Courts don't often impose sanctions for frivolous litigation, but when they do, it usually involves something unusual (apologies to John Winger). Unusual -- and perhaps even unfortunate -- would be the only way to describe the facts of a recent decision from the Appellate Division that revived a party's request for legal fees in a case involving a failed (alleged) engagement and the return of a (purported) engagement ring that the recipient initially claimed to have lost, but later (apparently) found.

In Wachsman v. Tobias, plaintiff gifted a "very expensive, 2.1 carat diamond ring and other items to defendant." Plaintiff claimed that the ring was an engagement ring, and, when the relationship soured, demanded that defendant return it to him. Defendant denied that the ring was an engagement ring and refused to return it. That is when the case really gets interesting.

Plaintiff sued defendant to recover the ring -- which the court ruled was an engagement ring because it was given in anticipation of marriage -- and other personal property. In response, defendant claimed that she had lost the ring a few weeks before filing her answer to plaintiff's complaint. (Defendant also filed a counterclaim seeking damages arising from plaintiff's alleged physical and emotional abuse.) At her deposition several weeks later, however, defendant changed her tune and admitted that she still had the ring but stated, "I'm not just going to hand it back. We need to do a settlement." On the scheduled trial date, the parties did just that - defendant agreed to return the ring and the other personal property and both parties dismissed all claims.

As part of the settlement, plaintiff also reserved the right to bring a motion for his legal fees under the frivolous litigation statute. However, the trial court denied his request for fees, holding that he was not a prevailing party because the parties settled the case before trial, and that defendant's defenses were not "patently frivolous" but were instead the product of defendant "merely defending the claim against her."

Plaintiff appealed, and the Appellate Division reversed, holding that a dispute need not proceed to trial before a party can be deemed to have "prevailed" for the purposes of being awarded fees, and that courts had previously recognized parties as having "prevailed" for the purpose of awarding such fees even after settlement. The Appellate Division remanded the case to the trial court to determine whether defendant's false claim to have lost the ring was made in bad faith. However, it did so while also pointing out that "defending against a claim is no excuse for knowingly making a false factual statement in a pleading." This comment suggests that the Appellate Division was less than convinced that the trial court got it right the first time when it ruled that defendant's statement was not made in bad faith.