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Bruno v. Gale

June 29, 2004


On appeal from Superior Court of New Jersey, Law Division, Essex County, L-10751-97.

Before Judges Petrella, Wefing and Collester.

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


Submitted January 26, 2004

Although the caption in this case relates to a civil action for damages, the issue presented on appeal involves an application for division of a contingent fee between attorneys following a settlement of the above-captioned negligence case in the amount of $400,000.

Appellant Charles J. Gayner, Esq. filed a motion before the Law Division seeking a referral fee in an amount equaling one third of the net legal fee received by Shapiro & Sternlieb, LLC, the respondent law firm. Although an order was entered on August 16, 2002, granting Gayner's application, the judge later entered an order granting reconsideration because the court had not received the opposing papers before the return date. The judge therefore vacated the August 16, 2002 order. She further found that Gayner was not entitled to a one-third"referral fee" since respondent was not a certified civil attorney*fn1 and restricted allocation of any portion of the fee to Gayner upon his showing a basis under quantum meruit. The motion was then adjourned to give time for Gayner to submit an affidavit of services and any accompanying papers and for Shapiro & Sternlieb to file papers in opposition. After the supplemental filings by both parties, the judge decided the matter on the papers by a letter opinion on January 7, 2003, in which she denied Gayner any part of the contingent fee amount.

The issue presented is what, if any, referral fee is Mr. Gayner entitled to in this case. He seeks one-third of the fee based upon his referral to Mr. Sternlieb. Since neither Mr. Sternlieb nor his partner are Certified Civil Trial Attorneys, the one-third referral fee cannot be paid. R. 1:39-7(d) permits a referral fee to be divided without regard to services performed when a certified attorney receives a case referral. Therefore, the Court must look to a quantum meruit scheme of fee apportionment.

I have reviewed submissions by and on behalf of Mr. Gayner and by Mr. Sternlieb. Clearly there was interaction between plaintiff Paul Bruno and Mr. Gayner. Unfortunately, there is no showing that any fruits of that labor were passed on to Mr. Sternlieb in furtherance of the prosecution of the case. Therefore, there can be no recovery of an attorney's fee. To be paid, one's work must have played a part in the recovery.

Gayner appeals from the February 10, 2003, order entered pursuant to the judge's letter opinion. He concedes that he is not entitled to a one-third referral fee by reason of R. 1:39-6(d), but he argues that the judge did not give proper consideration and weight to the work he performed in advancing the cause of plaintiff Paulo Bruno and thereby denied him a portion of the contingent fee received and held by respondent.*fn2

By way of background, Paulo Bruno was injured as a result of a construction site accident on September 20, 1995. He sustained injury when a nail he was hammering popped up from the wood and impaled his eye. After the accident, he consulted and retained Gayner, then a partner in the law firm of Handwerker, Honschke, Marchelos & Gayner, which had offices in both New York and New Jersey and shared office space in both states with Shapiro & Sternlieb. Gayner had Bruno sign medical authorization forms, which are dated September 28, 1995, and, within a matter of days thereafter, referred the case to Sternlieb to be handled, at least initially, as a workers' compensation case. Neither Gayner nor anyone in his law firm handled workers' compensation matters.

On October 3, 1995, Gayner wrote to Mr. and Mrs. Bruno as follows:

As discussed with you today, it appears that your claim will be handled as a worker's compensation claim. Towards that end, and to further evaluate a potential personal injury action, we have referred your matter to David Sternlieb, Esq. We anticipate Mr. Sternlieb keeping us apprised as to all significant developments. Bruno met with Sternlieb and signed a standard retainer agreement providing for a contingent fee in conformity with the Rules of Court and including a provision that Shapiro & Sternlieb would advance all costs and disbursements concerning a third party action and, in the event of non-recovery, would not seek reimbursement from Bruno. From this time forward Sternlieb was in charge of the litigation, which included not only the workers' compensation claim but also a subsequent third party negligence case which was developed and advanced by Sternlieb. Sternlieb's law firm made all disbursements, conducted all investigations, filed all pleadings, retained an ophthalmologist for a report concerning Bruno's eye injury, retained an expert in occupational safety to show deviations from OSHA standards, retained a vocational expert, participated with plaintiff in mediation and negotiated the $400,000 settlement of the third party action. Sternlieb certified that Gayner did not participate to any extent in the third party action, did not contribute to any of the costs and did not assist or act as co-counsel prior to and following the settlement of the case.

Gayner underscores that Bruno contacted him immediately after the accident and requested his representation in the matter. He admits that he turned the contents of his file over to Sternlieb five days after Bruno signed the medical authorizations. Moreover, while he concedes that the great bulk of the work in advancing Bruno's cause and settlement of the third party claim were due to Sternlieb's effort, he supplied an affidavit of services indicating that he spent 47.1 hours on Bruno's personal injury claim. Using a multiplier of $237.50 as his hourly rate, Gayner calculated his total fee entitlement in quantum meruit as $11,186.25.

Gayner relies to a great extent on the supporting certification of Paulo Bruno in which he states that he met with Gayner to discuss the case and signed a retainer agreement with him. He provided Gayner with information about the job site where he had been injured. He said that Gayner visited the scene and spoke with a co-worker about how the accident occurred. After Gayner told him he wished to transfer the case to Sternlieb, Bruno says he was assured by Gayner"that he was not abandoning me and would stay in touch with me throughout the case." Bruno certified that throughout the entire litigation he remained in touch with Gayner"every step of the way." He discussed various aspects of the case, had Gayner prepare him for his deposition and he consulted with him ...

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