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Scullion v. State Farm Insurance Company

December 06, 2001


On appeal from the Superior Court of New Jersey, Law Division, Bergen County, L-12158-96.

Before Judges Petrella and Steinberg.

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


Argued: October 22, 2001

In this appeal, we are again confronted with an award of counsel fees in a sum grossly disproportionate to the amount in dispute. The genesis of the law suit that gives rise to the appeal is an accident that occurred on July 3, 1996, between a vehicle operated by defendant Sally Quinlan and owned by defendant Elliot Henslovitz and another unknown automobile. Plaintiff, Joseph J. Scullion, a pedestrian, sustained personal injuries when struck by the Quinlan vehicle. Because plaintiff did not own an automobile, he sought personal injury protection benefits (PIP) from defendant, State Farm Indemnity Company (State Farm).

Ultimately, Rosemarie Arnold, on behalf of plaintiff, filed suit on December 26, 1996, against Henslovitz and Quinlan seeking to recover damages as a result of his injuries. She also sued State Farm, contending that it had not paid plaintiff's PIP bills. Apparently, the PIP dispute involved the bill of a chiropractor, Robert Bado. State Farm took the position that Bado's treatment was not related to the accident.

On June 30, 1997, State Farm propounded interrogatories upon plaintiff. On April 23, 1998, State Farm moved to dismiss plaintiff's complaint for failure to answer interrogatories. On May 15, 1998, an order was entered directing plaintiff to provide answers to PIP interrogatories by June 4, 1998.

At some point, plaintiff's attorney lost contact with plaintiff who apparently moved without notifying counsel. Thus, plaintiff failed to answer the PIP interrogatories. In addition, according to State Farm, on May 17, 1999, plaintiff failed to appear for an independent chiropractic examination with Dr. Lawrence Rosenberg, and, on June 16, 1999, failed to appear for an independent medical examination with Dr. Richard Jacobs. According to State Farm, plaintiff's attorney had originally sent a letter informing it that plaintiff would not attend an independent medical examination until plaintiff's bills were paid.

Unfortunately, a plethora of discovery motions were filed. We need not encumber this opinion by recounting each and every motion. Suffice it to say that there were motions to dismiss, reconsider, and vacate the dismissal.

Meanwhile, during the pendency of the litigation, Bado filed suit against both plaintiff and Arnold. Although not clear from the record, it appears that Arnold had sent a letter to Bado protecting his outstanding bill, representing that it would be paid from the proceeds of the settlement. When the personal injury claim settled, Arnold failed to pay Bado's bill. Consequently, Bado filed suit against plaintiff and Arnold. According to Arnold, she was on maternity leave when the suit was filed. The return of service indicates that the summons and complaint were served upon a receptionist in Arnold's office. Nevertheless, Arnold contends that she was never served with the summons and complaint and further asserts that "no one in the firm had any recollection of ever being served." She filed a motion to vacate the default judgment that had been entered against her, explaining she had not been properly served. However, by that time, Bado had already levied upon her personal bank account in the amount of $4004.97.

Thereafter, Arnold successfully moved to consolidate the suit filed by her with the complaint filed by Bado. Finally, on March 22, 2000, the PIP suit was settled for $4004.97. In addition, the parties agreed that the judge before whom the settlement conference had taken place would determine the amount of fees due Arnold, as well as costs. In support of her application, Arnold submitted an itemized bill, which was not certified. The judge awarded Arnold $28,200.20 in attorney's fees and costs. State Farm sought reconsideration. While the motion for reconsideration was pending, State Farm sent a check to Arnold for $3954.97, in settlement of the PIP claim, which was $50 less than the amount agreed upon. In addition, the check was made payable to Arnold and Bado, despite the fact that Bado had already executed upon the account of Arnold. Thus, Arnold wrote State Farm's attorney, returning the check and requesting that he replace it with one made payable only to her. For some unknown reason, State Farm then sent a check to Arnold for $3314.50, which was $690.47 less than the amount agreed upon in settlement. In any event, the judge subsequently reconsidered and reduced the fee award to Arnold to $19,565.20. Thereafter, Arnold moved to enforce the settlement. That application was granted.

In its appeal, State Farm contends that the motion judge "failed to undertake the appropriate analysis for the award of counsel fees." To some extent, we agree with that contention and are constrained to reverse and remand.

Initially, we note that we are troubled by the conduct of the parties, as well as their respective attorneys, throughout this litigation. What should have been a rather simple, straightforward suit for PIP benefits mushroomed to unfathomable proportions in which counsel fees in excess of $28,000 were initially awarded in litigating a claim of approximately $4000. Unfortunately, this litigation does little to enhance the reputation of the legal profession. Regrettably, this is not the first case in recent years in which we have been called upon to consider an award of counsel fees that is grossly disproportionate to the amount in dispute.

In Rendine v. Pantzer, 141 N.J. 292, 317 (1995), the Supreme Court noted that its objective was to set forth standards that inform the exercise of discretion by trial courts called upon to determine counsel fees "while at the same time sharply discouraging collateral litigation of 'reasonable fee' issues under fee-shifting statutes." The Court specifically noted an "assumption that in the future the need for appellate supervision of ...

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