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Lupo v. Varsano

A-1359-02T1 (N.J. Super. App. Div. 2004) (Unpublished)

RESTRICTIVE COVENANTS; ABUSE OF PROCESS—So long as a litigant has a valid reason for dropping its pursuit of an action to set aside a restrictive covenant, the party defending the covenant has no claim based upon alleged abuse of process.

Two property owners owned adjoining properties. The first owners’ property had a restrictive covenant running to the benefit of the second owners’ property, limiting the first owner’s property to residential use. A wireless communication carrier was looking for a site to construct a wireless communication facility including a tower and an equipment shelter building. After researching available sites, the wireless company concluded that the first property was better, and its owners were willing to lease part of it. The owners of the second property objected based upon the restrictive covenant. So the first owners and the telecommunications company sought an adjudication that the public interest and public policy served by the communication facility justified the wireless facility despite the restrictive covenant. Later, due to the time and expense involved in litigation as well as technological advances, the company abandoned its plans and proceeded onto an alternate site.

Then, based upon this abandonment, the owners of the second property claimed damages for the fees and costs of litigating under the frivolous litigation statute, N.J.S.A 2A:15-59.1: for abuse of process; and for fraudulent concealment. These charges were dismissed by the lower court, leading to an appeal.

The Appellate Division agreed with the lower court that there were no genuine issues of material fact supporting a prima facie claim based on any of these claims. It then denied the claims based on procedural and substantive grounds. As to the merits, the owners of the second property contended that neither the wireless company nor the owners of the first property had any basis in the first place for their assertion that the first property was “uniquely and particularly suited for the proposed wireless communication facility.” The lower court found no evidence that the wireless company willfully lied. The only evidence offered was that while the wireless company was proceeding on the first property, it had already conceived of the idea of moving the project to the alternate site. The second property owners claimed that the wireless company clearly stated that the other site was its second choice, and that the first property was in fact “uniquely and particularly suitable” for the site. The Court opined that the record showed that the wireless company had reasonably believed the first property was the best available site, and that belief alone, by definition, made the property uniquely suitable even though an alternate site was eventually chosen. The sole fact that an alternative site was discussed and then eventually used did not provide the owners of the second property a “smoking gun” necessary to prove frivolity.

The abuse of process claim was also based on the contention that the wireless company knew that its statement, to the effect that the first property was unique and suitable, was false, and therefore the wireless company must have commenced litigation for the sole purpose of intimidating the owners of the second property into yielding.

The lower court could find no evidence in the record showing malicious prosecution or “misapplication of process for an end other than that which it was designed to accomplish.” Furthermore, it concluded that essential elements in the second owners’ claims were missing. Prior case law has shown that to bring such claims, a defendant must show that the plaintiff had no probable cause to bring the action; that the plaintiff was motivated by malice; that the litigation ended in the defendant’s favor, and that the defendant suffered a special grievance. The lower court held that neither lack of probable cause nor actuating malice could be inferred from the evidence in the record. Also, there was no special damage alleged. There was no infringement of personal or property rights beyond litigation expenses incurred in defending the action.

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