JERSEY MICHAEL KIMM v. KCC TRADING, 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NOT FOR PUBLICATION WITHOUT THE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 only binding 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. A-0T2

MICHAEL KIMM,

Plaintiff-Appellant,

v.

KCC TRADING, INC., WON BOK

CHOI, MISUK CHOI and JIHAE

CHOI,

Defendants-Respondents.

____________________________

September 30, 2016

Argued on September 13, 2016 Decided

Before Judges Reisner and Koblitz.

On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5888-13.

Adam Garcia argued the cause for appellant (Kimm Law Firm, attorneys; Michael S. Kimm and Mr. Garcia, on the brief).

Respondents have not filed a brief.

PER CURIAM

Plaintiff Michael Kimm, named partner of a small law firm, appeals from the trial court's March 6, 2015 denial of his summary judgment motion and dismissal of his case, as well as four other prior orders. We affirm.

On September 8, 2009, Rainbow Apparel, Inc. and Peter Kim (the Rainbow Apparel plaintiffs) filed an eleven-count complaint (Rainbow Apparel complaint) against defendants, KCC Trading, Inc., Won Bok Choi, Misuk Choi and Jihae Choi, along with two other parties unrelated to this appeal, in the Superior Court of New Jersey, Law Division, Hudson County.1 The Rainbow Apparel plaintiffs demanded damages arising from the business of a multi-million-dollar joint venture between them and defendants, who had agreed to supply the financing. In this action unrelated to the present appeal, the Rainbow Apparel complaint alleged defendants refused to provide funding to the joint venture, advised contacts Rainbow Apparel was no longer participating in the joint venture, and improperly removed business records from Rainbow Apparel's premises.

In October 2009 defendants retained the Kimm Law Firm, pursuant to a retainer agreement, "to serve as primary litigation counsel to defend against a lawsuit filed by [the Rainbow Apparel plaintiffs] . . . and to prosecute any and all appropriate counterclaims and related claims." Defendants agreed to a $400 billable hour rate for plaintiff and $250 billable hour rate for the Kimm Law Firm's associates. Defendants also agreed to send a rolling monthly fee payment of $15,000 starting October 15, 2009. Paragraphs four and six of the retainer agreement covered indemnification and termination

4. Indemnification of Claims Against Lawyer. If Clients or any third-party asserts a claim against Lawyer for any matter arising from Lawyer's representation of Clients (such as Clients' dissatisfaction of Lawyer's services, a [sic] fee disputes, or a third-party claim asserted against Lawyer for any reason stemming from this representation), Clients will indemnify or become directly responsible to pay Lawyer for customary fee for time expended in such matters plus Lawyer's own professional expenses and out-of-pocket costs, if any, so that Lawyer is made whole.

. . . .

6. Termination. Either party may terminate this relationship at any time for any reason or no reason. If Lawyer is terminated or withdraws before completion of a matter, Lawyer will be paid for services rendered to the point of termination, on the basis of time and his Customary Hourly Rate.

In April 2010, following the federal court's partial dismissal of certain counts, defendants discharged plaintiff. According to defendants, they discharged the law firm because they had paid the law firm $75,000 and believed that "the case had not progressed in any way." After defendants notified the law firm that they were obtaining new representation, plaintiff sent defendants the monthly billing statements from October 2009 to March 2010, which totaled $45,957,75. In January 2011, the law firm sent another billing statement covering the hours expended litigating against defendants to collect fees. The law firm charged defendants $30,280 for fee collection alone, including the following efforts.

On August 5, 2010, plaintiff filed a four-count complaint in the United States District Court for the Southern District of New York against defendants. Plaintiff sought "an amount in controversy in excess of $75,000" and alleged the following: 1) declaratory judgment as to the agreement; 2) quantum meruit; 3) payment on the basis of account stated; and 4) unjust enrichment. A December 25, 2010 order dismissed plaintiff's complaint for lack of jurisdiction, stating that plaintiff's claim failed to allege a sufficient amount in controversy pursuant to 28 U.S.C.A. 1332. Plaintiff appealed, and the dismissal was affirmed on February 15, 2012. Kimm v. KCC Trading, Inc., 449 F. App'x 85 (2d Cir. 2012) (summary order).

On January 25, 2012, plaintiff filed a complaint in the Southern District of New York that was virtually identical to his July 30, 2013 complaint, with the exception of an additional paragraph stating

13. Pursuant to the parties' written retainer agreement, if defendants, as clients, asserted any claim or dispute as to the validity of fees, they are to be responsible for plaintiff's legal fees, other professional fees, and plaintiff's own time at his customary rate of $500.00 hour.

A November 5, 2012 order dismissed plaintiff's complaint for lack of subject matter jurisdiction, again because the amount in controversy did not exceed $75,000. A July 25, 2013 order denied plaintiff's motion for reconsideration. Plaintiff did not deny that defendants had paid fees totaling $75,000, instead he claimed that unpaid fees for work performed on behalf of defendants from October 2009 to March 2010, and efforts to collect those unpaid fees, together totaled more than $75,000.

In July 2013 plaintiff filed a four-count complaint in the Law Division of Bergen County against defendants. Plaintiff sought relief in the amount of $76,237.75, alleging: 1) breach of agreement; 2) quantum meruit; 3) payment on the basis of account stated; and 4) unjust enrichment. In September 2013 plaintiff filed a motion for the entry of default because defendants failed to respond to plaintiff's complaint, and default was entered.

In early November, defendants filed a notice of motion to vacate default judgment based on improper service. After extensive motion practice, including the filing of a counterclaim for attorney malpractice that was subsequently dismissed for failure to serve an expert's report, and after a failed mediation, on March 6, 2015, the motion judge dismissed plaintiff's claim for $30,280 in fees incurred as a result of the fee collection litigation, holding the indemnification clause unenforceable as "void as against public policy."

The judge also denied plaintiff's summary judgment motion after considering whether plaintiff's fees in the Rainbow Apparel matter were reasonable

In this matter, the Court's review of Plaintiff's billing reveals instances of double billing and excessive billing on basic procedural matters which should not have required the extensive research conduct. In all, the Court finds the billing of "JS" an associate with the firm to be unnecessary and/or excessive in the amount of $11,187.50. As to "FL" another associate with the firm the Court finds the billing unnecessary and/or excessive in the amount of $6,500. Finally, as to "MK" the Plaintiff the Court finds double billing as to conferences with his own associates to be unreasonable as a matter of law. Other billings were excessive. In total, MK's billings should be reduced by $35,300. Total billing is therefore reduced by $52,987.50. Because the total amount of credits resulting from the over-billing are in excess of the amount Plaintiff seeks, Plaintiff's motion for summary judgment must be denied.

Plaintiff's notice of appeal lists the trial court's March 6, 2015 summary judgment order, the December 20, 2013 order to vacate default judgment, the July 25, 2014 order denying plaintiff's request to dismiss defendants' counterclaims, the August 4, 2014 order extending discovery, and the October 10, 2014 order, which amended an August 22, 2014 order by denying the dismissal of defendants' answer and counterclaims.2 We discuss only the issues raised by the March 6, 2015 dismissal of plaintiff's complaint. Plaintiff's appeal from the other orders do not merit discussion in a written opinion, either because they involve procedural issues as to which the trial court did not abuse its discretion,3 or are moot now that defendants' counterclaim has been dismissed, see Campbell-Ewald Co. v. Gomez, ___ U.S. ___, 136 S. Ct. 663, 669, 139 L. Ed. 2d 571, 579 (2016). R. 2:11-3(e)(1)(E).

At oral argument counsel acknowledged, as he must, that the indemnification clause of the retainer agreement by its terms applies to "Claims Against Lawyer" and not claims brought by the lawyer against former clients, although he asserted that counsel interpreted the clause to apply also to legal work expended on claims brought by counsel for unpaid fees.

Even if this provision were viewed as ambiguous, an ambiguous contract provision is generally interpreted against the interests of the scrivener. Pacifico v. Pacifico, 190 N.J. 258, 267 (2007). A retainer agreement must be scrupulously limited to its explicit terms so as not to disadvantage the client. See Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510, 529-31 (App. Div. 2009). We therefore affirm the motion judge's decision to deduct the fees charged for the extensive fee collection litigation engaged in by counsel.

With regard to the motion judge's review of the counsel fees, plaintiff argues that expert testimony is required to reduce counsel fees. Trial courts, however, have traditionally been entrusted with reviewing the reasonableness of counsel fees. "[A] reviewing court will disturb a trial court's award of counsel fees 'only on the rarest occasions, and then only because of a clear abuse of discretion.'" Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 386 (2009) (quoting Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001)). "In the field of civil litigation, New Jersey courts historically follow the 'American Rule,' which provides that litigants must bear the cost of their own attorneys' fees." Innes v. Marzano-Lesnevich, 224 N.J. 584, 592 (2016) (quoting Litton Indus., Inc., supra, 200 N.J. at 404). "New Jersey disfavors the shifting of attorneys' fees . . . . When the fee-shifting is controlled by a contractual provision, the provision should be strictly construed in light of our general policy disfavoring the award of attorneys' fees." Litton Indus., Inc., supra, 200 N.J. at 385. Requiring clients to pay their attorney to sue the clients themselves certainly constitutes fee shifting.

Even outside the context of fee shifting, awards of attorneys' fees "by courts, regardless of their basis, are governed by principles of reasonableness." Green v. Morgan Props., 215 N.J. 431, 455 (2013) (quoting Walker v. Giuffre, 209 N.J. 124, 127-28 (2012)). "[A] lawyer's bill for services must be reasonable both as to the hourly rate and as to the services performed." Gruhin & Gruhin, P.A. v. Brown, 338 N.J. Super. 276, 280 (App. Div. 2001). "[T]he party seeking to be awarded attorneys' fees ordinarily bears the burden of proving that they are reasonable . . . ." Green, supra, 215 N.J. at 455.

"Agreements between attorneys and clients concerning the client-lawyer relationship generally are enforceable, provided the agreements satisfy both the general requirements for contracts and the special requirements of professional ethics." Cohen v. Radio-Electronics Officers Union, 146 N.J. 140, 155 (1996). "As between attorney and client, their agreement ordinarily controls unless it is overreaching or is violative of basic principles of fair dealing or the services performed were not reasonable or necessary." Gruhin, supra, 338 N.J. Super. at 281. "[T]he attorney bears the burden of establishing the fairness and reasonableness of the transaction." Cohen, supra, 146 N.J. at 156 (citations omitted).

The motion judge did not clearly abuse his discretion in finding that the fees were excessive and unreasonable. See Litton Indus., Inc., supra, 200 N.J. at 404. In determining the reasonableness of plaintiff's fees, the judge properly reviewed plaintiff's billing records and evaluated the "difficulty of the questions involved, and the skill requisite to perform the legal service properly." RPC 1.5(a)(1). The judge found "instances of double billing and excessive billing on basic procedural matters which should not have required the extensive research." The judge also calculated the exact amounts of unnecessary or excessive billing.

The facts do not support a determination that the judge's decision was an abuse of discretion in that it was "made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis." US Bank Nat'l Ass'n v. Guillaume, supra, 209 N.J. at 467-68 (2012) (quoting Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 123 (2007)).

Affirmed.

1 Upon application of Kimm, the case was later removed to the United States District Court for the District of New Jersey.

2 Plaintiff also appeals from "any other previous order [sic] which were adverse to plaintiff." We disregard this language as it does not comport with the requirements of Rule 2:5-1(f)(3)(A). See Pressler & Verniero, Current N.J. Court Rules, comment 6.1 on R. 2:5-1 (2016) (citing Sikes v. Twp. of Rockaway, 269 N.J. Super. 463, 465-66 (App. Div.), aff'd o.b., 138 N.J. 41 (1994) and W.H. Indus., Inc. v. Fundicao Balancins, Ltda, 397 N.J. Super. 455, 458-59 (App. Div. 2008)).

3 See US Bank Nat'l Ass'n v. Guillaume, 209 N.J. 449, 467 (2012) (holding abuse of discretion as the standard for trial court's decision to vacate a final judgement or order); Leitner v. Toms River Reg'l Sch., 392 N.J. Super. 80, 87 (App. Div. 2007) (holding abuse of discretion as the standard for review of trial court's decision to extend discovery); Marinelli v. Mitts & Merrill, 303 N.J. Super. 61, 77 (App. Div. 1997) (holding abuse of discretion as the standard for denial of motion for reconsideration).