ROBERT GALANTY v. DAIMLER CHRYSLER CORPORATION

(NOTE: The status of this decision is published.)
 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1695-04T11695-04T1

ROBERT GALANTY,

Plaintiff-Appellant,

v.

DAIMLERCHRYSLER CORPORATION,

Defendant-Respondent,

and

DAYTON DODGE, INC.,

Defendants.

_________________________________________________

 

Argued September 20, 2006 - Decided

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

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-5551-98.

Laurie Rush-Masuret argued the cause for appellant.

Paul Daly argued the cause for respondent (Hardin, Kundla, McKeon, Poletto & Polifroni, attorneys; Mr. Daly, on the brief).

PER CURIAM

The jury verdict in this consumer fraud action entitled plaintiff Robert Galanty to a judgment in the amount of $751. Because plaintiff had rejected a $10,000 offer of judgment, the trial judge made an allowance of counsel fees to defendant DaimlerChrysler Corporation of $51,866.29. We reverse that allowance because the matter was governed by the offer of judgment rule in effect when the offer was conveyed, and because that version of the rule, as held in Schettino v. Roizman Dev., Inc., 158 N.J. 476 (1999), precluded an allowance when only one of multiple defendants alleged to be jointly and severally liable serves an offer of judgment.

In seeking reversal of the award of counsel fees and in seeking a new trial, plaintiff presents the following arguments:

I. PLAINTIFF IS NOT SUBJECT TO THE FINANCIAL CONSEQUENCES OF THE OFFER OF JUDGMENT RULE.

II. THE SETTLEMENT AGREEMENT SHOULD HAVE BEEN VACATED BECAUSE THE PARTIES WERE NEVER IN AGREEMENT WITH RESPECT TO MATERIAL TERMS.

III. THE ANSWER OF DEFENDANT DAIMLERCHRYSLER SHOULD HAVE BEEN DISMISSED FOR THE FAILURE TO PROVIDE DISCOVERY AND SPOLIATION OF EVIDENCE.

IV. THE TRIAL COURT ABUSED ITS DISCRETION IN FAILING TO EXCLUDE THE AUDIOTAPE OF THE TELEPHONE CONVERSATION BETWEEN PLAINTIFF AND AN EXPERT WITNESS.

After carefully reviewing the record in light of the contentions advanced on appeal, we conclude that the arguments contained in Points II, III and IV are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We, however, conclude that although there is evidence to support the trial judge's determination that plaintiff's claim had little or no merit, and although the amount of the offer of judgment far exceeded the results obtained by plaintiff at trial, the offer of judgment rule in existence at the time the offer was made did not allow for such an award in these circumstances and we, therefore, reverse the order awarding fees to DaimlerChrysler.

The complaint plaintiff filed in 1998 in this action alleged that he experienced numerous problems with his 1996 Dodge Intrepid and demanded an award of damages from defendant DaimlerChrysler Corporation and Dayton Dodge, Inc. The complaint contained five counts, which encompassed various theories of negligence, breach of contract, and violations of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20, and the New Jersey Lemon Law, N.J.S.A. 56:12-29 to -49. Plaintiff also amended his complaint on three occasions. The amended complaint filed in 1999 added a sixth count, which alleged a violation of the Magnuson-Moss Act, 15 U.S.C.A. 2301 to 2312. The second amended complaint filed in January 2001 expanded on the details of the consumer fraud count set forth in the original complaint; it added no new counts. A third amended complaint filed on February 7, 2001 added a seventh count, which alleged that the vehicle was damaged as a result of being towed during the course of its inspection by a defense expert.

On January 2, 2001 -- prior to the filing of the third amended complaint -- DaimlerChrysler served plaintiff's counsel with a pleading, pursuant to R. 4:58, offering to plaintiff a judgment in his favor and against DaimlerChrysler in the amount of $10,000. This pleading was filed with the court on February 20, 2001, thirteen days after the filing of the third amended complaint. Plaintiff rejected the offer.

The action was tried to a jury on April 22 and 23, 2004. The jury found no cause for action as to defendant Dayton Dodge, Inc.; as for DaimlerChrysler, the jury found no merit in any of plaintiff's allegations other than its finding that DaimlerChrysler was liable for damages caused by the towing of his vehicle as alleged in the seventh count. Because the parties stipulated that the damages on that count were $751, the jury's finding of liability required the entry of a judgment in favor of plaintiff and against DaimlerChrysler in the amount of $751. Following the trial, DaimlerChrysler moved for an award of counsel fees in light of plaintiff's rejection of its 2001 offer of judgment. The trial judge ordered on July 21, 2004 that DaimlerChrysler was entitled to $51,886.29 in counsel fees. On October 22, 2004, the judge also denied plaintiff's motion for reconsideration for reasons set forth in his written decision. Judgment in favor of plaintiff in the amount of $751 was also entered on October 22, 2004.

The offer of judgment rule has undergone a number of revisions in recent years. At the time DaimlerChrysler served its offer of judgment, R. 4:58-3 provided that if the offer of a party who is not a claimant is not accepted, and "the determination is at least as favorable to the offeror [here, DaimlerChrysler] as the offer" the court may award to the offeror a reasonable attorneys' fee "for such subsequent services as are compelled by the non-acceptance." The last sentence of that version of the rule, however, declared that no fee is to be awarded "unless the amount awarded to the claimant [here, plaintiff] is in excess of $750.00 and is less than 80% of the offer." Since the jury verdict resulted in the entry of a judgment in excess -- by $1 -- of the $750 minimum contained in the rule as it then existed, and since that determination was far less than 80% of DaimlerChrysler's rejected offer, the trial judge concluded that plaintiff was liable for DaimlerChrysler's counsel fees and awarded $51,866.29.

In arguing that DaimlerChrysler was not entitled to relief based on the offer of judgment rule, plaintiff contends that because, in his view, the parties "settled" the seventh count, the offer of judgment rule does not apply because it applies only to "favorable determinations" resulting from "a verdict or determination" not to settlements; that the parties stipulated to $750 in damages, not $751; that DaimlerChrysler's offer related only to the claims contained in his second amended complaint and not the third amended complaint; that the offer of judgment rule then in existence, as interpreted by the Supreme Court, did not impose financial consequences when one defendant makes an offer of judgment in a multiple defendant action; and that an award of fees based on the offer of judgment rule would be unfair in these circumstances.

We reject plaintiff's argument that the stipulation of damages in the amount of $751 represents a settlement of the seventh count and thereby precludes the application of the rule. It is true that the rule would not permit an award of fees when a suit has settled, even when the amount of the settlement meets the monetary requirements of the rule, but this case was not settled. The parties stipulated to the damages that would be encompassed in a judgment if the jury found DaimlerChrysler liable. To obtain the benefit of the agreement that plaintiff had incurred $751 in damages, plaintiff remained obligated to convince the jury of defendant's liability on the seventh count. The jury's verdict represented a favorable determination in excess of $750.

We also reject plaintiff's contention that the parties stipulated to damages in the amount of $750 and not $751. That one dollar difference is not insignificant since the offer of judgment rule in its form at that time permitted an award of counsel fees only so long as the claimant obtained a favorable determination that "exceeds" $750. Despite that significance, the premise underlying plaintiff's argument is erroneous. The parties clearly stipulated to the towing damages, if the jury found DaimlerChrysler liable on that category of damage, in the amount of $751. During the colloquy on this point, it is clear that the parties stipulated to $751 and not $750:

THE COURT: Hold on. So -- what -- you're stipulating then?

MR. DALY: To the number.

THE COURT: Okay.

MR. DALY: $751.

THE COURT: Okay. So $751?

MS. RUSH-MASURET: Right.

THE COURT: So if [the] jury was to answer that Chrysler is liable to plaintiff for the damage to plaintiff's vehicle incurred in the towing of the vehicle, then that amount would be paid by defendant Chrysler to the plaintiff.

MS. RUSH-MASURET: Right.

THE COURT: Is that your understanding, Ms. Masuret?

MS. RUSH-MASURET: That's my understanding.

THE COURT: Mr. Galanty, do you understand that?

THE PLAINTIFF: I just wanted to ask Ms. Masuret one question.

THE COURT: Sure.

(Plaintiff Confers with Attorney Off the Record)

THE PLAINTIFF: Yes.

THE COURT: Any -- any questions about that?

THE PLAINTIFF: No.

THE COURT: If -- you understand you're going to be bound by that term as an agreement in this matter?

THE PLAINTIFF: -- pertaining to one section, I understand that to be the maximum amount --

MR. DALY: That one section.

THE PLAINTIFF: -- that one section the jury could give.

THE COURT: Okay.

MS. RUSH-MASURET: On that count.

THE PLAINTIFF: On that count.

This colloquy leaves no doubt about what it was that the parties had stipulated.

In addition, we reject plaintiff's contention that DaimlerChrysler's offer of judgment had no impact because it was filed prior to the filing of the third amended complaint and it was the third amended complaint's seventh count which asserted the claim that resulted in the $751 award. The premise for this argument is also inaccurate. The offer of judgment, although served upon plaintiff prior to the filing of the third amended complaint, was filed nearly two weeks after the filing of the third amended complaint. There could have been no confusion that DaimlerChrysler intended to encompass the entirety of all plaintiff's claims at the time plaintiff was obligated to decide whether to accept or reject the offer of judgment.

Notwithstanding the lack of merit in many of plaintiff's arguments on this point, we agree that the counsel fee award in favor of DaimlerChrysler was based upon a mistaken understanding of the then-existing rule and its application when an offer is made by only one of a multiple of defendants. Although the offer of judgment rule has since been amended to deal with the present circumstance, see R. 4:58-4, the version of the rule in existence when DaimlerChrysler filed its offer of judgment left doubt about the rule's application in multiple defendant cases. See Schettino, supra, 158 N.J. at 481-82. That uncertainty was eliminated by Schettino and, indeed, at oral argument, DaimlerChrysler conceded that as interpreted by our Supreme Court in Schettino, the offer of judgment rule in effect at the time DaimlerChrysler filed its offer of judgment would not have permitted, in these circumstances, an award of counsel fees to DaimlerChrysler. Id. at 484. Instead, DaimlerChrysler argues that the 2004 amendment to the offer of judgment rule is that which ought to apply and, if applied, that rule would support the ruling in question. We reject that contention. Fundamental fairness requires that plaintiff be subjected to the terms of the offer of judgment rule as written at the time the offer was made and not when the matter was ultimately tried or the motion for fees was entertained and decided. A plaintiff's decision to accept or reject an offer of judgment undoubtedly includes not only the plaintiff's assessment of the worth of the claim but also the potential liability for fees faced if the offer is rejected. That latter aspect can only be knowingly evaluated by an examination of the wording of the rule as it then existed and not how it might ultimately be amended in the future. As we have observed, DaimlerChrysler has conceded that, if applicable, the Supreme Court ruling in Schettino -- where the Court held that an offer by a single defendant in a multiple defendant case is not the type of offer that may later support an award of fees pursuant to the offer of judgment rule, 158 N.J. at 484 -- precludes an award of fees in this case. Because we conclude that the version of the rule that Schettino construed is that which applies here, the fee award cannot stand.

The judgment entered in favor of plaintiff and against DaimlerChrysler on October 22, 2004 is affirmed. The order of July 21, 2004, which awarded counsel fees in the amount of $51,866.29 in favor of DaimlerChrysler and against plaintiff, is reversed.

 

The 2004 amendment to R. 4:58-3 removed the $750 threshold in favor of a provision that no award shall be made "if (1) the claimant's claim is dismissed, (2) a no-cause verdict is returned, (3) only nominal damages are awarded, (4) a fee allowance would conflict with the policies underlying a fee-shifting statute or rule of court, or (5) an allowance would impose undue hardship." R. 4:58-3(c).

(continued)

(continued)

11

A-1695-04T1

 

October 16, 2006