MIDDLEBROOKS & SHAPIRO, P.C. v. KENNETH ESDALE

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3285-02T13285-02T1

MIDDLEBROOKS & SHAPIRO, P.C.,

Plaintiff-Appellant/

Cross-Respondent,

v.

KENNETH ESDALE,

Defendant-Third Party Plaintiff-

Respondent/Cross-Appellant,

v.

ESTATE OF RICHARD SHAPIRO,

Third Party Defendant-Appellant/

Cross-Respondent.

 
 
________________________________________

Argued October 11, 2005 - Decided January 20, 2006

Before Judges Cuff, Lintner and Gilroy.

On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. UNN L-4726-01.

Andrew R. Turner argued the cause for appellants/cross-respondents (Turner Law Firm, attorneys; Mr. Turner, of counsel and on the brief).

Nicholas Khoudary argued the cause for respondent/cross-appellant.

PER CURIAM

Plaintiff, Middlebrooks & Shapiro, P.C., a law firm, and third-party defendant, Estate of Richard Shapiro, appeal from the February 10, 2003, order entering judgment against them on the counterclaim and third-party complaint for $5,000, together with $48,340.80 in attorney's fees, expenses, and costs. Defendant, plaintiff on the counterclaim and third-party complaint, Kenneth Esdale, cross-appeals. Except to remand for reconsideration of the award of attorney's fees and expenses, we affirm.

On or about April 3, 1998, Wood Fleet Corporation and Salvatore Salimbeno, sole shareholder of the corporation, owned a tract of real property located at 1127-1133 Stuyvesant Avenue, Irvington, upon which was located a tavern/restaurant (tavern) known as the Old Homestead Bar and Grill. The tavern operated under an annual liquor license issued by the Township of Irvington. The real property was placed for sale at public auction for non-payment of real estate taxes. On June 23, 1998, defendant, through his limited liability company, 758 Lyons Avenue, LLC, purchased the real property at auction for $80,000. In July 1998, defendant entered into a contract with Salvatore Salimbeno and a second corporation owned by him, 1439 Stuyvesant Avenue, Inc., (hereinafter referred to jointly as Salimbeno) for the purchase of the liquor license, equipment and other business assets for the sum of $35,000. The contract provided that defendant was the party obligated to "diligently pursue transfer of the liquor license so that the transfer of title shall occur as soon as practical." At time of negotiations on the contract, defendant was represented by attorney Jeffrey Rosenberg.

The $35,000 purchase price was held in escrow by seller's attorney pending closing of title. In the interim, defendant was granted permission by the seller to operate the tavern under the current license. Defendant took over the operation of the tavern on September 25, 1998, and made structural repairs to the building. A sales tax issue arose, and the parties spent the better part of a year trying to straighten the matter out, with no affirmative steps taken to transfer the liquor license to defendant, or to a corporation to be formed by defendant, or to a contract third-party purchaser. During this time period, defendant continued to be represented by attorney Rosenberg. Both defendant and Rosenberg were aware that the license had to be renewed by June 30, 1999. Rosenberg suggested that defendant retain the services of another attorney to enforce the contract provision for the transfer of the license.

On March 1, 2000, defendant retained the services of the plaintiff law firm. A retainer agreement was executed between the parties, and defendant paid plaintiff a retainer of $5,000. Plaintiff instituted suit in Chancery against Salimbeno for specific performance of the contract, directing the transfer of the liquor license, together with consequential damages, should the transaction fail to close. On May 3, 2000, a consent order was entered directing Salimbeno to renew and transfer the annual liquor license to defendant within sixty days. The sixty-day time period concluded beyond the license renewal date of June 30, 2000. The license was not renewed, and ceased to exist as of that date. The Chancery suit continued, and because of defendant's un-cooperativeness, plaintiff moved to be relieved of counsel. On December 7, 2000, an order was entered in the Chancery proceeding relieving plaintiff as counsel of record, and defendant retained new counsel. On August 20, 2001, summary judgment was entered by Judge Cohen in the Chancery proceeding determining that the contract to transfer the liquor license was unenforceable because of defendant's criminal conviction and his operating the tavern prior to transfer of the liquor license.

Plaintiff instituted suit in Special Civil Part to recover approximately $8,000 for legal services in prosecuting the Chancery lawsuit. Defendant filed an answer and counterclaim, and subsequently had the matter transferred to the Law Division. On the counterclaim, defendant alleged legal malpractice, asserting that plaintiff was engaged not only to pursue litigation but to take all steps necessary to renew and transfer the liquor license. Defendant asserted that plaintiff breached its duty of care by failing to: 1) properly investigate and recognize that the contract for the purchase of business assets was unenforceable under the Act; and 2) take all necessary steps to renew and transfer the liquor license, causing him to suffer consequential damages by loss of profit from a potential sale of the tavern to a third party and by plaintiff failing to return his $5,000 retainer.

Prior to trial, plaintiff filed a motion for summary judgment seeking dismissal of the counterclaim on the basis that defendant's claim was barred by res judicata and collateral estoppel, or issue preclusion, because Judge Cohen had determined that the dismissal of the Chancery action was due solely to the actions and non-disclosure of defendant, all of which occurred prior to plaintiff being engaged to represent defendant. The motion was denied on the basis that defendant's expert's report asserted that plaintiff should have taken affirmative steps to renew the liquor license prior to June 30, 2000.

During trial, plaintiff presented evidence through a third-party that the third-party would have purchased the property and liquor license from defendant for $225,000 if defendant had been successful in obtaining the liquor license. Defendant offered his own testimony in an attempt to quantify the amount of profit that he allegedly lost when the contract with the third-party purchaser was voided due to defendant's failure to obtain the liquor license. The court prohibited defendant from testifying on damages and dismissed defendant's claim for loss of profit for failure to obtain the liquor license, determining that expert testimony was required to establish both damages and proximate cause between the alleged breach of duty, and the alleged damages. The judge determined that there were other reasons that defendant may not have been successful in having the liquor license transferred, other than possible negligent acts or omissions of plaintiff.

After ruling on the dismissal of the loss of profit claim, defendant inquired whether the decision affected his claim for the return of the $5,000 retainer should the jury find plaintiff negligent in its representation of defendant. The judge stated that he would allow the claim for return of the retainer to remain; and that if the jury found plaintiff negligent, defendant would be entitled to a judgment for $5,000, representing the return of the retainer based on the principle that an attorney may not collect fees for services negligently performed, citing Saffer v. Willoughby, 143 N.J. 256 (1996). Based on special interrogatories, the jury found that: 1) plaintiff failed to prove its claim for legal services on the book account claim; 2) plaintiff was negligent; and 3) plaintiff proximately caused harm, loss or injury to defendant.

Plaintiff filed a motion NOV to vacate the $5,000 award arguing that defendant's claim should have been dismissed in total because there was no proximate cause between any losses suffered by defendant and the actions or omissions of plaintiff. Defendant cross-moved for attorney's fees under Saffer. The court denied plaintiff's motion NOV; molded the verdict; awarded defendant $5,000 damages on his counterclaim and third-party complaint for return of the retainer previously paid; and awarded attorney's fees in the amount of $40,000, together with out-of-pocket expenses and costs of $8,340.80.

On appeal plaintiff argues: 1) the motion judge should have granted its pre-trial motion for summary judgment dismissing defendant's counter-claim; 2) defendant was not able to establish the required elements of legal malpractice because of the trial judge's finding of lack of causation and damages; and 3) that the trial judge improperly awarded attorney's fees and costs to defendant. Defendant cross-appeals asserting that the trial judge improperly reduced his claim for attorney's fees and expenses.

I.

Plaintiff argues that the motion judge erred in denying its motion for summary judgment for dismissal of defendant's counterclaim. Plaintiff contends that all issues that led to the Chancery Court's decision occurred before plaintiff was retained and that granting of summary judgment would have been consistent with the doctrines of res judicata and collateral estoppel. We disagree.

"The term `res judicata' refers broadly to the common-law doctrine barring re-litigation of claims or issues that have already been adjudicated." Velasquez v. Franz, 123 N.J. 498, 505 (1991). The doctrine "provides that a cause of action between parties that has been finally determined on the merits by a tribunal having jurisdiction cannot be relitigated by those parties or their privies in a new proceeding." Ibid. The principle is one based on fairness to the defendant and in ensuring efficient court administration to achieve finality in the litigation. Ibid.

"Collateral estoppel is that branch of the broader law of res judicata which bars relitigation of any issue which was actually determined in a prior action, generally between the same parties, involving a different claim or cause of action." State v. Gonzalez, 75 N.J. 181, 186 (1977) (citations omitted). It "extends to questions of fact, mixed questions of fact and law and, where injustice would otherwise result, to questions of law." Woodrick v. Jack J. Burke Real Estate, Inc., 306 N.J. Super. 61, 79 (App. Div. 1997) (citing Gonzalez, supra, 75 N.J. at 187), certif. granted, Woodrick v. Fox & Lazo, Inc., 153 N.J. 214, and app. dismissed, 157 N.J. 537 (1998).

To assert the defense of collateral estoppel, five elements must be satisfied:

(1) the issue to be precluded is identical to the issue decided in the prior proceeding;

(2) there was a full and fair opportunity to litigate the issue in the prior proceeding;

(3) a final judgment on the merits was issued in the prior proceeding;

(4) determination of the issue was essential to the prior judgment; and

(5) the party against whom issue preclusion is sought was a party to, or in privity with, a party to the prior proceeding.

[Perez v. Rent-A-Center, Inc., 375 N.J. Super. 63, 76-77 (App. Div.), certif. granted, 183 N.J. 586 (2005).]

However, the doctrine will not be applied where it is unfair to do so. Id. At 77. In its determination as to whether the doctrine is applicable, the court "consider[s] whether the party against whom it is asserted could not obtain review of the prior judgment, whether the quality or extent of the two proceedings was different, and whether it was not foreseeable at the time of the prior action that the issue would arise in subsequent litigation." Fama v. Yi, 359 N.J. Super. 353, 359 (App. Div.), certif. denied, 178 N.J. 29 (2003). The court should also determine "whether new evidence has become available which could likely lead to a different result." Ibid.

We conclude that neither the doctrine of res judicata nor collateral estoppel is applicable because the issues involved in the two proceedings are different. The matter before Judge Cohen in the Chancery action concerned the transfer of the liquor license from Salimbeno to defendant. The Chancery action did not concern defendant's legal malpractice claim against plaintiff which included acts and omissions that occurred outside the parameters of the subject matter of the Chancery action.

Plaintiff contended on the summary judgment motion that all of the issues that led to the Chancery Court's decision occurred before plaintiff was retained, and that it was retained for the limited purposes of filing suit to compel Salimbeno to transfer the liquor license in accordance with the contract of sale. The argument misses the mark. The essence of defendant's claim at time of the motion was that plaintiff failed to do its "homework" before thrusting into litigation; and if plaintiff had done so, it would have realized that defendant possessed a criminal record which would have precluded him from obtaining a liquor license. In addition, defendant argued that if plaintiff had engaged in proper due diligence, it would have discovered that the tax issues that plaintiff advised had to be resolved prior to transfer of the liquor license, had little to do with the actual transfer of the license.

Judge Perfilio was methodical in examining plaintiff's potential liability for malpractice. The findings of fact in Paragraphs 11, 12, and 13 of Judge Perfilio's letter opinion of July 28, 2002, make clear that he determined that plaintiff had mistakenly believed that certain tax issues were relevant to the transfer of the liquor license, and pending settlement of those matters, plaintiff took no action to renew or transfer the license. In analyzing the situation, Judge Perfilio explained:

Giving the benefit of all the favorable inferences to the defendant, as this court is required to do, it cannot be said that the plaintiff attorneys were unaware of the disqualification of the defendant to obtain the license; nor can it be said that they proceeded to act on his behalf to remove the disqualification; nor can it be said that they acted on his behalf prior to suit in attempting to obtain a transfer of the liquor license; nor can it be said that they conveyed to the defendant the advice that the tax liabilities of the seller of the liquor license had nothing to do with the obtaining of a tax clearance letter. Plaintiff's assertions that the defendant is taking two contrary positions and should be barred from doing so under the doctrine of judicial estoppel is misguided. The defendant is not denying that he was disqualified from obtaining a license, nor that his action for specific performance before Judge Cohen was an erroneous decision. Defendant's assertions in his counterclaim are that plaintiffs knew or should have known that the contract was unenforceable and should have advised the defendant prior to commencing the litigation before Judge Cohen of the certain failure of the litigation as a result of the criminal disqualification which was uncorrected by the plaintiff; that as a result of plaintiff's presumed knowledge that a tax sales certificate had already been given for purposes of transfer of the liquor license, no law suit should ever have been commenced, but rather defendant should have been advised that he could most certainly not succeed by way of litigation and that negotiation was the only avenue to success.

Plaintiff also contends that its motion for summary judgment should have been granted because it had been relieved as defendant's counsel due to defendant's failure to cooperate with plaintiff in prosecuting the Chancery action, thereby precluding a claim for legal malpractice. The argument is unpersuasive. The record establishes that plaintiff was relieved as defendant's counsel on January 19, 2001. However, by that time, the liquor license had lapsed and could not be reinstated. Plaintiff's claim that defendant was uncooperative by that point is understandable from defendant's point of view given the fact that he failed to obtain the liquor license and, as a result, lost the sale of the tavern. Defendant's unwillingness to cooperate by that point is obvious.

Plaintiff argues next that the counterclaim should have been dismissed because defendant failed to demonstrate a claim for legal malpractice, and a directed verdict on plaintiff's book account for fees for legal services rendered, should have been entered. We find the argument without merit.

Legal malpractice is a variation of the tort of negligence. McGrogan v. Till, 167 N.J. 414, 425 (2001). For a claimant to succeed on a malpractice claim, the claimant must prove a duty, breach of that duty, proximate causation, and damages. Ibid. (citing Conklin v. Hannoch Weisman, 145 N.J. 395, 416 (1996)). We conclude that defendant established all necessary elements for a legal malpractice claim.

Plaintiff owed a duty of care to defendant once plaintiff agreed to represent defendant as evidenced by the retainer agreement. While plaintiff argues that the scope of duty was limited to institution of litigation to enforce the contract for sale of the liquor license, the record reveals that the scope of representation involved all matters necessary to enforce the transfer of the liquor license including, but limited to, litigation. Evidence of breach of the duty of care was presented through testimony of Passarella, who testified that the consent order entered in the Chancery action on May 3, 2000, gave the parties a last chance to save the license before it "lapsed and ceased to exist" as of June 30, 2000. Passarella opined that Richard Shapiro deviated from the proper standards of care because he took no affirmative action to save the liquor license during the time period provided under the consent order:

Well, I don't see anything that he did, so I would have to say the license lapsed and he didn't do anything. It seems to me, candidly, that he reached an opinion. I don't know at which time he reached an opinion, but it seems like Mr. Shapiro made a decision that he would rather litigate civilly in this matter rather than take the steps necessary to save this liquor license and have it transferred.

. . . .

Well, there was an order here and it was the seller's responsibility according to this order, but my review of all these documents doesn't show one correspondence from Mr. Shapiro to the Township or to the seller's attorney to take any action to implement the mandate of this order.

Passarella testified that steps could have been taken by having defendant assign the contract to purchase the liquor license to a new corporation to be formed by defendant, which would have avoided the problems concerning defendant's criminal conviction and operating the tavern prior to transfer of license. Based on the expert's testimony, a foundation was laid for the jury to conclude that plaintiff's inaction in pursuing steps beyond litigation for the renewal and transfer of the liquor license caused the license to lapse. While the trial judge barred defendant's claim for consequential damages for loss of profit by not being able to transfer the property and business to a third-party purchaser, the jury determined that defendant was damaged as a result of the breach of duty of care. This equated to the $5,000 retainer advanced by defendant to plaintiff for legal services, which were negligently rendered.

On the issue of damages, defendant argues that the trial judge erred in barring him from testifying concerning consequential damages that he allegedly incurred when he was unable to sell the property and business to a third party for profit. Defendant contends that although the trial court barred him from presenting expert testimony on the issue, that damages could have reasonably been calculated on his own testimony. The judge's ruling was correct.

During trial, defendant presented evidence through a third-party that the third-party would have purchased the property and liquor license from defendant for $225,000 if he had been successful in obtaining the liquor license. Defendant offered his own testimony in an attempt to quantify the amount of profit he lost because the contract with the third-party purchaser had to be voided due to defendant's failure to obtain the liquor license. The court prohibited defendant from testifying on damages for two reasons. First, because defendant had previously advised the court and plaintiff that he was going to present an expert to prove his damage claim, but never obtained an expert. Plaintiff was led to believe that defendant would not be able to prove his claim for damages without an expert, and had not retained its own expert. Secondly, Judge Coleman found defendant was required to prove proximate cause of the loss of profit by expert testimony because of other factors which could have, in and of themselves, prevented the transfer of the liquor license.

The argument that has been repeatedly advanced by the defendant is that the property had no value, or little value, without the liquor license.

. . . .

The question here is what is the value of the license because he still has the property, or did still have the property, and to the extent that the property has a separate value, and he has not lost that. The property was purchased for $80,000, and obviously that was done because of the tax sale that he just did and it was a result of competitive bidding at an auction. Whether that represents the true value or whether it [is] at the present value, we don't know because we don't have an expert to tell us.

The property has a unique value because of the owner having . . . had the liquor license and the expectation that Mr. Esdale had of acquiring that and, therefore merging, the two, the property and the license, but that did not occur. And the subject of the litigation was the effort to acquire that to occur pursuant to the terms of the agreement.

I am going to bar the testimony of the evidence. The proffer that was made did show . . . that he had purchased the property for 20 -- I'm not sure, but that he could have sold the property to Mr. Modh for $225,000, but that sale obviously includes -

. . . .

I'm going to bar [defendant] from testifying on the damages. I have allowed him to testify outside the presence of the jury to tell me what his - - what he believes his damages are. And he stated that he believes the damages are $225,000 for the sale that he would have made to Mr. Modh.

That sale would have been a sale of not only the property - - well, the liquor license. Not only the liquor license, but the property and the equipment and the ongoing business. There [has] been no one to value this. There [has] been no one who put a separate value on the real estate itself. So, and there is no one who will be coming in to testify as to what the value of the liquor license itself is or would be.

And, therefore, his having continued the carrying charges, are charges that may or may not be attributable to the failure on the part of Middlebrooks & Shapiro to have gotten a successful result in the litigation, or it may be due to other factors. I don't doubt, and in fact I [am] sure, that a liquor license has value, but the problem here is no one has fixed that value or even offered an opinion as to the value or has stated a way of calculating what that value is.

And however he may attempt to characterize his damages, his damages are the loss of that value because of his asserted claim of negligence. And his contention that he has incurred additional expenses because he has remained the owner of the premises beyond the time that he would have been able to transfer. If there is no way of calculating the damages, then what are we talking about

. . . .

It may be a harsh remedy to dismiss a claim for damages for failure of proofs, but that is precisely what the Best Practices Rules require where there has been a failure to provide information that would give a jury a reasonable basis to conclude what the damages are.

There is an opinion that was rendered just recently in a context of barring an expert from testifying and offering . . . an opinion at trial where that expert's report had not been given more than 20 days prior to the expiration of the discovery period. In this case, there was no opinion given within the 20 days and there was no opinion expert identified, and no expert is being offered.

. . . .

The claim for damages that are represented by the counterclaim in this case will be dismissed. I will inform the jury that there is no basis whatsoever for the recovery because of the failure to establish that there was proximate causation, and also because of failure to have given notice as required for the basis for calculating the damages that are alleged.

We conclude that the judge correctly determined that expert testimony was required to establish proximate cause and the amount of consequential damages from the loss of the liquor license.

The last issue raised by both plaintiff and defendant concerns both the award itself and amount of attorney's fees and expenses awarded defendant. Plaintiff challenges the award of attorney's fees on the counterclaim on which defendant was only successful in recouping the $5,000 retainer. Plaintiff contends that attorney's fees are not proper under Saffer, where defendant was unsuccessful in his claim for loss of the liquor license.

The Court in Saffer set forth the general rule as it relates to attorney's fees and a malpractice verdict.

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.]

The purpose of the rule is to place the client in "as good a position as he or she would have been if the attorney had performed competently." Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 441 (2001) (citing Saffer, supra, 143 N.J. at 269-71.

Here, the trial judge concluded that because the jury found that plaintiff was negligent in performance of its legal services that plaintiff was not entitled to retain the $5,000 retainer. The judge entered judgment for $5,000 damages, and properly concluded that under Saffer defendant was entitled to reasonable attorney's fees, expenses and costs in prosecuting the counterclaim to recoup the $5,000 retainer. However, where we differ with the judge is on the amount of attorney's fees, and expenses awarded.

Defendant's post-trial application for attorney's fees was based on a request to be compensated for 369.95 hours at the rate of $225 per hour, or $91,579.55 which included expenses of $8,340.80. The judge reviewed the items of services and reduced the same to 200 hours, at the rate of $200 per hour, or $40,000, together with the requested expenses and costs, concluding that the matter was over litigated.

Plaintiff contends that the judge erred in awarding that amount because the application was not accompanied by a certification stating the "usual and customary rate charged by [defense counsel], together with the level of expertise which was necessary to handle this case." Nor was the application accompanied by a statement of defense counsel setting "forth the basis upon which he was retained (contingent or hourly)." Plaintiff further contends there was no reduction in the amount of fees or services for unnecessary time expended because "Esdale or his attorney failed to comply with case management orders entered in the Law Division." Lastly, plaintiff contends that the application was not supported "with any documentation to support the claim for disbursements." Defendant contends that the court erred in reducing the number of hours and the hourly rate. Defendant asserts that the court concluded that defense counsel had rendered all the services billed, and that it was improper to reduce the number of billable hours, just because the judge thought "this case was over litigated on both sides."

An attorney's fee is required to be reasonable. R.P.C. 1.5(a). "The starting point in awarding attorneys' fees is the determination of the `lodestar,' which equals the `number of hours reasonably expended multiplied by a reasonable hourly rate.'" Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 21 (2004) (quoting Rendine v. Pantzer, 141 N.J. 292, 334-35 (1995)). The Court in Furst, set forth the procedure to be followed by a trial court in ruling upon an application for attorney's fees:

In setting the lodestar, a trial court first must determine the reasonableness of the rates proposed by prevailing counsel in support of the fee application. In that regard, the court should evaluate the rate of the prevailing attorney in comparison to rates "'for similar services by lawyers of reasonably comparable skill, experience, and reputation'" in the community. Second, a trial court must determine whether the time expended in pursuit of the "interests to be vindicated," the "underlying statutory objectives," and recoverable damages is equivalent to the time "competent counsel reasonably would have expended to achieve a comparable result . . . ." The court must not include excessive and unnecessary hours spent on the case in calculating the lodestar. Whether the hours the prevailing attorney devoted to any part of a case are excessive ultimately requires a consideration of what is reasonable under the circumstances.

Third, a trial court should decrease the lodestar if the prevailing party achieved limited success in relation to the relief he had sought. However, there need not be proportionality between the damages recovered and the attorney-fee award itself. Fourth, when the prevailing attorney has entered into a contingent-fee arrangement, a trial court should decide whether that attorney is entitled to a fee enhancement. In determining and calculating a fee enhancement, the court should consider the result achieved, the risks involved, and the relative likelihood of success in the undertaking.

[Furst, supra, 182 N.J. at 22-23 (internal citations omitted) (emphasis added).]

Attorney's fees and costs cannot be awarded for services pertaining to wasteful or unsuccessful litigation activities.

Blakey v. Cont'l Airlines, Inc., 2 F. Supp. 2d 598, 605 (D.N.J. 1998) (attorneys' work on an unsuccessful defamation claim against an airline cannot be compensated when determining an award of attorneys' fees and costs, and were properly deducted from work related to successful hostile work environmental claims).

Defendant is not entitled to an award of attorney's fees and expenses in prosecuting his unsuccessful claim for consequential damages for loss of profit caused by his failure to obtain the liquor license, but only for services and expenses necessarily related to the prosecution for the recovery of the $5,000 retainer. The counterclaim for recovery of the $5,000 retainer could have remained in the Special Civil Part. The case was only removed to the Law Division because of defendant's assertion of a claim for damages over and above the jurisdictional amount of the Special Civil Part, on which claim he was unsuccessful. Defendant is not entitled to attorney's fees caused by his delay in prosecuting the action by non-compliance with case management orders.

We conclude that the trial judge erred in awarding defendant attorney's fees on the record submitted. The court was not presented with a certification advising as to whether defendant and his counsel had entered into an hourly fee arrangement or a contingent fee arrangement in prosecuting the action. We also note the judge awarded expenses without having proper backup documentation concerning the expenses requested by defendant. The burden is on the party requesting attorney's fees and expenses to provide the court with proper documentation supporting the claims. We question a $40,000 attorney's fee award when the matter could have been litigated in the Special Civil Part at a cost far less in amount. "Although there is no requirement that an award of attorneys' fees be proportionate to damages, `the amount of damages a plaintiff recovers is certainly relevant to the amount of attorneys' fees to be awarded . . . .'" Chattin v. Cape May Greene, Inc., 243 N.J. Super. 590, 616 (App. Div. 1990) (quoting City of Riverside v. Rivera, 477 U.S. 561, 574, 106 S. Ct. 2686, 2694, 91 L. Ed. 2d 466, 479 (1986)), aff'd, 124 N.J. 520 (1991).

 
We affirm the judgment as to dismissal of plaintiff's claim and the award of $5,000 damages on the counterclaim and third-party complaint. We remand to the court for reconsideration on the issue of attorney's fees and expenses. We do not retain jurisdiction.

Shareholder Richard Shapiro died during the course of the action, on May 9, 2002. An order was entered on October 11, 2002, granting leave to defendant to file a third-party complaint against the Estate of Richard Shapiro. The third-party complaint was filed on October 21, 2002, and an answer was filed by the Estate on November 1, 2002. For purpose of this opinion, except where specifically required by the facts, we shall refer to plaintiff and third-party defendant jointly as the "plaintiff."

Judgment on the counterclaim and third-party complaint was entered following a jury trial that resulted in a verdict of no cause of action on plaintiff's book account action for legal services rendered and a finding of negligence against plaintiff on defendant's counterclaim and third-party complaint for legal malpractice. Although the trial court denied plaintiff's post trial motion for Judgment Notwithstanding the Verdict (NOV), R. 4:40-2(b), the record on appeal does not include an order denying the motion.

Defendant had a prior criminal conviction and would not have been able to hold the liquor license in his own name under the New Jersey Alcoholic Beverage Control Act (the Act), unless defendant received from the Director of the Division of Alcohol and Beverage Control (ABC) an order removing the statutory disqualification. N.J.S.A. 33:1-25 and 1-31.2. In addition, defendant's operation of the tavern under the liquor license held by Salimbeno constituted a violation of the Act. N.J.S.A. 33:1-26.

The annual licensing period for the class of liquor license covering the tavern commences on July 1, of a given year, and ends on June 30, of the following year. N.J.S.A. 33:1-26. Under the statute, a license automatically expires on June 30. Defendant's expert, Frank J. Passarella, an attorney licensed to practice in New Jersey, by written reports dated July 11, July 31, and August 8, 2002, opined that notwithstanding the non-renewal of the liquor license on June 30, 1999, that there were two subsequent opportunities to obtain a license for the premises. The attorney for Salimbeno applied for and received a Special Ruling from the ABC on November 12, 1999, that authorized the Township of Irvington to consider the licensee's application for a new license for the premises provided the application was filed within forty-five days of November 12, 1999. Passarella determined, however, that neither the licensee, nor anyone on behalf of defendant, ever took steps necessary to perfect the Special Ruling within the allotted forty-five day time period. The second opportunity resulted from the Township of Irvington adopting a resolution on May 31, 2000, permitting the licensee to apply to the Director of the ABC for a second Special Ruling to issue a new license to replace the license that previously lapsed. Passarella could not find evidence that any action was ever taken by the licensee, or by plaintiff on behalf of defendant to apply for the Special Ruling. Passarella's research disclosed that "[a]ccording to the records of both the Township of Irvington and the State of New Jersey, Division of Alcoholic Beverage Control, the license lapsed and ceased to exist as of June 30, 2000." As such, Passarella concluded that as a result of the inaction, the "license lapsed on June 30, 2000."

(continued)

(continued)

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A-3285-02T1

January 20, 2006