XCALIBUR COLLECTIONS, LLC VS. ANDREW J. KARCICH (L-1632-15, BURLINGTON COUNTY AND STATEWIDE) ( 2017 )


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  •                         NOT FOR PUBLICATION WITHOUT THE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.
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