VINCENZA DIPOALO v. JOHN SCHUSTER, III, ESQ.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5954-03T35954-03T3

VINCENZA DIPOALO,

Plaintiff-Appellant/

Cross-Respondent,

v.

JOHN SCHUSTER, III, ESQ.,

Defendant-Respondent/

Cross-Appellant.

_______________________________________

 

Argued March 27, 2006 - Decided April 13, 2006

Before Judges Fall, C. S. Fisher and Yannotti.

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. MON-L-877-99.

Stuart S. Ball argued the cause for appellant/cross-respondent (Ball Livingston, attorneys; Mr. Ball, on the brief).

Christopher J. Carey argued the cause for respondent/cross-appellant (Graham, Curtin & Sheridan, attorneys; Mr. Carey, Barry J. Muller and Joshua R. Elias, on the brief).

PER CURIAM

Plaintiff Vincenza DiPoalo appeals from an order entered by Judge Ronald L. Reisner on May 17, 2004 granting in part and denying in part plaintiff's application for attorney's fees and costs and an order entered by Judge Lawrence M. Lawson on May 28, 2004 denying plaintiff's motion pursuant to R. 1:21-7(f) for an enhanced fee. Defendant John Schuster, III cross-appeals from the May 17, 2004 order. We affirm.

The relevant facts may be stated succinctly. On February 22, 1999, plaintiff filed an action against defendant asserting a claim for legal malpractice arising from defendant's representation of plaintiff in a workers' compensation action. Plaintiff retained the Ball Livingston firm to represent her in the matter and on November 18, 1998 entered into a retainer agreement which provided among other things that the firm would receive a fee of 33 1/3% of the first $500,000 recovered, after payment of costs and expenses incurred in the litigation. In March 2004, the matter was ultimately settled and plaintiff received a lump sum payment of $35,000 plus an annuity purchased at a cost of $83,511.22. The parties agreed that the issue of attorneys' fees would be resolved by motion practice.

On March 12, 2004, plaintiff filed a motion seeking attorney's fees and costs pursuant to Saffer v. Willoughby, 143 N.J. 256 (1996), and R. 1:21-7(f), calculated using the lodestar method. Plaintiff sought an award of $105,000 in attorney's fees and $5,000 in costs. Defendant opposed the application arguing that plaintiff was not entitled to recoup her attorneys' fees from defendant. Alternatively, defendant asserted that under Distefano v. Greenstone, 357 N.J. Super. 352 (App. Div.), certif. denied, 176 N.J. 278 (2003), the fee should be based on the contingency agreement rather than determined using the lodestar methodology.

Judge Reisner determined that plaintiff was entitled to an award of attorneys' fees but found that under DiStefano the fee must be based on the contingency agreement. The judge heard oral argument on April 30, 2004 and rendered his decision from the bench, in which he concluded that under Saffer and DiStefano, plaintiff was entitled to an award of counsel fees and costs but it must be determined according to the terms of the contingency fee agreement. Plaintiff's application was thus granted in part and denied in part, without prejudice to an application by plaintiff for an enhanced fee pursuant to R. 1:21-7(f).

Judge Reisner entered an order on April 30, 2004 awarding fees and costs to plaintiff and entered an amended order on May 17, 2004 awarding plaintiff attorneys' fees in the amount of $38,198.01 and costs in the amount of $3,917.19. The judge filed a written opinion on July 26, 2004 amplifying the oral decision he had placed on the record April 30, 2004.

On May 7, 2004, plaintiff filed an application with Judge Lawson for an enhanced fee and the motion was heard on May 28, 2004. Judge Lawson denied the application and placed his decision on the record. The judge stated that plaintiff had not established that the fee based on the contingency agreement was unreasonable, nor had plaintiff shown that the matter required exceptional skills or was unusually time consuming. Judge Lawson entered an order on May 28, 2004 denying the application.

In the appeal from Judge Reisner's order, plaintiff argues that the judge erred in limiting her fee to the amount determined pursuant to the contingency agreement. Plaintiff asserts that the judge erroneously applied Distefano because that case is factually distinguishable. In the cross-appeal, defendant argues that Saffer is inapplicable and moreover the Saffer rule is unconstitutional because it denies attorneys as a class due process and equal protection under the law.

We are convinced that the arguments raised on the appeal and the cross-appeal are entirely without merit. The Court in Saffer held:

Ordinarily, an attorney may not collect attorney fees for services negligently performed. In addition, a negligent attorney is responsible for the reasonable legal expenses and attorney fees incurred by a former client in prosecuting the legal malpractice action. Those are consequential damages that are proximately related to the malpractice. In the typical case, unless the negligent attorney's fee is determined to be part of the damages recoverable by a plaintiff, the plaintiff would incur the legal fees and expenses associated with prosecuting the legal malpractice suit.

[Saffer, supra, 143 N.J. at 272.]

In DiStefano, plaintiff successfully pursued a legal malpractice claim against the defendant and received $90,000 in partial settlement of the dispute, which represented compensatory damages plus interest. DiStefano, supra, 357 N.J. Super. at 354. We held that under Saffer, plaintiff was entitled to recover the entire $90,000 without any deduction for the original $30,000 contingency fee, plus an award of consequential damages for the attorneys' fees and costs required to pursue the legal malpractice action. Ibid. We rejected the defendant's assertion that the resulting award amounted to duplicate recovery. Id. at 357. We noted that the result was compelled by Saffer and added, "Presumably, the duplicate recovery, even though a windfall to the plaintiff, is considered the lesser evil to crediting the attorney with an undeserved fee where he has botched the job." Ibid.

In DiStefano, we also rejected the plaintiff's assertion that the award of fees and costs for the legal malpractice action should be determined using the lodestar method. Id. at 360-61. We noted that the plaintiff had entered into two contingency fee agreements with her attorneys, "never contemplated an hourly rate of compensation and indeed specifically rejected such an arrangement in both contingent fee agreements." Ibid. We further stated, "There is no sound reason to tinker with [the] standard retainer agreement, which has insured appropriate compensation in this case." Id. at 361.

We are convinced that Judge Reisner correctly determined that under Saffer and DiStefano, plaintiff was entitled to attorneys' fees and costs for pursuit of the legal malpractice action, without any reduction for the fee that would have been billed to plaintiff for the underlying matter. We find no merit whatsoever in plaintiff's assertion that this case is distinguishable from DiStefano and defendant's assertion that the Saffer rule unconstitutionally discriminates against attorneys as a class. We therefore affirm substantially for the reasons stated by Judge Reisner on the record April 30, 2004 and in his written opinion filed on July 26, 2004.

We likewise find no merit in plaintiff's appeal from the order denying her application for an enhanced fee. R. 1:21-7(c) provides that an attorney may not contract for, charge or collect a contingent fee in excess of certain specified limits. The rule limits a contingent fee to 33 1/3% for the first $500,000 recovered. R. 1:21-7(c)(1). If an attorney considers the fee permitted by the rule to be inadequate, the attorney may make application to the Assignment Judge for a determination "of a reasonable fee in light of all the circumstances." R. 1:21-7(f). We have held that in ruling on an application pursuant to this rule, the attorney must demonstrate that: "(1) the fee allowed under the rule is not reasonable compensation for the services actually rendered, and (2) the case presented problems which required exceptional skills beyond that normally encountered in such cases or the case was unusually time consuming." Wurtzel v. Werres, 201 N.J. Super. 544, 549 (App. Div.), certif. denied, 102 N.J. 353 (1985).

We are satisfied that Judge Lawson properly found that the fee based on the contingency agreement between plaintiff and her attorneys for the legal malpractice action was reasonable. The judge found that the case did not require exceptional skills, nor was it unusually time consuming. The judge's findings are amply supported by the record and therefore are binding on appeal. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974). We affirm the order entered on May 28, 2004 denying plaintiff's motion for an enhanced fee substantially for the reasons stated by Judge Lawson on the record.

Affirmed on the appeal and the cross-appeal.

 

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April 13, 2006