SITAR COMPANY v. 222 REALTY, INC., et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5010-03T15010-03T1

SITAR COMPANY,

Plaintiff-Appellant/

Cross-Respondent,

v.

222 REALTY, INC., a corporation,

BRIDGEWOOD PROPERTIES, INC., a

corporation, AT&T RESOURCE MANAGEMENT

CORPORATION, a New York corporation that

does business in New Jersey, GEOFFREY

SCHUBERT, JAMES LESTER, TOWNSEND PROPERTY

TRUST LIMITED PARTNERSHIP, a Maryland

limited partnership that does business in

New Jersey, DENNIS TOWNSEND, DWT VENTURE,

INCORPORATED, a corporation and AMERICAN

TELEPHONE AND TELEGRAPH COMPANY, a

corporation,

Defendants-Respondents,

and

CAMPUS DRIVE LIMITED PARTNERSHIP, a

Maryland limited partnership that

does business in New Jersey,

Defendant-Respondent/

Cross-Appellant.

_____________________________________________

 

Argued November 16, 2005 - Decided

Before Judges Conley, Winkelstein and Sabatino.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County,

L-6054-98.

John D. Monte, Jr., argued the cause for appellant/cross-respondent Sitar Company (Monte, Sachs & Rudolph, attorneys; Thomas D. Monte, Jr., on the brief).

Gary K. Wolinetz argued the cause for respondent/cross-appellant Campus Drive Limited Partnership (Greenbaum, Rowe, Smith & Davis, attorneys; Gary K. Wolinetz, on the brief).

PER CURIAM

This commercial case, which was resolved in favor of defendants in an April 16, 2003 per curiam opinion of this court, returns on issues of counsel fees and costs.

On remand following this court's disposition on the merits, the Law Division awarded defense counsel $275,894 in fees. It did so pursuant to a "loser pays" fee-shifting provision in the contract between plaintiff Sitar Company ("Sitar") and defendant Campus Drive LP ("Campus Drive"). Sitar appeals that fee award as excessive. Campus Drive cross-appeals the trial court's omission of its litigation costs from the fee award and also its failure to include fees for the legal work associated with prosecuting the fee application.

For the reasons explained below, we affirm the trial court's fee award, enhancing it to include costs as well as a supplement for reasonable fees incurred in connection with the contested fee application.

As detailed in this court's April 16, 2003 opinion, the genesis of this lawsuit stems from a real estate commission contract between Sitar, as broker, and the owner of certain commercial buildings. With the assistance of Sitar, the buildings were initially leased in 1983 to AT&T Long Lines. The lease was extended several times. Eventually Campus Drive, a limited partnership, became the owner of the buildings. In 1993 Campus Drive negotiated a fourth lease extension with a successor in interest to AT&T Long Lines. Following these lease extensions, Sitar demanded more commissions under the 1983 contract.

When its demands for payment were rebuffed, Sitar brought suit in 1998 against Campus Drive and nine other defendants. The nine co-defendants included Dennis Townsend (the controlling general partner of Campus Drive), DWT Venture, Incorporated (the other general partner of Campus Drive), Townsend Property Trust Limited Partnership ("TPTLP") (another partnership controlled by Mr. Townsend), and various other persons and entities. The total recovery sought by Sitar exceeded a million dollars.

After a jury trial, Sitar obtained a $315,540 judgment against Campus Drive and its general partners, plus an award of $111,107 in counsel fees. Sitar also obtained a $30,000 judgment against co-defendant AT&T Resource Management Corporation. On appeal, this court reversed both judgments, finding as a matter of law that Sitar was not entitled to be paid any further sums under the 1983 commission agreement or under any other legal theory.

We remanded the case to the Law Division for a calculation of attorneys fees under paragraph eighteen of the commission agreement. That fee-shifting provision, the enforceability of which is not challenged here, reads as follows:

If the parties to this Agreement or their successors, successors in title or assignees are ultimately involved in litigation with respect to the rights and obligations contained in this Agreement, the successful party to that litigation shall be entitled to recover from the other party its reasonable attorneys fees.

[Emphasis added]

It is undisputed that Campus Drive is a successor in interest under the commission agreement, and is entitled to fees under paragraph eighteen as a "successful party" by virtue of this court's reversal of the judgments procured by Sitar. The present dispute is simply over how the trial court calculated that fee.

As reflected in certifications from counsel, the law firm of Greenbaum, Rowe, Smith & Davis LLP represented Campus Drive and seven of the other co-defendants in the defense of Sitar's lawsuit. Four of those parties, the so-called "AT&T Defendants," were represented by the Greenbaum firm pursuant to indemnification and joint defense arrangements with Campus Drive. Because Campus Drive had few assets, its controlling partner Townsend arranged for defendant TPTLP and another business entity he controlled, Townsend Capital, LLC, to pay the Greenbaum firm's legal fees on behalf of Campus Drive.

On remand, Campus Drive applied to the trial court for $457,237 in legal fees charged by the Greenbaum firm. It did not include in its application any fees attributed to the law firm's representation of the AT&T parties. Sitar strenuously opposed the application, and a period of discovery on the fee issues ensued.

After reviewing the law firm's billings and considering the arguments of counsel, the trial court awarded fees to Campus Drive in the reduced amount of $275,894, finding that sum to comport with the reasonableness standard recited in the contract and the factors of R.P.C. 1.5. Sitar moved for reconsideration, and Campus Drive cross-moved for reconsideration; both motions were denied. This second appeal ensued.

Sitar principally contends on appeal that the trial court should have reduced the fee award to Campus Drive by a factor of 7/8ths because the Greenbaum law firm represented eight named defendants in the lawsuit. We affirm the trial court in rejecting that mechanistic suggestion.

The law does not inexorably require that a court awarding counsel fees in a multiparty case must divide up the billings among all of the prevailing parties represented by the same attorney or law firm. We reject Sitar's claim that such fee apportionment is mandatory. Rather, a court should consider the totality of circumstances in assessing whether such apportionment is necessary to assure that the fee awarded is one that is reasonable.

Here, the Greenbaum firm successfully defended Sitar's lawsuit in all respects, an ultimate outcome that inured to the benefit of all of the defendants. There was a shared community of interest among the defendants in defeating those claims. At least three of those defendants were affiliated with defendant Dennis Townsend, the controlling partner of Campus Drive. The other defendants, although not business affiliates of Townsend, nevertheless similarly relied upon Campus Drive's counsel to fend off Sitar's allegations. The Greenbaum firm mounted a unified defense, filing a single answer for all of the defendants it represented, and advancing many common legal and factual arguments.

The record does not demonstrate that the legal work that defense counsel performed would have been any less extensive or time-consuming had Sitar sued only Campus Drive, rather than the numerous defendants Sitar chose to include in the complaint.

On the whole, we defer to the discretion of the trial judge, who was quite familiar with this seven year-old litigation, in determining that $275,894 was a fair and reasonable sum to compensate Campus Drive's attorneys.

We find inapposite Sitar's citation of insurance cases involving the allocation of counsel fees. See Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165 (1992); SL Industries, Inc. v. American Motorists Ins. Co., 128 N.J. 188 (1992); Hebala v. Healthcare Ins. Co., 370 N.J. Super. 260 (App. Div. 2004). Those cases distinguishably concerned the allocation of fees among claims, not among clients, in the discrete context of insurance coverage litigation.

We likewise reject Sitar's argument that Campus Drive is ineligible to recover counsel fees because it did not pay its legal bills out of its own funds. Such arrangements are common in many contexts, including legal work funded by a client's relatives, contingent fee cases and pro bono civil rights litigation. Where a prevailing party is entitled to counsel fees by statute or contract, courts have awarded fees against the losing side regardless of the manner in which the litigation was financed. See, e.g., Specialized Medical Sys., Inc. v. Lemmerling, 252 N.J. Super. 180 (App. Div. 1991)(upholding counsel fee award even though fee claimant's counsel had provided services for free), certif. granted, 127 N.J. 565, appeal dismissed, 142 N.J. 443 (1992); Carmel v. Borough of Hillsdale, 178 N.J. Super. 185, 189-90 (App. Div. 1981)(authorizing fee recovery under statute where pro bono counsel had been supplied to prevailing plaintiff by a civil rights organization).

Even though the Greenbaum firm's fees in defending the suit were considerably higher than those of plaintiff Sitar's counsel, we shall not set aside the lower court's fee award for that reason. The trial judge had alerted both sides before trial that they risked a hefty fee liability under the contract if they lost. The stakes at trial were substantial. We find no inequity to be redressed.

With respect to Campus Drive's cross-appeal, we do find that the trial court erred in omitting reasonable litigation costs from the fee award. Costs are necessarily expended in virtually every lawsuit, especially a hard-fought commercial case such as this one. Those expenses go hand in hand with the professional time devoted by the attorneys and staff handling the case.

We are unpersuaded that the absence of any explicit mention of costs in paragraph eighteen of the parties' commission agreement disallows their recovery by Campus Drive. Courts at times have construed the phrase "counsel fees" or "attorneys fees" to encompass the costs of suit. See, e.g., Council Enter., Inc. v. City of Atlantic City, 200 N.J. Super. 431, 443 (Law Div. 1984)(including telephone charges, photocopying, transcript costs, lodging and other out-of-pocket expenses within counsel fee award); see also To-Am Equip. Co. v. Mitsubishi Caterpillar Forklift of Am., Inc., 953 F. Supp. 987, 1000-01 (N.D. Ill. 1997)(allowing various costs to be included in counsel fee award), aff'd, 152 F.3d 658 (7th Cir. 1998).

Without declaring here that costs are always subsumed into such fee-shifting provisions, we are satisfied that Sitar anticipated that the losing party in a lawsuit over the commission agreement would be responsible for the other side's reasonable costs. Indeed, Sitar presented a claim for its own costs to the trial court after it had initially prevailed at trial. The since-vacated judgment it procured below included such costs. Given that history, Sitar should not be permitted now to adopt a contrary position about the scope of permissible recovery under paragraph eighteen of the agreement.

Rather than remanding this case a second time, we shall exercise our prerogative under R. 2:10-5, and directly evaluate the itemized costs submitted by Campus Drive. None of those disbursements for delivery services, transcripts, photocopying, electronic legal research, and other costs of the litigation appear unreasonable. We therefore award the full amount of $41,960 in costs sought by Campus Drive.

Lastly, we address Campus Drive's claim for fees associated with the prosecution of its fee application. The trial court offered no rationale for leaving out such prosecution fees from its award. Such fees are commonly recoverable. See, e.g., Courier News v. Hunterdon County Proscutor's Office, 378 N.J. Super. 539, 547 (App. Div. 2005)(authorizing recovery for attorney time spent on fee petition); Tanksley v. Cook, 360 N.J. Super. 63, 68 (App. Div. 2003)(awarding fees for enforcement of a Consumer Fraud Act judgment inclusive of a fee award). Indeed, a fee-shifting provision would have little value if the party entitled to collect its fees under that provision must pursue collection measures at its own expense.

We therefore exercise original jurisdiction on this issue as well. Counsel at the Greenbaum firm reportedly spent over 100 hours at the trial level litigating Campus Drive's claims for fee reimbursement. Presumably lawyers at the firm devoted a substantial number of additional hours on this appeal. In the interests of finality and efficiency, we shall not invite defense counsel to submit their updated billings reflecting that appellate work. Instead, we approve a total of fifty combined hours of compensable time spent on the fee prosecution issue at the trial and appellate levels. We shall multiply those hours by an imputed blended hourly rate of $250, which roughly corresponds to the average billing rates reflected on defense counsel's bills from the proceedings before this appeal. That calculation yields an award of $12,500 to Campus Drive for its fee prosecution efforts. To that sum we add $2,238 in costs related to the appeal that are itemized in the present record; any additional costs not yet documented in the record shall not be reimbursed.

In conclusion, we affirm the $275,894 in fees awarded to respondent below, and modify the judgment to include an additional amount of $56,698 for fee prosecution and litigation costs.

 

The only defendants not represented by the Greenbaum firm were Bridgewood Properties, Inc. and Geoffrey Schubert. Neither of those parties' interests are relevant to this appeal.

The AT&T Defendants consisted of American Telephone and Telegraph Company, AT&T Corp. (successor to AT&T Resource Management Corp.), James Lester and 222 Realty, Inc.

Courts outside of our State have also accepted this proposition. See, e.g., ABC, Inc. v. Primetime 24 Joint Venture, 67 F. Supp. 2d 558, 562 (M.D.N.C. 1999)(third party's payment of a client's legal fees does not bar the client from recovering statutory counsel fees from the opposing party), aff'd, 232 F.3d 886 (4th Cir. 2000); Macias v. Hartwell, 55 Cal. App. 4th 669, 675-76 (Cal. Ct. App. 1997)(approving defendant's recovery of counsel fees from plaintiff even though defense counsel had been funded by a third party).

(continued)

(continued)

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A-5010-03T1

December 1, 2005