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State Farm Fire and Casualty Insurance Co. v. Florkiewicz


December 4, 2008


On appeal from Superior Court of New Jersey, Chancery Division, Passaic County, Docket No. C-80-07.

Per curiam.


Argued October 16, 2008

Before Judges Stern, Payne and Waugh.

Plaintiff, State Farm Fire and Casualty Insurance Co., appeals from a judgment entered on September 17, 2007 which granted defendant Marion Florkiewicz's application for counsel fees incident to the negotiation of an access agreement needed to conduct remediation on her residential property. The Department of Environmental Protection had directed Florkiewicz's neighbors, Jan and Connie Thomas, who were insured by State Farm, to perform remediation on Florkiewicz's property because of contamination emanating from their property. Plaintiff commenced this action against defendant seeking access to her property so that he could perform the remediation pursuant to the Brownfield and Contaminated Site Remediation Act ("Brownfield Act"), N.J.S.A. 58:10B-1 to -31. See N.J.S.A. 58:10B-1.1 (title).

Plaintiff argues that Florkiewicz's attorney is "not entitled to any legal fees for the negotiation of the access agreement." We agree, and reverse the judgment.

The dispute arises out of the parties' attempt to negotiate the access agreement to allow State Farm's contractor access to defendant's property to remediate contamination caused by the leaking of the insured's oil tank onto defendant's property. After more than a year of unsuccessful negotiations, State Farm, exercising its right of subrogation on behalf of its insureds, filed a verified complaint and obtained an order to show cause, dated June 21, 2007, designed to secure access to the property. Defendant filed a cross-motion seeking to have State Farm accept her proposed agreement. An agreement, dated September 10, 2007, was ultimately entered by the parties, but it did not resolve their dispute as to the issue of counsel fees relating to the matter.

The trial judge considered defendant's application for fees and awarded $13,228.35.*fn1 The parties now debate before us the question of entitlement to counsel fees under the Brownfield Act, N.J.S.A. 58:10B-16, which provides in part:

Any person who undertakes the remediation of suspected or actual contamination and who requires access to conduct such remediation on real or personal property that is not owned by that person, may enter upon the property to conduct the necessary remediation if there is an agreement, in writing, between the person conducting the remediation and the owner of the property authorizing the entry onto the property. If, after good faith efforts, the person undertaking the remediation and the property owner fail to reach an agreement concerning access to the property, the person undertaking the remediation shall seek an order from the Superior Court directing the property owner to grant reasonable access to the property and the court may proceed in the action in a summary manner. [N.J.S.A. 58:10B-16(a)(1).]

For purposes of this opinion it suffices to note that before the litigation was commenced, the parties differed on a number of issues relative to access and remediation, including compensation for the decreased value of defendant's property; guarantees relating to the work to be done; costs of removal of defendant's oil tank and conversion to natural gas; inspection, review and approval of the work done; compensation for defendant's damages for inconvenience and the costs related thereto; and costs of legal fees relating the agreement. The parties and their counsel exchanged communications about these subjects for a period of time between February 2006 and June 20, 2007 when the complaint was filed.

The narrow issue before us is whether attorneys' fees are permissible with respect to either the negotiations or the litigation, or both. Defendant insists that they are, as an element of damages, because N.J.S.A. 58:10B-16(a)(2)(d) permits recovery to "indemnify the owner of the property for any damages, penalties or liabilities resulting from the remediation." That question, of course, turns on whether "damages" under N.J.S.A. 58:10B-16 includes counsel fees. The text of N.J.S.A. 58:10B-16 does not specifically authorize legal fees as part of damages, and we, therefore, also consider whether counsel fees can be an element of damages independent of the statute.*fn2

The award of counsel fees is permitted only in certain circumstances provided in Rule 4:42-9(a). One of those circumstances is when a statute permits the award. R. 4:42-9(a)(8). See, e.g., Satellite Gateway Commc'ns, Inc. v. Musi Dining Car Co., Inc., 110 N.J. 280, 285-86 (1988); Dep't of Envtl. Prot. v. Ventron Corp., 94 N.J. 473, 504-05 (1983); In re Thomas, 278 N.J. Super. 580, 584-85 (App. Div.), certif. denied, 141 N.J. 95 (1995). However, counsel fees are not precluded as a "traditional element of damages." Pressler, Current N.J. Court Rules, comment 2.9 on R. 4:42-9 (2009).

In Ventron Corp., the Supreme Court stated that the award of fees is authorized when they "are awarded to '[o]ne who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person ....'" Ventron Corp., supra, 94 N.J. at 504-05 (quoting Restatement (Second) of Torts § 914 (2) (1979)). The Court held that "in a fraud action, ... if a third party sues one who has been defrauded, ... the defrauded party 'may recover from the tortfeasor the expenses of that litigation, including counsel fees, as damages flowing from the tort.'" Id. at 505 (quoting Dorofee v. Planning Bd. of Pennsauken, 187 N.J. Super. 141, 144 (App. Div. 1982)). However, the third party "may not recover the part of their counsel fees attributable to defending their own acts. Nor may they recover the portion of the counsel fees incurred in prosecuting their own claim ...." Id. at 505.

Similarly, in Central Motor Parts Corp. v. E.I. duPont deNemours & Co., 251 N.J. Super. 5, 9 (App. Div. 1991), we held that an indemnitee may recover attorneys' fees attributable to defending a claim when liability is only vicarious and the indemnitee is free from fault. The trial court had determined that attorneys' fees could not be awarded as part of a claim for indemnification. Central Motor Parts Corp. v. E.I. duPont deNemours & Co., 251 N.J. Super. 34, 44 (Law Div. 1989). However, on appeal, we determined that "[w]here one is obliged by another's tort to bring or defend an action, the fees are damages resulting from the tort and are recoverable as such." Central Motor Parts Corp., supra, 251 N.J. Super. at 9 (citing Ventron Corp., supra, 94 N.J. at 504-05; Penwag Prop. Co. v. Landau, 76 N.J. 595, 598 (1978); Pressler, Current N.J. Court Rules, Comment on R. 42-9(a)(8) (1991)). The Central Motor Parts case was remanded, however, to determine whether the indemnitee was rebutting a charge of its own active negligence, which would preclude the award or require "allocation or apportionment." Id. at 12-13.

These cases are distinguishable from the present matter because they deal with causes of action grounded in the common law and do not arise as a result of a statutory cause of action stemming from legislation which can address the right to counsel fees under the statute. See R. 4:42-9(a)(8) (authorizing counsel fees where "permitted by statute").

In McGowan v. O'Rourke, 391 N.J. Super. 502, 502-05 (App. Div. 2007), plaintiff prevailed on her domestic violence claim against defendant pursuant to the Prevention of Domestic Violence Act, N.J.S.A. 2C:25-17 to -35, and requested an award of attorneys' fees. N.J.S.A. 2C:25-29(b)(4) provides for "reasonable attorney's fees" as a "compensatory loss." In McGowan we upheld plaintiff's claim for attorneys' fees because she obtained a final restraining order under the Prevention of Domestic Violence Act and "[t]he Act specifically provides for an award of attorney's fees [as compensatory damages] and, therefore, they are permitted by" Rule 4:42-9(a)(8). Id. at 507-08. The McGowan court concurred with a similar holding in the trial court case, Wine v. Quezada, 379 N.J. Super. 287, 292 (Ch. Div. 2005). Id. at 507. In Wine, the trial court explained:

[s]ince attorney's fees, are expressly included in the Act as compensatory damages, there is no prerequisite that the case be 'appropriate' for compensatory damages, as is the requirement for punitive damages. An award of fees, as compensatory damages, in a domestic violence action is no different than an award of compensatory damages in a tort action. They are intended to make the victim whole.

[Wine, supra, 379 N.J. Super. at 292.]

See also Liberty Mut. Ins. Co. v. Land, 186 N.J. 163, 173 (2006) (where the Supreme Court discussed the Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 to -30, which allows insurance companies "to bring a civil action to recover compensatory damages, including reasonable investigation costs and attorneys' fees"); Thomas, supra, 278 N.J. Super. at 587 ("the Legislature did not intend that the [Spill] Fund would compensate a claimant for legal services rendered in the preparation, presentation and litigation of a claim"); Borough of Rockaway v. Donofrio, 186 N.J. Super. 344, 352 (App. Div. 1982), certif. denied, 95 N.J. 183 (1983) ("[i]f a condemnee must engage an attorney to represent him, then the fees of the attorney will necessarily reduce the award of just compensation kept by the condemnee. [However, t]he Eminent Domain Act does not require that upon completion of a proceeding the condemnor must pay the condemnee's legal fees and other expenses ... as an additional element of damages.")

It is clear from the above cited cases that the Legislature is aware of how to provide for the award of counsel fees when intended. See also N.J.S.A. 10:5-27.1 (providing in part that in any action commenced under the Law Against Discrimination, the prevailing party may be awarded a reasonable attorney's fees as part of the cost, ..."). N.J.S.A. 39:19-5, -6 (permitting "reasonable attorney's fees" to an employee or employer under the Conscientious Employee Protection Act); N.J.S.A. 34:11-56.40 (providing for "reasonable attorney's fees" under the Prevailing Wage Act). Yet the Brownfield Act does not authorize parties to bring a civil action for the specific purpose of recovering attorneys' fees, as does the Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 to -30; nor does the Brownfield Act specifically or expressly permit the award of fees. See N.J.S.A. 58:10B-16. Accordingly, we conclude that defendant may not seek counsel fees as damages for the cost of the negotiations. Nor do our Court Rules authorize an award with respect to the litigation in the absence of express statutory authorization. See R. 4:42-9(a)(8). We add only that if the Rules authorized such an award, counsel might commence litigation earlier in order to recover fees that would not otherwise be recoverable.

We reverse the award of counsel fees.

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