(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
Argued March 1, 1999 -- Decided June 21, 1999
POLLOCK, J., writing for a unanimous Court.
The issue in this appeal is whether, in an action asserting joint and several liability of multiple
defendants, a single defendant, following rejection of its offer to settle the claim against it, may be awarded
attorney's fees pursuant to the offer-of-judgment rule, Rule 4:58-1, -2 and -3.
In 1985, John Schettino, a licensed real estate broker, arranged for the sale of property in Fairview
to Biltmore Properties, Ltd.. Three years later, Biltmore sold the property to the Belgiovine defendants,
subject to a purchase money mortgage. Schettino was not involved in that sale.
Belgiovine filed for bankruptcy in 1990. Biltmore moved to foreclose, and the Bankruptcy Court
entered a judgment directing the sale of the property. Six months later, before the foreclosure sale, the
Roizman defendants became interested in purchasing the property from Belgiovine. Roizman's attorney,
apparently unaware of the foreclosure, asked Schettino to arrange a meeting with Belgiovine. Schettino
claims that at the meeting, the parties discussed a purchase price of $12 million and the pending foreclosure
action. Roizman claims that Schettino falsely represented himself as Belgiovine's broker and that the
foreclosure sale was not disclosed. Negotiations ceased when Roizman discovered that Belgiovine could not
sell the property.
According to Roizman, from that point forward, Schettino was no longer involved in the sale.
Schettino claims that he remained involved and that Belgiovine introduced Roizman to Crystal Lake, Inc.,
which had purchased the property at the foreclosure sale in January 1994. Schettino concedes that no party
ever entered into a written broker agreement with him.
Roizman purchased the property from Crystal Lake in July 1994 for $7.8 million. Neither party paid
a commission to Schettino. Schettino filed a complaint on 7/15/96, asserting joint and several liability
against Roizman, Biltmore, Crystal Lake, and Belgiovine for a real estate commission of $390,000.
Roizman's attorney demanded that Schettino withdraw the complaint, contending that it was
frivolous. Roizman argued that among other things, Schettino's claim for a commission was barred by the
Statute of Frauds, N.J.S.A. 25:1-16(b), which states that a broker is entitled to a commission only if the
authority of the broker is given in a writing signed by the principal or the principal's agent, and the writing
states the amount or rate of the commission. Roizman served Schettino with an offer of judgment for
$1,000, which Schettino rejected. Roizman later warned Schettino that based on the rejection of the offer,
Roizman would seek counsel fees.
The Law Division granted Roizman's motion for summary judgment. Pursuant to Rule 4:58-3, the
Law Division granted Roizman's motion for counsel fees of over $17,700. It stayed execution of the award
pending completion of Schettino's appeal. Thereafter, the Law Division entered a consent order for final
judgment dismissing Schettino's claim against Biltmore and Crystal Lake. Schettino has not pursued his
claim against Belgiovine.
On Schettino's appeal, the Appellate Division affirmed the summary judgment for Roizman and the
dismissal of the complaint against Biltmore and Crystal Lake. However, it reversed the award of counsel
fees to Roizman. The Appellate Division relied on the unofficial comment to Rule 4:58, which states that an
offer made by a single defendant to pay a specific amount as his pro rata share should not be considered an
offer within the intendment of the rule. The Appellate Division concluded that the rule was inapplicable to
piecemeal offers or acceptances in multi-party actions, especially where the pro rata intention is unclear.
The Supreme Court granted Roizman's petition for certification.
HELD: A plaintiff alleging joint and several liability among multiple defendants is not required to accept the
offer of an individual defendant to settle his pro rata share of liability under the offer-of-judgment rule.
1. The offer-of-judgment rule is designed to encourage early out-of-court settlement of negligence claims.
To fulfill its purpose, it imposes financial consequences on a party who rejects a settlement offer that turns
out to be more favorable than the ultimate judgment. Rule 4:58-3 provides that if the offer of a defendant is
not accepted by the plaintiff, and the ultimate judgment is at least as favorable to the defendant, plaintiff
shall be liable for attorney's fees for services compelled by the non-acceptance. It does not state, however,
whether it applies when a plaintiff asserts that multiple defendants are jointly and severally liable and rejects
an offer by a single defendant to settle its share of liability. (pp. 9-10)
2. Rule 4:58-2, concerning the consequences of non-acceptance of a claimant's offer, addresses the
analogous situation in which a single defendant in a multiple-defendant case counteroffers to settle its share
of liability in response to a plaintiff's offer to all defendants to settle. The unofficial comment to the rule,
Pressler, Current N.J. Court Rules, comment on R. 4:58-2 (1999), interprets this provision as permitting a
plaintiff to act in respect of the total judgment and to refuse to deal with a defendant who offers to settle
only its share of liability. Comparable reasoning, according to the comment, protects plaintiffs, after
rejecting a single defendant's offer, from the obligation to pay costs and attorney's fees pursuant to R. 4:58-3.
(pp. 10-12)
3. The imposition of a financial penalty on a plaintiff for rejecting a settlement offer by a single joint
defendant would undermine the purpose of joint and several liability. Joint and several liability was designed
to place the burden on the defendants to prove the share of injury that each defendant is responsible for.
Applying the offer-of-judgment rule to cases alleging joint and several liability would shift to plaintiffs, when
evaluating the adequacy of an offer, the burden of determining a single defendant's share of liability. (pp.
12-14)
4. Roizman urges that an exception should apply when no defendant is ultimately found liable for plaintiff's
claim. In certain cases where defendant's offer is below $1,000 and plaintiff's recovery is small or
nonexistent, however, Rule 4:58-3 expressly precludes the award of attorney's fees to the defendant. This is
intended to prevent a defendant from invoking Rule 4:58 by making a nominal offer immediately after
plaintiff files a complaint with the sole intent of shifting the cost of litigation to the plaintiff. That result
would run counter to the purpose of the offer-of-judgment rule, which is intended to encourage good-faith
settlement offers. (pp. 14-16)
5. Perhaps it would have been more appropriate for Roizman to seek attorney's fees and other sanctions
pursuant to the Frivolous Claims Statute, N.J.S.A. 2A:15-59.1 and Rule 1:4-8. The crux of Roizman's
objection is not so much that Schettino should have accepted the offer, but that the complaint was not
supported by law or by the evidence. Rule 1:4-8 directly addresses these concerns, authorizing the court to
impose sanctions and attorney's fees if a party's complaint is frivolous. Roizman, however, has not raised
that issue at any time in these proceedings. (pp. 16-18)
6. The Court requests the Civil Practice Committee to review Rule 4:58-3 to determine whether it should
address settlement offers by single defendants in cases involving multiple defendants, and to reconsider the
prohibition against an award of counsel fees when plaintiff's award is small. (18-19)
Judgment of the Appellate Division is AFFIRMED.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, O'HERN, GARIBALDI, STEIN and
COLEMAN join in JUSTICE POLLOCK's opinion.
SUPREME COURT OF NEW JERSEY
A-
19 September Term 1998
JOHN SCHETTINO,
Plaintiff-Respondent,
v.
ROIZMAN DEVELOPMENT, INC.,
ISRAEL ROIZMAN, Individually,
FAIRVIEW ASSOCIATES 94 L.P.,
Defendants-Appellants,
and
BILTMORE PROPERTIES, LTD., INC.,
BELGIOVINE ENTERPRISES,
BELGIOVINE ENTERPRISES, INC.,
BELGIOVINE DEVELOPMENT,
and CRYSTAL LAKE, INC.,
Defendants.
Argued March 1, 1999 -- Decided June 21 1999
On certification to the Superior Court,
Appellate Division, whose opinion is reported
at
310 N.J. Super. 159 (1998).
Joseph B. Fiorenzo argued the cause for
appellants (Sokol, Behot & Fiorenzo,
attorneys; Mr. Fiorenzo and Susan I. Wegner,
on the brief).
John J. D'Anton argued the cause for
respondent.
The opinion of the Court was delivered by
POLLOCK, J.
The issue is whether, in an action asserting joint and
several liability of multiple defendants, a single defendant,
following rejection of its offer to settle the claim against it,
may be awarded attorney's fees pursuant to the offer-of-judgment
rule, Rule 4:58-1, -2 and -3.
Plaintiff, John Schettino, alleged that four defendants were
jointly and severally liable to him for a real estate broker's
commission of $390,000. One set of defendants, Israel Roizman,
Roizman Development, Inc., and Fairview Associates 94 L.P.
(collectively, "Roizman") offered to settle its share of
liability for $1000. Schettino rejected the offer. The Law
Division thereafter granted Roizman's motion for summary judgment
and dismissed plaintiff's complaint. The court then awarded
Roizman attorney's fees incurred after Schettino had rejected its
offer.
The Appellate Division affirmed the dismissal, but vacated
the award of attorney's fees.
310 N.J. Super. 159, 167-68 (App.
Div. 1998). It held that the offer-of-judgment rule does not
apply when a single defendant in a multi-defendant action makes
an offer of settlement representing only its pro rata share of
liability.
We granted Roizman's petition for certification to review
the denial of attorney's fees,
156 N.J. 411 (1998), and now
affirm. We hold that a plaintiff who has asserted that multiple
defendants are jointly and severally liable is not subject to the
financial consequences of Rule 4:58-3 for rejecting an offer by a
single defendant to settle only the claim against it. We further
hold that, because Schettino's action was for unliquidated
damages and did not result in an award "in excess of $750,"
Roizman is not entitled to counsel fees under Rule 4:58-3.
Lastly, in light of the concerns raised by this appeal, we refer
the matter to the Civil Practice Committee for reconsideration of
the offer-of-judgment rule.
In 1985, Schettino, a licensed real estate broker, arranged for the sale of property at 371-377 Bergen Boulevard, Fairview, New Jersey ("the property") to Biltmore Properties, Ltd. ("Biltmore"). Three years later, Biltmore sold the property, subject to a purchase money mortgage, to Belgiovine Enterprises, Belgiovine Enterprises, Inc., and Belgiovine Development (collectively, "Belgiovine"). Schettino was not involved in that sale.
Belgiovine began development of the property, but encountered financial difficulties and could not meet its monthly mortgage payments. In 1990, Belgiovine filed a Chapter 11 bankruptcy action in the Bankruptcy Court. Biltmore moved to foreclose, and in May 1993, the Bankruptcy Court entered a judgment directing the sale of the property.
Six months later, before the foreclosure sale, Roizman became interested in purchasing the property from Belgiovine. Roizman's attorney asked Schettino to arrange a meeting between Roizman, who apparently did not know that Biltmore had foreclosed on the property, and Belgiovine. According to Schettino, Roizman and Belgiovine discussed both a purchase price of $12 million and the pending foreclosure action. In contrast, Roizman asserts that Schettino falsely represented himself as Belgiovine's broker. Roizman also states that Schettino did not disclose the impending foreclosure sale. At some point, the negotiations ceased when Roizman discovered that Belgiovine could not sell the property.
According to Roizman, from that point forward Schettino no longer was involved in the sale. Schettino, however, claims that he remained involved and that Belgiovine introduced Roizman to Crystal Lake, Inc. ("Crystal Lake"), Biltmore's successor-in-interest, which had purchased the property at the foreclosure sale in January 1994. Schettino concedes, however, that no defendant entered into a written listing agreement with him.
One week after Crystal Lake purchased the property, Schettino sent a letter to Roizman seeking protection of his commission if Roizman purchased the property from Crystal Lake. In July 1994, Crystal Lake sold the property to Roizman for $7.8 million. Neither party paid a commission to Schettino.
On July 15, 1996, Schettino filed a complaint in the Law Division asserting joint and several liability against Roizman, Biltmore, Crystal Lake, and Belgiovine. Schettino claimed a real estate commission of $390,000 as the "efficient procuring cause of the sale" to Roizman. The complaint also asserted that defendants tortiously interfered with his right to a commission.
On three separate occasions, Roizman's attorney demanded that Schettino withdraw the complaint. First, on September 17, 1996, the attorney sent Schettino's attorney a notice, pursuant to Rule 1:4-8(b)(1), explaining why Schettino's action was frivolous as a matter both of fact and of law. The letter recited that Biltmore had foreclosed Belgiovine's interest in the property, and that because of the foreclosure Belgiovine had not sold the property to Roizman. Instead, Roizman had acquired the property in an unrelated purchase from Crystal Lake. Significantly, the letter expressly stated that Schettino's claim for a commission was barred by the Statute of Frauds, N.J.S.A. 25:1-16(b), which states in relevant part that a broker is entitled to a commission "only if before or after the transfer the authority of the broker is given or recognized in a writing signed by the principal or the principal's authorized agent, and the writing states either the amount or the rate of commission."
Second, before filing an answer, Roizman served Schettino with an offer of judgment for $1000. Schettino rejected the offer.
Finally, on October 7, 1996, Roizman's counsel sent a letter to Schettino's counsel warning that Roizman would apply for counsel fees. The letter stated in part:
[I]t will be necessary for us to perform additional legal services on behalf of our client. . . . Your client's rejection of our Offer of Settlement will ultimately mean that he will be responsible for counsel fees incurred in obtaining a dismissal of the action.
It is unfortunate that Mr. Schettino will
require our client to go through the time and
expense of obtaining a dismissal when there
exists no factual or legal basis for the
claim. Fortunately the Court Rules now
permit us to be made whole by being
reimbursed for those fees unnecessarily
incurred.
On January 24, 1997, Roizman moved for summary judgment.
The Law Division granted the motion both because of Schettino's
failure to comply with the Statute of Frauds and because of the
lack of any agreement by Roizman or Crystal Lake to pay Schettino
a commission. The Appellate Division denied Schettino's motion
for leave to appeal.
Pursuant to Rule 4:58-3, the Law Division granted Roizman's
motion for counsel fees of $17,746.44. The court stayed
execution of the award, indicating that it would reconsider the
award on completion of plaintiff's appeal.
Thereafter, the Law Division entered a consent order for
final judgment dismissing with prejudice Schettino's claim
against Biltmore and Crystal Lake. Schettino has not pursued his
claim against Belgiovine, although the record does not reflect
that the claim was ever dismissed.
On Schettino's appeal, the Appellate Division affirmed the
grant of summary judgment for Roizman and the dismissal of the
complaint against Biltmore and Crystal Lake. 310 N.J. Super.,
supra, at 167-68. The court held that Schettino was not entitled
to a commission because he had not been the "efficient procuring
cause of the sale" and he had not complied with N.J.S.A. 25:1-16(b). 310 N.J. Super., supra, at 166-67. As the Appellate
Division explained, Schettino failed to satisfy the statute
because he had neither obtained the requisite writing nor
complied with N.J.S.A. 25:1-16(d), which allows the commission if
"within five days after making an oral agreement and before the
transfer or sale, the broker serves the principal with a written
notice, which states that its terms are those of the prior oral
agreement including the rate or amount of commission to be paid."
310 N.J. Super., supra, at 165-66. The only writing Schettino
provided to Roizman was sent after the five-day time limit, did
not refer to any prior oral agreement, and did not state the rate
or amount of commission.
Relying on the unofficial comment to Rule 4:58 (the
"Comment"), the Appellate Division reversed the award of counsel
fees. As the Comment states, "an offer made by a single
defendant to the claimant to pay a specific amount as his pro
rata share should not be considered as an offer within the
intendment of this rule such as will result in binding the
claimant to the consequences stated in R. 4:58-3." Pressler,
Current N.J. Court Rules, comment on R. 4:58 (1999). Roizman's
offer, according to the Appellate Division, constituted an offer
by a single defendant to pay its pro rata share of liability, and
thus should not be considered an offer under Rule 4:58-3. 310
N.J. Super., supra, at 167. The court rejected Roizman's
contention that its offer was made on behalf of all defendants.
Ibid. It acknowledged that "the language of R. 4:58-1, -2, and -3 may leave room for future clarification and improvement." Id.
at 168. Nevertheless, the court concluded that "it [is]
sufficiently clear that the intention of the three-part Rule is
to address and obviate piecemeal offers or acceptances thereunder
by either a claimant or defendant in multi-party actions,
particularly if the pro rata intention is unclear." Ibid.
The offer-of-judgment rule is "designed particularly as a mechanism to encourage, promote, and stimulate early out-of-court settlement of negligence and unliquidated damages claims that in justice and reason ought to be settled without trial." Crudup v. Marrero, 57 N.J. 353, 361 (1971). To fulfill its purpose, the rule imposes financial consequences on a party who rejects a settlement offer that turns out to be more favorable than the ultimate judgment. Rule 4:58-3 sets forth the consequences for the non-acceptance of an "offer of a party other than a claimant," ordinarily a defendant:
If the offer of a party other than the claimant is not accepted and the determination is at least as favorable to the offeror as the offer, the offeror shall be allowed, in addition to costs of suit, a reasonable attorney's fee, for such subsequent services as are compelled by the non-acceptance, which shall belong to the client and constitute a prior charge upon the judgment. In an action for negligence or other unliquidated damages, however, no attorney's fee shall be allowed to such offeror unless the amount awarded to the claimant is in excess of $750.00 and is less than 80 per cent of the offer.
The rule does not state whether it applies when a claimant
asserts that multiple defendants are jointly and severally liable
and rejects an offer by a single defendant to settle its share of
liability. Rule 4:58-2, "Consequences of Non-Acceptance of
Claimant's Offer," however, addresses the analogous situation in
which a single defendant in a multiple-defendant case
counteroffers to settle its share of liability in response to a
claimant's offer to all defendants to settle the total damages.
Rule 4:58-2 provides:
If the offer of a claimant is not accepted
and the claimant obtains a verdict or
determination at least as favorable as the
rejected offer, the claimant shall be
allowed, in addition to costs of suit, . . .
a reasonable attorney's fee, which shall
belong to the client, for such subsequent
services as are compelled by the non-acceptance. . . . If there are multiple
defendants against whom a joint and several
judgment is sought, and one of the defendants
offers in response less than a pro rata
share, that defendant shall, for the purposes
of the allowance of interest and attorney's
fee, be deemed not to have accepted the
claimant's offer.
The Comment explains the intent behind the specific
provision in Rule 4:58-2 concerning multiple defendants:
The last sentence of R. 4:58-2, dealing with
multiple defendants, was added by amendment,
effective September, 1971. The intention of
this provision is to permit the claimant to
deal exclusively in terms of the total
judgment rather than to require him to accept
pro rata shares from individual defendants.
Since each defendant's ultimate monetary
responsibility depends on the number of
defendants ultimately held liable, the
claimant is thereby spared the risk, for
example, of having to accept one-half of his
offer from one of two defendants only to find
himself with a no-cause verdict against the
other. Thus the rule specifically intends
that the claimant need only state the total
amount of the judgment he seeks and no
individual defendant's offer to pay a pro
rata share thereof shall be deemed an
acceptance thereof.
According to the Comment, plaintiffs are permitted to act in
respect of the total judgment. Consequently, a plaintiff may
obtain costs and attorney's fees from a single defendant who
offers to settle only its share of liability. Comparable
reasoning, according to the Comment, protects plaintiffs, after
rejecting a single defendant's offer, from the obligation to pay
costs and attorney's fees pursuant to Rule 4:58-3:
Similarly, an offer made by a single
defendant to the claimant to pay a specific
amount as his pro rata share should not be
considered as an offer within the intendment
of this rule such as will result in binding
the claimant to the consequences stated in R.
4:58-3.
Adopting the Comment's interpretation of Rule 4:58, the Appellate
Division vacated the award of attorney's fees to Roizman.
We are satisfied that Rule 4:58 as written supports the
Appellate Division's judgment. A plaintiff who has asserted that
multiple defendants are jointly and severally liable for a claim
is not subject to the financial consequences of Rule 4:58-3 for
rejecting an offer by a single defendant to settle its share of
liability. The imposition of a financial penalty on a plaintiff
for rejecting a settlement offer by a single joint defendant
would undermine the purpose of joint and several liability.
"Joint and several liability was designed to obviate a
plaintiff's burden of proving which share of the injury each of
several defendants was responsible for; the burden of proof is
removed from the innocent plaintiff and placed upon the
wrongdoers to determine among themselves." J.D. Lee & Barry A.
Lindahl, Modern Tort Law: Liability & Litigation § 19.02 at 652
(Rev. ed. 1994). Applying the offer-of-judgment rule, however,
would shift to plaintiffs, when evaluating the fairness of a
settlement offer, the burden of determining a single defendant's
share of liability. Rather, plaintiffs need consider only an
offer to settle the entire liability on behalf of all defendants.
Individual defendants still may gain the benefits of the
offer-of-judgment rule by making a joint offer with the other
defendants. Although a single defendant individually may make a
settlement offer, that defendant is not entitled to counsel fees
under Rule 4:58 if the offer is rejected.
Roizman argues that, to the contrary, courts may award
counsel fees when a plaintiff rejects a single defendant's offer
to pay a pro rata share. As support, Roizman points to the
following statement in the Comment:
If a defendant, however, either as offeror or
offeree, does offer to pay a pro rata share
which is no less than his obligation as
determined after trial (or in an unliquidated
case, at least 80 per cent thereof), it may
well be inequitable to charge him with the
financial consequences of R. 4:58-2. In such
circumstances, the court may, presumably,
consider all pro rata offers by the
defendants in fixing both the amount of the
award to be made to the successful party, and
more significantly, the shares thereof to be
made by the adverse parties.
Fairly read, the Comment does not provide an individual
defendant with a claim for attorney fees under Rule 4:58-3.
Instead, the Comment allows a court, in its discretion, to excuse
an individual defendant who made a counteroffer representing its
pro rata share of liability from an award of counsel fees to the
plaintiff under Rule 4:58-2. The Comment thus provides a
mechanism to distinguish joint defendants who had rejected
unreasonably the plaintiff's offer from those who made a
reasonable counteroffer.
Roizman also argues that it is entitled to counsel fees
because it was the only defendant that could have been liable for
tortiously interfering with the alleged broker's agreement
between Schettino, Biltmore/Crystal Lake and Belgiovine. To
support its argument, Roizman contends that it is "'fundamental'
to a cause of action for tortious interference with a prospective
economic relationship that the claim be directed against
defendants who are not parties to the relationship." Printing
Mart-Morristown v. Sharp Elecs. Corp.,
116 N.J. 739, 752 (1989).
In effect, Roizman claims it was the only defendant in the case.
For purposes of avoiding the sanctions of Rule 4:58-3, the
complaint, even if baseless, need only have pled in good faith
that all defendants were jointly and severally liable on both
counts. Nothing indicates that Schettino joined additional
defendants merely to evade the consequences of the offer-of-judgment rule. Even if Roizman were the only party liable for
the tort claim, the other defendants could have been liable for
the contract claim. Roizman's offer, however, was to settle its
liability for both the tort and contract claims.
Lastly, Roizman urges us to carve an exception when no
defendant is ultimately found liable for plaintiff's claim. In
that setting, according to Roizman, a plaintiff is not at risk of
accepting less than all of his damages from one of multiple
defendants, only to encounter dismissal later of claims against
all others.
In certain cases, however, Rule 4:58-3 expressly precludes
the award of attorney's fees to defendants when the plaintiff
does not prevail: "In an action for negligence or other
unliquidated damages, however, no attorney's fee shall be allowed
to such offeror unless the amount awarded to the claimant is in
excess of $750.00 and is less than 80 per cent of the offer."
The purpose of this preclusion is to prevent the transformation
of the offer-of-judgment rule into a general fee-shifting rule.
These requirements "protect a plaintiff from the penalizing
consequences of the rule where he prosecutes the action in good
faith, an offer is made by the defendant in a nominal amount, and
a no-cause verdict is returned." Pressler, supra, comment on R.
4:58. Otherwise, a defendant, immediately after the plaintiff
files the complaint, could invoke Rule 4:58 by making a nominal
offer with the sole intent of shifting the cost of litigation to
the plaintiff. That result would run counter to the purpose of
Rule 4:58, which is intended to encourage good-faith settlement
offers that reflect the reasonable value of the claim.
Regulation of frivolous complaints is remitted to N.J.S.A. 2A:15-59.1 and Rule 1:4-8.
Recognizing that limitation of Rule 4:58 is particularly
relevant to a claim for unliquidated damages. In general,
damages are unliquidated "where they are an uncertain quantity,
depending on no fixed standard, referred to the wise discretion
of a jury, and can never be made certain except by accord or
verdict." 25 C.J.S. Damages § 2 (1966). On the other hand,
"liquidated damages are those the amount whereof has been
ascertained by judgment or by the specific agreement of the
parties, or which are susceptible of being made certain by
mathematical calculation from known factors." Ibid.
Here, Roizman disputed both Schettino's right to a
commission and the amount of any such commission. The absence of
a listing agreement or other writing not only defeated
plaintiff's claim for a commission, but also prevented the
computation of any commission that might be due. If the court
had not dismissed Schettino's claim, the amount of any commission
would have been an issue for the jury. On the facts of this
case, Schettino's claim is best viewed as one for unliquidated
damages.
The effect of characterizing Schettino's claim as one for
unliquidated damages is that Roizman would have been entitled to
counsel fees if Schettino, after rejecting Roizman's settlement
offer, had been awarded a sum greater than $750, but less than
eighty percent of Roizman's settlement offer of $1000. Because
Schettino's claims were dismissed on summary judgment, he did not
receive an award "in excess of" $750. Consequently, he is not
subject to an award of counsel fees under Rule 4:58-3.
Perhaps it would have been more appropriate for Roizman to
seek attorney's fees and other sanctions pursuant to the
Frivolous Claims Statute, N.J.S.A. 2A:15-59.1, and Rule 1:4-8,
the rule concerning frivolous litigation. The crux of Roizman's
objection to Schettino's pursual of his claims is not so much
that Schettino should have accepted Roizman's offer as a
reasonable settlement of a valid claim, but that the complaint
was not supported by the law or by the evidence. Rule 1:4-8
directly addresses these concerns.
Rule 1:4-8 authorizes the court to impose sanctions,
including attorney's fees, if a party's complaint: is filed in
bad faith; is not “warranted by existing law or by a non-frivolous argument for the extension, modification, or reversal
of existing law or the establishment of new law”; or contains
factual allegations that do not "have evidentiary support or, as
to specifically identified allegations, [are neither] likely to
have evidentiary support [nor] will be withdrawn or corrected if
reasonable opportunity for further investigation or discovery
indicates insufficient evidentiary support."
Litigation is not cost-free. Merely by instituting a
lawsuit, a plaintiff imposes litigation costs on a defendant.
When a plaintiff asserts frivolous claims, a defendant may seek
relief under N.J.S.A. 2A:15-59.1 and Rule 1:4-8. A
countervailing consideration to enforcement of those strictures,
however, is that courts should not discourage claimants from
challenging outworn precedents or seeking justifiably to make new
law. Thus, courts must balance the policy against frivolous
claims with that favoring open access to the courts. In light of
the unmistakable requirement of N.J.S.A. 25:1-16(b), plaintiff's
claim for a commission might have been a candidate for
consideration as frivolous litigation. Roizman, however, has not
raised that issue at any time in these proceedings.
In allocating the costs of litigation, Rule 4:58-3 provides
a disincentive for a single defendant in a multiple-defendant
action to make an offer of judgment. Only the sanctions of
N.J.S.A. 2A:15-59.1 and Rule 1:4-8 against instituting frivolous
actions constrain litigants. The institution of an action,
particularly a complex action involving allegations of joint and
several liability, nonetheless can impose substantial financial
costs on a defendant. Perhaps the interests of litigants and the
public would be better served by a Rule of Court providing that a
court may award counsel fees to a single defendant in a multiple-defendant action if the defendant offers to settle the claim
against it for a sum greater than the judgment that a plaintiff
obtains against all defendants. In effect, the rule would treat
a single defendant's offer to settle its share of liability like
an offer to settle the entire case. Instead of reviewing
insubstantial piecemeal offers, the plaintiff could evaluate the
individual defendant's offer in the context of the fair value of
the claims against all defendants. Yet another issue concerns
the prohibition under Rule 4:58-3 of awarding counsel fees
against a plaintiff who does not recover a judgment of at least
$750. The prohibition is paradoxical. A plaintiff who fails to
recover anything is not subject to such an award, but one who
recovers more than $750 may be obligated to pay counsel fees.
Both issues are fit topics for consideration by the Civil
Practice Committee, which we request to review Rule 4:58-3.
The judgment of the Appellate Division is affirmed.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, O'HERN, GARIBALDI, STEIN, and COLEMAN join in JUSTICE POLLOCK's opinion.
NO. A-19 SEPTEMBER TERM 1998
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
JOHN SCHETTINO,
Plaintiff-Respondent,
v.
ROIZMAN DEVELOPMENT, INC.,
ISRAEL ROIZMAN, Individually,
FAIRVIEW ASSOCIATES 94 L.P.,
Defendants-Appellants,
and
BILTMORE PROPERTIES, LTD., INC.,
BELGIOVINE ENTERPRISES,
BELGIOVINE ENTERPRISES, INC.,
BELGIOVINE DEVELOPMENT,
and CRYSTAL LAKE, INC.,
Defendants.
DECIDED June 21, 1999
Chief Justice Poritz PRESIDING
OPINION BY Justice Pollock
CONCURRING OPINION BY
DISSENTING OPINIONS BY