Borough Of Sanctions

Municipalities can be sanctioned for frivolous litigation per a decision of the New Jersey Supreme Court

Municipalities and municipal corporations, as defined by N.J.S.A. 1:1-2, that engage in frivolous litigation are subject to sanctions under the FLS. The Supreme Court of the United States has recognized “that municipalities, unlike States, do not enjoy a constitutionally protected immunity from suit,” Jinks v. Richland County, 538 U.S. 456, 466 (2003), and neither the FLS nor any other substantive law in New Jersey has immunized municipalities from FLS liability for filing frivolous pleadings like the Borough was found to have filed here.

Facts

The Court considers a challenge brought by plaintiff Borough of Englewood Cliffs (the Borough) to sanctions imposed by the trial court, which found that the Borough filed a complaint and an amended complaint in bad faith to harass, delay, and cause malicious injury to its former attorneys and a builder. Specifically, the Borough argues that it is immunized from the award of reasonable litigation costs and attorney fees by New Jersey’s Frivolous Litigation Statute (FLS), N.J.S.A. 2A:15-59.1, and the doctrine of sovereign immunity.

Following the Court’s 2015 order requiring judicial oversight of municipal housing obligations to preclude exclusionary development, the Borough filed an action seeking a declaration that it had discharged its constitutional affordable housing obligations. A builder intervened and opposed the motion, and the Borough retained several attorneys as counsel. After assessing the weaknesses of the Borough’s case, the attorneys urged the Borough to settle. The Borough declined that advice and went to trial, but did not prevail. Thereafter, the Borough settled with the builder. The Borough Council passed a Resolution censuring the mayor for pursuing “needless” litigation against the “accurate” warnings of the attorney defendants. The Resolution also praised the attorney defendants. Thereafter, a municipal election occurred during which some new Borough Council members were elected. Under the newly constituted Council, the Borough filed a separate suit against the attorneys and the builder. That action led to this appeal.

Defendants demanded in writing that the Borough withdraw its complaint and amended complaint against them. They described in detail the frivolous nature of the Borough’s pleadings and warned that if the Borough failed to withdraw the complaints, they would file motions to dismiss and seek sanctions. Despite those warnings, the Borough forged ahead.

Thereafter, defendants filed motions to dismiss for failure to state a claim pursuant to Rule 4:6-2(e). The trial judge granted those motions and entered multiple orders dismissing the Borough’s pleadings with prejudice. Defendants also 1 moved for sanctions, and the judge awarded them attorney fees and costs, finding that the Borough acted in bad faith to harass, delay, and cause malicious injury by filing its frivolous pleadings. In total, the Borough was ordered to pay $216,484.45.

The Appellate Division affirmed, concluding, as relevant to the appeal before the Court, that “a public entity is not immune from the sanctions that can be imposed under the FLS.” 478 N.J. Super. 426, 441, 451 (App. Div. 2024). The Court granted certification. 259 N.J. 323 (2024).

Advice of counsel

In the Affordable Housing Litigation, the Borough retained as counsel Thomas J. Trautner of Chiesa Shahinian & Giantomasi, PC (together, CSG), Albert Wunsch, III, and Jeffrey R. Surenian and Jeffrey R. Surenian and Associates, LLC (together, Surenian) (collectively, attorney defendants).1 After assessing the weaknesses of the Borough’s case, the attorney defendants urged the Borough to settle. The Borough declined that advice and went to trial, but did not prevail. Thereafter, the Borough settled with Sylvan.

The Borough Council subsequently passed Resolution 20-132 censuring the mayor for pursuing “needless” litigation against the “accurate” warnings of the attorney defendants. The Resolution also praised the attorney defendants. It resolved: “The Council supports the actions of attorneys Surenian, Wunsch, Trautner and Mariniello and finds that they have been appropriate, professional and ethical.” Thereafter, a municipal election occurred during which some new Borough Council members were elected. Under the leadership of the newly constituted Council, the Borough filed a separate suit against the attorney defendants and Sylvan (collectively, defendants), asserting claims of professional malpractice, breach of contract, unjust enrichment, civil conspiracy, and aiding and abetting. That action led to this appeal.

(Mike Frisch)