MSW CAPITAL, LLC v. CAPUTO MARK

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

MSW CAPITAL, LLC CURRENT

ASSIGNEE, [WASHINGTON MUTUAL

FINANCE, ORIGINAL CREDITOR],

Plaintiff-Respondent,

v.

CAPUTO MARK a/k/a MARK CAPUTO,

Defendant-Appellant.

___________________________________

July 28, 2015

Argued April 21, 2015 Decided

Before Judges Koblitz and Higbee.

On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Monmouth County, Docket No. DC-9491-13.

David Wisniewski argued the cause for appellant.

Steven A. Lang argued the cause for respondent (Pressler and Pressler, L.L.P., attorneys; Lawrence J. McDermott, Jr., on the brief).

PER CURIAM

Counsel for defendant, Mark Caputo, appeals from a March 7, 2014 order requiring him to pay counsel fees to plaintiff, MSW Capital, LLC (MSW). We hold that there is no legal or factual basis to impose attorney fees in this case, and we therefore reverse.

On July 23, 2013, MSW, a collection agency, filed a complaint against defendant. The complaint alleged defendant owed a debt on a credit card account, for which plaintiff was the assignee. Defendant, pro se, filed an answer on July 29, 2013, denying the allegations in the complaint, and requesting a fee waiver pursuant to Rule 1:13-2(a), so that he could proceed as indigent. Defendant's request for a fee waiver was granted, and Legal Services of New Jersey (LSNJ)1 asked counsel to represent defendant on a pro bono basis. Counsel agreed, and entered his appearance on behalf of defendant on September 27, 2013.

Prior to trial in this matter, which was scheduled for December 17, 2013, a mandatory mediation session was held. Defense counsel asserts that at the mediation session, he advised plaintiff's counsel that defendant was indigent and was receiving Federal Emergency Housing Agency assistance as a victim of Hurricane Sandy. Plaintiff's counsel maintains that he made a settlement offer during the mediation.

Following the mediation session, trial commenced on the same date, where one of plaintiff's representatives testified. After about one hour, the trial was adjourned for the day. Defendant did not appear in court for either the mediation or the trial.

Two days later, on December 19, 2013, defense counsel filed a motion to withdraw as counsel, accompanied by an affidavit. He asserted that as a result of a communication with his client, he and defendant could no longer have an effective attorney-client relationship. Counsel did not disclose to the court any of the details of his communication with defendant. On January 7, 2014, the court denied the request to be relieved as counsel.

The case was then adjourned until January 21, 2014. On that date, neither plaintiff's witnesses nor defendant appeared in court. Instead, both counsel met with the court in an attempt to resolve the matter. Defense counsel represented that the case would not settle because defendant had no assets or income, and wanted a trial. In response, plaintiff's counsel expressed concern that defendant was not being told about plaintiff's settlement offers. He argued that but for this failure, the case could possibly have settled without a trial.

Plaintiff's counsel, at some point, told defense counsel his client would dismiss the case without prejudice if defendant was a Sandy victim.

Defendant was reached by phone during the January 21, 2014 conference. The conversation was placed on the record. The judge unexpectedly put defendant under oath and asked him if his counsel had conveyed any settlement offers to him. Defendant responded that he had not been told about any offers, and his counsel had not even talked to him on the day of the mediation. Counsel insisted that defendant's statement was not true, and that his time log showed he had spoken to defendant for over fifteen minutes on the phone the day of the mediation.

Plaintiff's counsel asked the judge to sanction defense counsel and award counsel fees because of the alleged failure to convey settlement offers. Eventually, the court dismissed the case without prejudice, and relieved defense counsel, as he had previously requested, from his position as counsel.

Following dismissal of this action, plaintiff's counsel sent the court a letter accompanied by the transcript of the phone conference with defendant and claimed that he was entitled to counsel fees. He acknowledged that he had handled the case on a contingency basis, and was owed no fees by his client. The court, without holding a hearing or making findings of fact, granted plaintiff's request without explanation. In the March 7, 2014 order, defense counsel was ordered to pay plaintiff $1750.00 in counsel fees. This appeal followed.

We note that clearly stated factual findings and conclusions of law are required "on every motion decided by a written order that is appealable as of right." R. 1:7-4(a); See Shulas v. Estabrook, 385 N.J. Super. 91, 96 (App. Div. 2006) (requiring an adequate explanation of the basis for the court's action). In this case, no findings were made and no explanation of the decision was rendered. There were material facts in dispute. There could be no accurate finding of facts made without an opportunity for defense counsel to testify or cross- examine his client. More significantly, there was no evidence that defendant would have accepted a settlement offer or been able to make any payments if he had accepted an offer.

Not only were there no credibility or fact findings by the court, there was no legal rationale given to support the decision either. It is hard to discern what law the court believed was applicable. The order signed by the court simply awarded counsel fees without reference to a rule, statute, or legal precedent.

The decision of the trial court was not supported by the facts or law, nor is it sensible that plaintiff should be enriched by pro bono counsel in a situation where it was not required to pay counsel fees.

We reverse and vacate the order.

1 LSNJ coordinates the statewide legal services system, which provides free legal assistance to low-income residents of New Jersey for their civil legal problems.