Opinion
DOCKET NO. A-2714-12T3 DOCKET NO. A-3384-12T3
01-21-2015
STEPHEN WINYARD, Plaintiff-Appellant/Cross-Respondent, v. 21st CENTURY LEASING CORP. and DMITRY ZELDIN, Defendants-Respondents/Cross-Appellants, and BIG LOU'S WHEELS IN MOTION, LLC, a/k/a WHEELS IN MOTION, LLC; ARTHUR KHARKO and JOSEPH ROTMENSZ, Defendants. STEPHEN WINYARD, Plaintiff—Appellant, v. 21st CENTURY LEASING CORP. and DMITRY ZELDIN, Defendants-Respondents, and BIG LOU'S WHEELS IN MOTION, LLC, a/k/a WHEELS IN MOTION, LLC; ARTHUR KHARKO and JOSEPH ROTMENSZ, Defendants.
Joshua M. Lurie argued the cause for appellant/cross-respondent (A-2714-12) and appellant (A-3384-12) Stephen Winyard (Furst & Lurie, attorneys; Mr. Lurie and Henry F. Furst, on the brief). Anthony E. Bush argued the cause for respondents/cross-appellants (A-2714-12) and respondents (A-3384-12) 21 Century Leasing Corporation and Dmitry Zeldin (Eckert Seamans Cherin & Mellott, LLC, attorneys; Carol A. Crossett (Bellavia Blatt Andron & Crossett, P.C.) of the New York bar, admitted pro hac vice, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Fisher and Manahan. On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-4796-09. Joshua M. Lurie argued the cause for appellant/cross-respondent (A-2714-12) and appellant (A-3384-12) Stephen Winyard (Furst & Lurie, attorneys; Mr. Lurie and Henry F. Furst, on the brief). Anthony E. Bush argued the cause for respondents/cross-appellants (A-2714-12) and respondents (A-3384-12) 21 Century Leasing Corporation and Dmitry Zeldin (Eckert Seamans Cherin & Mellott, LLC, attorneys; Carol A. Crossett (Bellavia Blatt Andron & Crossett, P.C.) of the New York bar, admitted pro hac vice, on the brief). PER CURIAM
In these consolidated appeals, Stephen Winyard (plaintiff) and 21st Century Leasing Corporation (defendant) both appeal from an award of counsel fees. We affirm.
In May 2008, plaintiff purchased a motor vehicle from defendant. After finalizing the contract for purchase, defendant required plaintiff pay an additional $6,500 when plaintiff picked up the license plates. Plaintiff wrote a check for that amount, obtained his license plates, and immediately stopped payment on the check.
On April 2, 2009, defendant filed a complaint against plaintiff seeking $6,500. Defendant voluntarily dismissed its complaint without prejudice in November 2009. In August 2010, plaintiff filed a complaint against defendant, its owner, general manager, and sales person to recover his counsel fees which averred, among other claims, a violation of the Consumer Fraud Act (CFA).
After the litigation was pending for more than three years, a settlement was reached on December 13, 2012. The settlement's relevant terms included: (1) defendant would pay $10,000 to plaintiff; and (2) plaintiff's counsel would file a counsel fee application, which would not seek counsel fees for legal work involved in filing the initial moving papers, but would retain the right to seek reasonable costs and fees should plaintiff be obliged to enforce or defend the application.
Thereafter, plaintiff filed an application for counsel fees and costs, seeking approximately $94,000. Defendant opposed the fee application. On February 8, 2013, a judgment and order was entered, awarding counsel fees and costs in the amount of $43,619.85. The court determined the settlement agreement precluded counsel fees for filing the initial application. The court did not award counsel fees to plaintiff for defending the application.
On February 20, 2013, plaintiff filed a notice of appeal. On February 26, 2013, defendant moved to stay enforcement of the judgment and compel plaintiff to accept payment in installments rather than a lump sum. On March 22, 2013, the court entered an order denying defendant's motion to stay enforcement and ordering payment of the judgment in twelve monthly installments.
On March 22, 2013, defendant appealed the February 8, 2013, judgment arguing the counsel fee award was excessive. Plaintiff filed an amended notice of appeal on April 2, 2013, of the March 22, 2013, order permitting payment of the judgment over time. Plaintiff argued the trial court abused its discretion by reducing the amount of attorneys' fees awarded and by denying his request for a fee enhancement.
Trial courts have considerable latitude in resolving fee applications, and a reviewing court will not set aside an award of attorneys' fees except "on the rarest occasions, and then only because of a clear abuse of discretion." Rendine v. Pantzer, 141 N.J. 292, 317 (1995). We have intervened, for example, when a court's determination "was not premised upon consideration of all relevant factors, was based upon consideration of irrelevant or inappropriate factors, or amounts to a clear error in judgment." Masone v. Levine, 382 N.J. Super. 181, 193 (App. Div. 2005); see also Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002).
New Jersey generally follows the so-called "American rule," which requires that each party pay its own legal costs. Rendine, supra, 141 N.J. at 322. Nonetheless, fees may be shifted when permitted by statute, court rule or contract. Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 440 (2001). Here, fee shifting was permitted statutorily by the CFA. Regardless of the source authorizing fee shifting, the same reasonableness test governs. Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 386 (2009).
When fee shifting is permissible, a court must ascertain the "lodestar"; that is, the "number of hours reasonably expended by the successful party's counsel in the litigation, multiplied by a reasonable hourly rate." Ibid. To compute the lodestar, courts must first determine the reasonableness of the hourly rates charged by the successful party's attorney in comparison to rates "'for similar services by lawyers of reasonably comparable skill, experience and reputation'" in the community. Rendine, supra, 141 N.J. at 337 (quoting Rode v. Dellarciprete, 892 F.2d 1177, 1183 (3d Cir. 1990)). After evaluating the hourly rate, the court must then determine the reasonableness of the hours expended on the case. Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 22 (2004). "Whether the hours the prevailing attorney devoted to any part of a case are excessive ultimately requires a consideration of what is reasonable under the circumstances[,]" and should be informed by the degree of success achieved by the prevailing party. Id. at 22-23. The award need not necessarily be proportionate to the damages recovered. Id. at 23.
Rules of Professional Conduct 1.5(a), commands that "[a] lawyer's fee shall be reasonable in all cases, not just fee-shifting cases[.]" Furst, supra, 182 N.J. at 21-22. In determining reasonableness, RPC 1.5(a) requires the court to consider:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services;
(8) whether the fee is fixed or contingent.
[RPC 1.5(a).]
The judge issued an oral opinion. After noting the contentiousness of the litigation, the nature of the claims, and the settlement agreement which provided for counsel fees and costs, the trial court found:
Plaintiff's counsel urges the Court to apply the Lodestar method of calculat[ing] the fees and also requests an enhancement of the fees due to the contingent nature of the agreement with the client, complexity of the issues that it entailed.
In making a determination of what attorney's fees are reasonable and fair for the matter, the Court has to determine first if the rates charged by the plaintiffs are reasonable, given their experience and skill. Next, if the time spent was reasonable, and third, if the case warrants the application of enhancement of fees as requested.
Here the plaintiff provided detailed information relating to each of the plaintiffs' attorneys, as required under the Rules of Professional Conduct 1.5. Plaintiff seeks attorney's fees at the rate of $275 an hour for Mr. Lurie, who is an associate at plaintiff's lawyer's firm, and has been admitted to practice approximately six years. Plaintiff also seeks a rate of $475 per hour for Mr. Furst's attorney's fees, who is a partner in the firm and has been admitted to practice law since 1977.
Based upon my review of the certification submitted with this motion, the Court finds that these rates are reasonable, given the experience of the two attorneys, their
reputation in the community, their knowledge and skill.
With relation to the within issues, the hourly rates by the plaintiff's counsel's fees are confirmed and I will agree with the rates of fees.
Next the Court has to determine if the hours expended in prosecuting the matter were reasonable. Having reviewed the detailed hourly billing provided by Mr. Lurie and his certification, the Court determines that a reduction of the hours and the hours spent must be made to reflect the outcome of the matter.
Now given that this matter was settled for $10,000, an award of attorney's fees and costs that totals more than six, now probably nine times that amount for the plaintiff, even without the requested enhancement, is excessive in my view.
So the Court will grant the award of attorney's fees for these specific items in the billing: client meetings, legal research, drafting of Court documents, Court appearances, motion practice, completion of review of discovery materials, trial preparation, and final settlement talks.
The court added:
Now, despite plaintiff's counsel's assertion in his reply papers that the Court may not sua sponte reduce attorney's hours spent in the litigation without specific factual objections from the adversary, the case of [Rendine, supra, 142 N.J. at 292], a case heavily relied upon by the plaintiff, specifically addressed the need for the Court to carefully analyze time submissions by counsel. The calculation of the Lodestar, "requires the trial court to evaluate carefully and critically the
aggregate hours and specific hourly rates advanced by counsel for the prevailing party to support the fee application. Trial courts should not accept passively the submissions of counsel to support the Lodestar account.The court then determined the fee enhancement.
Compiling all materials of hours spent, however, does not complete the inquiry. It does not follow that the amount of the time actually expended is the amount of time reasonably expended. [Id. at] 335.
Regular communication with opposing counsel, the plaintiff, the Court, and minor conferences held within the firm have been excluded by me. These activities and the proper activities, in my view, which are the ones that I mentioned before: client meetings, legal research, drafting Court documents, Court appearances, motion practice, completion and review of discovery materials, trial preparation, and final settlement talks, in my calculations, I've highlighted them in my and I had my law clerk highlight them for me, as well, 61.3 hours at $275 for Mr. Lurie or $16,857.50. For Mr. Furst, 51.9 hours at $475, $24, 652.50.
Additionally, the Court grants the costs requested $2,109.85, so that the total attorneys' fees and costs will be $43,619.85.
Now, with regard to the request for enhancement of fees by 33 and a third percent due to contingency nature of the fee agreement, complexity of the issues, the Court denies that application. As noted in plaintiff's moving brief, plaintiff's primary justification of awarding fee enhancement is sounded in public policy. Appropriate incentive must be available for
attorneys for them to take continent fee cases, particularly where it requires a firm to decline representation for clients who would pay on a monthly or regular schedule.
The court employed a proportionality rationale but did so in conjunction with other considerations in arriving at an appropriate fee enhancement. Further, the court noted the public policy for awarding fee enhancement, i.e., risk of nonpayment. The court found:
[H]ere the plaintiff's counsel provides no information to suggest a fear of nonpayment. Additionally, to the extent that the Court may predict the amount of the fees that would have been negotiated . . . between counsel and plaintiff. Were this not a contingency matter plaintiff certainly would never have agreed to pay over $80,000 in a case that settled for $10,000.
We conclude, even in the context of fee shifting, a fee award should not be premised on a recoupment that would not have been the product of a rationally related fee agreement. In reaching this conclusion, we do not detract from the competence of counsel and the manner in which they fulfilled their obligation to their client. However, in an assessment of reasonable counsel fees, consideration whether a client would engage an attorney at the proposed rate is not wide of the mark. Nor does it "amount[] to a clear error in judgment." Masone, supra, 382 N.J. Super. at 193.
In the final analysis, in rejecting both plaintiff's and defendant's criticisms of the court's methodology, we rely on the spirit of our Supreme Court's declaration that "there is no precise formula . . . [and that t]he ultimate goal is to approve a reasonable attorney's fee that is not excessive." Litton, supra, 200 N.J. at 388. We are satisfied the judge's approach ultimately produced a reasonable fee award.
Finally, we conclude that the judge did not abuse his discretion in ordering the payment of the fees be made in monthly installments.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION