CITIBANK, N.A. VS. SHERRY DEMETRO VS. SLATER TENAGLIA, FRITZ & HUNT, PA (DC-000268-15, CAPE MAY 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NOT FOR PUBLICATION WITHOUT THE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-1771-18T4

CITIBANK, N.A.,

Plaintiff,

v.

SHERRY DEMETRO,

Defendant/Third-Party
Plaintiff-Appellant,

v.

SLATER, TENAGLIA, FRITZ
& HUNT, PA,

Third-Party Defendant-
Respondent.
_____________________________

Argued telephonically June 2, 2020 –
Decided July 16, 2020

Before Judges Yannotti, Hoffman and Currier.

On appeal from the Superior Court of New Jersey, Law
Division, Cape May County, Docket No. DC-000268-
15.
 Christopher Bruschi argued the cause for appellant.

Robert B. Hille argued the cause for respondent
(Greenbaum, Rowe, Smith & Davis, LLP, attorneys;
Robert B. Hille, of counsel; John W. Kaveney and
Parampreet Singh, on the brief).

PER CURIAM

On March 3, 2015, Slater, Tenaglia, Fritz & Hunt (Slater Tenaglia) filed suit

in the Special Civil Part on behalf of Citibank, N.A. against Sherry Demetro, after

she failed to make certain credit card payments. Along with her answer, Demetro

filed a third-party complaint against Slater Tenaglia, alleging the law firm violated

the Fair Debt Collection Act1 (the Act). Specifically, Demetro alleged that Slater

Tenaglia violated 15 U.S.C. § 1692(g)(b), by filing a complaint against Demetro

following receipt of a timely dispute of the debt, but prior to mailing verification of

the debt.

On September 18, 2015, the Special Civil Part granted Slater Tenaglia's

motion to dismiss Demetro's third-party complaint, notwithstanding conflicting

evidence regarding the timing of the mailing of the debt verification. Demetro

appealed and we reversed, finding the trial court allowed Slater Tenaglia to rely on

1
15 U.S.C. §§ 1692-1692p.
A-1771-18T4
2
an inadequate certification regarding the date it filed its collection action. Citibank,

N.A. v. Demetro, No. A-1317-15 (App. Div. Oct. 2, 2017) (Slip op. at 5-6).

On remand, Slater Tenaglia extended an offer of judgment of $3000, exclusive

of attorney's fees. Demetro accepted the offer. Pursuant to the Act, Demetro then

filed a motion seeking attorney's fees and costs, requesting a total of $82,144.27. On

November 9, 2018, the motion judge entered an order awarding Demetro $17,500 in

attorney's fees, plus $551.34 in costs. Thereafter, Demetro filed three additional

motions: to tax fees, for supplemental attorney's fees, and for sanctions. The trial

court denied all three motions in separate orders entered on April 22, 2019. This

appeal followed. We affirm.

I

On December 29, 2014, Slater Tenaglia sent a debt collection letter to

Demetro on behalf of Citibank. On January 12, 2015, Demetro contested the debt,

demanded verification of the debt, and instructed Slater Tenaglia to cease collection

efforts until it mailed the debt verification, in accordance with 15 U.S.C.A. §

1692(g). On January 20, 2015, Slater Tenaglia received documents purporting to

verify Demetro's debt; however, the firm did not mail the debt verification to

Demetro until March 3, 2015, at the earliest. Slater Tenaglia electronically filed its

collection complaint against Demetro at 4:26 p.m. on March 3, 2015.

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 In addition to alleging that Slater Tenaglia filed its complaint prior to mailing

verification of the debt, Demetro alleged the collection complaint was drafted by the

firm on February 27, 2015. She argued that preparation of the draft complaint

constituted continuing efforts to collect the debt, in violation of the Act. Demetro

sought discovery to prove her claim that Slater Tenaglia violated the Act. Through

discovery requests, Demetro sought Slater Tenaglia's collection file. Instead of

responding to the discovery requests, Slater Tenaglia filed a motion to dismiss.

The parties disputed the date that Slater Tenaglia mailed the debt verification

to Demetro. Slater Tenaglia's answer to Demetro's third-party complaint stated the

debt verification was mailed on March 2, 2015. However, in support of its motion

to dismiss, Slater Tenaglia submitted a June 15, 2015 certification from a legal

assistant, Jasmine Garcia, stating the firm mailed the debt verification to Demetro

on March 3, 2015.

Garcia's certification explained the procedure for handling outgoing mail at

Slater Tenaglia and stated she deposited the envelope, with postage, in the firm's

mail room on March 3, 2015. Garcia certified that outgoing mail from Slater

Tenaglia "is collected in bins located in the office mail room. A staff member

transports the mail once or twice a day to a mail drop box located in the Mack Cali

Centre Complex." Significantly, Garcia did not certify she deposited the envelope

A-1771-18T4
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into a United States Post Office mail receptacle prior to 4:26 p.m. on March 3, the

date and time Slater Tenaglia electronically filed its collection complaint.

Demetro contended that the factual dispute as to the mailing of the debt

verification was central to her claim against Slater Tenaglia, and therefore, dismissal

of the third-party complaint prior to the exchange of discovery was improper. We

agreed, and reversed the dismissal order and remanded for further proceedings. At

that point, the underlying case settled when Demetro accepted Slater Tenaglia's offer

of judgment.

On April 23, 2018, Demetro filed a motion to amend the judgment, seeking

attorney's fees and costs, pursuant to the Act. In a supporting certification, Demetro's

attorney stated that since 2007, "the primary focus and concentration of [my]

practice has been in the area of debt defense and consumer protection law –

specifically, the [Act]." Seeking a lodestar multiplier of 1.33, he requested

$81,592.93 in attorney fees, plus $551.34 in costs, based on 164.7 hours billed at

rates of $360 and $380 per hour. Slater Tenaglia opposed the requested fees as

excessive and challenged the claim of Demetro's attorney regarding his level of

experience in handling these types of matters, asserting he only filed seven cases in

the Special Civil Part in the previous eleven years, and only five involved the Act.

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 On November 9, 2018, the motion judge issued a written opinion. The judge

discussed the lodestar method used in New Jersey statutory fee shifting cases and

the law relevant to motions for a supplemental award of attorney's fees. The judge

also reviewed the eight factors set forth in New Jersey Rules of Professional Conduct

(RPC) 1.5(a) to determine the reasonableness of the fees requested.

Addressing the first factor – the time and labor required, the novelty and

difficulty of the questions involved, and the skill requisite to perform the legal

service properly – the judge found the matter involved "relatively-low complexity"

and required only a "moderate level of skill" to perform the legal services.

Considering the second factor – the likelihood, if apparent to the client, that

the acceptance of the particular employment will preclude other employment by the

lawyer – the judge found the time Demetro's attorney spent on the matter would not

have been apparent to his client because he spent an excessive amount of time on

the case, even though it was "relatively straight forward."

Turning to the third factor – the fee customarily charged in the locality for

similar legal services – the judge found that $250 per hour in Cape May County for

Special Civil Part matters represented the upper tier of fees charged, instead of the

$360 to $380 per hour rate requested by Demetro's attorney.

A-1771-18T4
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 As to the fifth factor – the time limitations imposed by the client or by the

circumstances – the judge noted that Demetro's attorney did not provide any

evidence of time limitations imposed on him by handling this case.

Addressing the sixth factor – the nature and length of the professional

relationship with the client – the judge indicated that Demetro's attorney did not

provide the court "with any information as to [his] relationship with his client,

including any substantiation of [his] fee arrangement with the client."

Turning to the seventh factor – the experience, reputation, and ability of the

lawyer performing the services – the judge noted Demetro's attorney was a solo

practitioner with fifteen years of experience; however, he failed to supply the court

with "any information or data" to support his claim that "he is an experienced [Act]

attorney." Undermining this claim, the judge pointed out that Demetro's attorney

"spen[t] more than twelve (12) hours researching mailings, P.O. Boxes, registered

businesses and agents, and postal-related issues . . . ."

Addressing the eighth factor – whether the fee is fixed or contingent – the

judge again noted that Demetro's attorney did not disclose his fee relationship or

provide the court with a retainer agreement. Additionally, the judge found "nothing

in the record . . . to suggest [he had] a contingent fee agreement . . . ."

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 After balancing the eight factors, the judge found the fee request excessive,

"[G]iven the nature of the legal issues and low risk: the matter was resolved for

[$3000]. Requesting compensation for [164.7 hours] is excessive, even though this

matter involved an appeal." The court reduced defense counsel's $360 to $380

hourly rate to $250, based on his review of the certifications submitted and the

factors identified in RPC 1.5(a).

The judge further found Demetro's attorney was not entitled to a fee

enhancement, pursuant to Redine v. Pantzer, 141 N.J. 292, 334-35 (1995). In

pertinent part, the judge explained his rationale for reducing his claimed billable

hours:

[T]his court removed billing for administrative tasks, as
well as excessive billing such as [Demetro's attorney]
requesting compensation for more than five (5) hours of
time before having a retainer agreement from the client
and eleven and eight-tenths (11.8) hours of drafting and
edits in opposition to a motion to dismiss. Additionally,
as this was a single, straightforward issue for appeal, this
[c]ourt finds the sixty-four and five-tenths (64.5) hours
[Demetro's attorney] billed for [a]ppellate briefing is
excessive. The [c]ourt finds that several hours billed by
[Demetro's attorney] were for administrative tasks such as
gathering exhibits or delivering filings to the [c]ourt. The
[c]ourt is not finding those tasks unnecessary, but those
tasks are normally delegated to someone who is not billing
three-hundred eighty dollars ($380) per hour for his time.
For the [a]ppellate briefing alone, counsel billed sixty-four
and five-tenths (64.5) hours. This is excessive give[n] the
scope of the appeal having nothing to do with the amount

A-1771-18T4
8
 in controversy. Included in this time but not separated out
in the billing are items such as collecting exhibits,
organizing exhibits, preparing table of contents, and
delivery to the court. As such, the [c]ourt finds it
appropriate to reduce the hours billed.

The motion judge reduced the trial court hours from seventy-six and eight-

tenths (76.8) to forty-five hours. He reduced the number of appellate hours from

eighty-seven and nine-tenths (87.9) to twenty-five hours – fifteen hours for briefing

and preparation of the written submission and ten hours for oral argument

preparation and attendance. The judge noted the appeal involved a "narrow

procedural issue."

After the judge's adjustments, the trial and appellate billable hours totaled

seventy hours. When multiplied by the $250 hourly rate the judge found reasonable,

the resulting lodestar figure totaled $17,500; in addition, the judge awarded costs of

$551.34. The judge denied the request for a contingency fee enhancement because

Demetro's attorney failed to supply the court with his fee agreement.

On November 28, 2018, Demetro filed three post-judgment motions: 1) a

motion to tax fees, pursuant to N.J.S.A. 22A:2-42; 2) a motion for supplemental

attorney's fees; and 3) a motion for sanctions. While the three motions were pending,

Demetro filed a notice of appeal on December 24, 2018. On January 22, 2019, we

dismissed the appeal without prejudice as interlocutory due to the pending motions.

A-1771-18T4
9
On March 1, 2019, the motion judge heard oral argument on the three motions. On

April 22, 2019, the court denied all three motions in separate written orders.

Addressing the first motion, the judge denied the request for additional

attorney's fees of $425, pursuant to N.J.S.A. 22A:2-42. The judge relied on Alba v.

Sopher, 296 N.J. Super. 501, 505 (App. Div. 1997), and noted that Demetro had

already been awarded attorney's fees under the Act, and therefore "the more specific

statute" of the Act took precedence over N.J.S.A. 22A:2-42.

The judge also denied defense counsel's motion for supplemental attorney's

fees. The judge stated it "has already determined the appropriate level of

compensation to be awarded . . . and declines to award further compensation given

the previously-awarded compensation, given the nature of the case, the amount in

controversy, and the skill necessary to perform the tasks [defense counsel] had to

perform as counsel."

Turning to Demetro's motion for sanctions, the judge declined to award

sanctions and additional attorney's fees because she "was not the prevailing party

and has failed to show egregious conduct to warrant sanctions." The court granted

Slater Tenaglia 's cross-motion to deposit the final judgment amount of $21,095.82

into the Superior Court Trust Fund.

A-1771-18T4
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 On June 27, 2019, Demetro filed this appeal. On May 4, 2020, Demetro filed

a motion to withdraw the funds Slater Tenaglia previously deposited into the

Superior Court Trust Fund, pursuant to Rule 4:57-2. In an order dated May 15, 2020,

we reserved our decision on this motion pending our current decision.

II
The decision to award attorney's fees rests "within the sound discretion of the

trial court." Maudsley v. State, 357 N.J. Super. 560, 590 (App. Div. 2003). "[F]ee

determinations by trial courts will be disturbed only on the rarest of occasions, and

then only because of a clear abuse of discretion." Packard-Bamberger & Co. v.

Collier, 167 N.J. 427, 444 (2001) (quoting Rendine, 141 N.J. at 317). An abuse of

discretion occurs "when a decision is 'made without a rational explanation,

inexplicably departed from established policies, or rested on an impermissible

basis.'" Flagg v. Essex Cty. Prosecutor, 171 N.J. 561, 571 (2002) (quoting

Achacoso-Sanchez v. Immigration and Naturalization Serv., 779 F.2d 1260, 1265

(7th Cir. 1985)).

Although New Jersey generally disfavors the shifting of attorney's fees, a

prevailing party may recover attorney's fees if expressly provided by statute, court

rule, or contract. Collier, 167 N.J. at 440 (citing North Bergen Rex Transp., Inc. v.

Trailer Leasing Co., 158 N.J. 561, 569 (1999) and Dep't of Envtl. Prot. v. Ventron

A-1771-18T4
11
Corp., 94 N.J. 473, 504 (1983)). Rule 4:42-9(a)(8) permits the award of attorney's

fees "[i]n all cases where attorney's fees are permitted by statute."

The Act provides for the payment of attorney's fees to a successful consumer.

It states, "[A]ny debt collector who fails to comply with any provision of this

subchapter . . . is liable to such person in an amount equal to the sum of –

(1) any actual damage sustained . . . .

(2)(A) such additional damages as the court may allow,
but not exceeding $1,000; and

(3) in the case of any successful action to enforce the
foregoing liability, the costs of the action, together with
a reasonable attorney's fee as determined by the court."

[15 U.S.C. 1692k(a)].

In calculating the amount of reasonable attorney's fees, "an affidavit of

services addressing the factors enumerated by RPC 1.5(a)" is required. R. 4:42-9(b);

Twp. of W. Orange v. 769 Assocs., LLC, 198 N.J. 529, 542 (2009). RPC 1.5(a) sets

forth the factors to be considered:

(a) A lawyer's fee shall be reasonable. The factors to
be considered in determining the reasonableness of a fee
include the following:

(1) the time and labor required, the novelty and
difficulty of the questions involved, and the skill requisite
to perform the legal service properly;

A-1771-18T4
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 (2) the likelihood, if apparent to the client, that the
acceptance of the particular employment will preclude
other employment by the lawyer;

(3) the fee customarily charged in the locality for
similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the
circumstances;

(6) the nature and length of the professional
relationship with the client;

(7) the experience, reputation, and ability of the lawyer
or lawyers performing the services;

(8) whether the fee is fixed or contingent.

A court awarding attorney's fees must first determine the "lodestar," defined

as the "number of hours reasonably expended" by the attorney, "multiplied by a

reasonable hourly rate." Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 386

(2009) (citing Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 21 (2004)). "The court

must not include excessive and unnecessary hours spent on the case in calculating

the lodestar." Furst, 182 N.J. at 22 (citing Rendine, 141 N.J. at 335-36).

"The amount of attorney fees usually rests within the discretion of the trial

judge, but the reasons for the exercising of that discretion should be clearly stated."

Khoudary v. Salem Cty. Bd. of Soc. Servs., 281 N.J. Super. 571, 578 (App. Div.

A-1771-18T4
13
1995) (citations omitted); see also R. 1:7-4(a) (requiring a court to "find the facts

and state its conclusions of law thereon in all actions tried without a jury, on every

motion decided by a written order that is appealable as of right, and also as required

by R. 3:29").

"[T]he court must specifically review counsel's affidavit of services under

Rule 4:42-9, and make specific findings regarding the reasonableness of the legal

services performed . . . ." F.S. v. L.D., 362 N.J. Super. 161, 170 (App. Div. 2003).

"Without such findings it is impossible for an appellate court to perform its function

of deciding whether the determination below is supported by substantial credible

proof on the whole record." Monte v. Monte, 212 N.J. Super. 557, 565 (App. Div.

1986). "The trial judge may satisfy the court rules by relying on the facts or reasons

advanced by a party; however, the court is obligated to make the fact of such reliance

'explicit.'" Allstate Ins. Co. v. Fisher, 408 N.J. Super. 289, 301 (App. Div. 2009)

(quoting Pressler, Current N.J. Court Rules, cmt. 1 on R. 1:7-4 (2009)).

III

Demetro argues the motion judge erred when he considered the

proportionality between the attorney's fees and damages obtained under RPC

1.5(a)(4). In doing so, she asserts the court's interpretation of RPC 1.5(a)(4)

would "thwart Congress' policy to attract and encourage competent counsel to

A-1771-18T4
14
take these types of risky, low-dollar-value cases." She argues the Act is a "fee-

shifting statute that exists to vindicate important rights that otherwise would go

undetected and unpunished if competent counsel were not compensated at

competitive rates and, yes, received disproportionate fees."

Demetro's assertion that the judge misinterpreted RPC 1.5(a)(4) is misguided.

While he did describe the request for over $80,000 in attorney's fees as

proportionately unreasonable, considering the matter was not complex and resulted

in a $3000 damage award, the judge awarded only $17,500 in attorney's fees because

the fees requested were unreasonable, regardless of the amount of the damage award.

The judge reduced the amount of trial-court level hours billed from seventy-six and

eight-tenths (76.8) hours to forty-five hours and reduced the number of appellate

hours billed from eighty-seven and nine-tenths (87.9) hours to twenty-five hours.

In total, the judge approved seventy billable hours. In making his determination, the

judge analyzed the RPC 1.5(a) factors, provided a detailed explanation for his

application of each factor, and provided a thorough evaluation of the affidavit of

services and billing records submitted by Demetro's attorney. We do not view the

judge's rulings in this case as an effort to cap potential recoveries for claims filed

under the Act. Demetro's attorney clearly submitted unreasonable billing, as the

judge explained in his well-reasoned and thorough analysis.

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 Demetro further argues the judge misapplied the law and abused his

discretion in reducing her attorney's hourly rate. She asserts the reduction to $250

per hour was arbitrary, capricious, and inconsistent with similar cases. In the same

vein, she argues the judge abused his discretion in reducing the number of hours

spent on the matter.

In considering the hourly rate to apply in making an award of attorney's fees,

the trial court should look to the prevailing market rate in the community, and

"satisfy itself that the assigned hourly rates are fair, realistic, and accurate, or should

make appropriate adjustments." Rendine, 141 N.J. at 337. Addressing the hourly

rate adjustment, the judge noted $250 per hour represents the upper limit or tier for

attorneys handling Special Civil Part cases in Cape May and concluded, based on

the factors set forth in RCP 1.5(a) and the certifications submitted, the $250 rate was

appropriate.

The judge thoroughly analyzed the billing and made specific findings. F.S.

362 N.J. Super. 161. The judge analyzed the amount of billing during the trial stage

and noted many unreasonable billing entries. For example, the judge noted that

Demetro's attorney billed for administrative tasks at a rate of $380 per hour, when

those tasks could have been completed by a clerk at a lower rate. The judge

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identified numerous billing entries he deemed unnecessary or unreasonable,

especially considering the limited scope of discovery. Furst, 182 N.J. at 22.

The judge also addressed the unreasonableness of appellate billing submitted

by Demetro's attorney. The judge pointed out that he billed over sixty hours for

appellate briefing, even though the appeal involved one narrow issue. We find no

basis to disturb the judge's decision to award fees based on a reduced number of trial

and appellate billable hours.

Demetro further argues the motion judge erred when he denied her request

for additional attorney's fees, pursuant to N.J.S.A. 22A:2-42, which provides for

a nominal award of attorney's fees in Special Civil Part cases to be taxed by the clerk.

The statute provides, in pertinent part:

There shall be taxed by the clerk of the Superior Court,
Law Division, Special Civil Part in the costs against the
judgment debtor, a fee to the attorney of the prevailing
party, of five per centum (5%) of the first five hundred
dollars ($500.00) of the judgment, and two per centum
(2%) of any excess thereof.

[N.J.S.A. 22A:2-42]

Demetro relies on Chase Bank U.S., N.A. v. Staffenberg, 419 N.J. Super. 386

(App. Div. 2011), where we addressed whether attorney's fees were mandatory under

N.J.S.A. 22A:2-42, and if so, whether in-house counsel was precluded from

recovering attorney's fees under N.J.S.A. 22A:2-42 by application of N.J.S.A.

A-1771-18T4
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17:3B-40 and N.J.S.A. 17:16C-42(d). Id. at 408-13. In Staffenberg, plaintiff's

counsel were employed as salaried, in-house counsel. Id. at 388. The debtor argued

that attorney's fees were not recoverable by plaintiff because multiple other statutes

precluded the recovery of counsel fees in certain scenarios where the creditor was

represented by in-house counsel; therefore, awarding fees under N.J.S.A. 22A:2-42

would amount to "double counting" attorney's fees. Id. at 409.

We disagreed and found that credit card companies were entitled to recover

statutory attorney's fees from a debtor in the Special Civil Part, pursuant to N.J.S.A.

22A:2-42, even when they utilized the services of in-house attorneys in procuring

the judgment. Id. at 412. We explained, in pertinent part:

Thus, in determining the amount of counsel fees to award
a prevailing party under a contractual agreement, a court
must evaluate the reasonableness of those fees. In making
that assessment, the court may take into consideration that
the creditor or its attorney had already received a modest
statutory fee as a taxed cost under N.J.S.A. 22A:2-42.
Hence, the court has the authority — not under N.J.S.A.
22A:2-42 but under its review of a separate request for
contract-based fees — to prevent or limit a potential
double recovery.

[Id. at 409]

We stated N.J.S.A. 22A:2-42 was more akin to a tax "that does not attempt to

reimburse the creditor fully for the reasonable costs of its counsel's services . . . the

award . . . operates to shift only a small portion of the burden of litigating the matter

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to the judgment debtor." Id. at 404. We held that attorney's fees are mandatory

under N.J.S.A. 22A:2-42, and that in-house counsel may receive attorney's fees

because the two other statutes did not conflict with N.J.S.A. 22A:2-42. Id. at 412.

Here, however, the motion judge based his decision on Alba, where we dealt

with the issue of whether a specific security deposit penalty provision, N.J.S.A. 46:8-

21.1, superseded the fees section of the Special Civil Part contained in N.J.S.A.

22A:2-42. 296 N.J. Super. at 505. We found that the specific security deposit fee

provision "takes precedence" over the fee section in N.J.S.A. 22A:2-42 because,

when "two statutes are in apparent conflict'[,] the specific will take precedence over

the general." Id. at 504. We reasoned that the fees described in N.J.S.A. 22A:2-42

are "the statutory fees allowed in all special civil part cases," but not as specific as

"the legislatively permitted fees intended to make whole a tenant whose security

deposit was not returned and who is forced to resort to the courts for statutory

remedies." Id. at 505.

In this case, the motion judge found Demetro's attorney was not entitled to

statutory fees under N.J.S.A. 22A:2-42. Applying Alba, the judge correctly held

that when multiple statutes permit the award of specifically described fees in a

Special Civil Part proceeding, the more specific statute takes precedence. The judge

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therefore ruled that Demetro should be awarded attorney's fees under the Act, rather

than under N.J.S.A. 22A:2-42.

Demetro further contends the motion judge erred when he did not apply the

lodestar test to the "supplemental attorney's fees submitted by [her] attorney [for]

the time expended from June 6, 2018 through November 28, 2018 – just prior to the

filing of the [a]ppeal."

The judge explained that he addressed Demetro's request for supplemental

compensation in his November 9, 2018 order. The judge refused to award more

compensation based on the previously awarded compensation, the nature of the case,

the amount in controversy, and the skill necessary of defense counsel to perform the

tasks associated with this case. We find no abuse of discretion.

Demetro additionally argues the motion judge abused his discretion by

denying her motion for frivolous litigation sanctions. We review a judge's decision

on a motion for frivolous lawsuit sanctions under an abuse of discretion standard.

McDaniel v. Man Wai Lee, 419 N.J. Super. 482, 498 (App. Div. 2011). Reversal is

warranted "only if [the decision] 'was not premised upon consideration of all relevant

factors, was based upon consideration of irrelevant or inappropriate factors, or

amounts to a clear error in judgment.'" Ibid. (quoting Masone v. Levine, 382 N.J.

Super. 181, 193 (App. Div. 2005)).

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 Sanctions against an attorney under Rule 1:4-8 "are specifically designed to

deter the filing or pursuit of frivolous litigation." LoBiondo v. Schwartz, 199 N.J.

62, 98 (2009). A second purpose of the rule is to compensate the opposing party in

defending against frivolous litigation. Toll Bros., Inc. v. Twp. of W. Windsor, 190

N.J. 61, 71 (2007). The rule provides for the imposition of sanctions where the

attorney or pro se party filed a pleading or a motion with an "improper purpose, such

as to harass or to cause unnecessary delay or needless increase in the cost of

litigation," Rule 1:4-8(a)(1), or by asserting a claim or defense that lacks the legal

or evidential support required by Rule 1:4-8(a)(2), (3) and (4). See State v. Franklin

Sav. Account No. 2067, 389 N.J. Super. 272, 281 (App. Div. 2006) (noting these

factors under the rule). "For purposes of imposing sanctions under Rule 1:4-8, an

assertion is deemed 'frivolous' when 'no rational argument can be advanced in its

support, or it is not supported by any credible evidence, or it is completely

untenable.'" United Hearts, LLC v. Zahabian, 407 N.J. Super. 379, 389 (App. Div.

2009) (quoting First Atl. Fed. Credit Union v. Perez, 391 N.J. Super. 419, 432 (App.

Div. 2007)).

"The nature of litigation conduct warranting sanction under [Rule 1:4-8] has

been strictly construed." Pressler & Verniero, Current N.J. Court Rules, cmt. 2 on

R. 1:4-8 (2020). Accordingly, Rule 1:4-8 sanctions will not be imposed against an

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attorney who mistakenly files a claim in good faith. Horowitz v. Weishoff, 346 N.J.

Super. 165, 166-67 (App. Div. 2001); see also First Atl. Fed. Credit Union, 391 N.J.

Super. at 432 (holding that an objectively reasonable belief in the merits of a claim

precludes an attorney fee award).

N.J.S.A. 2A:15-59.1(a)(1), which governs frivolous litigation sanctions

against parties, provides:

[a] party who prevails in a civil action, either as plaintiff
or defendant, against any other party may be awarded all
reasonable litigation costs and reasonable attorney fees, if
the judge finds at any time during the proceedings or upon
judgment that a complaint, counterclaim, cross-claim or
defense of the nonprevailing person was frivolous.

A finding that the pleading is "frivolous" must be based upon a finding that:

(1) The complaint, counterclaim, cross-claim or defense
was commenced, used or continued in bad faith, solely for
the purpose of harassment, delay or malicious injury; or

(2) The nonprevailing 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:15-59.1(b).]

The frivolous litigation statute is interpreted restrictively. DeBrango v. Summit

Bancorp, 328 N.J. Super. 219, 226 (App. Div. 2000). Sanctions should be awarded

only in exceptional cases. Fagas v. Scott, 251 N.J. Super. 169, 181 (Law Div. 1991).

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 "'[T]he burden of proving that the non-prevailing party acted in bad faith' is on

the party who seeks fees and costs pursuant to N.J.S.A. 2A:15-59.1." Ferolito v.

Park Hill Ass'n, 408 N.J. Super. 401, 408 (App. Div. 2009) (alteration in original)

(quoting McKeown-Brand v. Trump Castle Hotel & Casino, 132 N.J. 546, 559

(1993)). When a prevailing party's allegation is based on an assertion that the non-

prevailing party's claim lacked "a reasonable basis in law or equity," and the non-

prevailing party is represented by an attorney, "an award cannot be sustained if the

'[nonprevailing party] did not act in bad faith in asserting' or pursuing the claim."

Ibid. (quoting McKeown-Brand, 132 N.J. at 549).

"When the [non-prevailing party's] conduct bespeaks an honest attempt to press

a perceived, though ill-founded and perhaps misguided, claim, he or she should not

be found to have acted in bad faith." Belfer v. Merling, 322 N.J. Super. 124, 144-45

(App. Div. 1999) (citing McKeown-Brand, 132 N.J. at 563). Rule 1:7-4(a) requires

trial judges to make specific findings of fact and conclusions of law, either in writing

or orally, on all motions decided by written orders appealable as of right. Curtis v.

Finneran, 83 N.J. 563, 569-70 (1980); Foley, Inc. v. Fevco, Inc., 379 N.J. Super.

574, 589 (App. Div. 2005).

Here, the judge denied Demetro's motion for sanctions and additional attorney's

fees because she was not the prevailing party and she failed to show egregious

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conduct to warrant sanctions. Demetro alleges that Slater "sat back silently as this

case made its way through the Appellate Division from 2015 through 2017."

However, the underlying dispute did not involve frivolous conduct, and there is no

evidence that the judge abused his discretion in making that determination.

Demetro argues she was the prevailing party in the case, but cites no New Jersey

cases that support her contention. The offer of judgment rule permits a party to offer

to take a monetary judgment or to allow judgment to be taken against it for a sum

certain. R. 4:58-3. The fundamental purpose of the rule is to induce settlement by

discouraging the rejection of reasonable offers of compromise. See Palmer v.

Kovacs, 385 N.J. Super. 419, 425 (App. Div. 2006). That goal is achieved through

the imposition of financial consequences (the award of fees and costs) where a

settlement offer turns out to be more favorable than the ultimate judgment.

Firefreeze, 347 N.J. Super. at 441.

Demetro accepted Slater Tenaglia's offer of judgment, which precluded an

adjudication on the merits. Therefore, we conclude the motion judge correctly found

that Demetro was not a prevailing party.

Lastly, we address Demetro's motion for the immediate turnover of the funds

that Slater Tenaglia previously deposited in court. She asserts that immediate access

to the funds is necessary so that the amount on deposit would be "exempt from the

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calculation of 'prevailing market rates."' We are not persuaded by this argument to

grant the requested relief; accordingly, we deny the motion.

Affirmed.

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