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SANCTIONS (ATTORNEY’S FEES AND COSTS) FOR FRIVOLOUS CLAIMS?

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By SHERRI RUGGIERI

We live in a litigious society.  For some, a lawsuit can transform into a winning lottery ticket.  Once a group of people learn that I am an attorney, they constantly ask me, “Can I sue for . . .”   My response, “You can always sue but winning is a different matter. It all depends.”

To curb the appetite for litigation, there have challenges to claims that “lack merit in law or fact.”  The concept of a “frivolous lawsuit” and the adding of sanctions (attorney’s fees and litigation costs) to the non-prevailing party and his/her attorney have been in the news.  Typically, the courts rely upon the  “American Rule,” which prevents fee shifting.  The rationale is based upon equal access to the courts regardless of a party’s financial status.  However, legislators and judges have supported changes to prevent the wasting of judicial resources on frivolous cases.  As explained in McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 548-549 (1993), the statute N.J.S.A. 2A:15-59.1 “allows the award of attorney’s fees to a prevailing party in a lawsuit if the non-prevailing party asserts a claim or defense ‘in bad faith, solely for the purpose of harassment, delay or malicious injury,’ N.J.S.A. 2A:15-59.1b(1), or if `[t]he non-prevailing 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:15-59.1b(2).”  By extension, the New Jersey Court’s Rule 1:4-8 holds attorneys accountable for frivolous claims.  This means that clients and their attorneys should beware of filing frivolous lawsuits in bad faith or with the purpose to harass, delay, or cause malicious injury because they run the risk of sanctions (prevailing party’s reasonable attorney’s fees and costs.

However, the “American Rule,” where parties pay their own legal fees, is still preferred.  The concept of fee shifting (the “English Rule) and “winner take all” is restricted:  “We thus construe N.J.S.A. 2A:15-59.1 in view of the concern that while baseless litigation must be deterred, nevertheless the counsel-fee sanction mode of deterrence should not [emphasis added in bold] be permitted to generate even more litigation, the right of access to the courts should not be unduly infringed upon, honest and creative advocacy should not be discouraged, and the salutary policy of litigants bearing, in the main, their own litigation costs, should not be abandoned.”  Iannone v. McHale, 245 N.J.Super. 17, 28 (App. Div. 1990).  The “scales of justice” will be put to work deciphering what is meant by “honest and creative advocacy.”  Egalitarian access to the justice system remains a priority but must have a rational basis.  Not everything in life should be litigated and the judicial system should not be a weapon for improper motive.  Society’s preferences will affect judicial interpretation and shape legislative initiatives.

Sherri Ruggieri is the managing editor of Empire State News. A practicing attorney for over 20 years, Ms. Ruggieri is also chairperson of Edison Township’s Planning Board. Additionally, she has served as a college professor, with nearly a decade of experience in teaching law and political science courses.
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