Opinion
DOCKET NO. A-2286-13T4
02-22-2016
ATLANTIC RESEARCH CORPORATION AND SEQUA CORPORATION, Plaintiffs-Respondents/Cross-Appellants, v. ROBERTSON, FREILICH, BRUNO & COHEN, L.L.C., JEFFREY A. COHEN, KEVIN J. BRUNO, IRVIN M. FREILICH, AND ESTATE OF WILLIAM W. ROBERTSON, Defendants-Appellants/Cross-Respondents.
James A. Scarpone argued the cause for appellants/cross-respondents (Scarpone & Vargo, LLC, attorneys; Mr. Scarpone and Bruce D. Vargo, of counsel and on the brief). Samuel J. Samaro argued the cause for respondents/cross-appellants (Pashman Stein, attorneys; Mr. Samaro, Dennis T. Smith and Candida J. Griffin, on the briefs).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Hoffman, Leone and Whipple. On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-9620-11. James A. Scarpone argued the cause for appellants/cross-respondents (Scarpone & Vargo, LLC, attorneys; Mr. Scarpone and Bruce D. Vargo, of counsel and on the brief). Samuel J. Samaro argued the cause for respondents/cross-appellants (Pashman Stein, attorneys; Mr. Samaro, Dennis T. Smith and Candida J. Griffin, on the briefs). PER CURIAM
Following a jury trial, plaintiffs Atlantic Research Corporation and its parent company Sequa Corporation (collectively plaintiff) obtained a judgment against its former counsel, defendant law firm Robertson, Freilich, Bruno & Cohen, LLC (RFBC), for $81,738.40. The jury rejected RFBC's $1 million quantum meruit counterclaim against plaintiff, and the judge dismissed plaintiff's $800,000 claim for disgorgement of fees previously paid to RFBC.
Because Atlantic Research Corporation is a subsidiary of Sequa Corporation, and for ease of reference, we refer to the two corporations in the singular, as plaintiff.
This sum consisted of $50,185.65 in damages awarded by the jury, $3,452.75 in prejudgment interest, and $28,100 in attorney's fees awarded by the court.
RFBC appeals, arguing that the legal malpractice verdict was improper and that trial errors tainted the jury's decision as to its quantum meruit claim. Plaintiff counters that quantum meruit was precluded in the circumstances of this case. Plaintiff also cross-appeals, contending that the trial judge erred in awarding only a fraction of attorneys' fees actually incurred. After careful review of the record, we discern no reversible error. We therefore affirm.
I.
We derive the following facts from the trial record. In December 2005, plaintiff retained RFBC to represent it in insurance coverage litigation (coverage case) against approximately thirty insurance carriers (the carriers). Plaintiff sought reimbursement of environmental clean-up costs, incurred primarily in connection with its facility in Gainesville, Virginia, where it had manufactured rocket propulsion products. Plaintiff and RFBC had a "partial contingent fee arrangement" (the retainer agreement) providing that RFBC would receive a portion of its regular hourly fees and, if successful, a share of any recovery at the end of the case.
Under the retainer agreement, RFBC would receive twenty-five percent of its standard hourly rates for the first $300,000 billed, thirty-seven-and-a-half percent of its rates for the next $300,000 billed, fifty percent for the next $300,000 billed, and seventy-five percent for billings above $900,000. In addition, the agreement provided that RFBC would receive twenty percent of any recovery by plaintiff between $1.5 million and $2,999,000, and twenty-five percent of any recovery above $3 million.
Several of RFBC's attorneys and paralegals worked on the coverage case between 2007 and 2009. Throughout the course of the case, RFBC claimed that its attorneys "reviewed several million pages of documents" and engaged in significant paper discovery. Plaintiff paid RFBC $806,000 for the hours worked on the case, in accordance with the percentages in the retainer agreement. Had RFBC charged its standard hourly rate for this work, it would have charged plaintiff an additional $1,074,000.
During 2008, RFBC experienced financial difficulties due to the economy and the death of William W. Robertson, its senior partner. The firm explored merger possibilities, but without success. In the fall of 2009, the three remaining equity partners, Irvin M. Freilich, Kevin J. Bruno, and Jeffrey A. Cohen, decided that RFBC would close. By the end of December, the support staff and associate attorneys had been terminated. RFBC officially closed its doors at the end of January 2010.
In October 2009, RFBC started advising its clients, including plaintiff, of its decision to close. Plaintiff's general counsel, Steven Lowson, "was not happy to hear" that the firm was going out of business because plaintiff "had a lot invested in this case." Lowson testified that he "was totally shocked" and said he made it clear that he would not have the same fee arrangement if the file went to another firm.
On January 12, 2010, the carriers filed an omnibus discovery motion (omnibus motion), seeking to compel documents they contended were requested but not produced. Shortly thereafter, the carriers also filed two motions seeking to compel plaintiff to produce all of the documents it had listed on its privilege log, amounting to over 3000 documents (privilege motions). By Cohen's own admission, these motions were received by him but never sent to Lowson.
Lowson testified that he did not learn about the discovery motions until the end of June 2010, two months after they were decided. By this time, the carriers had filed dismissal motions for failure to comply with discovery orders.
Effective February 8, 2010, Cohen went to work at the firm Anderson Kill & Olick (Anderson Kill). Cohen testified that he had many conversations with Lowson between the time he told him that RFBC was closing and February 2010, when he began working at Anderson Kill. In contrast, Lowson testified that he had no communication with Cohen from late December 2009 until February 2, 2010, when he received an email from Cohen indicating that he had accepted a position with Anderson Kill. The email prompted Lowson to call Cohen and inquire as to how he intended to handle the coverage case. Lowson testified that he was specifically interested in hearing from Cohen regarding the new fee arrangement and how the file would be staffed at the new firm. Lowson said that Cohen told him he had just joined the firm and was not in a position to make a proposal, but he would talk to the Anderson Kill partners and get back to him. Lowson said he told Cohen that his willingness to retain Anderson Kill on a permanent basis would depend on the parties' ability to work out a new fee arrangement; he also expressed concern regarding staffing matters, because this "was a huge case" with "[twenty] lawyers on the other side."
Cohen testified that he worked on the coverage case in January 2010 but did not bill any time. Further, while Cohen took the file with him when he joined Anderson Kill in early February, he did not work on or bill any time to the file in February, blaming "a bad bout of bronchitis." No paralegal or attorney other than Cohen worked on the file while it was at Anderson Kill. Cohen's first recorded time entry mentioning the pending motions was on March 12, 2010, when he noted "review[ing] three separate discovery motions filed by carriers relating to privilege logs and general disputes regarding discovery responses." Cohen said that this was not the first time he reviewed the motions, only the first time he billed plaintiff for reviewing them.
A court-appointed Special Master held a hearing on the pending motions on April 9, 2010. On April 26, the Special Master issued a recommended ruling on the omnibus and privilege motions that, among other things, compelled plaintiff to produce various documents by April 29, and identify a person with knowledge of plaintiff's information technology systems and electronic data who would meet with the parties and the Special Master to discuss electronic data issues (the April 2010 ruling). The April 2010 ruling also incorporated what Cohen called a "clawback agreement" regarding privileged documents. Cohen claimed that Lowson agreed to the clawback provision, a claim that Lowson strongly disputed. The trial court entered the April 2010 ruling as an order on May 14, 2010. Cohen never sent the April 2010 ruling to Lowson, either before or after it was entered as an order.
Cohen described the clawback agreement as follows:
What happens with the clawback is you . . . turnover the [privileged] documents that the client has determined [have] no real bearing on their business operations or any litigation they're involved with. The carriers will then say well, maybe we will want ten of these, maybe we want [twenty], and we say, we'll give you [fifteen], but won't give you these five. And if that occurs, you then have a very limited argument before the judge on a very limited set of documents. . . . By turning over these documents pursuant to the clawback agreement you haven't waived the privilege.
In addition to addressing issues raised in the omnibus motion and privilege motions, the April 2010 ruling also provided that plaintiff would make certain documents, not previously produced, available for inspection at plaintiff's Gainesville, Virginia facility by May 7, 2010. Cohen arranged for the carriers to review the documents in mid-May and about twenty attorneys representing the carriers traveled to Gainesville for the inspection; however, Cohen did not go or send anyone from Anderson Kill. Problems with the document inspection quickly became evident when it was discovered that many of the documents were stored in uninhabitable buildings, forcing the attorneys to review the documents under unsanitary and unsafe conditions.
On or around June 23, 2010, the carriers filed a motion to dismiss plaintiff's complaint and for sanctions (the sanctions motion), citing plaintiff's failure to comply with discovery orders. Lowson testified that when he received the sanctions motion on June 24, he "couldn't believe it" because he "had not been informed up to this point that there was even a motion to compel discovery, much less a motion to dismiss the litigation for failure to provide discovery." Lowson said this was also the first time he learned of the clawback agreement or that there had been any problems with document review at the Gainesville facility.
On June 30, 2010, following a heated telephone conversation, Lowson "terminated" Cohen's services. At that point, the file had been with Cohen at Anderson Kill for about four-and-a-half months, without plaintiff and the firm signing a retainer agreement and without the filing of a substitution of attorney in the coverage case.
Plaintiff hired a replacement firm, which represented plaintiff for the next two years, producing more than a million new documents and handling about sixty depositions in the coverage case. The new firm handled the sanctions motion, which was argued at some point in August 2010 and ultimately decided by the Special Master on December 13, 2010. The Special Master concluded that plaintiff had been "stonewalling" discovery and had failed to comply with the April 2010 ruling and another order.
Because of the age of the coverage case, the expectation had been that trial would commence in early 2011. According to the Special Master, in order "to avoid prejudice to the [carriers] by compressing remaining discovery into a very short period of time," the parties in the coverage case accepted his suggestion that the parties consent to the dismissal of the coverage case without prejudice. This resolved "the prejudice that would have been incurred by [the carriers] if they were forced to complete a great deal of discovery to make the case trial ready by the first quarter of 2011."
Regarding monetary sanctions, the Special Master noted that plaintiff "does not deny that other provisions of the discovery orders in question were not obeyed." The Special Master examined the fee application of each carrier law firm in detail and awarded a portion of the fees requested in connection with attending the ill-fated document review in Gainesville, preparing and filing the sanctions motion, and arguing the sanctions motion. In total, the Special Master awarded sanctions of $4 6,041.88.
Plaintiff's new law firm eventually settled with over fifteen different insurance companies, with plaintiff receiving approximately $11.5 million in gross settlements. Lowson was satisfied with this result.
On November 21, 2011, plaintiff filed a complaint for declaratory judgment against (1) RFBC, (2) the three surviving equity partners of RFBC (Freilich, Bruno and Cohen), and (3) Robertson's estate. Plaintiff sought a declaration that RFBC, as prior counsel in the environmental coverage litigation, was not entitled to assert an attorneys' lien for a portion of the recovery in the coverage case, and was "not entitled to any fee on either a contingent or quantum meruit basis."
RFBC filed a counterclaim, seeking attorneys' fees pursuant to the retainer agreement between plaintiff and RFBC, and claiming entitlement to more than $1 million in fees, in addition to what plaintiff had already paid. Plaintiff then filed an amended complaint, adding a second count seeking disgorgement of the fees plaintiff previously paid to RFBC.
Following discovery, RFBC moved to strike the report of plaintiff's malpractice expert, Glenn Bergenfield, and to dismiss plaintiff's legal malpractice claim, contending that the expert's opinion was a net opinion and that, without an expert opinion, plaintiff's claim was unsustainable. Plaintiff cross-moved for summary judgment on the invalidity of RFBC's lien. Both motions were denied, as well as cross-motions for reconsideration.
The case was tried before a jury in September 2013. The jury found that RFBC had deviated from accepted standards of legal practice and caused damages to plaintiff of $50,185.65. The jury also found that RFBC was not entitled to additional fees for its services to plaintiff. The judge reserved decision on the non-jury issue of plaintiff's entitlement to disgorgement of the fees previously paid to RFBC.
On October 11, 2013, RFBC moved for judgment notwithstanding the verdict or, alternatively, for a new trial. Four days later, plaintiff moved for attorneys' fees and costs, seeking a total of $561,332.53. On November 15, 2013, the judge (1) denied RFBC's motions, (2) rejected plaintiff's claim for disgorgement, and (3) awarded plaintiff attorneys' fees and costs of $28,100. These cross-appeals followed.
II.
A.
We first address RFBC's contention that the jury charge on the applicable standard of care for legal malpractice was fatally flawed because it did not specifically track the language of RPC 1.16(d) concerning a lawyer's duties upon termination of representation, and because the court's instructions treated RPC 1.16(d) as essentially a learned treatise that the jury could accept or reject. RFBC argues that the judge did not provide the jury with proper guidance regarding the applicable standard of care, noting that the judge declined to give either party's proposed charge regarding the termination of representation. RFBC further asserts that the judge's charge left the jury "to devise its own standard of care for this case, while undercutting the testimony of RFBC's expert." We are not persuaded.
From our review, the jury charge given in this case incorporated all the essential elements of the standard-of-care charge set forth in Subsection A of the Model Charge, "General Duty Owing." Although the judge did not give Model Jury Charge (Civil) 5.51A word for word, the components of the charge instructing the jury as to both the general standard of care and how to assess competing expert opinions regarding the applicability of that standard to the facts of the particular case were all included. On appeal, RFBC does not contend that the judge incorrectly charged the jury on the basic principles of legal malpractice and the general standard of care. Rather, RFBC argues that such a general explanation was insufficient because it did not address the "essential and fundamental issue" of a dissolving law firm, and a former partner taking a case to a new firm.
Our Supreme Court has explained:
The function of a request to charge is to draw from the court a declaration of the law, coupled with an instruction to the jury on how it is to be applied by them in reaching a conclusion upon the issues before them. Requests for jury instructions may be classified into three levels of importance: (1) those concerning essential and fundamental issues; (2) those concerning substantially material matters; and (3) all other relevant and material subjects.
[State v. Green, 86 N.J. 281, 289 (1981) (citation omitted).]
When a party requests jury instructions "that correctly state the controlling legal principles in relation to the evidence, and concern the material issues and points of the case[,]" such requests "should be honored" by the trial judge. Id. at 290 (quoting State v. Spruill, 16 N.J. 73, 81 (1954)). However, "[w]hen the subject matter of the request does not fall within the first two categories, essential or substantially material issues, then the trial court may exercise broad discretion on whether to grant the request." Ibid. Moreover, "[n]o party is entitled to have the jury charged in his or her own words; all that is necessary is that the charge as a whole be accurate." State v. Jordan, 147 N.J. 409, 422 (1997) (citations omitted).
We hold that the jury charge sufficiently covered the "essential and fundamental issues" and "substantially material matters" relating to the applicable standard of care for legal malpractice. The request by the parties that the judge also charge the jury with respect to a specific standard of care applicable to the dissolution of a law firm was a request as to an "other relevant and material subject" and, accordingly, within the judge's discretion to deny.
According to RFBC, the judge was obligated to effectively advise the jury that the applicable standard of care was limited to following the dictates of RPC 1.16(d); moreover, RFBC claims that even plaintiff's expert agreed that the firm satisfied this RPC. This argument is flawed, however, because the contention that the applicable standard of care was limited to following the express requirements of RPC 1.16(d) does not correctly state the controlling legal principles in relation to the evidence in this case.
RPC 1.16(d) provides, in pertinent part:
Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee that has not been earned or incurred.
First, RFBC assumes without justification that the firm's duty to plaintiff as a client was limited to the four corners of RPC 1.16(d), arguing, "[t]he proper fact question below was only whether RFBC had performed the 'reasonably practicable' measures that the rule identifies." However, Bergenfield testified that RFBC violated a duty that had nothing to do with its dissolution when it failed to advise the client of the pending motions to compel, which were filed before Cohen took the case to Anderson Kill.
RFBC's own expert, Frederick J. Dennehy, acknowledged that the express dictates of RPC 1.16(d) are not necessarily "a complete list" and that, "depending on the facts," there may be other reasonably practicable steps a lawyer needs to take.
Second, RFBC overstates the case in saying that "even Bergenfield . . . admitted that RFBC had met the express requirements of RPC 1.16(d)[.]" To the contrary, Bergenfield did not mention RPC 1.16(d) at all, and the testimony cited by RFBC establishes only that Bergenfield acknowledged that plaintiff was notified of the dissolution and informed that the coverage case was going to a generally respected firm. It is RFBC, not Bergenfield, that suggested that these are the only "steps" that were "reasonably practicable to protect" plaintiff's interests when RFBC went out of business.
Bergenfield testified that RFBC should also have taken additional steps to ensure that the coverage case had a "safe landing" at Anderson Kill, including discussing "the conditions under which it'll be handled" with the client, and "mak[ing] sure as best they can that the client actually lands where the clients wants to go and that the client knows everything about the status, everything about the new relationship that they have with the firm . . . ."
Bergenfield testified that when a partner takes a contingency case to a new firm, the dissolving firm does not satisfy its obligation to the client simply by ensuring that the partner takes the case to a good firm. He further noted that the partners at the dissolving firm are
supposed [to] do the things that they would do in part when the lawyer was their partner, to make sure that the thing, as I was saying before, is staffed right, that the lawyer who's handling it is in a position to do so at his new firm, to make sure that the case . . . was being handled
in a particular way, presumably competently . . . .
Bergenfield acknowledged that RFBC had no responsibility for policing or conducting the Gainesville inspection in May 2010 because they no longer existed and that RFBC could not control Anderson Kill.
Bergenfield also stated that "it wasn't clear . . . who the successor lawyer was" at the time the January 2010 motion to compel was filed, noting, "[i]f there was a successor lawyer in place, that's great, but the lawyer's got to make sure that a motion that's open at the time the firm goes out of business, that something's done about that."
Although Bergenfield did not phrase the duty in terms of RPC 1.16(d), the substance of his testimony was that RFBC had a duty to inform plaintiff of the status of the case in January 2010 while it was still at RFBC. He further opined that RFBC had a duty to confirm that the case was properly transferred to Anderson Kill so that the client's interests were protected, which he described as "a duty to see that there's a soft landing[.]"
The trial judge characterized the disagreement between Bergenfield and Dennehy as one about what specific actions were entailed in taking steps to the "extent reasonably practicable." The judge noted that:
The evidence supported the inference that this jury could have come to[,] that adequate arrangements had not been made, while the file was still with RFBC, and that there was enough information available to the partnership as a whole. And to suggest that something might be [amiss] in the handling of the file to warrant an inquiry into Mr. Cohen's future plans regarding how he was going to be dealing with this extensive insurance coverage litigation.
We find no error in the judge declining to charge the jury with the RPC 1.16(d)-specific charge requested by RFBC. We specifically reject the argument that the sole duty owed to plaintiff by RFBC, at the end of 2009 and beginning of 2010, was to notify plaintiff that the firm was dissolving and to ensure that the case and file went to a law firm that was competent to handle environmental litigation.
Finally, RFBC argues the judge erred in providing the jury with the following charge regarding the RPCs:
You will recall that statements were read in connection with the testimony of Mr. Dennehy. These statements were contained in the Rules of Professional Conduct. Please know that because a publication has been read to you does not mean that you must accept it as binding on any of your decisions. You may give the statements discussed in the publication whatever weight you believe it deserves using your reason, judgment, and common sense.
RFBC contends that this instruction was improper because the RPCs "are not mere periodicals or pamphlets to be admitted into evidence if established as a reliable source" and are not "something to be accepted or rejected by jurors." Rather, they are "pronouncements by the highest court in New Jersey" and "grounded upon the New Jersey Constitution."
Our Supreme Court has "observed that the RPCs 'establish the state's public policies with respect to attorney conduct'" such that "[c]ontracts that violate the [RPCs] violate public policy, and courts must deem them unenforceable." Borteck v. Riker, Danzig, Scherer, Hyland & Perretti, LLP, 179 N.J. 246, 251 (2004) (quoting Jacob v. Norris, McLaughlin & Marcus, 128 N.J. 10, 17 (1992)).
However, the Court has also held that New Jersey does not allow a cause of action based solely on a violation of the RPCs and that a violation of an RPC does not, without more, establish legal malpractice. Baxt v. Liloia, 155 N.J. 190, 198-200 (1998). Nevertheless, an attorney's obligations under the RPCs can be relevant and admissible in evaluating the legal duty of an attorney in a malpractice action. See id. at 199-200 ("[T]he existence of a duty owed by an attorney may be supported by reference to an attorney's obligations under the RPCs, and that plaintiffs may present evidence that an attorney has violated the RPCs in cases claiming the attorney has breached his or her duty of care.").
Accordingly, the RPCs can serve as evidence of the standard of care in a legal malpractice case, but they do not in and of themselves establish the standard of care. Thus, we hold that it was appropriate for the judge to treat the RPCs as similar to a learned treatise or publication when charging the jury.
N.J.R.E. 803(c)(18) creates a hearsay exception for certain "statements contained in published treatises, periodicals, or pamphlets" where they are "established as reliable authority by testimony or by judicial notice." A publication will "qualify as a 'reliable authority' if it represents the type of material reasonably relied on by experts in the field." Jacober v. St. Peter's Med. Ctr., 128 N.J. 475, 495 (1992). The RPCs, which are accepted as evidence of the standard of care, could be considered to fall within this definition.
Even assuming that the RPCs do not fall within the ambit of N.J.R.E. 803(c)(18), we hold that it was harmless error for the judge to give the jury that charge. The prejudice RFBC claims is that this charge could have suggested to the jury that it could "accept or reject" RPC 1.16(d) as the applicable standard of care. As noted, the jury was free to conclude from the evidence that the RFBC's duty of care was not limited to the express dictates of RPC 1.16(d), and it was not obliged to accept Dennehy's contention that it was.
Also, as plaintiff contends on appeal, even assuming the learned treatise charge was error, it was an error invited by counsel for RFBC. RFBC responds that the claim of invited error is "an unreasonable and illogical reading of the transcript" because it "ignores the debate that consumes over [thirty] pages of the charge."
However, the thirty-page debate referenced by RFBC is about the competing standard of care charges proposed by the parties and not the question of how the jury should be instructed regarding Dennehy's reference to the RPCs. A review of the trial transcript confirms that it was indeed counsel for RFBC who first raised the issue of giving the learned treatise charge, specifically noting in that context that Dennehy had referenced the RPCs.
Significantly, counsel did not object when the judge stated immediately thereafter that the learned treatise charge would be given. Therefore, even it was error to give the learned treatise charge regarding the RPCs, we hold that the error was harmless and invited. Accordingly, we reject RFBC's claims of harmful error in the jury charge regarding the applicable standard of care for legal malpractice.
B.
RFBC further argues that the trial judge erred in not granting a directed verdict on plaintiff's malpractice claim, arguing that the evidence at trial established that the discovery sanction imposed on plaintiff was "based on a document inspection that took place . . . more than three months after RFBC ceased to practice law" and "was clearly not proximately caused by RFBC." We are not persuaded.
Proximate cause is an essential element of a legal malpractice claim. Jerista v. Murray, 185 N.J. 175, 190-91 (2005) (noting that duty, breach, and proximate cause are the three essential elements to a legal malpractice case). To establish this element, a plaintiff in a legal malpractice claim must show that the claimed negligent conduct was a "substantial contributing factor" in causing the plaintiff's damages. Lamb v. Barbour, 188 N.J. Super. 6, 12 (App. Div. 1982) (citing State v. Jersey Central Power & Light Co., 69 N.J. 102, 110 ( 1976)), certif. denied, 93 N.J. 297 (1983).
RFBC's proximate cause argument is flawed because it is predicated on the incorrect assertion that the sanction the Special Master imposed on plaintiff was solely the result of the mishandled Gainesville document inspection in May 2010. A careful reading of the Special Master's opinion, however, shows that he determined that sanctions against plaintiff were warranted because plaintiff had violated two discovery orders, including the April 2010 ruling that resulted from the motions filed while the coverage case was still at RFBC. The Special Master explained, "[i]t makes no difference to me who was to blame for the conduct that amounted to 'stonewalling' [the carriers'] legitimate discovery needs and court orders that required compliance. The orders were either ignored or not fulfilled in good faith." Thus, it was clearly plaintiff's overall discovery behavior in connection with the orders that was the subject of the sanction, and that behavior began when RFBC was still counsel and the carriers filed the motions to compel that ultimately led to those orders.
Nothing suggests that the Special Master would have considered plaintiff's discovery conduct sanctionable if the sole issue had been the problems with the Gainesville inspection. To the contrary, the Special Master found plaintiff's pattern of stonewalling and noncompliance as a whole sanctionable and simply used the costs the carriers incurred as a result of the Gainesville inspection as the appropriate measure of sanctions to impose because it corresponded to the monetary prejudice suffered by the carriers due to the cited noncompliance.
Moreover, the Gainesville inspection was not as wholly unrelated to RFBC's handling of the coverage case as RFBC now suggests. The May 2010 Gainesville inspection was ordered because, even after plaintiff had produced documents from the Gainesville site when Cohen was at RFBC, a question remained as to whether there were additional records responsive to the carriers' discovery requests. The jury could have reasonably inferred that the Gainesville inspection in May 2010 would not have been necessary if all responsive documents had been produced when the case was still at RFBC.
We conclude that there was sufficient evidence for the jury to determine that RFBC failed to appropriately respond to discovery requests and failed to appropriately address the motions filed in January 2010. Further, the jury could reasonably conclude that these failures were a substantial contributing factor for the sanctions imposed on plaintiff.
Because there was sufficient evidence of malpractice by RFBC before the transfer of the case to Anderson Kill, we need not address whether defendants RFBC could be liable for malpractice attributable solely to Anderson Kill between February and July 2010. We merely note that under the Court Rules, RFBC remained responsible for the conduct of the coverage case during this entire period because it neither filed a substitution of attorney nor moved to be relieved.
Once an attorney appears on behalf of a client, that attorney is obliged under the Rules to "withdraw formally from the representation" by filing a substitution of attorney, even where the lawyer has been expressly dismissed by the client. Strauss v. Fost, 209 N.J. Super. 490, 494 (App. Div.), modified on other grounds, 213 N.J. Super. 239, 240 (App. Div. 1986). "Without such formal withdrawal, [the lawyer's] responsibility continue[s] until the expiration of the time to appeal from the final judgment or order entered in the cause." Ibid. (citing R. 1:11-3). Accordingly, we reject RFBC's argument that the damages awarded by the jury could not have been proximately caused by RFBC's negligence.
C.
RFBC further argues that the judge erred by allowing Bergenfield to testify that RFBC owed duties to plaintiff beyond those specified in RPC 1.16(d), claiming that his testimony (1) was an inadmissible net opinion, (2) left the jury "with the unmistakable and false impression that RFBC had a legal obligation to interfere with and intrude upon the attorney-client relationship between" plaintiff and Anderson Kill, and (3) included inappropriate references to Cohen's negligence after joining Anderson Kill. We find no error.
The net opinion rule "forbids the admission into evidence of an expert's conclusions that are not supported by factual evidence or other data." State v. Townsend, 186 N.J. 473, 494 (2006) (citations omitted). "An expert's conclusion is considered to be a 'net opinion,' and thereby inadmissible, when it is a bare conclusion unsupported by factual evidence." Creanga v. Jardal, 185 N.J. 345, 360 (2005) (citations omitted). "In other words, an expert must 'give the why and wherefore' of his or her opinion, rather than a mere conclusion." Ibid. (quoting Rosenberg v. Tavorath, 352 N.J. Super. 385, 401 (App. Div. 2002)).
"The weight to which an expert opinion is entitled can rise no higher than the facts and reasoning upon which that opinion is predicated." Johnson v. Salem Corp., 97 N.J. 78, 91 (1984) (citation omitted). However, "[e]vidential support for an expert opinion is not limited to treatises or any type of documentary support, but may include what the witness has learned from personal experience." Rosenberg, supra, 352 N.J. Super. at 403 (citation omitted).
RFBC's contention that Bergenfield's opinions were net opinions is largely predicated on its incorrect assumptions that RPC 1.16(d) establishes the full scope of the standard of care, and opinions regarding the standard of care are necessarily net opinions unless based on the RPCs or other published authority. As previously noted, however, while RPC 1.16(d) may be evidence of the applicable standard of care, it does not necessarily define it. Also, an expert may base an opinion on knowledge and experience and does not necessarily need to reference RPCs or publications in order to avoid running afoul of the net opinion rule. See Bellardini v. Krikorian, 222 N.J. Super. 457, 462-63 (App. Div. 1988) (commenting "that an expert may rely on his own knowledge, as well as on facts supplied to him by others").
Here, Bergenfield based his opinions that RFBC's conduct was negligent on his knowledge and experience in handling attorney malpractice cases, and on the general propositions that a lawyer (1) must communicate significant case developments to the client, (2) has a duty of zealous advocacy, (3) must act to protect the client's interests, and (4) cannot secretly denigrate the client to the court. These undisputed general propositions formed the "why and wherefore" of Bergenfield's opinion that RFBC violated its duty of care to plaintiff in, among other things, failing to address the omnibus motions and privilege motions, failing to properly consult with the client as to how the matter would be handled going forward, and failing to take reasonably practicable steps to ensure a "safe landing" for the coverage case at Anderson Kill. Accordingly, we reject RFBC's argument that reversal is required because of the admission of Bergenfield's testimony.
Cohen had written to the trial court:
In short, I expect my firm and I will shortly be withdrawing from our role as counsel for Atlantic Research. We are in the position of not receiving appropriate support from the client. This has been an [ongoing] issue for some time and has frankly become more severe in the last several months. As you are aware there are a number of discovery obligations that are outstanding. We have been unable to obtain the necessary information or support from the client despite numerous written and oral requests. Essentially, our law firm's ability to enable the client to comply with discovery obligations has been severely hampered if not precluded. In our view we cannot continue to represent the client under these circumstances. I have made this clear to the client and have also advised that this situation must change whether our firm or another firm is brought in to the case. These communications have been [ongoing] for some time but the attorney client relationship continues to deteriorate.--------
RFBC does not point to any specific error related to the jury's verdict rejecting the firm's quantum meruit claim; however, RFBC contends that the errors related to plaintiff's malpractice claim require not only the dismissal of that claim but also require "a new trial limited to the question whether [plaintiff] owes additional fees to RFBC and how much." RFBC contends that the jury's verdict against them, presumably as to both claims, "was based on evidence of . . . things which RFBC had no duty, opportunity or right to control or change."
Because we affirm the jury's verdict on the malpractice claim, we reject this attack by RFBC on the jury's quantum meruit verdict. We discern no basis to accept RFBC's argument that the quantum meruit verdict was tainted.
III.
On its cross-appeal, plaintiff contends that the methodology used by the trial judge to calculate the fee award of $28,100 constitutes an abuse of discretion because the court employed a purely mathematical formula to calculate the award, and failed to address the factors set forth in RPC 1.5(a) in reaching her decision.
The judge held that plaintiff's primary success at trial was not in establishing legal malpractice but in defending RFBC's attorney lien claim. The judge noted, "[t]his case began and was aggressively litigated to defeat . . . an attorney lien claim that had been placed on this matter, by RFBC." The "legal malpractice issues came to the surface," but "the objective of [plaintiff] was not to receive a judgment or a settlement of $50,000 for its malpractice claim." Rather, it was "clear and basically almost undisputed that the objective of this litigation which was brought forth by [plaintiff] was to defeat the attorney lien claim and also [the Quantum Meruit] claim." The judge noted that the legal malpractice claim "would never have been adjudicated[] if RFBC had not filed its attorney lien of approximately $1 million."
Plaintiff sought a fee award of $561,332.53, comprised of $522,256.67 in attorneys' fees and $39,075.86 in costs, and the judge noted that this was "more than $10 in fees for every dollar of damages it recovered. Obviously, no client would spend approximately $500,000 in legal [fees] to litigate a potential malpractice claim of some $46,000."
Noting that the $50,000 malpractice award was approximately four-and-a-half percent of RFBC's $1.1 million fee claim, the judge stated, "[t]his Court does believe that [plaintiff] is entitled to be reimbursed some amount for the efforts it spent in the legal malpractice claim," but "to remotely suggest that it is entitled to the [$]561,332.53 is to ignore the very reason why this litigation began and why it was so aggressively litigated and defended." The judge determined that it was appropriate under the circumstances to award four-and-a-half percent of the total fees and costs incurred by plaintiff. The judge rejected the notion that an important issue of public policy was at stake that justified a fee award disproportionate to the malpractice recovery.
Our Supreme Court has noted that "New Jersey has a strong policy against the shifting of counsel fees." In re Niles, 176 N.J. 282, 293 (2003). In most circumstances, New Jersey courts follow the "'American Rule,' which prohibits recovery of counsel fees by the prevailing party against the losing party[,]" and which serves the threefold purposes of ensuring unrestricted access to the courts, "ensuring equity by not penalizing persons for exercising their right to litigate a dispute," and administrative convenience. Niles, supra, 176 N.J. at 294. Nevertheless, in Saffer v. Willoughby, 143 N.J. 256 (1996), our Supreme Court held that attorneys' fees incurred in successfully prosecuting a legal malpractice action could be recovered by the aggrieved client as consequential damages proximately related to the malpractice. Id. at 269-72.
In reviewing a trial court's counsel fee determination, this court applies a deferential standard. Grubbs v. Knoll, 376 N.J. Super. 420, 430 (App. Div. 2005). A fee award "will be disturbed only on the rarest of occasions, and then only because of a clear abuse of discretion." Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001) (quoting Rendine v. Pantzer, 141 N.J. 292, 317 (1995)).
Plaintiff's essential argument on appeal, as it was below, is that the work its counsel performed in litigating the malpractice claim cannot be clearly differentiated from the work performed in litigating the attorney lien and quantum meruit claims, so it is therefore entitled to attorneys' fees for all the work performed. The judge agreed with plaintiff that it would be difficult to separate the work for which plaintiff was entitled to fees from the work for which it was not entitled to fees by reviewing the billing records, but disagreed that this circumstance justified an award of all attorneys' fees.
This court has noted, "[i]n fixing counsel fees, a trial judge must ensure that the award does not cover effort expended on independent claims that happen to be joined with claims for which counsel is entitled to attorney fees." Grubbs, supra, 376 N.J. Super. at 431 (citation omitted); see also Ricci v. Corporate Express of the East, Inc., 344 N.J. Super. 39, 48 (App. Div. 2001) (noting that "[w]hen a party is entitled to attorney's fees for only some of the work performed, the relevant services should be identified or a reasonable explanation made for the failure to do so"), certif. denied, 171 N.J. 42 (2002); Chattin v. Cape May Greene, Inc., 243 N.J. Super. 590, 614 (App. Div. 1990) (holding that the court must take into account that plaintiff succeeded as to two claims that did not provide for attorneys' fees when awarding fees as to the one claim that did), aff'd o.b., 124 N.J. 520 (1991).
These cases establish that the judge was obligated to differentiate between the work plaintiff's counsel did in connection with the legal malpractice claim from the other work performed in making any fee award. They also establish that the burden was on plaintiff to make this differentiation in its fee application or to provide "a reasonable explanation made for the failure to do so."
Plaintiff acknowledges that its billing records did not provide a basis for the judge to isolate the work related to the legal malpractice claim from the other claims, noting that performing an "analysis of the time entries" would have made it "difficult, if not impossible, to differentiate the work being done in support of plaintiff's malpractice claim and the other claims involved in this suit."
Rather than deny any award of fees at all because plaintiff failed to provide any basis for differentiation, the judge opted to weigh the relative importance to plaintiff of succeeding on its legal malpractice claim as opposed to defeating RFBC's attorney lien claim, and to use that as a basis of differentiation. Plaintiff does not dispute that its interest in recovering money for its legal malpractice claim was of minor importance in comparison with defending against RFBC's claim for over $1 million.
Plaintiff argues that precedent precludes the "strictly mathematical" approach used by the trial judge, but its argument is flawed because it misapprehends the approach that is prohibited.
Citing Hensley v. Eckerhart, 461 U.S. 424, 434-35, 103 S. Ct. 1933, 1940, 76 L. Ed. 2d 40, 50-52 (1983), this court has explained that "[i]n cases where plaintiff presents 'distinctly different claims for relief' in one lawsuit, work on those unrelated claims cannot be deemed in pursuit of the ultimate result achieved[,]" but where "the plaintiff's claims for relief 'involve a common core of facts or will be based on related legal theories,' such a suit cannot be viewed as a series of discrete claims[]" and "the court must focus on the 'significance of the overall relief obtained by the plaintiff in relation to the hours reasonably expended on the litigation.'" Silva v. Autos of Amboy, Inc., 267 N.J. Super. 546, 556 (App. Div. 1993). Accordingly, this court held that it was error for the trial judge to award plaintiff one-seventh of the reasonable fees incurred because she prevailed on only one count of a seven count complaint. Ibid.
As our Supreme Court has more recently explained:
We reject "'a mathematical approach comparing the total number of issues in the case with those actually prevailed upon' because '[s]uch a ratio provides little aid in determining what is a reasonable fee in light of all the relevant factors.'" Stated differently, "the fee award should not be reduced simply because the plaintiff failed to prevail on every contention raised in the lawsuit."
[New Jerseyans for a Death Penalty Moratorium v. N.J. Dep't of Corr., 185 N.J. 137, 154 (2005) (citations omitted).]
The judge did not simply count up the number of claims at issue and award fees based on a mathematical ratio. To the contrary, the judge's ruling tracks this court's direction in Silva that, when the same core facts are relevant to claims for which fees are to be awarded and other claims, "the court must focus on the 'significance of the overall relief obtained . . . in relation to the hours reasonably expended on the litigation." Silva, supra, 267 N.J. Super. at 556 (quoting Hensley, supra, 461 U.S. at 435, 103 S. Ct. at 1940, 76 L. Ed. 2d at 51-52). Because the "significance" of plaintiff's relief obtained on the legal malpractice claim was nominal as compared to the significance of the non-malpractice claims, the judge awarded far less than a straight mathematical ratio would have dictated.
Plaintiff also faults the judge for making a ruling "devoid of any type of [RPC] 1.5 analysis which is contrary to the mandates of Rule 4:42-9(b)."
Fee applications must be submitted pursuant to Rule 4:42-9(b), which provides, in pertinent part, that "all applications for the allowance of fees shall be supported by an affidavit of services addressing the factors enumerated by [RPC] 1.5(a)." RPC 1.5(a), in turn, provides that "[a] lawyer's fee shall be reasonable" and the "factors to be considered in determining the reasonableness of a fee" include (1) the time, labor, difficulty level and skill required, (2) whether "acceptance of the particular employment will preclude other employment," (3) customary fees for similar legal services, (4) "the amount involved and the results obtained," (5) time limitations imposed, (6) the nature and length of the relationship with the client, (7) experience, reputation, and ability of the lawyer, and (8) whether the fee is fixed or contingent.
The judge admitted she "did not go through an [RPC] 1.5 analysis of each and every entry" of billing records. However, we find no prejudicial error.
Also, while applying the factors of RPC 1.5 would have assisted the judge in determining whether plaintiff's counsel charged reasonable fees overall, it would not have assisted in resolving the key issue related to the fee application, namely what portion of the total work performed could be properly credited to the legal malpractice case. The fundamental purpose of evaluating the RPC 1.5 criteria in connection with applications for attorneys' fees is to insure that the fee charged was reasonable. See, e.g., S.N. Golden Estates, Inc. v. Cont'l Cas. Co., 317 N.J. Super. 82, 91 (App. Div. 1998) (noting that the trial judge should "make specific findings as to the reasonableness of the legal services provided and the fees charged" and not "broad [conclusory] statements regarding the legal services performed").
Here, the reasonableness of the total fee is not an issue on appeal. The judge essentially assumed that the hourly rate charged and number of hours expended were reasonable, even though RFBC evidently challenged the reasonableness of at least $83,000 in fees. The judge simply determined that, even assuming total reasonableness, only a fraction of the total fees could be properly attributable to the legal malpractice claim. A detailed analysis of the RPC 1.5 factors might have caused the judge to determine that less than the full amount sought was reasonable and, consequently, to award four-and-a-half percent of a lesser number, but any error in not conducting such an analysis worked in plaintiff's favor and is not raised on appeal by RFBC.
RFBC does not challenge the fee award on appeal on any basis other than that it would necessarily be vacated if RFBC's appeal of the underlying malpractice verdict succeeds, but argues in response to the cross-appeal that any award of fees to plaintiff was unwarranted because "[t]he complaint never contained a legal malpractice count[,]" and "there was never a legal malpractice action until one was manufactured at trial." This is incorrect. Plaintiff's amended complaint, filed in October 2012, (1) alleged that RFBC's handling of the coverage case was negligent and that Cohen breached his fiduciary duty, and (2) sought disgorgement of the fees previously paid to RFBC, attorneys' fees and costs, and "such other and further relief" as deemed proper. Plaintiff submitted an affidavit of merit opining that Cohen's and RFBC's conduct violated the standards of care in the legal profession in June 2012. Accordingly, it could not have been a surprise to RFBC at trial in 2013 that plaintiff was alleging legal malpractice.
We hold that it was within the trial judge's discretion to make a fee award of $28,100 to plaintiff, based on the comparative insignificance of the legal malpractice claim to the litigation as a whole. If the judge erred in failing to analyze whether the overall fee plaintiff's counsel charged was reasonable under RPC 1.5, that error caused plaintiff no harm.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION