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Rivera v. Salerno Duane


June 22, 2007


On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. MRS-L-1017-04.

Per curiam.


Argued May 9, 2007

Before Judges Lefelt and Parrillo.

Plaintiff Evelyn Rivera appeals from the final judgment of the Law Division granting defendant Salerno Duane, Inc.'s motion for reconsideration and vacating its previous award of attorney's fees in her favor. For reasons that follow, we reverse and remand.

The underlying lawsuit arises from plaintiff's purchase in April 1998 of a used Toyota Corolla from Dependable Motors, a small used car dealership in Somerset. The car was sold "as is" with no warranties and plaintiff paid $9,000, financed through defendant, Dependable's finance agent. Soon thereafter, plaintiff experienced some difficulties with the car and sometime after 2001 discovered from a CARFAX(r) report that the car supposedly had been involved in an accident in February 1998, a fact not disclosed to her at time of purchase.

On April 7, 2004, plaintiff sued defendant and Chrysler Financial Corporation (Chrysler),*fn1 as well as unknown persons and corporations, in a nine-count complaint alleging: violations of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20 (Count One); violations of the Truth-in-Consumer Contract, Warranty and Notice Act (NJTCCA), N.J.S.A. 56:12-1 to -18 (Count Two); misrepresentation or common law fraud (Count Three); equitable fraud (Count Four); breach of contract under the Uniform Commercial Code, N.J.S.A. 12A:2-101 to -725 (Count Five); failure to deal in good faith (Count Six); DaimlerChrysler's liability under theories of agency or respondeat superior (Count Seven); unjust enrichment (Count Eight); and finally, DaimlerChrysler's liability under the Federal Trade Commission (FTC) Holder Rule (Count Nine). The statutory consumer fraud count (Count One) was based in part on allegations that defendant overcharged plaintiff for registration and title fees. The NJTCCA count (Count Two) alleged statutory violations by defendant by not properly itemizing the actual registration and title fees in the initial sales document or Retail Buyer's Order; failing to provide plaintiff with a used car buyer's guide; failing to provide plaintiff with a copy of a written warranty; and by failing to provide her with a copy of the used car lemon law notice.

Following discovery, the parties filed a series of summary judgment motions. On April 29, 2005, the trial court granted plaintiff partial summary judgment on part of Counts One and Two. On August 5, 2005, DaimlerChrysler was effectively dismissed from the case when the trial court granted its motion for partial summary judgment and ordered defendant to indemnify DaimlerChrysler for any adverse judgment. On August 30, 2005, the trial court granted summary judgment to defendant on part of Count One and Counts Three through Nine, and also granted summary judgment to plaintiff on part of Count Two. In its final order of November 23, 2005, clarifying all previous orders, the trial court granted judgment to plaintiff on Count One in the amount of $17.90, which was then trebled under the CFA to $53.70, and also granted judgment to plaintiff on Count Two in the amount of $400.00, $100.00 each for four violations of the NJTCCA, for a total judgment against defendant of $453.70, in addition to reasonable attorney's fees and costs upon proper application.

Consequently, plaintiff moved for attorney's fees and costs. Having received no timely opposition from defendant, the trial court granted the motion and awarded the requested fees in the amount of $20,240.00 and costs in the amount of $719.69. The counsel fee represented an hourly rate of $275 multiplied by 64 hours with a fee enhancement of 15%.

Defendant then moved for reconsideration and plaintiff cross-moved for additional fees and costs. Stating that she originally "awarded fees requested because there was no opposition and the Court concluded that there was thus no objection to the fees requested[,]" the trial judge granted defendant's motion and vacated the earlier order awarding attorney's fees and costs, further reasoning:

After reviewing the entire file upon submission of this motion, the Court has concluded that an award of $100, even though trebled to $453.70, warrants no counsel fee award, much less an award of $20,000. The fact that the initial (untrebled) award was $100 is strong support for the proposition that this case should not have been filed and is not consonant with the salutary pursuits of the Consumer Fraud Act. The fact that the untrebled award is less than the filing fee is further support for that proposition. Moreover, plaintiff's application for fees does not fulfill the requirements of RPC 1.5.

We disagree.

Rule 4:42-9(a) permits attorney's fees when authorized by statute. R. 4:42-9(a)(8). The statutes which defendant was found to have violated, the CFA and the NJTCCA, are each fee-shifting statutes that award attorney's fees to "injured" parties. N.J.S.A. 56:8-19; N.J.S.A. 56:12-17. Specifically, the CFA states in pertinent part:

In any action under this section the court shall, in addition to any other appropriate legal or equitable relief, award threefold the damages sustained by any person in interest. In all actions under this section, including those brought by the Attorney General, the court shall also award reasonable attorneys' fees, filing fees and reasonable costs of suit. [N.J.S.A. 56:8-19 (emphasis added).]

Similarly, the NJTCCA states in relevant part:

Any person who violates the provisions of this act shall be liable to the aggrieved consumer for a civil penalty of not less than $100.00 or for actual damages, or both at the election of the consumer, together with reasonable attorney's fees and court costs. This may be recoverable by the consumer in a civil action in a court of competent jurisdiction . . . . [N.J.S.A. 56:12-17 (emphasis added).]

Thus, an award of attorney's fees is mandatory under both N.J.S.A. 56:8-19 and N.J.S.A. 56:12-17. The use of the word "shall" in these statutes suggests as much. See Cox v. Sears Roebuck & Co., 138 N.J. 2, 24 (1994); Ramanadham v. N.J. Mfrs. Ins. Co., 188 N.J. Super. 30, 32-33 (App. Div. 1982); Skeer v. EMK Motors, Inc., 187 N.J. Super. 465, 470 (App. Div. 1982). Indeed, a consumer fraud or NJTCCA plaintiff can recover "reasonable attorneys' fees, filing fees, and costs if that plaintiff can prove that the defendant committed an unlawful practice, even if the victim cannot show any ascertainable loss and thus cannot recover treble damages." Cox v. Sears Roebuck & Co., supra, 138 N.J. at 24; see, e.g., Performance Leasing Corp. v. Irwin Lincoln-Mercury, 262 N.J. Super. 23, 31, 34 (App. Div.) (holding that where jury found that defendant had committed unconscionable commercial practice and thus had violated Act, but that plaintiff had not been damaged by that violation, strong precedent supported award to plaintiff of attorneys' fees), certif. denied, 133 N.J. 443 (1993).

Particularly with respect to the CFA, "[t]he fundamental remedial purpose . . . dictates that plaintiffs should be able to pursue consumer-fraud actions without experiencing financial hardship." Cox v. Sears Roebuck & Co., supra, 138 N.J. at 25. Its legislative history "indicates that the provision for attorneys' fees was intended to impose on the defendant in a private action 'a greater financial penalty [than in an action brought by the Attorney General] and . . . [to ensure] that the financial cost to the private plaintiff was minimized and compensation maximized.'" Id. at 24 (quoting Skeer, supra, 187 N.J. Super. at 471). On this score, our Supreme Court has recognized that "the right of access to the courts is meaningless unless the injured party has the resources to launch a suit" and that this right of access is empowered by "[f]ee-shifting[, which] provides an incentive to competent counsel to undertake high-risk cases and to represent victims of fraud who suffer relatively minor losses." Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 21 (2004).

In fact, defendant concedes that attorney's fees in this case are mandated by the plain language of both the CFA and the NJTCCA, and we find the trial judge's contrary interpretation erroneous. R. 4:49-2. Defendant argues, however, that plaintiff's fee request should be greatly reduced due to her nominal damages award. To the extent this position is based on Tarr v. Ciasulli, 181 N.J. 70 (2004), that case offers defendant no support. There, the Supreme Court considered the fee-shifting provision of the Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -49, N.J.S.A. 10:5-27.1, and held that "[i]n the case of a nominal damages award, however, we leave to the discretion of the trial court whether to award minimal attorney's fees or no fees at all." Id. at 87. Nothing in Tarr, however, suggests its application to statutory schemes outside of the LAD, much less to those expressly mandating a fee award to a successful plaintiff. Moreover, the statutory schemes serve different purposes and we have already explained how the remedial purpose of the CFA is served by the award of attorneys' fees even where the statutory violation results in no ascertainable loss to the successful plaintiff. Cox v. Sears Roebuck & Co., supra, 138 N.J. at 24-25.

In fact, the Supreme Court in Szczepanski v. Newcomb Med. Ctr., 141 N.J. 346 (1995), "decline[d] to construe New Jersey's fee-shifting statutes to require proportionality between damages recovered and counsel-fee awards even if the litigation, as in this case, vindicates no rights other than those of the plaintiff." Id. at 366. Instead, the Court made clear that the trial judge's responsibility to carefully review the fee request "is heightened in cases in which the fee requested is disproportionate to the damages recovered":

In such cases the trial court should evaluate not only the damages prospectively recoverable and actually recovered, but also the interest to be vindicated in the context of the statutory objectives, as well any circumstances incidental to the litigation that directly or indirectly affected the extent of counsel's efforts. Based on that evaluation, if the court determines that the hours expended "exceed those that competent counsel reasonably would have expended to achieve a comparable result, a trial court may exercise its discretion to exclude excessive hours from the lodestar calculation." [Szczepanski, supra, 141 N.J. at 366-67 (quoting Rendine v. Pantzer, 141 N.J. 292, 336 (1995)).]

In Rendine, supra, the Court "set down standards governing the award of attorneys' fees under a fee-shifting statute." Furst, supra, 182 N.J. at 21. The Court in Rendine stated that:

[u]nder . . . state fee-shifting statutes, the first step in the fee-setting process is to determine the "lodestar": the number of hours reasonably expended multiplied by a reasonable hourly rate. In our view, the trial court's determination of the lodestar amount is the most significant element in the award of a reasonable fee . . . . [Rendine, supra, 141 N.J. at 334-35.]

In order to facilitate the proper determination of the lodestar, applications for attorney's fees must be "supported by an affidavit of services addressing the factors enumerated by [Rule of Professional Conduct (RPC)] 1.5(a)." R. 4:42-9(b). RPC 1.5(a) lists those factors, which "must inform the calculation of the reasonableness of a fee award in this and every case," Furst, supra, 182 N.J. at 22, as:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services;

(8) whether the fee is fixed or contingent. [RPC 1.5(a).]

The Court in Furst identified three steps in determining the lodestar. First, "a trial court . . . must determine the reasonableness of the rates proposed by prevailing counsel in support of the fee application." 182 N.J. at 22-23 (citing Rendine, supra, 141 N.J. at 335). This evaluation requires the court to compare the fees charged by a prevailing attorney against those of comparable attorneys in the community. Ibid. (citing Rendine, supra, 141 N.J. at 337).

"Second, a trial court must determine whether the time expended in pursuit of the 'interests to be vindicated,' the 'underlying statutory objectives,' and recoverable damages is equivalent to the time 'competent counsel reasonably would have expended to achieve a comparable result . . . .'" Ibid. (quoting Rendine, supra, 141 N.J. at 336). The Rendine Court reinforced this point when it stated that:

[c]ompiling raw totals of hours spent, however, does not complete the inquiry. It does not follow that the amount of time actually expended is the amount of time reasonably expended. In the private sector, "billing judgment" is an important component in fee setting. It is no less important here. Hours that are not properly billed to one's client also are not properly billed to one's adversary pursuant to statutory authority. Thus, no compensation is due for nonproductive time. For example, where three attorneys are present at a hearing when one would suffice, compensation should be denied for the excess time. [141 N.J. at 335 (quoting Copeland v. Marshall, 641 F.2d 880, 891 (D.C. Cir. 1980)).]

Moreover, determination as to whether hours claimed are excessive "ultimately requires a consideration of what is reasonable under the circumstances." Furst, supra, 182 N.J. at 22-23.

As its final step, "a trial court should decrease the lodestar if the prevailing party achieved limited success in relation to the relief he had sought." Id. at 23 (citing Rendine, supra, 141 N.J. at 336). In this regard, the Rendine Court quoted the Court of Appeals for the Third Circuit:

The district court should exclude hours that are not reasonably expended. Hours are not reasonably expended if they are excessive, redundant, or otherwise unnecessary. Further, the court can reduce the hours claimed by the number of hours spent litigating claims on which the party did not succeed and that were distinct in all respects from claims on which the party did succeed. The court also can deduct hours when the fee petition inadequately documents the hours claimed. [141 N.J. at 335 (quoting Rode v.

Dellarciprete, 892 F.2d 1177, 1183 (3d Cir. 1990)) (citations and internal quotation marks omitted).]

Thus, the Rendine analysis must govern the determination of a reasonable attorney's fee in this case. In her original counsel fee award of $20,240, which she later vacated, the trial judge noted that "fees awarded . . . comply with [New Jersey] lodestar calculations and RPC 1.5 . . . ." However, that determination was devoid of any Rendine analysis, or articulation of the factors relied upon in reaching the judge's ultimate determination. See R.M. v. Supreme Court of N.J., 170 N.J. 1, 23-24 (2007) (vacated attorney's fee award where the Court could not "ascertain with confidence whether the trial court applied the long-standing "lodestar" methodology for the determination of counsel fee awards"); Furst, supra, 182 N.J. at 21 ("[A] trial court must . . . state its reasons on the record for awarding a particular fee."); R. 1:7-4(a) (requiring trial courts to "find the facts and state its conclusion of law"). Therefore, in light of the court's failure to explicitly acknowledge the principles fully developed in Rendine in rendering its original attorney-fee award, we cannot determine whether that decision constituted "a clear abuse of discretion." Grubbs v. Knoll, 376 N.J. Super. 420, 430 (2005) (quoting Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001)); see also Rendine, supra, 141 N.J. at 317 ("Our expectation is that future fee determinations by trial courts will be disturbed only on the rarest occasions, and then only because of a clear abuse of discretion.").

Because the ultimate decision awarding no attorney's fees was incorrect and because its original determination was bereft of any Rendine analysis, we remand to the trial court to calculate an appropriate award for plaintiff's attorney's fees and costs consistent with this opinion. The trial court is best situated to ascertain and weigh the mix of factors that go into the "reasonableness" equation. Likewise, we refer the issue of attorney's fees and costs for appellate services, Rule 2:11-4(a); Rule 2:11-5; Hirsch v. Tushill Ltd., 110 N.J. 644, 646 (1988), to the trial court for disposition. R. 2:11-4; see also Delaney v. Garden State Auto Park, 318 N.J. Super. 15, 22 (App. Div.) (remanding to the trial court to determine reasonable attorney's fees at trial and on appeal in a CFA case), certif. denied, 160 N.J. 477 (1999).

Reversed and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.

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