MALDEN REAL ESTATE v. CYCLE CRAFT, INC

NOT FOR PUBLICATION WITHOUT THE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.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. 0

MALDEN REAL ESTATE,

Plaintiff-Appellant/

Cross-Respondent,

v.

CYCLE CRAFT, INC.,

Defendant-Respondent/

Cross-Appellant.

___________________________________________________

November 15, 2016

Argued October 13, 2016 Decided

Before Judges Simonelli, Carroll and Gooden Brown.

On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-2052-08.

Mark A. Rothberg argued the cause for appellant/cross-respondent (Wilf Law Firm, LLP, attorneys; Mr. Rothberg, on the briefs).

Robert W. Mauriello, Jr., argued the cause for respondent/cross-appellant (Graham Curtin, P.A., attorneys; Mr. Mauriello, Jr., on the briefs).

PER CURIAM

Plaintiff Malden Real Estate (Malden) appeals, and defendant Cycle Craft, Inc. (Cycle) cross-appeals from, the March 18, 2015 Law Division order awarding counsel fees to Cycle in the amount of $62,308.26, following our reversal of the prior counsel fee award and remand for reconsideration. For the reasons that follow, we affirm.

This case, which has involved two prior appeals, arises out of a landlord/tenant dispute between Malden, the owner of a shopping center located on Route 46 in Parsippany, and Cycle, a former tenant of the shopping center. The underlying facts relating to the dispute are set forth at length in Malden Real Estate v. Cycle Craft, Inc., No. A-0798-10 (App. Div. Jan. 6, 2012) (slip op. at 2-4). Briefly, in 2002, the State condemned a portion of the shopping center in order to widen Route 46, and compensated Malden accordingly. The project affected access to Cycle's business and eliminated some of Cycle's parking spaces, prompting Cycle to sue Malden alleging breach of its lease and demanding damages for the adverse effects on its business. The litigation ended in 2005 with a settlement order requiring Malden to compensate Cycle by reducing Cycle's rent proportionately pending completion of the road project, re-striping of the parking lot, installation of speed bumps, and relocation of signage.

Despite the settlement, Malden brought suit against Cycle for failing to remain current on its common area maintenance (CAM) charges as required under the lease. Cycle filed counterclaims alleging violation of the Consumer Fraud Act (CFA), unjust enrichment, breach of the settlement order, and breach of the implied covenant of good faith and fair dealing. After conducting a bench trial, the court determined that Malden had in fact breached the settlement order and the implied covenant of good faith and fair dealing. Accordingly, the court denied Malden's demand for possession of the premises and awarded Cycle a retroactive rent abatement to offset the amount due to Malden for unpaid CAM charges, resulting in a judgment to Malden for $4,658.23. Upon finding no substantial aggravating circumstances, however, the court dismissed Cycle's CFA and unjust enrichment claims and denied both parties' demands for attorney's fees.

On Cycle's appeal, we affirmed the dismissal of the CFA claim but reversed the court's denial of Cycle's request for attorney's fees and remanded for a determination of the fees incurred solely for enforcing the settlement order. Id. at 9. On remand, the court awarded $65,000, instead of the $125,972.36 requested by Cycle. On Malden's appeal, we overturned that award and determined that the court erroneously awarded counsel fees "based solely on an affidavit of services and in camera review of counsel's files, without affording the adverse party an opportunity to review those files and examine counsel with respect to the necessity of the services and the reasonableness of the fees requested." Malden Real Estate v. Cycle Craft, Inc., No. A-5022-11 (App. Div. Feb. 8, 2013) (slip op. at 3), certif. denied, 215 N.J. 485 (2013).

Accordingly, we remanded the matter for reconsideration in order to afford Malden "an opportunity to review defense counsel's files and invoices and, if necessary, examine defense counsel with respect to the necessity of the services rendered 'solely in the effort to enforce [defendant's] rights pursuant to the settlement order' and the reasonableness of the fees requested." Ibid. (alteration in original). See Sears Roebuck & Co. v. Nat'l Union Fire Ins. Co. of Pittsburg, PA, 340 N.J. Super. 223, 243 (App. Div.), certif. denied, 169 N.J. 608 (2001); Scott v. Salerno, 297 N.J. Super. 437, 452 (App. Div.), certif. denied, 149 N.J. 409 (1997). We directed the judge to analyze the factors enumerated in Rule 4:42-9(b) and RPC 1.5 in determining the amount of the award. Malden, supra, No. A-5022-11 (slip op. at 3).

On remand, Cycle's counsel submitted a certification of services, to which Malden objected, and Malden deposed Cycle's counsel regarding the necessity of the services and the reasonableness of the fees. Cycle requested counsel fees totaling $132,415.25, which included both appeals. The court reviewed the history of the litigation, applied the pertinent legal principles and awarded Cycle $62,308.26. In analyzing the factors enunciated in RPC 1.5(a), the court noted

[T]his all arose originally from a condemnation proceeding going all the way back to the time period of 2004-2003 [sic], which ultimately was settled. And there were certain obligations that Malden undertook and its undertaking of those obligations was disputed by the parties.

And although one sometimes thinks of landlord/tenant disputes as being fairly straightforward and uncomplicated, this was not quite that way. It's made two trips to the Appellate Division, a bench trial. Now the parties are back here. And the question of whether Malden met its obligation under the settlement to move certain signage at the site, to restripe the parking lot, to construct speed bumps, . . . to reduce certain leasehold payment rent obligations. All of that was disputed, and so, the case took on some complexity. And so, it did require time and labor and . . . skill, and certainly on both sides.

. . . [T]he time spent here, presumably, could have been spent working on . . . other matters. There [was] a considerable amount of time expended. The question is how much is reimbursable here?

The fee customarily charged in the locality for similar legal services . . . on the point of rates, hourly rates, they're more than reasonable. [Counsel] billed at $300 an hour, the associate at $200 an hour, except for the first couple of invoices, which were a few dollars less than those hourly rates. But the [c]ourt specifically finds that the hourly rates were reasonable. . . .1

The amount involved and the results obtained. The . . . results were largely favorable to the tenant, particularly the fact that the tenant's litigation staved off eviction. . . . It did permit the tenant to sell the business and it maintained its leasehold, which, according to the papers, was an important aspect for the . . . plaintiff. There were certain sums due and owing to the landlord, but they were more than offset by what sums were recovered on behalf of the tenant.

Time limitations imposed by the client or by the circumstances . . . well, there were orders of the court. The . . . matter proceeded to a bench trial. There were appeals. There was actually a petition for certification . . . which was . . . denied. And so, according to the court's schedule there were time limits imposed . . . on both parties by the nature of the rules and the nature of the litigation.

Nature and length of the professional relationship with the client is unknown to this [c]ourt.

Experience, reputation, and ability of the lawyer or lawyers performing the services, [counsel] has considerable experience based on his certification of services. He was assisted by . . . the associate, and certainly their reputations in the community are . . . good and their ability is also good, based on the [c]ourt's review. The fee was a fixed hourly rate.

In evaluating the necessity of the services rendered to enforce Cycle's "rights pursuant to the settlement order," the court conducted a "line by line, item by item" review of Cycle's invoices "beginning with March 30th, 2007." Preliminarily, the court adopted Cycle's line-by-line "self-reductions" for its CFA related legal fees. Next, the court eliminated all "redacted time charges," reasoning that "if time charges are redacted, the Court has no way of knowing what transpired, whether the time was reasonable or not." The court noted further that the "redactions" deprived Malden of "the right to review the invoices" as directed by this court.

For some activities, such as researching, drafting and reviewing pleadings, motion papers, and trial briefs, the court determined that the amount of time expended was excessive and redundant and reduced the amount accordingly. Regarding office conferences, the court made deductions noting it would not "allow the partner and the associate both to charge for conferences, just the higher-billing lawyer." The court also disallowed billings for the petition for certification, explaining that it was "unsuccessful" and that it was not "contributory toward the enforcement of litigant's rights." Further, the court deducted duplicative entries and unnecessary trial appearances, noting "I don't think two lawyers were required to appear on this case." The court also subtracted time expended on generic categories, such as "document reproduction[,]" that lacked the specificity the court needed to evaluate its necessity and reasonableness. Disbursements were allowed by the court where appropriate.

The court's line item deductions reduced Cycle's demand to $100,444.71. The court then deducted one-third as well as $4,658.23, representing the judgment previously entered for Malden after the bench trial. In explaining the one-third deduction, the court stated that while Cycle's counsel attempted "to winnow out the consumer fraud time charges," the reductions were inadequate "in spite of counsel's good faith." The court stated

[M]y overall judgment is that the reductions that counsel made don't truly reflect . . . much of the time spent in pursuit of the consumer fraud claim . . . . If one reviews the bills line by line, as I did, there are many general entries that could very well include and encompass consumer fraud claims, which just don't break out so easily.

So, I think there needs to be a further reduction here to reflect for time that had to be invested in pursuit of the consumer fraud and also the unjust enrichment claim . . . .

So, I think there is some consumer fraud time that needs to be still wrung out, if you will, of this . . . award of $100,444.71. And I don't know of any other way to do this except to . . . assign an arbitrary percentage that I think is reasonably fair. I think the result leaves a reasonable . . . compensation to counsel for . . . pursuing their client's rights under the . . . settlement order.

In rejecting Malden's objection to the award, the court noted that Malden's objection did not go "into any specifics with respect to the individual time charges made here. It's a general attack on this being too broad" and goes beyond enforcing the settlement order. The court explained that

Malden's characterization of this being essentially a case about some speed bumps, and striping a parking lot, and moving a sign . . . misses the significance of the case for Cycle Craft, which the [c]ourt has to take into consideration, and the fact that Malden overcharged rent, sought to evict Cycle Craft unjustifiably, and Cycle Craft successfully defeated those efforts, which would have been catastrophic for its corporate existence.

The court memorialized the award of counsel fees in a conforming order and this appeal and cross-appeal followed. Malden argues, as it did in the prior counsel fee appeal, that the award was beyond the scope of the limited remand for attorney's fees rendered solely in connection with enforcement of the settlement order. Malden asserts that the court entered an award it conceded was "arbitrary." Malden also characterizes the award as unreasonable and excessive by virtue of the fact that the amount mirrored the amount previously overturned by this court, and by interpreting our prior decision to mean that such an award is, by definition, unreasonable. Malden also seeks an award of counsel fees associated with this appeal.

Cycle argues that the demand should not have been reduced by the court. According to Cycle, its total counsel fees amounted to $154,124.50. By submitting a demand for $132,415.25, Cycle asserts that it isolated those invoices related solely to the enforcement of the settlement order, including the appeals and remands. Cycle argues further that the court's reductions were arbitrary and irrational and based on personal experience, contrary to Walker v. Giuffre, 415 N.J. Super. 597 (App. Div. 2010), rev'd in part, 209 N.J. 124 (2012). In the alternative, Cycle argues that the court should have either applied the hourly deductions and awarded $100,444.71 or deducted one-third and awarded $102,681.97, but not both. Cycle also seeks counsel fees associated with opposing Malden's appeal of the counsel fee award.

It is well-settled that the decision to award attorney's fees rests within the discretion of the trial judge, and accordingly we review the decision under the abuse of discretion standard. Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001). In this regard, we have long recognized that, "[t]he most useful starting point for determining the amount of a reasonable fee is" the calculation of the lodestar. Pennsylvania v. Del. Valley Citizens' Council for Clean Air, 478 U.S. 546, 564, 106 S. Ct. 3088, 3097, 92 L. Ed. 2d 439, 455 (1986) (quoting Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S. Ct. 1933, 1939, 76 L. Ed. 2d 40, 50 (1983)); Rendine v. Pantzer, 141 N.J. 292, 316 (1995)). The lodestar is "the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate. This calculation provides an objective basis on which to make an initial estimate of the value of a lawyer's services." Pennsylvania, supra, 478 U.S. at 564, 106 S. Ct. at 3097, 92 L. Ed. 2d at 455.

In cases such as this, Rule 4:42-9(b) requires all applications for fees to be "supported by an affidavit of services addressing the factors enumerated by RPC 1.5(a)." Further, "[t]he affidavit shall also include a recitation of other factors pertinent in the evaluation of the services rendered, the amount of the allowance applied for, and an itemization of disbursements for which reimbursement is sought." R. 4:42-9(b). RPC 1.5(a), in turn, provides that "[a] lawyer's fee shall be reasonable" and the "factors to be considered in determining the reasonableness of a fee include" (1) the time, labor, difficulty level and skill required; (2) whether "acceptance of the particular employment will preclude other employment by the lawyer;" (3) customary fees for similar legal services; (4) "the amount involved and the results obtained;" (5) time limitations imposed; (6) the nature and length of the relationship with the client; (7) "experience, reputation, and ability of the lawyer"; and (8) "whether the fee is fixed or contingent."

Given the heightened deference due, we find that the court did not abuse its discretion in the calculation of the lodestar and the application of the line item and proportional reductions, despite its mistaken use of the term "arbitrary" when describing the one-third proportional reduction. On the contrary, the court conducted a thorough RPC 1.5(a) analysis of each and every entry in the billing invoices submitted by Cycle, and conducted a painstaking and comprehensive review of Cycle's counsel's affidavit of services, delineating with specificity its rationale for each line item allowance and deduction. Hours that were deemed "excessive, redundant, or otherwise unnecessary" were properly excluded. Rendine, supra, 141 N.J. at 335 (citation omitted).

Our prior reversal was predicated on the court relying solely on an affidavit of services and an in camera review of counsel's files. The court did not afford Malden the opportunity to review those files and examine counsel with respect to the necessity of the services rendered solely in the effort to enforce Cycle's rights pursuant to the settlement order, and the reasonableness of the fees requested. Those conditions were satisfied on the remand and there is no warrant for our interference with the court's fee award, which we find to be eminently reasonable. In addition, since neither party prevailed in their respective appeal of the court's counsel fee award, each party's request for counsel fees associated with this appeal is denied. See Teeters v. Div. of Youth & Family Servs., 387 N.J. Super. 423, 428 (App. Div. 2006), certif. denied, 189 N.J. 426 (2007).

Affirmed.

1 The court also determined that the additional hourly rate of $345, billed for an attorney who spent 1.3 hours "to lend his appellate experience to the effort," was "also a reasonable hourly rate."