NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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.
2 A-4474-15T3 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
3 A-4474-15T3 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.
4 A-4474-15T3 (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
5 A-4474-15T3 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).
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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.
2 A-4474-15T3 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
3 A-4474-15T3 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.
4 A-4474-15T3 (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
5 A-4474-15T3 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
8 A-4474-15T3 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.
9 A-4474-15T3 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.
10 A-4474-15T3