role
in maliciously thwarting the sale of Chen's practice to Delvalle and retaining
Chen's security deposit totaling $3000 following the termination of the lease.
While acknowledging that "there may be a proof problem" and a "fatal"
deficiency of proof as "to the damage component," the judge determined there
were material facts in dispute and "it would be premature to dismiss [those
counts] without the opportunity to see what develops" at trial. Counts six and
seven were voluntarily withdrawn by Chen. The judge entered orders
memorializing her decisions.
On January 9, 2019, Lee moved for reconsideration of the December 21,
2018 order denying in part his cross-motion for summary judgment. In support,
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Lee relied on Chen's deposition testimony taken immediately after the December
21, 2018 summary judgment hearing in which Chen acknowledged selling her
practice several months after terminating her lease with Lee for $12,000 more
than the purchase price she had negotiated with Delvalle.
On January 25, 2019, the judge denied Lee's motion, concluding that
"[p]laintiffs have not satisfied any of the criteria for reconsideration under Rule
4:49-2 and 4:42-2, or applicable case law." The judge explained that the motion
was "not supported by a brief, did not attach the [o]rder for which they sought
reconsideration, and made no reference to any [c]ourt [r]ules or legal authority
for the motion." See Fusco v. Bd. of Educ. of City of Newark, 349 N.J. Super.
455, 462 (App. Div. 2002) ("Motions for reconsideration are granted only under
very narrow circumstances. . . .").
According to the judge, instead, Lee merely sought to "supplement the
previously filed papers with the transcript of [Chen's] deposition taken after the
motion was decided" notwithstanding the fact that "the [c]ourt had issued an
order" directing Chen's deposition months before. Thus, the judge determined
that Lee's purported motion for reconsideration was actually a "renew[ed] . . .
summary judgment motion [filed] after the time permitted by the Court Rules."
The judge continued that
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[i]n addition to being out-of-time, plaintiffs' summary
judgment motion[,] mislabeled as a motion for
reconsideration[,] does not comply in any manner with
Rule 4:46. There is no statement of undisputed material
facts, but rather a combination of deposition references
and arguments packaged in counsel's certification,
couple[d] with resubmitting the old motion papers.
On April 15, 2019, the parties appeared for trial. Prior to jury selection,
the judge heard in limine motions, after which the judge reiterated that "the only
damages . . . plaintiff [would] be permitted to recover [were] nominal damages"
because Lee was "precluded from offering proofs on compensatory damages for
the reasons" articulated in the December 21, 2018 ruling. 5 The judge then gave
the parties an opportunity to engage in settlement negotiations, with instructions
that if the parties did not settle and plaintiffs were not willing to waive a jury
trial, then they would commence jury selection "at 1:30 [p.m.]" Thereafter, the
parties advised the judge that the case was "resolved." Under the terms of the
settlement, defendant would "stipulate to liability and . . . an award of nominal
damages in the amount of $500." Defendant would also "voluntarily dismiss[]"
5
During the colloquy, plaintiffs' counsel acknowledged that they lacked
"accounting records to show that he lost [fifty] or [five hundred] patients or that
the revenue decreased."
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the remaining counterclaims. The judge marked the case as settled and later
entered an order of final judgment in accordance with the settlement.6
On April 19, 2019, Lee moved for attorneys' fees and costs pursuant to
Rule 1:4-8 and N.J.S.A. 2A:15-59.1 on the ground that Chen had filed frivolous
counterclaims. In support, Lee certified that he provided the requisite notice in
letters dated May 25, 2017, and May 7, 2018, to Chen's attorney requesting the
withdrawal of the counterclaims "in accordance with the safe harbor clause of
the Rule." On May 14, 2019, the judge denied Lee's motion. In her statement
of reasons accompanying the order, the judge explained that Lee's claim that
Chen's filings were frivolous was precluded by the fact that she had denied in
part Lee's motion for summary judgment dismissal of the counterclaims during
the course of litigation.
The order of final judgment that was ultimately entered on June 11, 2019,
stated that "following a settlement on the record reached between [d]efendant
and [p]laintiffs . . . on April 15, 2019[,] . . . [p]laintiffs agreed to withdraw their
remaining claims with prejudice in exchange for the payment of [$500] in
nominal damages." This appeal followed.
6
Despite the settlement, no one contends the present appeal by Chen is moot.
We therefore presume the settlement impliedly preserved the right to appeal the
issues before us.
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On appeal, Lee argues the judge erred in dismissing the libel per se,
slander,7 trade libel, and tortious interference counts; erred in failing to empanel
a jury to "proceed[] to trial" on the surviving counts and instead "limit[ing] . . .
plaintiffs' ability to recover to [$500] maximum by engaging in a qualitative
weighing of plaintiffs' evidence"; and erred in denying the application for
sanctions under the frivolous litigation statute based on Chen's purported
frivolous counterclaims.
II.
We review a grant of summary judgment applying the same standard used
by the trial court. Steinberg v. Sahara Sam's Oasis, LLC, 226 N.J. 344, 366
(2016). That standard is well-settled:
[I]f the evidence of record—the pleadings, depositions,
answers to interrogatories, and affidavits—"together
with all legitimate inferences therefrom favoring the
non-moving party, would require submission of the
issue to the trier of fact," then the trial court must deny
the motion. On the other hand, when no genuine issue
of material fact is at issue and the moving party is
7
Because plaintiffs voluntarily dismissed the slander count in the trial court,
they are barred from challenging the dismissal of that count on appeal. See
Mack Auto Imports, Inc. v. Jaguar Cars, Inc., 244 N.J. Super. 254, 258 (App.
Div. 1990) ("[A] voluntary dismissal terminates the action and may not be
appealable so as to reinstate what has been voluntarily terminated . . . ."). We
note however that "Internet postings, if defamatory, constitute[] libel rather than
slander . . . ." W.J.A. v. D.A., 210 N.J. 229, 236 (2012).
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entitled to a judgment as a matter of law, summary
judgment must be granted.
[Ibid. (quoting R. 4:46-2(c)) (citing Brill v. Guardian
Life Ins. Co. of Am., 142 N.J. 520, 540 (1995)).]
If there is no genuine issue of material fact, we must "decide whether the
trial court correctly interpreted the law." DepoLink Ct. Rep. & Litig. Support
Servs. v. Rochman, 430 N.J. Super. 325, 333 (App. Div. 2013) (quoting
Massachi v. AHL Servs., Inc., 396 N.J. Super. 486, 494 (App. Div. 2007)). We
review issues of law de novo and accord no deference to the trial judge's legal
conclusions. Nicholas v. Mynster, 213 N.J. 463, 478 (2013).
"[E]very motion for summary judgment requires the court, trial or
appellate, to review the motion record against not only the elements of the cause
of action, but also the evidential standard governing that cause of action."
Bhagat v. Bhagat, 217 N.J. 22, 26-27 (2014). To that end, we turn our discussion
to the governing principles in a defamation action that "does not involve a public
figure or a matter of public concern, but rather defamatory statements
concerning private . . . parties." Nuwave Inv. Corp. v. Hyman Beck & Co., Inc.,
221 N.J. 495, 498 (2015).
"The threshold issue in every defamation action is whether the language
in question is reasonably susceptible of a defamatory meaning." Lutz v. Royal
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Ins. Co. of Am., 245 N.J. Super. 480, 492 (App. Div. 1991) (citing Romaine v.
Kallinger, 109 N.J. 282, 290 (1988)). "The terms 'libel per se' and 'libel per
quod' have long been used to differentiate between writings defamatory on their
face and those defamatory solely in the light of extrinsic facts." Lawrence v.
Bauer Publ'g & Printing, 89 N.J. 451, 459 (1982). "A determination of whether
certain language is defamatory on its face rests within the power of the trial
court." Ibid. "Only when the court finds the words to be capable of both a
defamatory and a nondefamatory meaning does a question of fact arise for the
jury to decide." Ibid. Therefore, a trial court's ruling that statements are
"libelous per se" means "the court found as a matter of law that the statements
were not reasonably susceptible of a nondefamatory interpretation." Ibid."Words that clearly 'sound to the disreputation' of an individual are
defamatory on their face" and thus "libelous per se, i.e., not susceptible of a
nondefamatory interpretation." Id. 459-60 (quoting Shaw v. Bender, 90 N.J.L.
147 (E.& A. 1917)). "A false statement is defamatory if it exposes a person to
hatred, contempt or ridicule, or subjects him to a loss of good will and
confidence of others, or so harms his reputation as to deter others from
associating with him." Lutz, 245 N.J. Super. at 492 (citing Romaine, 109 N.J.
at 289).
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"A statement made in the context of and pertaining to a person's trade,
profession or business, such as in this case, is actionable if the statement is made
with reference to 'a matter of significance and importance' relating to the manner
in which the subject of the statement carries out his trade, profession or
business." Id. at 492-93 (quoting Prosser and Keeton, Law of Torts, § 112 at
791 (5th ed. 1984)). To that end, to establish the elements of trade libel, a
plaintiff must show: "1) publication; 2) with malice; 3) of false allegations
concerning [plaintiff's] property, product or business; and 4) special damages,
i.e.[,] pecuniary harm." Mayflower Transit, L.L.C. v. Prince, 314 F. Supp. 2d
362, 378 (D.N.J. 2004).
There are three "categories of damages in a defamation action" for which
recovery is permitted. Nuwave Inv. Corp., 221 N.J. at 499. They "are: (1)
compensatory or actual, which may be either (a) general or (b) special; (2)
punitive or exemplary; and (3) nominal." W.J.A., 210 N.J. at 239 (quoting
Prosser and Keeton, § 116A at 842 (footnote omitted)). Compensatory or
"[a]ctual damages, as the name implies, refers to the real losses flowing from
the defamatory statement." Ibid. (quoting Prosser and Keeton, § 116A at 843).
"It 'is not limited to out-of-pocket loss,' but includes 'impairment to reputation
and standing in the community,' along with personal humiliation, mental
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anguish, and suffering to the extent that they flow from the reputational injury."
Ibid. (quoting Gertz v. Robert Welch, Inc., 418 U.S. 323, 350 (1974)).
"[P]unitive or exemplary damages may be awarded in a defamation case."
Id. at 241. "Punitive damages are an exception to the general rule that damages
are aimed at compensation" and "are intended to punish and deter wanton
conduct." Ibid. However, "all elements of the Punitive Damages Act must be
satisfied in order to sustain a punitive damages award." Ibid.; see N.J.S.A.
2A:15-5.9 to -5.17; see also Ward v. Zelikovsky, 136 N.J. 516, 542 (1994)
(noting that where special damages were not established in a slander action,
"punitive damage awards were also improper").
"Contained within the notion of actual damages is the doctrine of
presumed damages -- the losses 'which are normal and usual and are to be
anticipated when a person's reputation is impaired.'" W.J.A., 210 N.J. at 239(quoting Prosser and Keeton, § 116A at 843 (footnote omitted)). "Presumed
damages are a procedural device which permits a plaintiff to obtain a damage
award without proving actual harm to his reputation." Ibid. "Among the
rationales underlying the doctrine are the difficulty of proving the effects of the
defamatory statement and that harm normally results from such a statement."
Id. at 239-40 (citing Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc., 472
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U.S. 749, 760 (1985)). "Presumed damages apply in libel cases." Id. at 240
(citing Prosser and Keeton, § 112 at 785-86; § 116A at 843).
"Where a plaintiff does not proffer evidence of actual damage to
reputation, the doctrine of presumed damages permits him to survive a motion
for summary judgment and to obtain nominal damages, thus vindicating his good
name." Id. at 233. "Nominal damages are 'awarded for the infraction of a legal
right, where the extent of the loss is not shown, or where the right is one not
dependent upon loss or damage.'" Id. at 240-41 (quoting Charles T. McCormick,
Damages, at 85 (1935)). "Such an award is a 'judicial declaration that the
plaintiff's right has been violated,'" and "serves the purpose of vindicating the
plaintiff's character by a verdict of a jury that establishes the falsity of the
defamatory statement." Id. at 241 (quoting McCormick, at 85).
"[P]resumed damages are not to be awarded as compensation and are not
appropriate when compensatory damages are otherwise available to the
plaintiff." Nuwave Inv. Corp., 221 N.J. at 500. "Compensatory damages,
however, will continue to require proof of actual damage to reputation." W.J.A.,
210 N.J. at 233. Thus, "[t]o receive a compensatory award for reputational loss,
a plaintiff will be required to prove actual harm, pecuniary or otherwise, to his
reputation through the production of evidence." Id. at 249. "Awards based on
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a plaintiff's testimony alone or on 'inferred' damages are unacceptable." Sisler
v. Gannett Co., 104 N.J. 256, 281 (1986); see McLaughlin v. Rosanio, Bailets
& Talamo, 331 N.J. Super. 303, 313 (App. Div. 2000) (explaining that a plaintiff
may not prevail in a defamation action unless he or she "adduce[s] 'concrete
proof' that third parties lowered their estimation of the plaintiff and that he or
she suffered emotional or pecuniary harm as a result" (quoting Sisler, 104 N.J.
at 281)).
Here, the judge correctly determined as a matter of law that the statements
were libel per se, meaning the writings were defamatory on their face without
resort to extrinsic facts. As plaintiffs themselves point out, libel is "t he more
general version of libel per se." Thus, libel per se is not a stand-alone cause of
action. See Romaine, 109 N.J. at 290-91. Therefore, the judge properly
dismissed the libel per se count as duplicative of and subsumed within the libel
count.
As to permissible damages for the surviving libel count, plaintiffs were
unable to provide any competent proof that Lee or the dental practice suffered
any injury or economic loss as a result of Chen's posts. In addition to failing to
produce any business or accounting records showing a decline in profits, Lee
could not "recall the names" of patients who discontinued treating with him
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based on the reviews, could not "recall the number" or names of persons who
told him they did not want to become his patients because of the reviews, and
stated that the people who told him about the negative reviews "generally . . .
thought it was false." See McLaughlin, 331 N.J. Super. at 313 ("[T]here can be
no defamation if the recipients of the alleged defamatory statements did not
believe them.").
"[P]roof that an existing relationship has been seriously disrupted or
testimony of third parties detailing a diminished reputation will be necessary to
satisfy the requirement that special damages exist before a jury may award any
other types of damages." Ward v. Zelikovsky, 136 N.J. 516, 540 (1994). In the
absence of any competent proof of actual damages, we agree with the judge that
the doctrine of presumed damages permitted plaintiffs to survive the motion for
summary judgment on the libel count, but properly limited plaintiffs' recovery
to nominal damages only. Nominal damages were then correctly capped at $500
in accordance with the Punitive Damages Act. See N.J.S.A. 2A:15-5.10
(defining nominal damages as "damages that are not designed to compensate a
plaintiff and are less than $500").
Likewise, we agree with the judge that the absence of proof of "pecuniary
harm" was fatal to the trade libel count. Mayflower Transit, L.L.C., 314 F. Supp.
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2d at 378. Accordingly, summary judgment dismissal of that count was
appropriate as well.
Regarding the tortious interference counts, 8 to establish such a claim, a
plaintiff must prove "(1) a protected interest; (2) malice--that is, defendant's
intentional interference without justification; (3) a reasonable likelihood that the
interference caused the loss of the prospective gain; and (4) resulting damages. "
Dimaria Const., Inc. v. Interarch, 351 N.J. Super. 558, 567 (App. Div. 2001)
(citing MacDougall v. Weichert, 144 N.J. 380, 404 (1996)). Failure to
"demonstrat[e] that a plaintiff has suffered or will suffer damage can be fatal to
a claim." Printing Mart-Morristown, 116 N.J. at 760.
Again, we agree with the judge that plaintiffs' failure to show damages
was "fatal" to the tortious interference claims. Ibid. We also conclude that
because plaintiffs' proof of the tortious interference claims was "precisely the
same evidence" forming "the basis for [the] defamation claim," they were
properly dismissed on the summary judgment motion "as duplicative of
plaintiff[s'] . . . defamation claim." Lutz, 245 N.J. at 503.
8
We use tortious interference in this opinion interchangeably with such
expressions as intentional interference with prospective economic relations,
tortious interference with prospective economic advantage or economic benefit,
intentional interference with a prospective contractual relationship, and the like.
Printing Mart-Morristown v. Sharp Electrs. Corp., 116 N.J. 739, 744 (1989).
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Next, plaintiffs argue that "[d]espite the parties' readiness for trial" when
they appeared on April 15, 2019, "the judge failed to call the jury pool and
instead engaged in an impermissible summary judgment type of analysis
precluded by settled authority of the [c]ourt." Plaintiffs' argument is wholly
belied by the record.
During the pre-trial conference, plaintiffs' counsel informed the judge that
"the only issue before the jury would be the measure of damages." Based on the
judge's prior ruling that plaintiffs were limited to nominal damages, 9 the judge
pointed out that "the only issue . . . for trial [would be] the quantity of nominal
damages," which counsel acknowledged was capped at "$500" under the
Punitive Damages Act. Given the limited dollar value involved, the judge
afforded the parties an opportunity to engage in settlement negotiations before
beginning jury selection, which negotiations led to the settlement of the case.
Contrary to plaintiffs' assertion, the judge was prepared to empanel a jury if the
parties could not reach an agreement.
Finally, plaintiffs argue the judge erred in denying their motion for
sanctions based on Chen's "frivolous" counterclaims. We disagree.
9
The judge reaffirmed the prior ruling during the pre-trial conference when
plaintiffs raised for the first time that the prior ruling did not preclude damages
for emotional distress.
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Rule 1:4-8 and the frivolous litigation statute, N.J.S.A. 2A:15-59.1,
authorize sanctions, including reasonable attorney's fees and costs, against any
party. The frivolous litigation statute provides that a prevailing party:
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.
[N.J.S.A. 2A:15-59.1(a)(1).]
To find "a complaint, counterclaim, cross-claim or defense" frivolous:
[T]he 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.
[N.J.S.A. 2A:15-59.1(b).]
Subsection (b) or Rule 1:4-8 sets forth procedural requirements, often
referred to as safe harbor provisions. "One of the obligations of a party who
intends to seek an award based on frivolous litigation is service of a written
notice and demand that, among other things, sets forth 'with specificity' the basis
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for his or her belief that the pleading is frivolous." Ferolito v. Park Hill Ass'n,
408 N.J. Super. 401, 408 (App. Div. 2009) (quoting R. 1:4-8(b)). "The notice
must be sufficiently specific and detailed to provide an opportunity to 'withdraw
the assertedly offending pleadings.'" Ibid. (citations omitted). "[C]laims against
parties pursuant to N.J.S.A. 2A:15-59.1 must be pursued . . . in accordance with
the procedural requirements of [Rule 1:4-8.]" Ibid."Sanctions are not to be issued lightly . . . ." McDaniel v. Man Wai Lee,
419 N.J. Super. 482, 499 (App. Div. 2011). We review a trial judge's decision
on an application for frivolous litigation sanctions for abuse of discretion and
will reverse "only if it 'was not premised upon consideration of all relevant
factors, was based upon consideration of irrelevant or inappropriate factors, or
amounts to a clear error in judgment.'" Id. at 498 (quoting Masone v. Levine,
382 N.J. Super. 181, 193 (App. Div. 2005)).
"Where a party has [a] reasonable and good faith belief in the merit of the
cause, attorney's fees will not be awarded." First Atl. Fed. Credit Union v.
Perez, 391 N.J. Super. 419, 432 (App. Div. 2007). Instead, "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)
A-4544-18
26
(quoting Perez, 391 N.J. Super. at 432). However, "continued prosecution of a
claim or defense may, based on facts coming to be known to the party after the
filing of the initial pleading, be sanctionable as baseless or frivolous even if the
initial assertion of the claim or defense was not." Iannone v. McHale, 245 N.J.
Super. 17, 31 (App. Div. 1990) (applying N.J.S.A. 2A:15-59.1).
Nonetheless,
a pleading cannot be deemed frivolous as a whole nor
can an attorney be deemed to have litigated a matter in
bad faith where, as in this case, the trial court denies
summary judgment on at least one count in the
complaint and allows the matter to proceed to trial.
[Zahabian, 407 N.J. Super. at 394.]
Here, we are satisfied that the judge was correct in denying plaintiffs'
application for frivolous litigation sanctions based on the judge having
previously denied summary judgment on four of defendant's counterclaims,
specifically, counts one, three, four, and five.10 Plaintiffs now challenge the
10
In denying the application for sanctions, the judge also relied in part on
procedural grounds, noting that plaintiffs had failed to address with specificity
each of the counterclaims deemed frivolous in their prior notice and demand
letters dated May 25, 2017, and May 7, 2018, as required by Rule 1:4-8(b).
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judge's denial of their cross-motion, asserting they were entitled to summary
judgment dismissal of those counterclaims.11
In count one, Chen asserted a tortious interference claim in connection
with Lee's ultimate refusal to lease the premises to Delvalle, "causing . . .
Delvalle to not purchase . . . Chen's dental business." Chen asserted Lee's
"actions intentionally and without justification or excuse and with malice,
tortiously interfered with [her] business contracts, resulting in damages to [her]
including diminished profits and business reputation." See Lamorte Burns &
Co. v. Walters, 167 N.J. 285, 305-06 (2001) ("To prove its claim, plaintiff must
show that it had a reasonable expectation of economic advantage that was lost
as a direct result of defendants' malicious interference, and that it suffered losses
thereby.").
In count five, Chen asserted that Lee breached an implied covenant of
good faith and fair dealing "by refusing to lease the [p]remises to . . . Delvalle,
by demanding an unreasonable and unjustified $80,000 payment from . . . Chen
in order for . . . Lee to agree to lease the [p]roperty to . . . Delvalle, and by
unreasonably withholding the [l]ease to . . . Delvalle" after assuring Chen "that
11
As previously stated, defendant voluntarily withdrew counts six and seven and
the judge granted plaintiffs' motion as to count two.
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28
he would provide a new lease" to Delvalle "despite . . . Chen's [premature]
termination of the [l]ease." In support, Chen alleged that in April 2013, she and
Lee "had discussions that . . . Chen was seeking to sell her dental practice to
another dentist who would lease the [p]remises," and Lee knew "that the sale of
[her] practice was entirely dependent on her buyer securing a lease for the
[p]remises." See Sons of Thunder v. Borden, Inc., 148 N.J. 396, 420 (1997) ("In
every contract there is an implied covenant that 'neither party shall do anything
which will have the effect of destroying or injuring the right of the o ther party
to receive the fruits of the contract; in other words, in every contract there exists
an implied covenant of good faith and fair dealing.'" (quoting Palisades
Properties, Inc. v. Brunetti, 44 N.J. 117, 130 (1965))).
In his deposition testimony, Lee averred that Chen brought Delvalle to
him "as a possible new tenant" after he "release[ed] her from the lease contract."
Lee admitted negotiating "[t]erms" and "conditions of a lease" with Delvalle but
said he never entered into a lease with Delvalle because "there were other
possible tenants at the time" who were willing to accept terms that were more
favorable to Lee. Lee specified that negotiations with Delvalle "fell
through . . . because [Lee] asked [Delvalle] to pay about $80,000 in exchange
for the use of [his] equipment," and Delvalle refused. Lee stated he requested
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29
the $80,000 payment sometime after May 14, 2013. Notably, Lee acknowledged
knowing that Chen was trying to sell her practice to Delvalle. However, he
denied knowing that the sale of Chen's practice was contingent on him leasing
the space to Delvalle.
When the summary judgment motion was adjudicated, the discovery
included Delvalle's deposition testimony in which Delvalle acknowledged
executing a purchase proposal on April 29, 2013, to purchase Chen's practice,
and indicated that he intended to take over Chen's lease with Lee. However, he
could not recall whether Lee's request for $80,000 caused the purchase with
Chen to fail. On the other hand, in an affidavit, Delvalle's attorney averred that
the purchase of Chen's practice was "contingent upon [Delvalle] obtaining a new
lease or an assignment of the current lease" from Lee and that during an April
25, 2013 meeting with Delvalle, Chen, and Lee, they "reached an agreement" on
the terms of the lease. However, after Lee "changed the terms of the proposed
lease with . . . Delvalle," to include the requirement that Delvalle "pay an
additional $80,000 prior to occupancy," Delvalle "decided not to purchase . . .
Chen's practice."
The judge ultimately denied plaintiffs summary judgment on counts one
and five because there were disputed material facts. See Brill, 142 N.J. at 540.
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30
However, the judge determined there was no dispute that after Lee accepted
Chen's notice of cancellation of the lease, there was no lease between Lee and
Chen and Chen therefore had no "[l]easehold [interest] to assign."12 Chen
asserted she intended to transfer a leasehold interest in Lee's property in the
transfer of assets between Chen and Delvalle contemplated in connection with
the sale of her practice. To that end, Lee, Chen, and Delvalle met to discuss
terms. However, according to Chen, Lee decided to forego an assignment and
instead enter into his own lease with Delvalle, which lease never came to
fruition.
We discern no error in the judge's ruling that disputed material facts
precluded a grant of summary judgment as to the interference count because "an
enforceable contract" is not required "before an action for intentional
interference with a prospective economic relationship can lie . . . ." Printing
Mart-Morristown, 116 N.J. at 751. Failure of an expected transaction to come
to fruition as a result of wrongful interference by a third party would, if proven,
constitute a compensable tort. On the other hand, an action for breach of implied
covenant of good faith and fair dealing cannot be maintained in the absence of
12
In fact, the judge granted summary judgment to plaintiffs on count two
alleging breach of the lease agreement "because . . . defendant had terminated
the [l]ease" as of June 13, 2015.
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31
a contract. See Wilson v. Amerada Hess Corp., 168 N.J. 236, 244 (2001) ("A
covenant of good faith and fair dealing is implied in every contract in New
Jersey.").
In count three, Chen asserted that "[p]laintiffs breached the [l]ease by
failing to return the [$3000] security deposit" after "inspect[ing] the [p]remises"
and "confirm[ing] . . . that the [p]remises was being left, at the end of the [l]ease,
in . . . good condition" in compliance "with the terms of the [l]ease." See
Ringwood Assocs., Ltd. v. Jack's of Route 23, Inc., 153 N.J. Super. 294, 309
(Law Div. 1977) ("Under New Jersey law a lease is like any other written
contract. When either party fails to perform a covenant, the injured party may
bring an action for damages for breach of covenant."); see also N.J.S.A. 46:8-
21.1 (regulating return of security deposits). In count four, Chen asserted unjust
enrichment by virtue of Lee's failure to return the security deposit despite
requests from Chen and her attorney. See VRG Corp. v. GKN Realty Corp., 135
N.J. 539, 554 (1994) ("To establish unjust enrichment, a plaintiff must show
both that defendant received a benefit and that retention of that benefit without
payment would be unjust.").
Chen produced the lease, proof of payment of the security deposit, and the
requisite sixty-day notice of cancellation. In contrast, Lee testified at his
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32
deposition that Chen had failed to make utility payments and failed to pay rent
increases as required under the lease. Lee also disputed that Chen had paid rent
for the final period of the lease. Thus, the judge determined there were disputed
material facts and denied plaintiffs summary judgment on counts three and four.
We discern no error in that determination. In any event, because the denial of
summary judgment on only one count is sufficient to withstand a frivolous
litigation claim, we find no abuse of discretion in the judge's refusal to impose
sanctions.
To the extent we have not addressed a particular argument, it is because
either our disposition makes it unnecessary, or the argument was without
sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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