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Awards of Counsel Fees in Matrimonial Actions in New Jersey

 

One consideration that comes up in almost every divorce action is the question of whether a spouse can request that the other spouse pay their counsel fees. Awards of counsel fees in New Jersey matrimonial cases are completely up to the discretion of the judges, and the Appellate Division generally will not reverse such decisions unless the judge abused his/her discretion. Eaton v. Grau, 368 N.J. Super. 443, 454 (App. Div. 2006). Judges’ discretion is not entirely unfettered, however, because judges still must address the standards set forth in the statutes, rules and case law.

Pursuant to New Jersey statute, N.J.S.A. 2A:34-23: “The court may order one party to pay a retainer on behalf of the other for expert and legal services when the respective financial circumstances of the parties make the award reasonable and just. In considering an application, the court shall review the financial capacity of each party to conduct the litigation and the criteria for award of counsel fees that are then pertinent as set forth by court rule. Whenever any other application is made to a court which includes an application for pendente lite or final award of counsel fees, the court shall determine the appropriate award for counsel fees, if any, at the same time that a decision is rendered on the other issue then before the court and shall consider the factors set forth in the court rule on counsel fees, the financial circumstances of the parties, and the good or bad faith of either party. The court may not order a retainer or counsel fee of a party convicted of an attempt or conspiracy to murder the other party to be paid by the party who was the intended victim of the attempt or conspiracy.”

In family actions, an award of counsel fees is governed by New Jersey Court Rule 5:3-5(c), which requires the judge to consider the following factors:

(1) the financial circumstances of the parties;

(2) the ability of the parties to pay their own fees or to contribute to the fees of the other party;

(3) the reasonableness and good faith of the positions advanced by the parties both during and prior to trial;

(4) the extent of the fees incurred by both parties;

(5) any fees previously awarded;

(6) the amount of fees previously paid to counsel by each party;

(7) the results obtained;

(8) the degree to which fees were incurred to enforce existing orders or to compel discovery; and

(9) any other factor bearing the fairness of the award.

The New Jersey Supreme Court has thus defined the general standard for an award of counsel fees, wherein a court “must consider whether the party requesting the fees is in financial need; whether the party against whom the fees are sought has the ability to pay; the good or bad faith of either party in pursuing or defending the action; the nature and extent of the services rendered; and the reasonableness of the fees.” Mani v. Mani, 183 N.J. 70, 94-95 (2005). Fees in family actions are normally awarded to permit parties with unequal financial positions to litigate in good faith on an equal footing. Kelly v. Kelly, 262 N.J. Super. 303, 307 (Ch. Div. 1992). When one of the parties behaves “in bad faith”, the economic positions of the parties may become less of a factor. Id. The application of the above factors is fact sensitive. For instance, fees have been awarded even to litigants who have not prevailed. See e.g., Eaton v. Grau, 368 N.J. Super. 443, 454 (App.Div. 2006); Kingsdorf v. Kingsorf, 351 N.J. Super. 144, 158 (App.Div. 2002); Anzalone v. Anzalone Bros., 185 N.J. Super. 481, 487 (App. Div. 1982).

What often becomes a dispute in family actions is what behavior constitutes “bad faith”. It is not uncommon for divorcing spouses to view everything the other does as in the light of “bad faith” and, therefore, judges are constantly bombarded with allegations of bad faith by one spouse against the other.

The case of Borzillo v. Borzillo, 259 N.J. Super. 286 (Ch.Div.1992), is an oft-cited case in which a trial judge noted that the Legislature had not defined “bad faith” and left it up to judges to determine on a case by case basis. Hence, the judge in Borzillo attempted to describe “bad faith” and define the types of behavior that judges are looking for when assessing whether a litigant behaves in “bad faith.” The judge pointed out that “bad faith” is not merely bad judgment or negligence, but requires an examination of motive. It “implies the conscious doing of a wrong because of dishonest purpose or moral obliquity. It is different from the negative idea of negligence in that it contemplates a state of mind affirmatively operating with furtive design or ill will.” Id. at 292. “‘Bad faith’ has also been defined as an intent to mislead or deceive another, or a neglect or refusal to fulfill some duty or contractual obligation not prompted by some honest mistake as to one’s rights or duties, but by some interested or sinister motive. . . as acts by a losing party that have been vexatious, wanton or carved out for oppressive reasons. . . Likewise, our federal courts have held that ‘Bad faith’ may be found not only in the actions that led to the lawsuit but in the conduct of the litigants and, therefore, is not solely restricted to cases where the action is filed in bad faith.” Id. at 292-93. Moreover, pursuant to the policy of this State to enforce court orders and judgments, as well as settlement agreements in matrimonial matters, ‘bad faith’ also has to include behavior designed to evade, without just cause, the lawful payment of alimony and/or child support.

The judge concluded:

“Accordingly—absent a showing of proper motive, legal justification, honest mistake, or reasonable conduct under the circumstances of the case—the following shall be deemed to be acts of bad faith:

* An unwillingness to provide pendente lite support or contribute to the preservation of marital assets or reduction of marital debt commensurate with one’s ability to pay;

* An unwillingness or intransigence during the litigation process to fairly negotiate an equitable distribution of property legally or beneficially acquired during the marriage or to pay alimony, or separate maintenance and child support commensurate with one’s ability to pay;

* The intentional noncompliance with court-ordered obligations; and

* The intentional noncompliance with a voluntary agreement.

Evidence of bad faith can also be established, shown or corroborated by these acts as well:

* The misuse or abuse of process to evade court-ordered obligations or obligations arising out of voluntary agreement;

* To seek relief which one knows or should know that no reasonable argument could be advanced in fact or law in support thereof;

* The intentional misrepresentation of facts or law designed or intended to discharge or unfairly or improperly limit equitable distribution or alimony, maintenance or support obligations; and

* Acts of a losing party that have been vexatious, wanton or carried out for oppressive reasons. Id. at 293-94.

In matrimonial actions, counsel fees are often a significant issue that can become as important a financial consideration as equitable distribution or alimony.