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Hulse & Germano, Esqs., LLC v. Sandoval

March 17, 2009

HULSE & GERMANO, ESQS., LLC, PLAINTIFFS-RESPONDENTS,
v.
RIGOBERTO SANDOVAL AND ELLEN SANDOVAL, JOINTLY, SEVERALLY AND ALTERNATIVELY, DEFENDANTS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Law Division, Burlington County, L-185-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted February 3, 2009

Before Judges Winkelstein, Gilroy and Chambers.

Defendants, Rigoberto Sandoval and Ellen Sandoval, husband and wife, appeal from a March 28, 2008 summary judgment dismissing their counterclaim for legal malpractice, and entering judgment against them on plaintiff's affirmative claim for legal fees in the sum of $24,158.53, together with $6039.50 in "contract interest," for a total judgment amount of $30,198.03. We reverse.

In March 2004, defendants entered into an agreement of sale with Feldman & Feldman, LLC (the seller), to purchase "all of the equipment, inventory, stock, name and lease rights of a business known as Oak Valley Pizza located in Deptford Township." As part of the agreement, defendants paid the seller a $20,000 deposit. Defendants subsequently claimed that the seller made material misrepresentations with regard to the agreement, and sought return of their deposit. When the seller declined to return the deposit, defendants hired plaintiff, the law firm of Hulse & Germano (the law firm), to represent them in a lawsuit against the seller for breach of contract. Under the terms of a retainer agreement with the law firm, defendants agreed to pay a $5000 retainer, and defendants would be billed for legal services at an hourly rate, with a separate rate for each court appearance. Ellen Sandoval claimed that one of the law firm attorneys informed her that there "would be a strong possibility of a fee shifting and that [the seller] would have to pay [the Sandovals' attorneys] fees."

Although Ellen Sandoval speaks some English, her husband, Roberto Sandoval, does not; his native language is Spanish. The law firm did not inform defendants that they could retain the law firm, or another law firm, on a contingency fee basis, nor did anyone from the law firm explain the fee agreement to defendants in Spanish.

The law firm filed suit on defendants' behalf against the seller. In addition to breach of contract, defendants claimed that the seller committed fraud, breached the implied covenant of good faith and fair dealing, and tortiously interfered with defendants' economic advantage. The case went to trial, and the jury awarded the Sandovals $21,700, including court costs, but no counsel fees.

Prior to the verdict, defendants had paid the law firm $10,860 toward the legal fee. Following the trial, the unpaid balance due to the law firm was $24,158.53. After giving a pre-action notice to defendants, see R. 1:20A-6, the law firm filed suit against defendants for the unpaid balance of legal fees. Defendants counterclaimed, alleging that the law firm committed legal malpractice by not informing them that it was customary for law firms in collection cases and breach of contract cases to offer the client a contingent fee agreement.

In support of their counterclaim, defendants submitted an affidavit of merit executed by Chester A. Luszcz, a New Jersey attorney, expressing his opinion that the law firm's representation of defendants fell outside acceptable professional standards.

During discovery, the law firm propounded an interrogatory upon defendants that asked them to "set forth the factual basis for [their] contention that [they] are not responsible for payment to Hulse & Germano with respect to the work performed on the subject premises." Defendants' response was: "Defendants will rely on its supplied expert's report. To sum it up, the plaintiffs failed to present the option of a contingency fee agreement, failed to explain the consequences of charging an hourly fee, failed to explain in Spanish, misrepresented the possibility of fee shifting in the original suit."

The expert report defendants referred to in their answer to the interrogatory was Luszcz's certification. The pertinent portions of that certification state the following:

4. I have reviewed the facts, file and discovery and conclude that "the law firm" deviated from the proper standards of care in regard to the fee arrangement and the representation of the defendants.

5. It is customary for many law firms in collection and/or breach of contract cases to offer a client a ...


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