Unfounded Defamation Suit Lands Lakefront Developer in Hot Water

 Unfounded Defamation Suit Lands Lakefront Developer in Hot Water

Following a lengthy court battle in South Jersey, wherein lakefront property owners won their case against the owner of the artificial lake, the homeowners’ lawyer made comments to the press about the litigation.  The developer filed a suit for defamation based on the lawyer’s comments, and, most interestingly, filed the suit not only against the lawyer who made the comments, but against the homeowner clients as well.  Samost v. Voorhees, A-5786-10T1, (N.J. App. Div. March 14, 2013).

The facts of the underlying case go back to 2004, when a dam was damaged in a storm, after which “the DEP (Department of Environmental Protection) ordered the lake drained because the dam was unstable.”  In 2006 a court ordered the dam’s owner to make repairs. In 2009, the owner sought contribution for the cost of repairs and refilling the lake from lakefront home owners.

By 2010, six years after the dam was first damaged, the case continued to drag on.  In March, the Court “ordered [the developer] to deposit $250,000 into court and appointed a receiver to monitor his compliance with various court orders.”  The developer claimed he had insufficient funds to make the deposit, wherein the homeowners alleged that he was intentionally hiding assets from the Court.  The Court agreed, finding, among other things, that the developer had a “history of manipulating his assets.”

Following that decision, in the Mount Holly courthouse, the homeowners’ lawyer gave a statement to the Courier Post: “‘We’re elated. We believe the court has seen through the actions of [the developer] . . . and chased down assets of a man who tried to hide them from the court and the homeowners[.]’”

The developer filed a defamation suit based on that statement.  Of great interest, the developer’s suit named not only the lawyer, but the homeowners, arguing that the lawyer-client relationship gave rise to a respondeat superior relationship.  In other words, the developer argued that if a lawyer makes defamatory comments in the course of representing specific clients, then those clients may themselves be liable for the defamation.

The Court was, apparently, not sympathetic to the developer’s allegation.  In the lower courts, Judge Hogan lamented that “getting information from Samost was ‘like pulling teeth,’ and that ‘[t]his had been from almost the first day I’ve been involved in this case, this has been a shell game with Mr. Samost and it’s got to stop[.]’”  Judge Suter granted summary judgment to the homeowners, finding that the lawyers statements were “opinion or interpretation or fair comment” and thus could not be defamatory under New Jersey law.

Judge Suter also expressed doubt that a respondeat superior relationship could exist between lawyers and clients but, as the statements were not even capable of being defamatory, did not reach the issue.  Judge Suter also ruled that the developer’s “defamation claims against the homeowner defendants were frivolous and brought in bad faith,” and awarded the homeowners counsel fees under New Jersey’s frivolous litigation statute, N.J.S.A. 2A:15-59.l.

The developer appealed.  The Appellate Division considered at length the opinion of Judge Suter, the conducted its own lengthy analysis of the law of defamation. The Appellate Court complete affirmed the lower Court’s opinion on the law of defamation.

The Appellate Court also looked at the award of attorney’s fees, finding that “[a] trial court’s determination on the availability and amount of fees and costs for frivolous litigation is reviewed for abuse of discretion.”  Again analyzing the law at length, the Appellate Court found, among other things, that “the record patently demonstrates that [the developer’s] defamation claim against the homeowner defendants was utterly without basis in law or fact.”

Addressing the respondeat superior issue, the Court looked to Baldasarre v. Butler, 132 N.J. 278, 292 (1999): “An innocent client should not be held vicariously liable for the wrongful conduct of his or her attorney . . . if the client does not direct, advise, consent to or participate in the attorney’s improper conduct.”

Under the Baldasarre rule, while a respondeat superior relationship could conceivably arise from a lawyer comments, a plaintiff would need to show that the clients actually took part, in some meaningful way, in the lawyer’s allegedly defamatory statements.  In this case, when the lawyer made his comment to the Courier Post in the Mt. Holly courthouse, immediately following a court decision, he was “flanked” by several of the homeowner clients, but they did not, apparently, actively participate in the lawyer’s comments.

Thus, even had the lawyer’s comments actually constituted defamation, based on the evidence it would have been within the trial court’s discretion to find that the clients had not participated in the comments and that the homeowners were “sued to get back at them for their participation and success in the . . . dam litigation.”

Read the unpublished opinion here

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About the Author: Brian Klitsch received his J.D. from George Washington University Law School and is currently a Legal Intern at Stern Law, LLC. He is barred in the State of New Jersey.

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