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Fave v. Sanitation Equipment Corp.

Decided: June 7, 1984.

JOSEPH DELLE FAVE, PLAINTIFF,
v.
SANITATION EQUIPMENT CORP., NORTH JERSEY WHITE COMPANY, LEACH COMPANY, WHITE AUTO CAR COMPANY, ABC CORP., A FICTITIOUS NAME, ET ALS., DEFENDANTS



Simpson, A.j.s.c.

Simpson

This is a contested application under R. 1:21-7(f) -- prior to amendments to R. 1:21-7 effective as to contingent fee arrangements agreed to after January 15, 1984 -- for an increased attorney's fee in excess of the amount allowable pursuant to R. 1:21-7(c). There are several questions of first impression -- not yet addressed under the new or old R. 1:21-7 -- in addition to the usually required comparative evaluation of the factors involved in the particular case against the presumed reasonableness of the percentages set forth in R. 1:21-7(c).

I. Background

Plaintiff was injured on May 2, 1979 when he fell from a ladder affixed to a sanitation truck. He filed a workers' compensation claim petition against his employer, Mario Services, Inc. whose insurance carrier was United States Fidelity and Guaranty Corporation (USF & G). He also brought a third-party product liability action against White Auto Car Company (the manufacturer of the cab and chassis of the truck), Leach Company (the manufacturer of the sanitation compactor), and Sanitation Equipment Corporation (the assembler of the sanitation unit).

On September 20, 1983 judgment was entered in the Division of Workers' Compensation in favor of plaintiff-petitioner upon a finding of 100% of total and permanent disability with benefits of $156 a week. The judge of compensation allowed a counsel fee of $6,250, payable $2,250 by plaintiff-petitioner and $4,000 by respondent. Temporary disability payments for 223 2/7 weeks at $156 a week had been paid pursuant to N.J.S.A. 34:15-12a and 450 weeks of initial total and permanent disability, pursuant to N.J.S.A. 34:15-12b, were awarded and which would run to April 1, 1992. Total and permanent disability payments might continue thereafter, of course, in accordance with the provisions of N.J.S.A. 34:15-12b. On the same date, the judge

of compensation approved commutation, pursuant to N.J.S.A. 34:15-25, of part of the award, in the amount of $15,582 to cover petitioner's share of attorneys fees ($2,250) and medical fees ($137.50) as well as the purchase of a van. This worked out to 135.196563 weeks to be deducted from the "rear end" of the permanent disability award, including a "discount gain" to respondent of $5,508.66, and advancing the initial termination date of permanent disability to February 10, 1989. With temporary disability payments and medical benefits, the workers' compensation lien totalled $84,546.93 at the time of settlement of the third-party action. The net lien was calculated to be $56,225.66 after crediting "expenses of suit" and a maximum 33 1/3% "attorney's fee" pursuant to N.J.S.A. 34:15-40(e).

The third-party action was settled on January 18, 1984, after 1 1/2 days of pretrial motions and negotiations, for a total of $235,000 to be paid by the defendants and a payment to plaintiff of $25,000 by U.S.F. & G. The compensation carrier also waived its N.J.S.A. 34:15-40 lien as set forth above, but plaintiff-petitioner released his possible future permanent disability claim rights against Mario Services, Inc. and U.S.F. & G. under N.J.S.A. 34:15-12(b). This lump-sum compensation claim settlement was approved by the judge of compensation pursuant to N.J.S.A. 34:15-20.

II. Counsel Fee Application

There apparently was no written contingent fee agreement as required by R. 1:21-7(g) in this type of case. The initial application was on notice that "the fee requested is [1/3] of the settlement after disbursements . . . in line with the recent amendment of R. 1:21-7(c)." Counsel's calculation of the requested fee, amount allowable under old R. 1:21-7(c), and the sought increase were as follows:

Settlement $260,000.00

Expenses and Costs of Litigation 7,038.11

------------

$252,961.89

Requested Fee 33 1/3% of $252,961.89*fn1 $84,320.63

Amount Allowable

R. 1:21-7(c) % On Fee

(1) 50 $1,000.00 $500.00

(2) 40 2,000.00 ...


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