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Pellettieri, Rabstein and Altman v. Protopapas

February 10, 2006

PELLETTIERI, RABSTEIN AND ALTMAN, PLAINTIFF-APPELLANT,
v.
MICHAEL PROTOPAPAS, DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Mercer County, L-690-03.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Submitted January 17, 2006

Before Judges Cuff, Lintner and Gilroy.

This appeal arises from cross motions for summary judgment in an action brought by plaintiff law firm, Pellettieri, Rabstein and Altman, against its former client defendant, Michael Protopapas, for collection of fees. Plaintiff represented defendant in two separate matters, a matrimonial proceeding and a bankruptcy. Finding there were material questions of fact that had to be resolved in a plenary hearing, the judge denied plaintiff's motion regarding the fees rendered in defendant's bankruptcy action. Although the judge entered partial judgment for a portion of plaintiff's fees for services rendered in the matrimonial action, the vast majority of the amount sought was determined to be barred by the six-year statute of limitations,*fn1 N.J.S.A. 2A:14-1. The judge certified the judgment as final pursuant to R. 4:42-2 and R. 4:59-1.

Plaintiff appeals from the order granting partial summary judgment and the order denying its motion for summary judgment. We decline to address the order denying summary judgment because it is interlocutory and not cognizable on plaintiff's notice of appeal.*fn2 We turn our attention to the judgment limiting plaintiff's recovery.

The central issue raised in this appeal, which has not previously been addressed in our jurisdiction, is when does the statute of limitations commence to run in an attorney's action against a client for fees pursuant to a retainer agreement calling for services at an hourly rate, billed on an interim basis, and payable within thirty days of receipt of the bill. The Law Division judge essentially found that the limitation period begins to run when payment is first overdue. We disagree with the judge's analysis and hold that the statute of limitations for attorney fees arising from a retainer agreement, permitting periodic hourly billing, commences when the services are concluded or attorney-client relationship is ended, whichever occurs first.

We combine the relevant facts and procedural history. Defendant entered into a retainer agreement with plaintiff on September 6, 1995, to substitute as his counsel in a contested divorce proceeding. In October 1995, defendant separately hired plaintiff to file a Chapter 7 bankruptcy petition on his behalf. A flat fee of $1500 plus costs was charged, pursuant to federal law. In March 1996, however, defendant's wife filed an adversary proceeding in bankruptcy, seeking to determine that certain matrimonial orders for support and equitable distribution were not dischargeable. Defendant then entered into a separate supplemental retainer agreement with plaintiff for the bankruptcy matter.*fn3

The retainer agreement for the matrimonial matter provided for a minimum upfront retainer of $3500 to be applied to legal service and costs. The agreement further provided that if the matter was resolved before the initial retainer was exhausted the unused balance would be retained by the firm "since prompt resolution will have been the result of our experience and ability." Hourly billing rates agreed upon were $225 for partner, $175 for senior associate, $150 for associate and $60 for paralegal. The agreement called for billing to be sent "approximately every sixty (60) days." Paragraph eight of the agreement provided:

8. We reserve the right to terminate our attorney-client relationship for non-payment of fees, costs or failure to replenish the fee upon request. All bills which are submitted are due and payable when rendered. If payment in full is not received within thirty days of the date of our bill, interest will accrue on the balance at the rate of 12 percent per annum. Ethics Opinion 446 (1980).

The agreement also provided that the retainer did not cover any services rendered after the date of the divorce.

As of January 30, 1996, defendant owed an accrued balance of $4206.40. On February 15, 1996, defendant tendered payment of $2500 toward his outstanding bill. By May 31, 1996, defendant owed an accrued balance of $12,202.76. On June 25, 1996, defendant remitted payment of $2000. By August 31, 1996, defendant owed $14,470.14. According to plaintiff, pursuant to discussion in September 1996, defendant agreed to pay the sum of $2000 per month to reduce the outstanding balance on his open account. Plaintiff claimed that defendant subsequently reaffirmed his commitment to pay $2000 per month.

On March 17, 1997, the partner handling the case wrote to defendant, indicating that he was disappointed that defendant had not made any payment on the outstanding balance the previous month. The letter advised defendant that the outstanding balance for both accounts was approximately $44,000. He reiterated that they had previously agreed to a payment plan. The letter also pointed out that plaintiff was holding $11,500, $7,795 of which was ordered to be held in escrow until the adversary proceeding with defendant's wife was concluded. The letter confirmed that defendant and plaintiff agreed to apply defendant's share of the amount held to reduce his outstanding ...


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