Opinion
DOCKET NO. A-3345-14T1
10-31-2016
WORLDWIDE RESTORATION, INC., Plaintiff-Respondent, v. PHILOMENA GAN, Defendant-Appellant, and GARY J. DeBLASIO, Defendant, and PHILOMENA GAN, Third-Party Plaintiff, v. NATHAN BUTTERFIELD, Third-Party Defendant.
The Wolf Law Firm, LLC, attorney for appellant (Henry P. Wolfe, on the briefs). Schatzman Baker, PC, attorneys for respondent (W. Scott Stoner, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3. Before Judges Sabatino and Nugent. On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-1134-13. The Wolf Law Firm, LLC, attorney for appellant (Henry P. Wolfe, on the briefs). Schatzman Baker, PC, attorneys for respondent (W. Scott Stoner, on the brief). PER CURIAM
The sole and narrow issue in this appeal is whether the trial court misapplied its authority in declining to grant a "lodestar enhancement" or "multiplier" when awarding counsel fees to the prevailing party in this case. For the reasons that follow, we conclude that the court was justified in denying that fee enhancement, given the particular circumstances of this litigation. We therefore affirm.
I.
The relevant background is as follows. In October 2012, plaintiff, Worldwide Restoration, Inc., agreed to perform disaster repairs to defendant Philomena Gan's rental property in Stafford Township, following Hurricane Sandy. Gan's nephew, co-defendant Gary J. DeBlasio, lived in the home and rented it from her. After the property sustained flooding during the hurricane, DeBlasio contacted plaintiff to repair the property.
An employee of plaintiff telephoned Gan. According to Gan, the employee told her that restoration services for the property would cost between $10,000 and $12,000. Gan orally agreed to hire plaintiff on those terms. However, plaintiff never memorialized any agreement in writing to do the repairs, as is required by a provision within the Consumer Fraud Act ("CFA"), N.J.S.A. 56:8-1, its related regulations, N.J.A.C. 13:45A-16.1, and the Truth in Consumer Contract, Warranty and Notice Act ("TCCWNA"), N.J.S.A. 56:12-14.
After plaintiff completed the restoration services, it demanded $55,524.59 from Gan for its repair work. Although defendant later recovered $16,055.35 in benefits from her homeowner's insurer, which she paid to her nephew to replace his personal property that was destroyed in the storm, she did not pay plaintiff's invoice.
Plaintiff thereupon filed a collection action in the Law Division in May 2013, seeking payment of the sums it had billed. Defendants answered, denying liability and asserting a counterclaim by Gan alleging consumer fraud violations.
DeBlasio was added as co-defendant, and defendant added Nathan Butterfield, plaintiff's owner, as a third-party defendant. Neither DeBlasio nor Butterfield are involved in this appeal. --------
The parties engaged in intermittent discovery motion practice, precipitated by what defendants characterized as the "failure of [plaintiff] to provide paper discovery and also to submit to depositions." Thereafter, in September 2014, the parties took part in court-annexed, nonbinding arbitration, pursuant to Rule 4:21A-6(b). The two-attorney arbitration panel found for defendants and dismissed all of plaintiff's claims against Gan and her nephew.
The panel awarded plaintiff no relief on its collection action due to its violations of the CFA, including the requirement of a written estimate for the repair work. However, the panel found that Gan had demonstrated no "ascertainable loss," as a required element for affirmative damages under the CFA, see N.J.S.A. 56:8-19, and denied her counterclaim. Additionally, the panel found plaintiff violated the TCCWNA and awarded Gan a nominal sum of $100 for that technical violation. Lastly, the panel found that Gan was entitled to statutory attorney's fees, but did not quantify their amount and instead indicated that such fees were "to be determined by the court if [the] arbitration [is] confirmed."
Following the arbitration award, neither party filed for a trial de novo within thirty days. Consequently, the award became final pursuant to Rule 4:21A-6(b).
In January 2015, Gan moved for confirmation of the arbitration award and petitioned for $39,574.97 in attorney's fees to be paid by plaintiff. The trial judge reviewed counsel's certification of services and attached billing entries, and compared the quoted rates with reasonable prevailing rates for similar legal work in Mercer County. After considering the matter, the judge confirmed the arbitration result but awarded a modified sum in counsel fees of $22,417.
The judge accepted the number of hours expended by the various attorneys within the law firm who performed work on Gan's case, but reduced the hourly rates that were claimed. The judge also expressly rejected the firm's request for a lodestar fee multiplier, finding that such an enhancement was unwarranted in light of the nature of the case and the limited scope of the work performed. The judge further awarded the requested sum of $958.97 in costs, yielding a $23,375.97 total award.
Gan accepts the judge's determinations regarding the compensable hours and the billing rates. She solely appeals the judge's discrete ruling to disallow a multiplier enhancement to the lodestar amount. Plaintiff has not cross-appealed.
II.
Parties who have their substantive issues decided by nonbinding arbitration do not have to include a request for an adjudication of attorney's fees in the arbitration itself. Riding v. Towne Mills Craft Ctr., Inc., 166 N.J. 222, 234 (2001). Unless the parties agree otherwise, the trial court will instead determine the appropriate award of attorney's fees under the pertinent fee-shifting statutes. Ibid.
The CFA provides that "[a]ny person who suffers any ascertainable loss of moneys or property . . . as a result of . . . [a] practice declared unlawful under this act" may bring a cause of action or assert a counterclaim. N.J.S.A. 56:8-19 (emphasis added). Successful litigants under this provision are entitled to recover reasonable attorney's fees. N.J.S.A. 56:8-19. The "ascertainable loss" aspect of the CFA notably differs from the fee-shifting provision of the TCCWNA, which more broadly provides that "[a]ny person who violates the provisions of this act shall be liable to the aggrieved consumer for a civil penalty of not less than $100.00 . . . together with reasonable attorney's fees and court costs." N.J.S.A. 56:12-17 (emphasis added).
The trial judge correctly recognized that Gan had prevailed in the arbitration on her TCCWNA claim as well as her CFA affirmative defense to the collection action, but not on her counterclaim under the CFA. The arbitration panel found that Gan was only entitled to attorney's fees under TCCWNA, not the CFA. However, the judge disagreed and ruled that both fee-shifting statutes applied, relying on Scibek v. Longette, 339 N.J. Super. 72 (App. Div. 2001). In Scibek, we reversed a trial court's denial of attorney's fees under the CFA, despite no ascertainable loss being present, given the remedial and deterrence objectives of the statute. Id. at 77-86.
After the judge determined that Gan was thus entitled to fees under both CFA and TCCWNA, she analyzed what would be a reasonable fee under the circumstances. She found that Gan's counsel completed a "couple of rounds of pleadings" and discovery motions, in addition to work on a "detailed [arbitration] statement." Although she ultimately ruled the attorney hours billed were reasonable, she did question why no paralegal hours were submitted, finding some of the work charged at an attorney's fee rate could have been done by a paralegal. Further, the judge found the hourly rates sought were unrepresentative of the rates a Mercer County attorney would typically charge for a collection action defense. She found the work done by the firm to be of quality, but the issues involved were not novel or difficult. The judge also noted that the litigation was resolved in nonbinding arbitration, rather than through summary judgment or a trial.
"In determining and calculating a fee enhancement, the court should consider the result achieved, the risks involved, and the relative likelihood of success in the undertaking." Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 23 (2004). "[C]ontingency enhancements in fee-shifting cases ordinarily should range between five and fifty-percent of the lodestar fee, with the enhancement in typical contingency cases ranging between twenty and thirty-five percent of the lodestar." Rendine v. Pantzer, 141 N.J. 292, 343 (1995) (emphasis added); see also Walker v. Giuffre, 209 N.J. 124 (2012) (reaffirming the Rendine framework).
On appeal, fee determinations by trial courts should be disturbed "only on the rarest occasions, and then only because of a clear abuse of discretion." Rendine, supra, 141 N.J. at 317; see also Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 443-49 (2001) (citing the "deferential standard of review" mandated by Rendine).
New Jersey courts analyze the application of attorney's fees under the framework established by the Court in Rendine, supra, 141 N.J. at 316. The Court there evaluated the calculation of reasonable attorney's fees under the fee-shifting statute in the Law Against Discrimination, N.J.S.A. 10:5-27.1.
The Court announced its policy goal in Rendine was to balance the Legislature's priorities in creating a fee-shifting statute, "while at the same time sharply discouraging collateral litigation of 'reasonable fee' issues under fee-shifting statutes by setting forth standards that inform the exercise of discretion by trial courts called on to determine such fees." Id. at 317. The Court held that "future fee determinations by trial courts will be disturbed only on the rarest occasions, and then only because of a clear abuse of discretion." Id. at 317. (Emphasis added).
After analyzing similar federal court rulings on contingent fee arrangements and attorney's fees, the Court in Rendine crafted a two-step approach. Id. at 334-35. First, the trial court should determine the lodestar by multiplying the number of hours expended by a reasonable hourly rate. Id. at 334-35. The Court signaled this step as the "most significant element" in determining a reasonable fee, and instructed courts to not "accept passively" counsel's submissions, but instead to "carefully and critically" analyze the hours and hourly rate. Id. at 335.
Further, the lodestar calculation should be limited by the "level of success achieved," meaning if the party seeking fees did not succeed on all claims, the lodestar should be reduced to only include the work on the successful claims. Id. at 336. However, the ultimate fee award need not be proportionate to the amount of damages recovered by the plaintiff. Ibid. In considering the rate submitted, then, a court should look to the prevailing market rate in the community and ensure the rate is "fair, realistic, and accurate, and should make appropriate adjustments." Id. at 337.
Next, Rendine instructed that, as a second step of the fee analysis, trial courts should "consider whether to increase that fee to reflect the risk of nonpayment in all cases in which the attorney's compensation entirely or substantially is contingent on a successful outcome." Ibid. The Court expressed an aversion to overpayment or double-counting, and strived to fashion a rule that balanced the amount of a contingency enhancement with the risk of nonpayment. Id. at 339. A trial court in its discretion could consider multiplying a lodestar award based on the likelihood of success, but a court should not factor the ability of the party to secure other counsel. Id. at 342.
The Court noted in Rendine that determining what amount by which to enhance the lodestar award is difficult, because there is no market hourly rate for contingent litigation. Ibid. The Court doubted that certifications from similarly placed attorneys could aid in determining the figure. Ibid. Ultimately, the Court concluded that "ordinarily" the enhancement in a fee-shifting case "should range between five and fifty-percent of the lodestar fee[.]" Id. at 343. The "typical" range should be between twenty and thirty-five percent of the lodestar. Ibid.
The Court did not discuss in Rendine the appropriateness of a judge awarding no lodestar adjustment at all. Ibid. Generally, the Court remained "willing to revisit the issue if presented with compelling evidence that [its] perception of the proper range of contingency enhancements is consistent with the relevant market[.]" Ibid.
More recently, our Supreme Court in Walker, supra, 209 N.J. at 140-41, considered a United States Supreme Court case on fee multipliers and reaffirmed Rendine's framework. Walker, supra, 209 N.J. at 140-41 (considering Perdue v. Kenny A., 559 U.S. 542, 550-51, 130 S. Ct. 1662, 1672, 176 L. Ed. 2d 494, 506 (2010)). Again, the Court underscored the trial court's wide discretion in evaluating a request for a fee enhancement. Walters, supra, 209 N.J. at 131-33.
The Court has stressed that fee enhancements should not be granted as a matter of course, and the ranges suggested in Rendine are solely a guideline. In New Jerseyans for a Death Penalty Moratorium v. New Jersey Dep't of Corrections, ("NJDPM") 185 N.J. 137, 158 (2005), the plaintiff public interest group successfully challenged under the Open Public Records Act ("OPRA"), the Department of Corrections' refusal to grant an open records request into death penalty records, and received attorney's fees and a five percent enhancement. Id. at 145-48. Both this court and the Supreme Court increased the fee enhancement in NJDPM because the trial court had failed to consider sufficiently "the actual risk that the attorney will not receive payment if the suit failed." Id. at 157.
In discussing the appropriateness of fee enhancements, the Court instructed in NJDPM that "[l]ike all fee-shifting statutes, the OPRA neither prohibits enhancements, nor does the Act require them," and that because fee enhancements are not "preordained," trial courts should not award them "as a matter of course." Ibid. Pointedly, the Court made clear that the five to fifty percent multiplier range set forth in Rendine is not mandatory, declaring that "[b]ecause we repose discretion in the trial court to establish the enhancement, those percentages are guidelines only." Id. at 158 (emphasis added).
The Court in NJDPM held that the trial court had overlooked several distinctive factors that were present in that case, such as: the attorney charging no fee; the high risk of failure due to the state agency's blanket claim of privilege; the public importance of the documents requested; and the attorney's excellent work in a case of first impression. Id. at 157-58. The Court found those extraordinary facts warranted an increase in the fee above the one that had been awarded by the trial court. Id. at 158.
There are no comparable distinctive circumstances here. Although we surely recognize the successful efforts of Gan's counsel in very capably handling a matter that was referred to their law firm by a legal services office, the claims and defenses here were not novel or especially complicated. The CFA violation here was essentially an individualized and relatively straightforward matter arising out of a particular home-repair transaction, rather than a lawsuit involving broader institutional concerns such as those depicted in NJDPM. The case here was not litigated to trial but instead disposed of through a comparatively less formal and less intensive arbitration process.
Although a favorable result was achieved for Gan, no more than a nominal $100 affirmative monetary recovery was obtained on her behalf because of the lack of proof of ascertainable loss. The fees were based on a reasonable hourly rate selected by the trial judge to comport with the local market. The hours expended by the firm were not reduced, even though they conceivably could have been in light of the non-use of paralegals and the firm's lack of success in obtaining more than a nominal recovery. On the whole, the fees awarded, even without a multiplier enhancement, were well within the zone of fair and reasonable outcomes.
In sum, the trial court did not misapply its discretion or the applicable legal standards in declining to award an enhancement in this particular case.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION