                                 NOT FOR PUBLICATION WITHOUT THE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 NOS. A-2531-17T11
                                                                     A-3936-17T1

ALLIANCE SHIPPERS INC.,

          Plaintiff-Appellant,
v.

CASA DE CAMPO INC., PEDRO PEREZ,
individually and as agents of CASA DE
CAMPO INC., ARTHUR DE PINTO, FELIX
PRODUCE CORPORATION, FELIX CEBALLOS,
individually and as an agent of FELIX PRODUCE
CORPORATION, GFP DISTRIBUTORS, INC.
t/a GARDEN FRESH PRODUCE, JOSEPH T.
GUARRACINO, individually and as an agent of
GFP DISTRIBUTORS, INC. t/a GARDEN FRESH
PRODUCE, JOSEPH KOLINEK, individually
and t/a C&M PRODUCE, LIONXEN
CORPORATION AND PRODUCE BIZ LLC
t/a POSEIDON FOOD SERVICE, XENOFON
GIALIAS, individually and as agent of
LIONXEN CORPORATION AND PRODUCE
BIZ LLC t/a POSEIDON FOOD SERVICE,
VILLAGE PRODUCE, INC., MOHAMMED
HADI, individually and as agent of VILLAGE
PRODUCE, INC., ALEX PRODUCE
CORPORATION, ALEX BONILLA, a/k/a
ALEJANDRO BONILLA, individually

1
     These are back-to-back appeals consolidated for the purpose of this opinion.
and as an agent of ALEX PRODUCE
CORPORATION, HEE JAE PARK, d/b/a
J&S PRODUCE COMPANY, LUIS JOSE
BONILLA, d/b/a LUIS JOSE PRODUCE,
ZEF DELJEVIC, HENRY GARLAND
individually and t/a PRO QUALITY
PRODUCE and BALMANGAN PRODUCE,
INC., GEORGE V. ROUSSOS, SANANJOS
PRODUCE CORPORATION, d/b/a FRIEMAN
BROS., KOREAN PRODUCE CORPORATION,
PAUL KIM, a/k/a PIL JUNG KIM and STELLA
KOUFALIS, individually and t/a KMS FRUIT
& VEGETABLES, and HAVANA PRODUCE,
INC.,

      Defendants,

and

ERNESTO REGUITTI, individually
and as an agent of SANANJOS PRODUCE
CORPORATION d/b/a FRIEMAN BROS.,

     Defendant-Respondent.
________________________________________

ALLIANCE SHIPPERS INC.,

      Plaintiff-Respondent,
v.

CASA DE CAMPO INC., PEDRO PEREZ,
individually and as agents of CASA DE
CAMPO INC., ARTHUR DE PINTO, FELIX
PRODUCE CORPORATION, FELIX CEBALLOS,
individually and as an agent of FELIX PRODUCE
CORPORATION, GFP DISTRIBUTORS, INC.
t/a GARDEN FRESH PRODUCE, JOSEPH T.

                                                A-2531-17T1
                                  2
GUARRACINO, individually and as an agent of
GFP DISTRIBUTORS, INC. t/a GARDEN FRESH
PRODUCE, JOSEPH KOLINEK, individually
and t/a C&M PRODUCE, LIONXEN
CORPORATION AND PRODUCE BIZ LLC
t/a POSEIDON FOOD SERVICE, XENOFON
GIALIAS, individually and as agent of
LIONXEN CORPORATION AND PRODUCE
BIZ LLC t/a POSEIDON FOOD SERVICE,
VILLAGE PRODUCE, INC., MOHAMMED
HADI, individually and as agent of VILLAGE
PRODUCE, INC., ALEX PRODUCE
CORPORATION, ALEX BONILLA, a/k/a
ALEJANDRO BONILLA, individually and
as an agent of ALEX PRODUCE CORPORATION,
 HEE JAE PARK, d/b/a J&S PRODUCE COMPANY,
 LUIS JOSE BONILLA, d/b/a LUIS JOSE PRODUCE,
ZEF DELJEVIC, HENRY GARLAND
individually and t/a PRO QUALITY PRODUCE
and BALMANGAN PRODUCE, INC.,
GEORGE V. ROUSSOS, SANANJOS
PRODUCE CORPORATION, d/b/a FRIEMAN
BROS., KOREAN PRODUCE CORPORATION,
PAUL KIM, a/k/a PIL JUNG KIM and STELLA
KOUFALIS, individually and t/a KMS FRUIT
& VEGETABLES, and HAVANA PRODUCE,
INC.,

      Defendants,

and

ERNESTO REGUITTI, individually
and as an agent of SANANJOS PRODUCE
CORPORATION, d/b/a FRIEMAN BROS.,

     Defendant-Appellant.
________________________________________

                                               A-2531-17T1
                               3
            Argued April 30, 2019 – Decided October 18, 2019

            Before Judges Suter and Geiger.

            On appeal from the Superior Court of New Jersey, Law
            Division, Middlesex County, Docket No. L-2650-13.

            Brett R. Schwartz argued the cause for appellant
            Alliance Shippers Inc. in A-2531-17 and respondent
            Alliance Shippers in A-3936-17 (Lebensfeld Sharon &
            Schwartz PC, attorneys; Ronald W. Horowitz, on the
            briefs).

            Mark C. Mandell argued the cause for respondent
            Ernesto Reguitti in A-2531-17 and appellant Ernesto
            Reguitti in A-3936-17.

      The opinion of the court was delivered by

SUTER, J.A.D.

      In appeal A-2531-17, plaintiff Alliance Shippers, Inc. (Alliance) appeals

from a January 19, 2018 order that denied its motion for sanctions against

defendant Ernesto Reguitti (Reguitti) and his attorney, Mark C. H. Mandell. In

appeal A-3936-17, defendant appeals from the December 15, 2017 order that

dismissed his counterclaim against Alliance and that denied his motion for

reconsideration. We affirm the orders.

      Alliance is a freight transportation company. In 2012, it was awarded a

$369,700 default judgment against the now defunct corporation, Krisp-Pak

Sales, Inc. for unpaid freight transportation charges. Krisp-Pak, in turn had a

                                                                       A-2531-17T1
                                         4
$77,120 judgment against Sananjos Produce Corp. (Sananjos) and Reguitti. In

a 2010 federal court Stipulation of Settlement (Consent Judgment), Krisp-Pak

agreed to accept the sum of $54,020.75 from Reguitti, who was personally liable

for this.2 It was to be paid in installments to an escrow agent. The "judgment

holders" were to "refrain and forebear" from enforcing their rights under the

Consent Judgment. Alliance was not a signatory to the Consent Judgment. In

an unopposed motion, Alliance executed on its judgment against Krisp-Pak in

order to transfer Krisp-Pak's rights against Sananjos to Alliance. The July 26,

2013 order that granted Alliance's motion, also provided that the monies owed

by Sananjos to Krisp-Pak could not be compromised to the extent of the amount

owed to Alliance.

      Relevant here, Alliance filed a second amended complaint as the

execution judgment creditor of Krisp-Pak against a number of Krisp-Pak's

debtors, including Sananjos and Reguitti. Reguitti contended that litigation by

Alliance would violate the federal Consent Judgment because judgment

creditors were to refrain from enforcement. Reguitti removed the Law Division

action to federal court. While the case was pending there, Reguitti filed an



2
 The claim was brought under the Perishable Agricultural Commodities Act, 7
U.S.C. § 499(c)(5).
                                                                       A-2531-17T1
                                      5
answer and a counterclaim. The counterclaim, which is at the center of these

appeals, alleged that Alliance breached the terms of the Consent Judgment by

filing litigation against defendant and sought more money from Reguitti than

the amount stipulated. The counterclaim alleged that plaintiff's litigation caused

Reguitti to incur unnecessary counsel fees.        It sought reimbursement of

reasonable attorney's fees.

      In Alliance Shippers, Inc. v. Casa DeCampo, Inc., No. A-0255-15 (App.

Div. April 24, 2017) (slip op. at 25), we reversed orders entered on May 29,

2015 in this case and remanded it for additional proceedings. The present

appeals relate to the proceedings that followed our remand. To understand the

issues raised, however, we restate a portion of our prior opinion.

                   Counsel for Reguitti sent a letter to Alliance and
            the escrow agent tendering the balance of the amount
            due under the [Consent Judgment]. The transmittal
            letter stated payment was conditioned on "full and final
            [s]atisfaction of the [c]onsent [j]udgment," a "general
            release" from Alliance, and stipulation of dismissal of
            the Law Division action, including Reguitti's
            previously filed counterclaim. Reguitti's payment by
            the escrow agent was delayed stating Alliance failed to
            respond to the "time sensitive" letter.          Alliance
            accepted the escrow agent's May 2014 warrant to
            satisfy the obligation, but declined Reguitti's demand
            for a general release. Alliance requested the Law
            Division enter default against Reguitti.
                   On July 2, 2014, Reguitti moved for default on
            his previously filed counterclaim. Alliance responded,

                                                                          A-2531-17T1
                                        6
asserting Reguitti's action was frivolous, and requested
Reguitti withdraw his application within twenty-eight
days because no Law Division responsive pleadings
were served upon Alliance, and no factual or legal basis
existed for relief. This engendered additional motion
practice.

      Alliance moved to dismiss its action as to
Reguitti and to dismiss Reguitti's counterclaim.
Alliance explained Reguitti filed no pleadings in the
Law Division, and it never received the District Court
pleadings, which likely were electronically filed.
Further, Alliance maintained Reguitti's recent request
for default was moot, as a stipulation to dismiss with
prejudice was circulated as to all claims between
Alliance and Reguitti regarding the Kris–Pak debt.
However, Reguitti cross-moved for a judgment on its
counterclaim.

      The motion judge issued an order on September
8, 2014. The order dismissed Alliance's complaint
against Sananjos and denied Alliance's request for
sanctions. Further, the order denied Alliance's request
to dismiss the counterclaim, because default was
entered. Apparently, judgment on the counterclaim
was also denied. The record contains no statement of
reasons.

      Civil case management assigned a September 22,
2014 trial date. Alliance wrote to the Clerk's office
explaining default judgments were entered against all
but one recently named defendant (not Reguitti), and
default against that defendant was pending. Alliance
closed its letter stating "this case should be removed
from the trial list."




                                                           A-2531-17T1
                           7
       On September 22, 2014, a different judge (the
trial judge) considered the matter. On that date,
Reguitti appeared, Alliance did not . . . .

      ....

      During the [subsequent] hearing, Reguitti's
counsel moved for entry of a default judgment against
Alliance on its counterclaim. He sought an award of
sanctions amounting to attorney's fees and costs
expended as a result of Alliance's violation of the
[Consent Judgment]. The trial judge allowed Reguitti
to submit proof of the amount due.

        Alliance moved to vacate default on October 22,
2014, stating default was improvidently granted and
restated its position. Believing Alliance did not file
opposition to the requested amount of sanctions, the
trial judge entered final judgment, ordering Alliance to
pay $21,750. That same day, Alliance filed a letter
memorandum explaining it was unaware a trial was
held, as it relied on its prior correspondence explaining
trial was unnecessary.

      The motion judge was assigned to review
Alliance's application to vacate default and dismiss the
counterclaim. The October 10, 2014 order denied the
request as moot because a default judgment was
entered. Alliance then moved to vacate the default
judgment. Reguitti opposed the motion. The matter
returned to the trial judge, who issued an order and
written opinion on December 2, 2014. The order
vacated default and default judgment and scheduled an
evidentiary hearing, on a date agreed to by counsel.

        Subsequent correspondence and orders reflect the
trial judge's intention was to limit Alliance's challenge
to the amount of fees paid as sanctions. Alliance

                                                            A-2531-17T1
                           8
            objected insisting once the court vacated default
            judgment and default, the right to challenge the validity
            of the underlying counterclaim remained. Alliance
            urged there was no basis to award relief on the
            counterclaim because there was no violation of the
            [Consent Judgment]. This disagreement prompted
            Alliance to again move to dismiss Reguitti's
            counterclaim and request sanctions for advancing
            frivolous litigation.

            [Id. at 6-10.]

      By orders dated May 29, 2015, the trial court denied Alliance's motion to

dismiss the counterclaim, granted Reguitti's motion for sanctions and ordered

Alliance to pay $21,750 in attorney's fees. We reversed the May 29, 2015 orders

and remanded the case for proceedings "including case management and

scheduling of Alliance's motion to dismiss Reguitti's motion seeking judgment

on the counterclaim." Id. at 24.

      On September 8, 2017, Alliance filed a motion for summary judgment to

dismiss the counterclaim of Sananjos and Reguitti. On October 3, 2017, Reguitti

filed opposition to the motion and a cross-motion for sanctions under Rule 1:4-

8 for a "completely frivolous and unnecessary motion."

      By orders dated December 15, 2017, Alliance's summary judgment motion

was granted, dismissing the counterclaim, but Reguitti's cross-motion for




                                                                        A-2531-17T1
                                       9
sanctions was denied. The court's reasons were set forth orally on October 31,

2017, when the motions were argued, and December 15, 2017.

      The trial court granted Alliance's motion for summary judgment finding

Reguitti's counterclaim was "untenable" and that was "because the only damages

sought [were] attorney's fees." The trial court noted that in this case, the

counterclaim was based on the claim by Reguitti that Alliance violated the

federal Consent Judgment. Reguitti's counterclaim stated:

            That as the sole and direct consequence of the actions
            of plaintiff and its attorney, defendant Reguitti has been
            forced to retain counsel and incur fees and costs and
            expenses in order to protect himself from the proper
            actions of plaintiff and its counsel, and such fees, costs,
            and expenses will continue to accrue.

      The trial court reasoned that unless there was "authorization by contract,

statute or [court] rule, the American Rule required each party to be responsible

to pay their own attorney." The court observed that even if defendant were

successful on the merits of his counterclaim, in this case, "the only damages pled

are attorney[']s fees which are not recoverable" in light of the American Rule.

      Following the trial court's December 15, 2017 order, Alliance filed a

motion on January 3, 2018, seeking sanctions against Reguitti and his attorney

"for filing and continuing frivolous litigation." In his supporting certification,



                                                                          A-2531-17T1
                                       10
Alliance's counsel asserted that Reguitti "never had any legal basis whatsoever

to be awarded counsel fees."

      In seeking attorney's fees against Reguitti's attorney under Rule 1:4-8,

Alliance contended that the counterclaim was presented for an improper purpose

to harass Alliance, cause delay and increase litigation costs because once

Alliance was willing to dismiss its complaint, Reguitti continued to pursue his

counterclaim, which was without any merit. See R. 1:4-8(a)(1) and (2). This

was so even though Alliance served counsel with a twenty-eight day notice

pursuant to Rule 1:4-8.

      On January 11, 2018, in response to a motion filed by Reguitti for

reconsideration of the December 15, 2017 order, Alliance sent a letter to

Reguitti's attorney advising the reconsideration motion was frivolous, it should

be withdrawn within twenty-eight days and if not, that additional frivolous

litigation sanctions would be requested. Reguitti opposed Alliance's motion for

sanctions. He argued that Alliance's refusal to provide a release "functionally

precluded the resolution of this case . . . while incurring thousands of dollars in

fees and costs not to mention acceleration of his structured federal settlement

and having to pay interest on the $44,000 in borrowed funds."




                                                                           A-2531-17T1
                                       11
      By order dated January 19, 2018, the trial court denied Alliance's motion

for sanctions. The order provided that "[n]either the prior ruling of this Court,

nor the current motion record presented, provide a basis for sanctions, fees or

costs."   On February 2, 2018, the court denied defendant's motion for

reconsideration.

                                         I.

      In appeal A-2531-17, Alliance appeals from the trial court's January 19,

2018 order. It argues that in New Jersey, courts "punish filers of frivolous

claims and compensate prevailing parties forced to defend frivolous claims."

Alliance blames Reguitti and his attorney for the delay in this case. It contends

that his counterclaim was commenced and maintained in bad faith and to harass

Alliance, it had no basis in law or equity and could not be supported by any good

faith extension, modification or reversal of existing law. It argues that this order

was entered without an oral or written opinion and without providing findings

of fact or conclusions of law.

      We review a decision addressing sanctions under Rule 1:4-8 for abuse of

discretion. United Hearts, L.L.C. v. Zahabian, 407 N.J. Super. 379, 390 (App.

Div. 2009) (citing Masone v. Levine, 382 N.J. Super. 181, 193 (App. Div.

2005)). An abuse of discretion "arises when a decision is 'made without a


                                                                            A-2531-17T1
                                        12
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 & Naturalization Serv., 779

F.2d 1260, 1265 (7th Cir. 1985)).

      We discern no abuse of discretion by the trial court in denying Alliance's

request for sanctions under N.J.S.A. 2A:15-59-1 or Rule 1:4-8.            Frivolous

litigation sanctions serve to deter that conduct and to compensate victims. See

Toll Bros. Inc., v. Twp. of West Windsor, 190 N.J. 61, 67 (2007) (quoting

Deutch & Shur, P.C. v. Roth, 284 N.J. Super. 133, 141 (App. Div. 1995)). We

restrictively interpret what is "'frivolous' in order to avoid limiting access to the

court system." Zahabian, 407 N.J. Super. at 390 (quoting First Atl. Fed. Credit

Union v. Perez, 391 N.J. Super. 419, 432 (App. Div. 2007)). Under N.J.S.A.

2A:15-59.1, litigation is frivolous when it is "commenced, used or continued in

bad faith, solely for the purpose of harassment, delay or malicious injury" or

where the 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). Under Rule 1:4-8, a party

can seek frivolous litigation sanctions against an attorney.


                                                                             A-2531-17T1
                                        13
      There was ample support in the record for the court's conclusion that both

parties had the opportunity to end the litigation but did not. Reguitti tendered

the amount outstanding in 2014, but requested a general release. Alliance would

not give Reguitti a release, providing that the order that dismissed the case with

prejudice was all that was necessary. The parties never compromised on those

issues.

      Defendant's counterclaim was not based on a New Jersey statute, contract

or court rule, and in this regard, it could not be sustained under the American

Rule. However, he did cite to out-of-state cases as authority for an additional

exception that he sought to have the court apply in this case. See infra. There

must be no "good faith argument for an extension, modification or reversal of

existing law" for the litigation to be frivolous under N.J.S.A. 2A:15-59.1(b) (2).

      We have carefully reviewed the detailed history of this case. We are fully

satisfied that the trial court's decision, not to impose sanctions in this case, was

not a misapplication of discretion; it was not made without rational explanation,

did not rest on an impermissible basis, and did not depart from well -established

policies. See Flagg, 171 N.J. at 571.




                                                                            A-2531-17T1
                                        14
                                        II.

      In appeal A-3936-17, Reguitti contends the trial court erred by dismissing

his counterclaim and by denying reconsideration. He argues the American Rule

should not apply in this case where the attorney's fees he incurred were the result

of Alliance's knowing and intentional breach of the Consent Judgment. With

one exception, he cites out-of-state cases in support of his argument.

      Reguitti's counterclaim against Alliance alleged that the Consent

Judgment prohibited further proceedings against him.            Because Reguitti

contends that Alliance succeeded to the rights and obligations of Krisp -Pak, he

argues that Alliance was limited in its pursuit of him to the terms of the Consent

Judgment as long as he was not in default of those provisions. Because Alliance

would not forgo its claim against him, even though he was not in breach of the

Consent Judgment, Reguitti was "forced" to retain an attorney in response to

Alliance's claims, and he incurred attorney's fees as damages.           Reguitti's

counterclaim alleged that Alliance violated the Consent Judgment by seeking

more than Krisp-Pak had agreed to in its settlement with Sananjos and Reguitti.

Defendant acknowledged that his counterclaim only sought attorney's fees as

damages.




                                                                           A-2531-17T1
                                       15
      New Jersey courts have traditionally adhered to the American Rule with

respect to the award of attorney's fees. Walker v. Giuffre, 209 N.J. 124, 127

(2012). The American Rule provides that "absent authorization by contract,

statute or rule, each party to a litigation is responsible for the fees charged by

his or her attorney." Ibid.

      We review summary judgment using the same standard that governs the

trial court. Murray v. Plainfield Rescue Squad, 210 N.J. 581, 584 (2012). Thus,

we consider "whether the evidence presents a sufficient disagreement to require

submission to a jury or whether it is so one-sided that one party must prevail as

a matter of law." Liberty Surplus Ins. Corp., Inc. v. Nowell Amoroso, P.A., 189

N.J. 436, 445-46 (2007) (quoting Brill v. Guardian Life Ins. Co. of Am., 142

N.J. 520, 536 (1995)).

      The trial court was correct to apply the American Rule in considering

whether to grant summary judgment on the counterclaim and dismiss it.

Defendant does not dispute that his claim for attorney's fees was not based on

an authorizing statute or court rule, nor was there a provision in the Consent

Judgment that allowed for an award of attorney's fees. Thus, under the American

Rule, Reguitti had no entitlement to an award of attorney's fees on the

counterclaim.


                                                                          A-2531-17T1
                                       16
      Instead, Reguitti contends there should be an exception to the American

Rule when attorney's fees are "foreseeable and direct compensatory damages,"

that arise from the breach of a contract not to sue. This should be distinguished

from attorney's fees that are incurred "adjunct to a primary cause of action."

Reguitti relies on Line & Nelson v. Nelson & Smalley, 38 N.J.L. 358 (Sup. Ct.

1876), arguing that where there is a breach of a covenant, the American Rule

does not apply. Line & Nelson involved a party suing another to recover the

balance on a promissory note where the question was whether one party's

payment released another from their obligation under the note. The cou rt held

that "an agreement not under seal to discharge a particular person, or not to sue

him, does not extinguish the debt, and therefore cannot bar the suit to recover

it." Id. at 360. It observed:

            [f]or the same reason, a covenant not to sue one of
            several obligors is not pleadable in bar to an action on
            the bond; it does not amount to a release, but is a
            covenant only, and the covenantee is put to his cross
            action to recover the damages which a breach may
            occasion him.

            [Id. at 360].

      The case has no application because defendant has not established there

was a covenant undertaken by plaintiff to defendant and this was not a suit by

signatories to a promissory note. Alliance was not a signatory to the Consent

                                                                         A-2531-17T1
                                      17
Judgment. Line & Nelson has not been cited as an exception to the American

Rule.

        Reguitti cites out-of-state cases to support his contention the American

Rule exceptions should be expanded. We are not persuaded to his position. We

find no value in defendant's reliance on unpublished decisions that have no

precedential value in their own jurisdictions, let alone ours. The other cases

cited are not persuasive. In CitiMortgage, Inc. v. Rey, 92 A.3d 278 (Conn. App.

Ct. 2014), the decision was limited because the court did not consider the me rits

of the counterclaim for damages. Also, Microsoft Corp. v. Motorola, Inc., 963

F. Supp. 2d 1176 (W.D. Wash. 2013) was expressly limited to the circumstances

of that patent case, which was not analogous to this case. We agree with the

trial court, therefore, that Reguitti's counterclaim properly was rejected based

on the American Rule. His subsequent motion for reconsideration added nothing

to the mix that dissuades us from affirming the trial court.

        After carefully reviewing the record and the applicable legal principles,

we conclude that the parties' further arguments are without sufficient merit to

warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

        With respect to both A-2531-17 and A-3936-17, we affirm.




                                                                          A-2531-17T1
                                       18
