ALFREDO GUTIERREZ and RENA ANDERSON v. FIRAS HAMADE, ABBAS JEWELRY CORPORATION d/b/a LEENS JEWELRY -

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

ALFREDO GUTIERREZ and

RENA ANDERSON,

Plaintiffs-Appellants,

v.

FIRAS HAMADE, ABBAS JEWELRY

CORPORATION d/b/a LEENS

JEWELRY,

Defendants-Respondents.

Before Judges Hoffman and Whipple.

On appeal from Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-0135-14.

Madeline L. Houston argued the cause for appellants (Houston & Totaro, attorneys; Ms. Houston and Melissa J. Totaro, on the briefs).

Robert H. Heck argued the cause for respondents (Spevack Law Offices, attorneys; Mr. Heck, on the brief).

PER CURIAM

Plaintiffs Alfredo Gutierrez and Rena Anderson appeal from a January 23, 2015 order awarding counsel fees and costs following a judgment in favor of plaintiffs under the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20. Plaintiffs maintain that the trial judge abused his discretion by awarding only $13,004 in attorney's fees and $408.27 in costs, less than one-half of the requested $29,461 in fees and $933.27 in costs. For the reasons that follow, we affirm.

I.

The underlying facts of this case are essentially undisputed. Plaintiffs, a young couple, sought a loan from defendants Firas Hamade and Abbas Jewelry, who operated a jewelry store in Perth Amboy. Defendants functioned as an illegal pawn brokering establishment, as defendants were not licensed pawnbrokers, N.J.S.A. 45:22-2, and also charged interest rates substantially higher than those permitted by law. In order to acquire a loan, in the spring of 2013 plaintiffs pawned a wedding band originally purchased for $1,500 at defendants' store for $300, plus $100 in interest per month. Plaintiffs returned in two weeks and retrieved the wedding band in exchange for $400. In June 2013, plaintiffs again needed money, and the same sequence of events occurred.

On July 12, 2013, plaintiffs again returned to pawn the same wedding band under the same conditions. Plaintiffs returned on August 9, and offered to pay $300 that day, and the other $100 in a week. Defendants refused and informed plaintiffs they needed the entire amount, and since a month had passed, they would require an additional $100 to retrieve the ring. Plaintiffs returned in mid-to-late September with $500, but defendants required an additional $100 in interest because extra time had passed. During a visit to defendants' store in December 2013, plaintiffs recorded an iPhone video of a conversation with defendant Hamade and another employee about the payments due;1 however, there were some issues with quality of the video and much of the dialogue was in Spanish.

Plaintiffs then sought the representation of the law office Houston & Totaro (the Houston firm), which accepted the matter on a contingency basis. In January 2014, the Houston firm filed a complaint for plaintiffs alleging violations of the CFA and the New Jersey Pawnbrokering Law, N.J.S.A. 45:22-1 to -40. Following difficulties perfecting service of process, default was eventually entered against defendants. On June 16, 2014, the Houston firm filed a motion for entry of default judgment, seeking restitution of the ring plus treble damages, attorney's fees, and costs. Defendants finally retained counsel, who requested an extension of time to respond to plaintiffs' motion, along with plaintiffs' settlement demand.

After settlement discussions failed, defendants retained new counsel, who opposed plaintiffs' motion for default judgment and filed a motion to vacate the entry of default, asserting "there are meritorious defenses to plaintiffs' complaint." These motions were accompanied by defendant Hamade's certification that there was no pawn or loan transaction; rather, plaintiffs merely sought a ring repair. In response, plaintiffs' counsel attached a translated transcription of plaintiffs' iPhone video recording. Following review of the iPhone video and transcript, defendants' counsel sent a letter to the court withdrawing defendants' motion to vacate default, as well as their opposition to plaintiffs' motion for default judgment.2 On December 5, 2014, the trial court entered a consent judgment in favor of plaintiffs that provided for the return of the wedding band to plaintiffs, and awarded them $3,600 in damages against defendants,3 along with attorney's fees and costs.

On December 24, 2014, the Houston firm filed its attorney's fees application, along with a twenty-page letter brief. The application sought a total of $20,163.75 for attorney's fees as of the filing of the submission. This amount broke down to 38.6 hours at junior partner Melissa Totaro's hourly rate of $340, 6.2 hours at senior partner Madeline L. Houston's hourly rate of $485, multiplied by a twenty-five-percent contingency enhancement. The application further sought $917.97 in costs. Following additional time responding to defendants' arguments, this amount increased to $27,521 in fees and $933.27 in costs, as well as reservation for a supplemental request for fees following oral argument, which amounted to five additional hours, including travel time paid at half time. Defendants opposed the application, contending the requests were excessive and unreasonable.

Following extensive oral argument, the trial judge issued an oral opinion on January 23, 2015. The judge first approved the hourly rates suggested by plaintiffs' two attorneys. However, the judge concluded that some aspects of the case were "over-lawyered" and that plaintiffs unreasonably withheld the iPhone video recording from defendants' counsel, which would have likely forced an immediate settlement. As such, the judge found the opposition to defendants' motion to vacate default was neither reasonable nor necessary. Similarly, the judge concluded that the nineteen-page brief accompanying plaintiffs' motion for entry of default judgment billed for 7.5 hours was excessive, given that the motion involved "very simple calculations about the value of the ring and the amount of unlawful interest that was charged." Accordingly, the judge deducted 5 hours.

The judge also deducted .2 hours for a review of some affidavits of service, as well as .1 hours for the failure of plaintiffs' counsel to include a return envelope. Next, the judge deducted 11 hours representing the amount of time billed in between defendants' settlement position until plaintiffs revealed the existence of the iPhone video recording which, according to the judge, could all have been avoided. Rather, the judge credited plaintiffs' counsel with 1 hour, representing the amount of time required to create and mail a disk of the recording to defendants' counsel.

In sum, for the litigation portion of the case, the judge reduced the Totaro's hours from 30.7 to 15.4; he left Houston's hours at 5.5. For the fee-application portion of the case, the judge granted Totaro's application for 7.2 hours, and Houston's application for 5.6 hours. Accordingly, this totaled 20.9 hours for the litigation portion of the case, out of the requested 43.4 hours approximately forty-eight percent. Therefore, the judge proportionately reduced the hours on the fee application by forty-eight percent, or 2.7 hours for Houston and 3.5 hours for Totaro. This amounted to a grand total of $10,404. The judge allowed for a twenty-five-percent fee enhancement, which added $2,600. As for costs, the judge deducted the translation and transcription costs of the iPhone video recording, amounting to a new total of $408.27.

II.

The present appeal followed, with plaintiffs presenting the following arguments for our consideration

POINT ONE

THE TRIAL COURT'S DENIAL OF COMPENSATION TO PLAINTIFFS' COUNSEL BASED ON ITS SUPPOSITION THAT IF PLAINTIFFS' COUNSEL HAD PROVIDED CERTAIN EVIDENCE TO DEFENSE COUNSEL IMMEDIATELY (EVEN BEFORE AN ANSWER HAD BEEN FILED) VIRTUALLY NO FURTHER WORK TO GET PROPER RELIEF FOR THE CLIENTS WOULD HAVE BEEN NECESSARY, IS AN ABUSE OF DISCRETION BECAUSE THERE IS NO FACTUAL SUPPORT FOR THIS IN THE RECORD, AND IS BASED ON AN ERROR OF LAW AS TO WHAT DAMAGES PLAINTIFFS WERE ENTITLED TO.

POINT TWO

THE TRIAL COURT ERRED BY DENYING COMPENSATION TO PLAINTIFFS' COUNSEL FOR TIME ACTUALLY AND REASONABLY SPENT ON THE MOTION FOR DEFAULT JUDGMENT.

POINT THREE

THE TRIAL COURT SLASHED PLAINTIFFS' COUNSELS' COMPENSATION FOR THE FEE APPLICATION ITSELF BASED ON AN IMPROPER APPLICATION OF THE MEASURE OF SUCCESS CRITERION, AND ABUSED ITS DISCRETION BY GIVING ZERO COMPENSATION FOR TIME SPENT BY COUNSEL REPLYING TO DEFENDANTS' OPPOSITION TO THEIR FEE APPLICATION.

Following our review of the record, the parties' briefs, and the judge's oral opinion, we conclude these arguments lack merit. We discern no mistaken exercise of discretion by the trial judge in his rulings on plaintiffs' application for attorney's fees and costs.

Rule 4:42-9(a) permits attorney's fees when authorized by statute. R. 4:42-9(a)(8). The statute which defendants were found to have violated, the CFA, is a fee-shifting statute that awards attorney's fees to financially-injured parties. N.J.S.A. 56:8-19. Specifically, the CFA states in pertinent part

In any action under this section the court shall, in addition to any other appropriate legal or equitable relief, award threefold the damages sustained by any person in interest. In all actions under this section, including those brought by the Attorney General, the court shall also award reasonable attorneys' fees, filing fees and reasonable costs of suit.

[N.J.S.A. 56:8-19.]

The statute's "fundamental remedial purpose . . . dictates that plaintiffs should be able to pursue consumer-fraud actions without experiencing financial hardship." Cox v. Sears Roebuck & Co., 138 N.J. 2, 25 (1994). Its legislative history "indicates that the provision for attorneys' fees was intended to impose on the defendant in a private action a greater financial penalty [than in an action brought by the Attorney General] and . . . [to ensure] that the financial cost to the private plaintiff was minimized and compensation maximized." Id. at 24 (citation and internal quotation marks omitted). Accordingly, our Supreme Court has recognized that "the right of access to the courts is meaningless unless the injured party has the resources to launch a suit" and that this right of access is empowered by fee-shifting, which "provides an incentive to competent counsel to undertake high-risk cases and to represent victims of fraud who suffer relatively minor losses." Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 21 (2004).

Neither party disputes that attorney's fees in this case are mandated by the plain language of the CFA. However, plaintiffs challenge the amount of attorney's fees awarded. Plaintiffs argue that the award of fees and costs to the Houston firm, in an amount substantially less the amounts requested, constitutes an abuse of judicial discretion. We disagree.

The amount of attorney's fees awarded to a prevailing party under the CFA is committed to the sound discretion of the trial court, "guided by those principles that run consistently through our caselaw when courts address the appropriate quantum of fees allowable pursuant to various fee-shifting statutes. Thus, along with other factors, courts must look at the level of success achieved in the litigation." Branigan v. Level on the Level, Inc., 326 N.J. Super. 24, 31 (App. Div. 1999) (citing Rendine v. Pantzer, 141 N.J. 292, 336 (1995); Szczepanski v. Newcomb Med. Ctr., 141 N.J. 346, 358-59 (1995)). We have applied this principle to the CFA and other fee-shifting statutes, "although expressed by our Supreme Court in cases arising under the Law Against Discrimination[.]" Ibid. Importantly,

[I]f the specific circumstances incidental to a counsel-fee application demonstrate that the hours expended, taking into account the damages prospectively recoverable, the interests to be vindicated, and the underlying statutory objectives, exceed those that competent counsel reasonably would have expended to achieve a comparable result, a trial court may exercise its discretion to exclude excessive hours from the lodestar calculation.

[Rendine, supra, 141 N.J. at 336.]

In reducing plaintiffs' counsel fee award, the trial judge found, among other things, that certain aspects of this matter "seem to be a case that has been over-lawyered[,]" as well as that "[plaintiffs'] counsel held the existence of the video as a trump card . . . ." Further, because plaintiffs' were only partially successful obtaining approximately forty-eight percent of the attorney's fees sought a proportional reduction in the fee-application hours was appropriate in view of the results achieved. In addition to these considerations, the court also acknowledged it fashioned its award by consideration of the factors outlined in R.P.C. 1.5(a). We note that the trial judge gave plaintiffs' counsel the benefit of the doubt in many areas, such as with regard to the level of detail in the complaint, and the time spent preparing for and traveling to oral argument.

We agree that plaintiffs' attorneys provide an invaluable service by representing victims of consumer fraud on a contingency basis. However, given the record before us, we discern no basis to interfere with the court's award. Affirmed.

1 The transcript of the video indicates defendants' position that plaintiffs would have to pay a total of $800 to retrieve the wedding band $300 representing the amount of the loan, plus $500 in interest.

2 This letter did not reach the court before it considered the motions. As a result, the court entered orders on August 12, 2014, granting defendants' motion to vacate default, and denying plaintiffs' motion for default judgment. To correct this error, defendants submitted an August 26, 2014 consent order that withdrew their motion to vacate default and their opposition to plaintiffs' motion for default judgment.

3 The $3,600 award represented treble damages pursuant to N.J.S.A. 56:8-19 as to the first two transactions in the amount of $300 each, and money damages of $3,000 double the value of the wedding band as to the third transaction.