Legal Question in Business Law in New Jersey

I'm wondering if someone can point me in the right direction concerning the bad faith exception to the American Rule in NJ. I am looking for precedents where fees were shifted to the defendant when it was the defendant who forced the litigation in bad faith.

A NJ company owes my company $20,000. The owner basically told me that I better settle with him for less because his friend is an attorney so if I sued I would rack up legal bills and he would not. My lawyer, accountant, and business partner congratulated me for settling for $15,000, saying the extra $5,000 would have been lost in legal fees anyway.

Could I have petitioned the court to shift fees under the bad faith exception?


Asked on 5/31/11, 7:16 pm

1 Answer from Attorneys

Barry Gartenberg Barry F. Gartenberg LLC

NJ Court Rule 1:4-8 (Frivolous Litigation) speaks to the issue. However, it is not easy to successfully assert its protections. The better solution would have been to have your contract state you would be entitled to recover your attorney's fees and costs if you sue and prevail. Please contact me so that I can review/revise your contract and protect your legal rights in the future. 973-921-0600.

Kindly note and remember that my response is merely a general comment on the law related to your question, and NOT legal advice or opinion. Also, your question and my response does NOT create an attorney-client relationship between us. You cannot rely upon what I have written, because I do not have all of the information that I need to advise you or render an opinion. Even simple facts you have not shared can completely change my answer. For me to give you legal advice or opinion, you would need to hire me to be your lawyer, and then we would need to discuss this in detail and go over the documents.

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Answered on 6/01/11, 4:49 am


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