Litigation

Fighting Back Against Frivolous Lawsuits and Meritless Claims

Ansell Grimm April 10, 2024

Businesses and individuals facing the prospect of litigation often ask legal counsel whether they can sue or be sued over a particular set of facts and circumstances, and the proper response is generally that “Anybody can file a lawsuit against anyone about anything.” That is not to say that every claim or suit has merit or should be pursued; far from it. But the reality is that the courthouse doors swing wide open for even the most absurd litigants asserting baseless and frivolous claims.

Want to sue your dentist for supposedly putting listening devices in your fillings? No one will stop you. Want to fight a lawsuit by alleging that the plaintiff’s true identity as an alien from a galaxy far, far away bars their claims? The court clerk will accept your filing with no questions. In both state and federal courts, the bar for filing a lawsuit or pleading is essentially non-existent.

However, once a frivolous lawsuit or claim is filed, those who must waste their time, money, and effort fighting back have powerful ways to hold such parties – and their attorneys – accountable for abusing the judicial process and help them recoup the fees and costs attendant to defending claims that lack any factual or legal merit. Court rules at the state and federal levels include provisions specifically designed to deter and address frivolous claims and provide remedies to the parties on the receiving end.

Aggressively Fighting Back Against Frivolous Claims

Our litigation practice group aggressively avails itself of those rules when a client is served with a meritless complaint, whether in New Jersey and New York state courts or in federal court. If we believe a suit was filed in bad faith, in violation of an attorney’s ethical obligations, or for improper purposes, we take all steps required to ensure that sanctions against the offending litigant and their attorneys can be sought to make our client whole. We have a solid track record of success fighting back against frivolous litigation, which, as noted, is all too easy to pursue, at least initially.

There is an important distinction, however, between a frivolous claim and a weak one. In every lawsuit that goes to trial, one party will prevail, and one party will lose. Just as the two contestants who lose on each episode of “Jeopardy!” can hardly be called dumb, a claim or defense will not automatically be deemed meritless simply because it was unsuccessful. To be considered frivolous, it must meet the definition of that term in the applicable court rule.

New Jersey’s Frivolous Litigation Act

New Jersey’s Frivolous Litigation Act (FCA) and Rule 1:4-8 of the state’s Rules of Court are prime tools that empower legal counsel and the courts to address meritless lawsuits and claims.

The FCA provides that a party who prevails in a civil action, either as plaintiff or defendant, may be awarded all of its reasonable litigation costs and attorney fees if the judge finds that a complaint, counterclaim, cross-claim, or defense of the non-prevailing person was frivolous.

For a claim or defense to be considered “frivolous” such that the filing party can be held liable for the other party’s attorneys’ fees and costs, the judge must find that:

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
The non-prevailing 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.

Holding Attorneys Accountable

As “officers of the court,” attorneys have legal and ethical obligations to the judicial process. The rules that codify these obligations and the potential penalties for violating them are designed to ensure attorneys have “skin in the game” when they file a lawsuit.

Under Rule 1:4-8 of New Jersey’s Rules of Court, an attorney must ensure, based on their reasonable investigation, that any papers they sign and submit to the court have a plausible basis in fact and law and are not being presented for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

When an attorney violates this obligation, a court can hold them accountable by imposing monetary penalties and other professional sanctions directly on them and their law firm.

New York Remedies For Meritless Lawsuits

New Jersey’s definition of frivolous litigation and the penalties a court can impose on parties and attorneys are similar to those detailed in Section 130-1.1 of New York’s court rules.

As is the case in New Jersey, a New York judge can make an award of costs or impose financial sanctions against an attorney and/or a party upon the motion of one of the parties, but can also decide to impose sanctions on its own without any such request. A judge in New York, at their discretion, can sanction an attorney or party for conduct that:

is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law;
is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or
asserts material factual statements that are false.

Federal Rule 11

Rule 11 of the Federal Rules of Civil Procedure provides the mechanism through which litigants in federal court, as well as the court itself, can hold parties and their lawyers accountable for abuses of court processes and the judicial system. If the judge does not entertain the possibility of sanctions on their own, an aggrieved litigant may file a motion for the entry of appropriate sanctions pursuant to Rule 11(c)(2) that describes the specific conduct that allegedly warrants such penalties.

As with its corresponding state court rules, Rule 11 is designed not only to address the misconduct at issue but also to put future litigants on notice that they face the same possible fate for filing frivolous matters. Specifically, the rule provides that sanction imposed “must be limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated.” If imposed upon the motion of an aggrieved litigant and warranted for effective deterrence, sanctions can include directing payment to the movant of part or all of their reasonable attorney’s fees and other expenses directly resulting from the violation.

No matter the forum, a frivolous claim or lawsuit is a scourge upon the civil justice system that has real, tangible, and harmful impacts on the parties that must respond to such filings. Accordingly, we do not hesitate to put opposing parties on notice of frivolous claims and pursue all available remedies on behalf of clients needlessly drawn into a bogus lawsuit.

If you believe you or your business are the target of a frivolous lawsuit, please contact Ansell.Law Litigation Partner Seth M. Rosenstein.

2024 Edition of Super Lawyers and Rising Stars Recognizes Ansell.Law Attorneys

Ansell Grimm April 3, 2024

The 2024 New Jersey Super Lawyers and Rising Stars list recognizes nine Ansell Grimm & Aaron attorneys.* Fewer than 5% of New Jersey attorneys are named to the annual Super Lawyers edition. “Rising Stars” are the legal profession’s up-and-coming attorneys, either under age 40 or practicing for ten years or less. These exceptional attorneys comprise fewer than 2.5% of New Jersey lawyers.

The attorneys appearing on the 2024 list of New Jersey Super Lawyers are:

Allison Ansell – Family Law

Mitchell Ansell – Criminal Defense, DUI-DWI, White Collar Crimes

Lawrence Shapiro – Business Litigation

Andrea White – Family Law

Attorneys recognized as 2024 Rising Stars are:

Brian Ashnault – Business Litigation

Anthony D’Artiglio – Business Litigation, Bankruptcy

Layne Feldman – General Litigation

Nicole Miller – General Litigation, Real Estate

Jonathan Sherman – Real Estate

*No aspect of this advertisement has been approved by the Supreme Court of New Jersey or the American Bar Association.

Interdepartmental Teamwork Overcomes Challenge to Client’s Use Variance Approval

Ansell Grimm March 18, 2024

In a client success, shareholder Jennifer Krimko obtained approval for the client to operate a community center and academic tutoring space in Rumson, New Jersey. On the heels of this victory, Litigation Department attorneys Anthony D’Artiglio and Layne Feldman protected that approval following an objecting neighbor’s appeal to the Superior Court. Through an aggressive defense, the approval was upheld, and the objector’s appeal was denied, allowing the clients to continue operating their business serving the local community. Collaboration with the Land Use Department provided nuanced insight into the case and helped secure another victory for the client.

Jennifer co-chairs the Firm’s Land Use Department. She devotes her practice to all areas relating to real estate, representing a wide variety of clients — from individuals to large developers — in all phases of governmental approvals before municipal, county, and state agencies.

Anthony is a partner and litigation team leader in the Firm’s Woodland Park office. His varied practice includes commercial lease disputes, class actions, Consumer Fraud Act claims, corporate/shareholder disputes, employment disputes, secured property actions, and creditors’ rights in bankruptcy matters.

As an associate in the Firm’s Commercial Litigation Department, Layne has a diverse complex commercial and civil litigation practice. She handles commercial lease disputes, Consumer Fraud Act claims, corporate/shareholder disputes, and secured property actions.

The Cost of Victory: What Business Owners Should Consider Before Filing a Lawsuit in a Commercial Dispute

Ansell Grimm January 17, 2024

By Seth M. Rosenstein

A wise person once said, “Litigation is the basic legal right which guarantees every corporation its decade in court.” While likely said facetiously, the fact is that business litigation often comes at great expense to the company and individuals involved.

The costs of vindicating and protecting a company’s rights – in time, money, disruption, reputation, and commercial relationships – along with the inherent risk and uncertainty involved in all litigation, can lead even a victorious plaintiff to ask whether their victory was worth the destruction it wrought.

Undoubtedly, there are situations where litigation is a company’s best or only path forward in a commercial dispute, whether it is with a customer, competitor, or business partner. Sometimes, a lawsuit is the last resort after other attempts to reach a resolution have failed or the only way to bring the other side to the negotiating table. Other times, quick intervention by a judge is necessary to prevent irreparable harm to the business. In those situations, your company will want and need an experienced and strategic litigator who stands ready to vigorously pursue your claims.

But even after the dogs of litigation have been unleashed, most commercial lawsuits settle or are otherwise resolved before trial for many of the same reasons cited above – the expense, disruption, and risk involved in entrusting the outcome to a judge or jury.

That is why, regardless of the perceived strength and merit of their claims, business owners should think carefully and consider the possible negative implications of litigation before telling their attorney to run to the courthouse and file a lawsuit. Here are three things to factor into your decision-making before pursuing business litigation:

Even the Most Straightforward Lawsuit Can Take Your Business Down a Long and Winding (and Expensive) Road

Lawyers are sometimes accused of making simple matters needlessly complicated. But for attorneys representing defendants in business litigation, making things complicated is often a feature, not a bug. Part of the defense’s strategy, especially when faced with a strong or straightforward claim, can include using any means to make litigation as drawn-out, convoluted, costly, and painful as possible for the plaintiffs.

Unfortunately, the wheels of justice are extremely amenable to a commercial defendant who wants to slow a plaintiff’s roll. The system isn’t designed for speed to begin with, and even if your attorney does everything in their power to speed your case along, there are plenty of ways a defendant can stretch your simple case out for years.

They may file multiple motions regarding various issues, most of which will require the submission of briefs and the time needed to prepare them. A lengthy briefing schedule could be followed by a hearing or ruling even further into the future, all delaying the suit’s progress until the motions are resolved.

Discovery, the process of requesting and exchanging documents, gathering evidence, and taking witness depositions, also offers ample opportunity for delay and added costs. It can take a while and cost lots of money to produce a voluminous amount of material in response to a party’s request. Depositions may be held in distant locations and involve significant travel costs (including fees for the attorney’s travel time) and complicated scheduling conflicts. You may also need to retain paid experts to testify or prepare reports.

But it is more than fees, expenses, and delays that can make discovery costly for a business plaintiff. Owners, executives, and employees who would otherwise be doing their jobs may need to divert their time, effort, and productivity toward handling document requests or preparing and sitting for their depositions. These disruptions should be factored into your litigation calculations as well.

Of course, the end of your case may not be the end of your case if one side appeals the judgment, which can keep the attorney’s fees meter and litigation clock running and even lead to another trial.

There Are No “Slam Dunks” in Business Litigation

Just as there is no crying in baseball, there are no slam dunks in business litigation. When you put your fate in the hands of a judge or 12 random people sitting on a jury, there is no guarantee they will see your case the way you and your lawyer do. There is always – always – a risk of an adverse ruling, no matter how strong your case appears to be.

Not only may your company lose on its claims (while still being on the hook for attorney’s fees and costs), but it may be exposed to liability and a judgment if the defendant files and prevails on a counterclaim. And if a contract or statute provides that the losing side in litigation must pay the winning side’s attorney’s fees and costs, the monetary hole can be even deeper.

A Judgment Is Not a Check

For all the risk of losing that is inherent in litigation, there is an equally inherent likelihood your company will prevail on its claims and obtain a substantial monetary judgment against the defendant. But no matter how many zeros that judgment contains, it could ultimately be worth far less – or nothing at all.

First, subtract all the amounts your business paid its lawyers from your judgment. That could shave tens or hundreds of thousands of dollars off that top-line figure. And those fees may keep coming if your attorneys have to spend time and effort trying to collect the amounts due from the defendant. Judgment debtors can engage in plenty of moves and tricks to hide assets and make collection efforts as difficult as possible.

Of course, nothing makes collecting on a judgment more challenging than an insolvent judgment debtor. If the defendant is actually broke, even the most talented litigator cannot get blood from a stone.

Again, as noted, sometimes litigation is the right or only way to resolve a business dispute despite the risks and costs it may involve. But before shooting first, you should ask your lawyer questions about the best path forward for your company, which may include pre-litigation demands, negotiations and non-binding mediation.

If you are involved in or anticipate a business dispute, please contact Ansell Grimm & Aaron Litigation Partner Seth M. Rosenstein.

Ansell.Law Elevates Seth Rosenstein and Tara Walsh to Partners

Ansell Grimm January 2, 2024

Ansell.Law is pleased to announce that Seth M. Rosenstein and Tara K. Walsh have been elevated to partners.

Seth enjoys a diverse practice handling litigation, controlled substances and regulatory law, and residential real estate matters. A savvy negotiator, Seth appears in state and federal courts and before the American Arbitration Association (AAA) and Financial Industry Regulatory Authority (FINRA) arbitration panels. He is licensed in New Jersey, New York, and Pennsylvania.

Before Seth joined Ansell Grimm & Aaron, he practiced in the Manhattan office of a national litigation firm. He earned his Juris Doctor from Benjamin N. Cardozo School of Law and his Bachelor of Arts from American University.

Tara specializes in criminal defense and municipal court defense and has taken several cases through trial. She has also handled high-profile criminal cases before the Monmouth County Superior Court Criminal Division. Tara frequently speaks on municipal court defense and criminal defense developments.

Dedicated to serving the greater New Jersey legal community, Tara is on the Monmouth Bar Association’s Municipal Court Committee and is an Inns of Court barrister. She also devotes significant time as secretary and board member of the Associate Board of Court Appointed Special Advocates for Children. Tara earned her Juris Doctor from New York Law School and her Bachelor of Arts from Syracuse University.

A Well-Crafted Medical Partnership Agreement Can Reduce the Likelihood of Disputes and Maximize the Benefits for Physicians

Ansell Grimm December 7, 2023

By Layne A. Feldman

Many elements go into building a successful medical practice. First is assembling a team of exceptional physicians with complementary talents and a shared vision and practice philosophy. But no matter how in sync the doctors who form a medical partnership may be at the outset, there is no guarantee they will remain on the same page. Differences of opinion on issues big and small can poison the partners’ relationship and result in costly litigation that poses an existential threat to the practice’s ongoing viability.

Minimizing the chances of such destructive disputes – and having clear mechanisms for resolving them – can be the key to an enduring and rewarding practice. Those are but two of the many purposes and benefits of a comprehensive and well-crafted medical partnership agreement. This foundational document outlines and governs the relationship between the physician-partners, clarifies their respective rights, roles, and responsibilities, and fills in many blanks that could otherwise create confusion or lead to disputes.

Physicians forming a medical partnership should work with experienced counsel at the outset of their professional endeavor to prepare a partnership agreement that proactively addresses all the critical issues likely to arise during the course of the partnership. Some of the essential provisions of a medical partnership agreement include, but are not limited to:

Establishing the Partnership’s Structure and Purpose

The agreement should clearly outline the legal structure of the entity being formed, whether it is a general partnership, limited partnership, or another legal entity. Additionally, it should articulate the purpose of the partnership and specify the medical services it aims to provide and the scope of its business activities.

Defining Partners’ Roles and Responsibilities

Clear delineation of the scope and limits of each partner’s responsibilities and obligations can keep physicians from stepping on each other’s toes – or bruising each other’s egos. This section should outline each partner’s specific duties, including clinical responsibilities, administrative tasks, and any specializations or areas of focus.

Financial Arrangements

As with all businesses, disputes and litigation between medical partners often revolve around financial matters, making provisions that address contributions and liabilities among the most critical elements of a partnership agreement. This includes details about each partner’s initial capital contributions, profit and loss allocation, and mechanisms for resolving financial disputes. The agreement should also address how expenses will be shared, whether a salary structure is used, and how the partners will handle financial decisions, such as investments in new equipment and facilities or mergers and acquisitions of other practices.

Decision-Making Processes

A clearly defined decision-making framework is essential to ensure a smooth operational workflow. A medical partnership agreement should specify who has the authority to make decisions, what decisions they are empowered to make, and how and when they can delegate decision-making authority. The agreement may also stipulate that certain, more significant management decisions require the approval of all or the majority of the partners.

Admission of New Physician-Partners

The agreement should detail the procedures and eligibility criteria for admitting new physician-partners to the practice. Such provisions may include establishing a minimum capital contribution before a new physician joins the partnership and requiring representations by the prospective partner as to their licensure status and history, claims and malpractice suits, and other professional matters. The document should also address any voting mechanisms or thresholds required for admitting new partners. Similarly, it should outline the circumstances under which a partner may withdraw from the partnership, whether due to retirement, disability, or other reasons. This ensures a transparent and fair process for changes in the partnership’s composition.

Dispute and Deadlock Resolution Mechanisms

While litigation is sometimes necessary or inevitable, it is rarely the optimal way to resolve disputes between business partners. Establishing alternative mechanisms for addressing conflicts or deadlocks when they arise can spare the partners and their practice from the inherent costs and disruption associated with lawsuits.

Mandatory mediation or arbitration (either binding or non-binding) provisions can facilitate early resolutions and minimize acrimony between partners. Similarly, the document should include mechanisms for resolving deadlocks.

Termination and Dissolution of Partnership

In the unfortunate event the medical partnership needs to be dissolved, the agreement should outline the procedures for doing so. This includes addressing issues such as the distribution of assets and liabilities and handling ongoing patient care. Having a well-defined process for termination and dissolution helps minimize disruptions and ensures an orderly winding down of the practice.

Insurance and Liability

Outlining the insurance requirements for the partnership and its individual members is crucial. This includes malpractice insurance, general liability coverage, and any other relevant policies. Clearly defined provisions regarding the allocation of liability among partners contribute to a secure and stable working environment.

A well-crafted medical partnership agreement is essential for the success and sustainability of a collaborative healthcare practice. While no document can guarantee a medical partnership will survive in perpetuity, a medical partnership agreement can go a long way toward minimizing the chance of litigation and maximizing the potential for a long and lucrative professional relationship.

If you are considering entering a partnership with one or more of your fellow physicians, you should work with an attorney who has specific experience with physicians and small medical practices. If you need assistance preparing a partnership agreement or if you are currently involved in a dispute with your physician-partners, please contact one of the attorneys in Ansell Grimm & Aaron’s Corporate or Litigation practice groups.

Early Endgames: What Is the Difference Between a Motion To Dismiss and a Motion for Summary Judgment in New Jersey Litigation?

Ansell Grimm November 13, 2023

By Nicole D. Miller

There is a big difference between a lawsuit and a trial. While tens of thousands of lawsuits are filed every year in state and federal courts here in New Jersey and across the country, only a small percentage of those cases ever reach the point where the parties present all their evidence and testimony in person before a judge or jury, ending in a judgment. While many cases end before trial because the litigants have reached a negotiated settlement, others conclude with a pretrial ruling by a judge. In New Jersey, most of these rulings come after one of the parties files either a motion to dismiss or a motion for summary judgment.

A judge granting either motion effectively ends a case – at least temporarily. That is why they are both called dispositive motions — the movant requests that the judge dispose of the case in their favor before trial. In state court, these motions follow the same 28-day schedule for filing moving papers, opposition, and reply, which was a recent amendment to N.J. Ct. R. 4:6-2, the rule governing motions to dismiss. But there are significant differences between a dismissal and summary judgment in terms of what the movant is asking the court to do, when such motions are filed, and the basis for granting or denying the motion.

Motion To Dismiss

No matter the subject – a commercial dispute, a personal injury case, or a divorce – all civil litigation begins with the plaintiff filing a complaint against a defendant. The primary purpose of a complaint is to inform the defendant – and the court – of three things:

The factual allegations that support the plaintiff’s legal claims against the defendant;
What those legal claims are; and
What the plaintiff is asking for in damages or other relief.

Every defendant served with a complaint must file a timely response with the court. That response can be an answer in which the defendant admits or denies the specific factual allegations in the complaint. But if the complaint doesn’t include essential elements of a valid legal claim – even if all the facts alleged are taken as true – a defendant can file a motion to dismiss for failure to state a claim upon which relief can be granted. As noted, motions to dismiss for failure to state a claim in New Jersey state court are governed by N.J. Ct. R. 4:6-2, while Fed. R Civ. P. 12(b)(6) forms the basis for such motions in federal court. Both rules are essentially the same, as is the analysis of a complaint’s legal sufficiency.

Motions to dismiss are usually filed early in the case as the defendant’s initial response to the complaint. That means the parties have yet to engage in discovery or develop evidence to either support or refute the plaintiff’s allegations. It also means a judge considering a motion to dismiss will only look at the allegations contained in the complaint when making their determination as to the complaint’s sufficiency. And to decide whether the complaint sets forth a cognizable legal claim, the judge will assume that each factual allegation is true. In the event the defendant includes facts or documents outside the complaint, the court is required to convert the motion to a motion for summary judgment.

A judge will grant a motion to dismiss if those facts don’t or couldn’t form the basis of a legal action, even if the complaint’s allegations were true. In effect, the judge looks at all the allegations and concludes, “So what?”

A dismissal can be either with or without prejudice. A dismissal without prejudice means the plaintiff may be able to fix the shortcomings of the initial complaint by filing an amended complaint, and the court is giving the plaintiff the chance to do just that. In most cases where a motion to dismiss is granted, the judge will grant it without prejudice. In entering a dismissal with prejudice, a judge has determined that the complaint’s flaws are insurmountable and conclusively dismisses the case with no opportunity for the plaintiff to refile.

Motion for Summary Judgment

While a motion to dismiss focuses on allegations, a motion for summary judgment is all about evidence. While a motion for summary judgment can be filed earlier, most often it is filed after the conclusion of discovery (when the parties produce and exchange documents, take depositions, and develop other evidence). A motion for summary judgment asks the court to look at the evidence and conclude there is no issue of material fact in dispute. In other words, the moving party argues there is no point in the case going to trial because all the relevant facts of the case, as reflected in the evidence, are undisputed. Since trials involve ascertaining the truth behind the parties’ claims and defenses, a trial is unnecessary if the truth is already apparent.

According to N.J. Ct. R. 4:46-2, a judge will grant summary judgment “if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law.” Importantly, the rule requires the moving party to submit a statement of facts as to which there is no genuine dispute. Each fact in this statement must be supported by citation to the record, i.e., documents produced, deposition transcripts, written discovery responses, etc.

An issue of fact is genuine only if “the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact.”

The entry of summary judgment in favor of the moving party conclusively ends the case at the trial court level. There is no second chance or do-over for the non-moving party as there often is when a court grants a motion to dismiss. However, in certain instances, a party may file a motion for reconsideration if the party believes the court overlooked something or erred, or requests that the court invoke its discretion in the interest of justice pursuant to R. 4:49-2 or R. 4:42-2(b). Nonetheless, motions for reconsideration are rarely granted.

When appropriate, filing a motion to dismiss or for summary judgment offers the movant the chance for an early resolution of a case without the cost, disruption, and risk of going to trial. Conversely, the party on the receiving end of such a motion faces the prospect of their lawsuit being thrown out or shut down without being given the opportunity to present their case at trial. Accordingly, these two motions are enormously consequential in New Jersey litigation.

If you have any questions about motions to dismiss or motions for summary judgment in New Jersey, please contact Nicole Miller.

Law360 Covers Closely Watched Verizon Cell Tower Litigation in Monmouth County

Ansell Grimm October 25, 2023

In a hotly contested and closely watched litigation matter, Verizon Wireless applied to place cell towers along a New Jersey boardwalk in Monmouth County. Verizon sued the county and its board when their request was denied, claiming the denial was not supported by substantial evidence. Proposed Intervenors now seek to join the case, asking the courts to dismiss Verizon’s claims against the county. A recent Law360 article covered the case.

Ansell.Law partner Anthony J. D’Artiglio and associate Layne A. Feldman, attorneys in the Firm’s Litigation Department, represent the intervenors in the case.

Anthony’s practice encompasses complex litigation, bankruptcy, controlled substances and regulatory law, and labor and employment. Layne handles a diverse range of complex commercial and civil litigation matters.

Click here to read the Law360 article (subscription required).

Default Judgments: What Happens When You Fail to Respond to a Lawsuit

Ansell Grimm October 24, 2023

By Seth M. Rosenstein

One of the brightest minds of our time once said, “Half the battle is just showing up.” While “showing up” and responding promptly to a lawsuit filed against you doesn’t necessarily give you an edge in winning the case, failing to respond gives you close to a 100% chance of losing and having a default judgment entered against you.

Whether in state court, federal court or arbitration forums, a defendant in a civil action who does not file a response to the complaint against them within the time set forth by law effectively forfeits their right to defend the action. The court will accept the allegations in the complaint as true, enter a default judgment against the wayward defendant, and allow the plaintiff to take all steps needed to collect on their judgment.

That is why you should never ignore a complaint served upon you or your business and contact legal counsel as soon as possible. We cannot wish a lawsuit away, and nothing is accomplished by putting a complaint in your junk drawer like some people crumble up parking tickets and shove them in their glove compartment. When that first wage garnishment hits, a lien is put on your home, or your assets are seized, it will likely be too late for a do-over.

Here is what you need to know about default judgments and their consequences.

What Is a Default Judgment?

To understand a default judgment, you need to understand the basics of how lawsuits work. They start with a plaintiff filing a complaint with the court that describes their claims against the defendant and the relief or amount of damages they want a judge to award. The complaint is then served on the defendant.

Once a defendant is properly served, the clock starts ticking on their time to respond. In New Jersey, that time is 35 days. It is either 20 or 30 days in New York, depending on how the complaint was served. In federal cases, defendants have 21 days to respond. Typically, that response will either be an answer to the complaint, a motion to dismiss the complaint, or a request for more time to respond. As long as the defendant “shows up” with a timely response and continues to participate in the case, the matter will proceed, and the defendant will be able to fight the allegations if they so choose.

When a defendant doesn’t respond promptly, the plaintiff can ask the court to enter a default judgment against the defendant. Unless the defendant has a legal basis for vacating that judgment, and seeks to vacate that judgment with the time set by court rules, the judgment will effectively close the door on any efforts to dispute the truth or accuracy of the complaint’s allegations.

How Does a Plaintiff Obtain a Default Judgment?

The procedures for requesting and requirements for obtaining a default judgment are slightly different in New York and New Jersey (and in federal court). In some New York cases, a plaintiff can receive a judgment for all the damages they requested in the complaint without proving they actually incurred those damages. In other cases, the plaintiff must present evidence regarding their damages before a judge will enter a final judgment in the requested amount.

In New Jersey, the first step after a defendant fails to respond to a complaint is to ask the court for an entry of default. The plaintiff must then provide the defendant with notice of the entry and again when they subsequently file a motion for judgment by default. In this motion, the plaintiff must show the defendant was properly served notice of the proceedings, the defendant failed to answer, and the defendant is not an active member of the military. If they do so, the court may enter a final judgment by default, which definitively establishes the defendant’s liability.

In some cases, the court will hold a “proof” hearing at which the plaintiff will present evidence supporting the amount of damages they seek. The defendant must be given notice of this hearing as well. If the defendant shows up, they can dispute the damages amount. At the end of the hearing, the judge may enter a final judgment for a set amount, and the plaintiff is free to begin efforts to collect on the judgment.

What Can a Defendant Do After Entry of a Default Judgment?

As much as courts – and the law – do not favor defendants who ignore properly served complaints, they also loathe default judgments. They prefer resolving lawsuits on the merits of the claims and defenses, as opposed to disposition on procedural bases.

That is why the court rules provide a way for a defendant to ask a court for relief from a default judgment. But that relief is far from automatic. There are specific and limited bases for having a default judgment vacated, most of which involve flaws with the judgment itself. But short of a problem with the judgment (other than the substance of the claims), a defendant in New Jersey can get relief from a judgment if they show their failure to respond was due to “mistake, inadvertence, surprise, or excusable neglect” and that they have a meritorious defense to the allegations in the complaint. Similarly, in New York, a defendant must show they had a “reasonable excuse” for their failure to appear and also show they have a meritorious defense.

What qualifies as “excusable neglect’ and a “reasonable excuse” is largely up to the judge’s discretion, but simply forgetting or ignoring a complaint will unlikely be sufficient to support an application to vacate a default judgment. Rather than digging yourself into a hole that may be impossible to escape, the best course of action after being served with a complaint is to take the matter seriously and meet with experienced counsel who can preserve your right to mount a defense.

If you have questions about a pending default judgment against you or your business, please contact Seth Rosenstein at Ansell.Law.

Anthony J. D’Artiglio Elevated to Litigation Team Leader

Ansell Grimm October 18, 2023

Ansell.Law is pleased to announce that partner Anthony J. D’Artiglio has been elevated to Litigation Team Leader for North New Jersey. This new role complements his mentoring and leadership abilities within the Firm. D’Artiglio will manage the Firm’s North New Jersey litigation presence. Additionally, he will work closely with Firmwide Litigation Department Chair Lawrence H. Shapiro to shape the department’s future.

Based in the Firm’s Woodland Park office, D’Artiglio’s practice encompasses litigation, bankruptcy, controlled substances and regulatory law, and labor and employment. A seasoned attorney, he litigates a broad range of commercial matters, including commercial lease disputes, class actions, Consumer Fraud Act claims, corporate and shareholder disputes, employment disputes, and secured property actions. He also routinely represents creditors in bankruptcy matters.

D’Artiglio is licensed in New York and New Jersey. Best Lawyers in America has recognized him as a “One to Watch” since 2021.

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