On November 15, 2024, the Supreme Court of New Jersey agreed to consider a closely watched public law case. The question before the justices in Borough of Englewood Cliffs v. Trautner is whether public entities are immune from sanctions under the state’s Frivolous Litigation Statute.
Facts of the Case
The Borough of Englewood Cliffs retained Thomas J. Trautner and Chiesa Shahinian & Giantomasi PC, (collectively CSG), Albert Wunsch III, Jeffrey Surenian and Jeffrey Surenian and Associates, LLC, (collectively Surenian) to represent it in affordable housing litigation. After judgment was entered for developer 800 Sylvan Avenue, LLC. (Sylvan), a settlement was reached between the Borough and Sylvan. Thereafter, political control of the Borough Council majority changed hands, and the newly constituted Council sued CSG, Wunsch, and Surenian, alleging professional malpractice, breach of contract, unjust enrichment, civil conspiracy, and aiding and abetting arising from their representation of the Borough in the litigation.
The Borough also sued Sylvan, alleging claims of conspiracy and aiding and abetting.
The trial court granted defendants’ Rule 4:6-2(e) motions to dismiss the Borough’s complaint with prejudice. The trial court subsequently granted defendants’ motion for sanctions, ordering the Borough to pay their attorney’s fees and costs for filing a frivolous lawsuit. The Borough appealed, arguing the sanction applications were procedurally deficient; as a public entity, it is immune from paying sanctions under the FLS; and the trial court abused its discretion in finding the Borough’s lawsuit was frivolous.
Appellate Division’s Decision
The Appellate Division affirmed. It held that a public entity is not immune from sanctions for filing a frivolous lawsuit under the FLS.
In reaching its decision, the appeals court acknowledged that whether a state and its agencies and political subdivisions are immune from the FLS is an unsettled question of law. “The only published cases are two divergent Chancery Division rulings issued almost four years apart, the most recent being some twenty-seven years ago,” Judge Thomas W. Sumners Jr. wrote. “The Chancery court held In the Matter of K.L.F. that N.J.S.A. 2A:15-59.1 applies to governmental bodies. Almost four years later, another Chancery court reached a contrary result in Div. of Youth & Fam. Servs. v. P.M.”
Nonetheless, the Appellate Division ultimately determined there is no immunity.
“K.L.F. and P.M. both express sound reasoning in reaching their respective rulings, making our decision a close call,” Judge Sumners wrote. “We, however, conclude, as did K.L.F. and the trial court, that a public entity is not immune from the sanctions that can be imposed under the FLS.”
Issues Before the NJ Supreme Court
The New Jersey Supreme Court granted certification. The justices agreed to consider the following question: “Is a municipality subject to sanctions for filing a frivolous lawsuit under the Frivolous Litigation Statute, N.J.S.A. 2A:15-59.1?” Oral arguments have not yet been scheduled. Please check back for updates.