On appeal from Superior Court, Law Division, Mercer County.
Deighan and Baime. The opinion of the court was delivered by Deighan, J.A.D.
Plaintiffs Sidney L. Hofing, Joseph E. Buckley, Jr. and Hofing & Buckley, Esquires, appeal from a denial of their motion for summary judgment and the grant of a summary judgment in favor of defendant CNA Insurance Companies (CNA). Plaintiffs filed a declaratory judgment action in the Law Division against CNA contending that a Legal Professional Liability Policy (policy) issued to them requires CNA to defend them and provide coverage in an action filed against plaintiffs in North River Insurance Co. v. Hofing and Buckley, et al, No. L-51359-86.
The underlying facts concerning this action are not disputed. In 1977, North River Insurance Company (North River) retained plaintiffs to represent it in a surety bonding matter that resulted in litigation entitled North River Insurance Co. v. Kupper Engineering, Inc. and Borough of Mantoloking, No. L-4342-79. The facts underlying that case involved the issuance
of a $1.7 million performance bond by North River on behalf of Major Construction Co. (Major) with regard to a construction project for Mantoloking. Major became bankrupt and abandoned the project in May 1977. At the direction of North River, plaintiffs instituted a suit against Kupper Engineering and Mantoloking and also represented North River in Major's bankruptcy matter. In February 1986, during the litigation, plaintiff filed a substitution of attorney at North River's request. While represented by new counsel, North River settled the underlying suit for an undisclosed amount.
Plaintiffs' counsel fees and related expenses for their representation exceeded $1.6 million. After the substitution of attorney, North River filed a complaint against plaintiffs in the Law Division to compel them to turn over all documents compiled in North River Insurance Co. v. Kupper Engineering, Inc., and to allow North River to post bond as security for $44,708.92 in disputed legal fees.
Subsequently, North River filed an amended complaint in which it alleged:
The attorneys' fees charged by the defendants were unreasonable in that they included charges for time and labor not actually expended by counsel. That the services rendered by the defendants to the plaintiff were not effective. That the said charges included time that was required due to the defendants' failure to properly meet the orders of the trial court and that the hours expended did not contribute to the successful prosecution of the plaintiff's case and that the monies received by the defendants were far in excess of the value of the professional services rendered to the plaintiff.
The charges made by the plaintiff to the defendant violated the standards of professional conduct, more particularly Rule 1:5 of the RPC and those standards applicable to attorneys fees as defined by the courts of the State of New Jersey.
The first count of the complaint demanded judgment against plaintiffs for:
(1) An accounting of any and all monies paid by the plaintiff to the defendants;
(2) A determination as to the reasonable value of the professional services rendered by the defendant to the plaintiff;
(3) A judgment for the difference between the sum of money paid by the plaintiff to the defendants and the reasonable value of the services rendered, costs, interest and such other relief as may be just in the premises [sic].
In the second count of the amended complaint, North River alleged that:
The defendants contracted with the plaintiff to perform professional services in accordance with the applicable standards of professional conduct and to render to the plaintiff ...