XCALIBUR COLLECTIONS, LLC VS. ANDREW J. KARCICH (L-1632-15, BURLINGTON 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NOT FOR PUBLICATION WITHOUT THE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-4474-15T3

XCALIBUR COLLECTIONS, LLC and
ANDREA LOIACONO,

Plaintiffs-Appellants,

v.

ANDREW J. KARCICH,

Defendant-Respondent.
_______________________________________

Argued September 19, 2017 – Decided October 31, 2017

Before Judges Fasciale and Moynihan.

On appeal from Superior Court of New Jersey,
Law Division, Burlington County, Docket No.
L-1632-15.

Mark J. Molz argued the cause for appellants.

Fardene E. Blanchard argued the cause for
respondent (Lynch & Karcich, LLC, attorneys;
Ms. Blanchard, on the brief).

PER CURIAM

Plaintiffs appeal from a May 26, 2016 order dismissing their

second amended complaint pursuant to Rule 4:6-2(e). On appeal,

plaintiffs argue it was "plain error" for the motion judge to find

the statements in defendant's letters were protected by the
litigation privilege; that discovery should have been completed

before the motion was decided; and that the litigation privilege

should not extend to defendant because his litigation tactics

constituted "bad behavior with nefarious intent." Applying the

absolute litigation privilege doctrine, we conclude plaintiffs

failed to state a claim upon which relief can be granted. We

therefore affirm.

Defendant represented J.P. and V.P. in a small claims lawsuit

filed by plaintiffs (the underlying suit). On March 6, 2015,

defendant filed a counterclaim on behalf of his clients. The

counterclaim was founded on an agreement between plaintiffs and

J.P., whereby plaintiffs were to act as J.P.'s trading assistants

for the sale of his merchandise on eBay. In the counterclaim,

J.P. alleged breach of contract, violation of the New Jersey

Consumer Fraud Act, N.J.S.A. 56:8-1 to -20, conversion, fraud and

the right of replevin; he sought payment for his items sold by

plaintiffs on eBay, and the return of items that J.P. delivered

to plaintiffs, but were never sold. The counterclaim in the

underlying suit also sought compensatory damages, treble damages

under the Consumer Fraud Act, punitive damages, interest,

attorneys' fees and costs of suit. The court transferred the

underlying suit from small claims court to special civil part.

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 While the underlying lawsuit was pending, plaintiffs filed

this law division complaint against J.P. and V.P.; they added

defendant as a party, alleging two letters he wrote to eBay defamed

plaintiffs. Defendant first learned he was named as a party when

plaintiffs' counsel advised him at the scheduled special civil

part trial on July 15, 2015. Plaintiffs' counsel also told

defendant that he had moved to consolidate the underlying suit

with the law division case. The underlying suit settled in late

July; as a result, plaintiffs' motion to consolidate was denied.

Defendant removed himself as counsel for J.P. and V.P. after

he was named in this suit, and signed a substitution of attorney.

On September 17, 2015, plaintiffs filed a second amended complaint

in the law division, which defendant sought to dismiss, arguing

plaintiffs failed to state a claim upon which relief could be

granted, Rule 4:6-2(e), because even if the statements in the

letter to eBay were defamatory, he was protected from liability

under the litigation privilege.

Plaintiffs' complaint against defendant, alleging

"intentional acts or omissions . . . as well as misrepresentation,

interference with contract, interference with economic advantage

and any other cause of action allowed by law," was based on two

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letters written by defendant to eBay on March 23 and 31, 2015. 1

Defendant did not address the letters to a particular person at

eBay; the salutation was "Dear eBay personnel." The portions of

the letters plaintiffs allege were defamatory are quoted in their

second amended complaint:

Loiacono refuses to pay money to my client
monies due and owing to him based on
[Loiacono's] sales of my client's merchandise
on eBay and Loiacono further refuses to return
the remaining hundreds of items in Loiacono's
care which were never listed or for which
listings were terminated, with those items
valued in the thousands of dollars, despite
numerous requests. It also appears that
Loiacono likely never had a Fidelity Bond in
place in connection with his actions as a
trading partner.[2]

The motion judge granted the Rule 4:6-2(e) motion, finding

the statements in defendant's letters addressed issues involved

in the litigation, and were thus protected by the litigation

privilege.

On a motion to dismiss for failure to state a claim under

Rule 4:6-2(e), a court must "accept as true the facts alleged in

the complaint[,]" Darakjian v. Hanna, 366 N.J. Super. 238, 242

1
The only difference between the letters is that the later one
specifies it was sent by both regular and certified mail; the
first letter does not indicate how it was posted. The bodies of
the letters are identical.
2
In the quoted section of the complaint, Loiacono is spelled as
"Loiacono" and "Loiacnono." We use Loiacono for consistency.

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(App. Div. 2004), and "search[] the complaint in depth and with

liberality to ascertain whether the fundament of a cause of action

may be gleaned even from an obscure statement of claim, opportunity

being given to amend if necessary." Printing Mart-Morristown v.

Sharp Elecs. Corp., 116 N.J. 739, 746 (1989). "The court may not

consider anything other than whether the complaint states a

cognizable cause of action." Rieder v. Dep't of Transp., 221 N.J.

Super. 547, 552 (App. Div. 1987). The party opposing the motion

is "entitled to every reasonable inference of fact." Printing

Mart-Morristown, supra, 116 N.J. at 746.

The absolute litigation privilege applies to "any

communication (1) made in judicial or quasi-judicial proceedings;

(2) by litigants or other participants authorized by law; (3) to

achieve the objects of the litigation; and (4) that have some

connection or logical relation to the action." Hawkins v. Harris,

141 N.J. 207, 216 (1995). The litigation privilege provides

immunity from suit to permit unfettered expression by litigants,

a policy concern that is critical to advancing the underlying

government interest at stake in such settings. Erickson v. Marsh

& McLennan Co., 117 N.J. 539, 563 (1990); see also Rabinowitz v.

Wahrenberger, 406 N.J. Super. 126, 134 (App. Div.), appeal

dismissed, 200 N.J. 500 (2009) (recognizing the litigation

privilege as "indispensable," and noting that "[t]he public policy

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rationale for the litigation privilege has not changed in half a

millennium"). "This absolute privilege applies 'even if the words

are spoken maliciously, without any justification or excuse, and

from personal ill will or anger[.]'" Williams v. Kenney, 379 N.J.

Super. 118, 134 (App. Div.) (alteration in original) (quoting

DeVivo v. Ascher, 228 N.J. Super. 453, 457 (App. Div. 1988),

certif. denied, 114 N.J. 482 (1989)), certif. denied, 185 N.J. 296

(2005). If the privilege attaches as a matter of law, "all vestige

of a cause of action is consumed in the necessary supremacy of the

rule of public policy . . . ." Fenning v. S.G. Holding Corp., 47

N.J. Super. 110, 120 (App. Div. 1957). "Although defamatory, a

statement will not be actionable if it is subject to an absolute

or qualified privilege." Erickson, supra, 117 N.J. at 563.

We have broadly interpreted the phrase, "made in judicial or

quasi-judicial proceedings[,]" Hawkins, supra, 141 N.J. at 216,

as extending the privilege "to all statements or communications

in connection with the judicial proceeding[,]" not just statements

made in court, Ruberton v. Gabage, 280 N.J. Super. 125, 133 (App.

Div.), certif. denied, 142 N.J. 451 (1995). "Thus, the privilege

extends to 'preliminary conversations and interviews between a

prospective witness and an attorney if they are in some way related

to or connected with a pending or contemplated action.'" Hawkins,

supra, 141 N.J. at 216 (quoting Ascherman v. Natanson, 100 Cal.

6 A-4474-15T3
Rptr. 656, 659 (Ct. App. 1972)); see also DeVivo, supra, 228 N.J.

Super. at 459 (applying the privilege to an attorney's letter,

alleged to contain libelous statements, written to counsel for a

company not a party to the litigation). The extension of the

privilege to communications by attorneys is grounded in the ability

to discipline counsel who flout the boundaries of permissible

conduct. Hawkins, supra, 141 N.J. at 220-21.

Defendant, as counsel for J.P. and V.P., wrote the letters

after plaintiffs commenced litigation and after the counterclaim

had been filed. They were, therefore, written in the course of

the underlying litigation, and counsel was a "participant[]

authorized by law[.]" Id. at 216.

There exists an interrelationship between the third and

fourth prongs. "Whether the statements were made to achieve the

objects of the litigation depends on their relationship to the

investigation." Id. at 218 (emphasis omitted).

Relevancy has been broadly and liberally interpreted.

DeVivo, supra, 228 N.J. at 461. We have held a defamatory

communication need not have direct relevance or materiality to an

issue before the court; "[i]t is enough that it have some reference

to the subject of the inquiry." Thourot v. Hartnett, 56 N.J.

Super. 306, 308 (App. Div. 1959), certif. denied, 31 N.J. 553

(1960); see also DeVivo, supra, 228 N.J. at 460. "The pertinency

7 A-4474-15T3
thus required is not a technical legal relevancy, such as would,

necessarily, justify insertion of the matter in a pleading or its

admission into evidence, but rather a general frame of reference

and relationship to the subject matter of the action." Fenning,

supra, 47 N.J. Super. at 118; see also Hawkins, supra, 141 N.J.

at 218. The privilege, however, will not extend to matters "so

wanting in relation to the subject matter of controversy as that

no reasonable man can doubt its irrelevancy and impropriety."

Thourot, supra, 56 N.J. Super. at 308; see also DeVivo, supra, 228

N.J. Super. at 460.

In Hawkins, defense investigators were hired to gather

information related to two accidents in which the plaintiff was

allegedly injured. 141 N.J. at 211-12. The Court found relevant,

and therefore privileged, statements made by the investigators to

plaintiff's minister whom they told that plaintiff and her husband

were committing insurance fraud, and to plaintiff's housekeeper

of whom they asked how much money plaintiff was paying her to lie.

Id. at 212-13, 221.

Defendant informed eBay that his clients were induced to hire

plaintiffs "based on the conditions of the eBay Trading Assistant

Program and representations on [eBay's] website concerning the

program," and specified the portions of eBay's program upon which

his clients relied. While defendant asked that plaintiffs be

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suspended as eBay trading assistants,3 he also asked how eBay

intended to "handle this matter." His general inquiry – addressed

to no one in particular at eBay – framed his client's allegations;

it was an initial communication made to a company that was not

unrelated to the litigation. Thus, the detailed version of events

set forth in the letters reflecting his clients' position regarding

plaintiffs' alleged actions were related to the action pending

between plaintiffs and defendant's clients.

In light of defendant's advice to eBay that his clients relied

on eBay's representations, and his request for a response from

eBay as to their intentions, the letters are in line with the type

of inquiry deemed by our Supreme Court to be "necessary to a

thorough and searching investigation of the truth, and, therefore,

essential to the achievement of the objects of litigation."

Hawkins, supra, 141 N.J. at 217. The requested response could

well have led to a claim against eBay by defendant's clients, or

an investigation by eBay into plaintiffs' practices that could

have supported defendant's clients' claim against plaintiffs. We

conclude, therefore, as did the motion judge, that defendant's

3
Plaintiffs, in the second amended complaint, do not claim that
defendant's request for their suspension was actionable. They
claim only defamation because of the false statements we have
already detailed.

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letters were meant to achieve the objects of the litigation between

the parties.

The litigation privilege was designed to allow "an

unqualified opportunity to explore the truth of a matter without

fear of recrimination." Ibid. Even accepting the allegations in

plaintiffs' complaint as true, defendant's letters are protected

by the privilege. Inasmuch as the letters are privileged, the

judge correctly dismissed plaintiffs' complaint.

We conclude that plaintiffs' remaining arguments are without

sufficient merit to warrant discussion in a written opinion. R.

2:11-3(e)(1)(E).

Affirmed.

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