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Gerszberg v. Jacuzzi Whirlpool Bath

December 27, 1995


On appeal from Superior Court, Law Division, Ocean County.

Approved for Publication December 27, 1995.

Before Judges King, Landau and Kleiner. The opinion of the court was delivered by Landau, J.A.D.

The opinion of the court was delivered by: Landau

The opinion of the court was delivered by LANDAU, J.A.D.

This appeal by plaintiff Rose Gerszberg, individually and as executrix of the estate of Shepherd Gerszberg, deceased, is taken from part of a final Law Division order of distribution dated November 7, 1994. The order apportioned, under N.J.S.A. 2A:31-4, net proceeds of the $300,000 settlement of a wrongful death action (N.J.S.A. 2A:31-1) in which plaintiff was represented by respondents O'Connor and Rhatican, Esqs. Respondents cross-appealed but did not pursue the cross-appeal in their brief and argument.

The order first approved deduction of respondents' reasonable out-of-pocket expenses, leaving $279,575. Upon recommendation of the court-appointed guardian ad litem, that sum was allocated in five equal parts of $55,915, before counsel fees, among decedent's wife Rose and their four children, Seth, Ephraim, Jonathan and Naomi.

Next, the order awarded $87,786 in counsel fees to respondents, purportedly calculated in accordance with R. 1:21-7, with a "specific reduction" to twenty-five percent for the allocation to Naomi, who was a minor at the time of allocation. *fn1 The counsel fee award is the subject of this appeal. We affirm the result.

Appellant executrix argues that the court erred in failing to consider dispositive a retainer agreement that she entered into individually and as "Administratrix" [sic] *fn2 of the estate, and as guardian ad litem of her four children. In support of this argument, appellant's appendix contained an unsigned All-State Legal Fee Agreement form. In that form, a check mark appears next to a box in paragraph five which purports to read, as amended by hand, "The legal fees will be reduced to 25% of the net recovery if this matter is settled without trial on behalf of any of the children of Shepherd Gerszberg." Respondents' appendix contains what purports to be a signed agreement, on the same All-State form, in which no check marks are made and no handwritten amendments appear. Each form provides for the standard contingent fee allowed by R. 1:21-7, namely 33 1/3% of the first $250,000 recovered, 25% of the next $250,000 recovered, and 20% of the next $500,000 recovered.

In order to address appellant's claim of error, we must first note that the trial Judge erred in dividing the net settlement into five equal shares before subtracting counsel fees. This procedure could have resulted in the improper application of a 33 1/3% *fn3 contingent fee to the entire net settlement of $279,575. As appellant challenges the counsel fee award because the equitable distributees under the Death Act apportionment included one or more minors, we refer to settled principles recently revisited in In re Estate of Travarelli, 283 N.J. Super. 431, 662 A.2d 572 (App. Div. 1995). Travarelli reaffirmed that there is only one wrongful death claim, and only one recovery for that claim on which to base a contingent fee. Id. at 439-40.

We repeat the comprehensive explanation set forth in McMullen v. Maryland Casualty Co., 127 N.J. Super. 231, 238-39, 317 A.2d 75 (App. Div. 1974), aff'd sub nom. McMullen v. Conforti & Eisele, Inc., 67 N.J. 416, 341 A.2d 334 (1975), and quoted in Travarelli:

Under our Death Act, in cases of intestacy an action for damages arising out of a wrongful death may be brought only by an administrator ad pros. specially appointed for that purpose. N.J.S.A. 2A:31-2. If the decedent dies testate, his executor may bring the action. In cases of intestacy payment is always to the general administrator of the estate, never to the administrator ad pros. N.J.S.A. 2A:31-6. No matter who brings the action, recovery is effectuated in one lump sum representing past and future economic loss to the class of beneficiaries entitled to share in the proceeds of the action. This class consists of "the persons entitled to take any intestate personal property of the decedent." N.J.S.A. 2A:31-4. The statute goes on to provide that if any members of the class were dependent upon decedent, they shall take to the exclusion of any non-dependent members of the class.

Once the lump-sum recovery is obtained, whether by way of settlement or judgment, the trial court must hold a hearing without a jury in order to apportion the fund equitably among the members of the class entitled to share in it. N.J.S.A. 2A:31-4. See Jurman v. Samuel Braen, Inc., 47 N.J. 586, 598, 222 A.2d 78 (1966), and Suarez v. Berg, 117 N.J. Super. 456, 285 A.2d 68 (App. Div. 1971).

The settlement here was apportioned among plaintiff and her children pursuant to N.J.S.A. 2A:31-4. The argument is advanced that each distributive share represents a separate recovery and that the fee schedule should be applied to each fund after its division among the beneficiaries. We reject the contention. The rule assesses a sliding scale fee based on varying percentages of the amount "recovered." There were no separate recoveries for each beneficiary and cannot be. The beneficiaries have no right to sue individually to recover their respective losses. All that our statute permits is a lump-sum recovery by one suing in a representative capacity, the sum later to be divided equitably among those entitled to benefit from it. Since under our Death Act there can be only one "recovery," the fee schedule is to be applied to the total amount received, no matter how many beneficiaries are entitled to share in it, and not to the amounts of the various shares after distribution is determined.

Applying the R. 1:21-7 formula incorporated in the fee agreement to the net settlement, as mandated by Travarelli and McMullen, would produce a maximum ...

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