On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-5784-04.
The opinion of the court was delivered by: Parrillo, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 10, 2007
Before Judges Lintner,*fn1 Parrillo and Sabatino.
Upon termination of her employment contract with defendant Inman Shopping Plaza, Inc. (Inman), plaintiff Elizabeth Trimarco, a one-sixth shareholder, sued the company as well as two other shareholders, John and Phyllis Trimarco, and a former company officer, Anne Trimarco, (collectively the Trimarco defendants), both individually and derivatively on behalf of Inman, utilizing the services of the law firm McCarter & English, LLP (M&E). Following settlement of all claims, cross-claims, counterclaims and third-party claims save for attorneys' fees, plaintiff and M&E both moved for counsel fees pursuant to Rule 4:42-9(a)(2), the former seeking reimbursement of $64,759.84 in fees already paid to M&E for services from July 2002 to April 2003, and the latter seeking unpaid fees of $89,000 generated from May to September 2003. By orders of February 28, 2006, the Law Division judge directed Inman to pay plaintiff $38,215.84 and to pay M&E $49,801.60. Inman ultimately settled with M&E as to the second order and appeals only from the first, awarding plaintiff counsel fees.
Some background is in order. Inman is a closely-held, family run business, incorporated in New Jersey in May 1986. Its sole asset is real estate in the Township of Woodbridge, on which is situated a shopping center consisting of two buildings housing about ten tenants, and a parking lot. The company was founded by two brothers, John and Nicholas Trimarco, whose equal shares, upon their deaths, devolved to their widows, who in turn each transferred their fifty percent shares equally to their three children. After John's death in 1993, his widow Anne functioned as Inman's de facto president while her son Richard, to whom plaintiff was married, assumed responsibility for dayto-day management of the company. Richard and his siblings, John Jr. and Phyllis, therefore owned fifty percent of Inman and their cousins, Kenneth, Laura and Judy (the non-defendant Trimarcos) -- Nicholas' children -- owned the remaining one-half although they were at the time completely passive shareholders, not involved in company operations.
Richard died in January 2002 and plaintiff inherited his one-sixth share, sharing management of Inman with her sister-inlaw Phyllis pursuant to an employment contract, fixing her annual salary at $40,000 with medical benefits. Plaintiff was terminated six months later by Anne. According to plaintiff, during her short tenure as Inman's co-manager, she uncovered evidence of misconduct, corporate malfeasance and improper use of company assets by the Trimarco defendants in their management of Inman and as a result she was fired.
Consequently, in July 2002, plaintiff filed suit against Inman and the Trimarco defendants alleging both wrongful termination and, on behalf of the shareholders, derivative claims of corporate misconduct under N.J.S.A. 14A:12-7. As to the latter, count three of plaintiff's nine-count complaint sought relief for statutory oppression of a shareholder due to the Trimarco defendants' breach of fiduciary trust based on their "misconduct and mismanagement of Inman" for their own "pecuniary gain to the exclusion of Inman's other shareholders." The Trimarco defendants answered, counterclaimed and filed a third-party complaint against, among others, Richard's estate, alleging misconduct on their part.
Discovery ensued through August 2003. Pursuant to court order in the interim, in July 2003 a shareholders' meeting was held at which time the non-defendant Trimarcos allied themselves with plaintiff and voted to oust the Trimarco defendants as officers and members of the Board of Directors. Plaintiff was elected president on a temporary basis. In that capacity, plaintiff attempted to use $263,647.92 in corporate funds to pay M&E's and another law firm's outstanding counsel fees and to reimburse herself for monies she already expended in legal fees on behalf of Inman. The non-defendant Trimarcos resisted and as a result of an order to show cause filed by Inman, plaintiff, M&E, and the other law firm were ordered to disgorge the fees. In so ruling, the judge also acknowledged the action had been started primarily as a derivative action on behalf of the corporation to remedy alleged wrongful acts committed by the Trimarco defendants, and that while such reimbursement was premature at the time, plaintiff could be entitled to recover counsel fees if it were later determined that she had been successful in her allegations.
In any event, as a result of additional information uncovered in discovery, on September 11, 2003, plaintiff filed an amended complaint adding new derivative claims of malfeasance by the Trimarco defendants, including usurpation of corporate opportunity by Anne's purchase of a contiguous lot (Lot 7) onto which she intended to move Inman's anchor tenant Walgreen's for her sole benefit. The complaint also sought ownership of a parcel of the property (Lot 6) on which Inman operated the shopping center, title to which was apparently disputed but in Anne's name. Inman answered plaintiff's amended complaint and counterclaimed, and in its cross-claims and claims for contribution against the Trimarco defendants asserted identical claims to those alleged by plaintiff in her original and amended complaints.
All substantive claims in the matter eventually were settled. As between Inman and the Trimarco defendants, Anne was required to sell the disputed lot to Inman. Plaintiff's employment claims against Inman and the Trimarco defendants were dismissed and the Trimarco defendants dismissed their claims against plaintiff as well as their third-party complaint. Inman and plaintiff also settled their respective claims against each other, save for the issue of Inman's responsibility to reimburse plaintiff for fees paid M&E between July 2002 and April 2003 in pursuing her derivative claims on behalf of Inman. Beyond that, the only other outstanding issue concerned M&E's related motion for counsel fees generated between May and September 2003.
These residual attorney fee matters were considered on February 3, 2006. Following briefing, examination of M&E's detailed time billing invoices, and oral argument, the Law Division judge determined that plaintiff was entitled to payment of that portion of legal fees she incurred pursuing claims asserted on behalf of Inman's shareholders because assertion of those claims had benefited Inman and its shareholders and resulted in the preservation and protection of a fund in court, pursuant to Rule 4:42-9(a)(2).*fn2 Accordingly, of the $65,566.34 invoiced fees incurred for the period July 2002 through May 2003 and previously paid by plaintiff to M&E, ...