On appeal from the Superior Court of New Jersey, Law Division, Bergen County from the grant of petition for reconsideration of Appellate Division's opinion reported at 202 N.J. Super. 58, cert. den.
Judges King, Deighan and Havey.
The opinion of the court was delivered by DEIGHAN, J.A.D.
This matter comes before the court pursuant to the grant of a motion for reconsideration of this court's opinion reported at 202 N.J. Super. 58, cert den. 104 N.J. 376 (1986). Plaintiffs' petition for certification to the Supreme Court on the issue of counsel fees was denied without prejudice to apply to this court for reconsideration of its prior disposition on the counsel fee issue. Previously we reversed an award of $15,000 counsel fees granted by the trial court pursuant to R. 4:42-9(a)(6), 202 N.J. Super. at 84. Though the petition for certification referred only to the "issue of counsel fees in accordance with a contract between the parties" the order of the Supreme Court does not limit reconsideration to that issue. Since all parties have briefed the right to counsel fees pursuant to R. 4:42-9(a)(6) as well as the provisions under the title insurance contract, we will deal with plaintiffs' rights to attorney's fees under both the Rule and the title insurance policy.
Plaintiffs, Enrights, purchased premises in Montvale, New Jersey in 1978. At the time of purchase both a survey and title insurance policy were ordered. The survey incorrectly located an easement on the premises. This court held that the survey, with the easement improperly located, was insured under the title insurance policy. Enright, 202 N.J. Super. at 70.
Plaintiffs became aware of the easement mislocation in February of 1980. On March 30, 1980 plaintiffs signed an agreement of sale with defendant-purchasers Lubows (purchasers) but did not inform them of the problem until after the agreement of sale was signed. 202 N.J. Super. at 81. Also, the title company, U.S. Life, was not informed of the easement mislocation on the survey until March 30, 1980. The title company ordered a second survey from the original surveyors, defendant Earle Bailey, P.E. and Associates. The second Bailey survey, which was not received until after the date of settlement, indicated the inaccuracy of the prior survey. Plaintiffs' attorney then ordered another survey in June 1980 from Cassetta
and Associates. The third survey, which was paid for by the title company, confirmed the inaccuracy of the first survey by Bailey Associates in that the easement was located within six feet, not 50 feet, of the dwelling.
After plaintiffs received their correct survey from Cassetta, the title company offered to settle plaintiffs' claim. They offered to have an appraiser, either appointed by the court or by agreement, "to assess the difference in the value of the property with the easement in its two different locations" and to pay the difference. Plaintiffs rejected this offer and elected to seek elevated compensatory, including consequential, as well as punitive damages resulting in a seven day trial which was not concluded until Nov. 24, 1982, two years after the original offer.
In their affidavit in support of a notice of motion to the Supreme Court for temporary remand to this court plaintiffs set forth the length of the trial and the judgment entered by the trial court in their favor:
After a seven day bench trial the trial judge awarded compensatory damages in favor of the plaintiffs and against the Title Company for $22,000.00 plus $18,438.81 interest and $15,000.00 counsel fees for a total compensatory damage award of $55,438.81. The trial judge further awarded the sum of $30,000.00 in punitive damages in favor of the plaintiffs and against the Title Company.
In their application before the trial court plaintiffs sought $27,052.50 for counsel fees plus expenses of $1,531.
In our opinion on the initial appeal we held that
the judgment is affirmed as to the allowance of $22,000 compensatory damages together with interest from December 1, 1980 in favor of the Enrights against the Title Company. The judgment is reversed as to the allowance of $15,000 counsel fees in favor of the Enrights . . . against the Title Company. The judgment of $30,000 punitive damages in favor of the Enrights and against the Title Company and the allowance of prejudgment interest of $18,438.81 is reversed. [202 N.J. Super. at 87]
In our previous opinion we held that "there is no authority under R.4:42-9(a)(6), statutes or equity to allow counsel fees to . . . the Enrights . . . incurred in litigation of this matter."
R. 4:42-9(a)(6) provides:
No fee for legal services shall be allowed in the taxed costs or otherwise except . . .
(6) In an action upon a liability or indemnity policy of insurance, in favor of a successful claimant. [Emphasis supplied].
The rule was promulgated both to discourage groundless disclaimers and to provide more equitably to an insured the benefits of the insurance contract without the necessity of obtaining a judicial determination that the insured, in fact, is entitled to such protection. Kistler v. N.J. Mfgs. Ins. Co., 172 N.J. Super. 324, 328-330 (App. Div. 1980). In our view plaintiffs are not ...