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Muller-Moreno v. Malouf

May 18, 2009

RUTH M. MULLER-MORENO, KIMBERLY A. ALLEN AND STEPHANIE FIGUEROA, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS-RESPONDENTS/CROSS-APPELLANTS,
v.
RICHARD MALOUF; RICHARD MALOUF D/B/A MALOUF AUTO GROUP; MALOUF AUTO GROUP D/B/A MALOUF LINCOLN MERCURY INC., MALOUF FORD, INC., MALOUF BUICK-PONTIAC-GMC TRUCK, INC. AND MALOUF LEASING AND RENTAL CORPORATION; MALOUF FORD, INC; MALOUF LINCOLN MERCURY, INC. F/K/A MALOUF DODGE, INC. AND MALOUF HYUNDAI, INC.; MALOUF BUICK-PONTIAC-GMC TRUCK, INC. F/K/A MALOUF BUICK-GMC TRUCK, INC. AND MALOUF BUICK, INC., DEFENDANTS-APPELLANTS/CROSS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Middlesex County, Docket No. L-4464-02.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: October 16, 2008

Before Judges Cuff, Fisher and C.L. Miniman.

This appeal requires us to decide whether the award of $907,865.79 in counsel fees*fn1 in this class action was consistent with the standards established by Furst v. Einstein Moomjy, Inc., 182 N.J. 1 (2004), and Rendine v. Pantzer, 141 N.J. 292 (1995). The judge set the lodestar at $626,114.33 and enhanced that sum by forty-five percent. Defendants contend that the judge abused his discretion both when he set the lodestar and when he enhanced it. Plaintiffs assert the judge did not abuse his discretion in either respect and that defendants are seeking to mire their counsel fee application in a second round of litigation, contrary to Furst, supra, 182 N.J. at 24-25. Plaintiffs' cross-appeal seeks interest on the fee award plus an award of appellate fees and costs.*fn2

I.

The class-action complaint in this matter was filed on April 30, 2002, and sought damages from defendants, all automobile dealers, for violations of the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20; the Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA), N.J.S.A. 56:12-14 to -18; and regulatory requirements for documentary and predelivery fees, N.J.A.C. 13:45A-26B.2; and for equitable fraud, common-law fraud, failure to deal in good faith, and unjust enrichment. Plaintiff Ruth M. Muller-Moreno alleged that she purchased a 2000 Mercury Sable from defendants and that they violated the CFA by overcharging her for title and registration fees and violated the TCCWNA by failing to itemize the overcharges and by failing to notify consumers of their rights. Similar allegations were made by the other named plaintiffs in the amended complaint.

Defendants answered the complaint on June 26, 2002, and the parties then engaged in discovery and motion practice. A class of about 41,657 members was certified on September 19, 2003, and partial summary judgment was granted to plaintiffs on February 3, 2005. The judge found that defendants' overcharge of official motor vehicle fees violated the Automobile Sales Practices Regulations, N.J.A.C. 13:45A-26B.2(a)(2), and the CFA. He also found that the failure to itemize that overcharge violated N.J.A.C. 13:45A-26B.2(a)(2)(i) and the TCCWNA. Finally, he found that defendants' failure to print the required notice in ten-point typeface violated N.J.A.C. 13:45A-26B.2(a)(2)(iii). A settlement agreement was reached on May 9, 2005, providing relief to class members, primarily in the form of coupons and cash certificates worth $325 for each class member. Thus, the total settlement exposed defendants to a payout of over $1.3 million. The settlement did not resolve the issue of counsel fees. The class settlement was approved on March 16, 2006, and the complaint was dismissed. A year later plaintiffs' counsel sought an award of fees and costs, which defendants opposed.

The judge found that the primary legal focus of the action was the CFA and that the action "was a relatively early case of this type" and had its own "unique set of facts and legal theories for recovery." He also found that "[t]his case has been vigorously litigated, even though a settlement was eventually reached. There were also some post-settlement proceedings." He additionally observed,

Class counsel worked hard for the settlement, it was not handed to them. In addition, class counsel have been, and may well continue to be, involved in the administration of the settlement notice and implementation process, some of which will be future work for which they will not be able to make supplemental fee requests.

The judge explained that he took "this sort of on-going post-settlement litigation into account in determining the final fee award" and based the fee award on the original, but not the supplemental, application for fees incurred after the initial fee application in the amount of $12,865.50.

The judge further found that "Andrew R. Wolf, Esquire, and Steven A Skalet, Esquire, are highly skilled class-action attorneys with an impressive record in class action and other multi-party litigation." He concluded that the hourly rates sought by class counsel were reasonable, appropriate, and "consistent with rates charged in New Jersey for complex commercial litigation in [his] experience." He specifically found that the rate of $350 for Christopher McGinn, Esquire, was appropriate despite his relatively short tenure as a member of the bar because he had "considerable prior experience in the area of consumer protection."

With respect to billings for internal conferences and telephone calls among class counsel, the judge found:

While multiple attorney conferences or attendance at court would not be appropriate for the average personal injury or contract action, they are, in my view, reasonable in class actions which are developing new theories of recovery and which are being vigorously defended. Although a class action defendant certainly has the right to mount a defense, they do so knowing that, if unsuccessful, they will be bearing the litigation expenses of class counsel.

Finally, he expressed the belief "that class counsel made appropriate use of paralegal time for performing work that might otherwise have been done by attorneys at a higher rate." Having made these findings, the judge "determined that the appropriate lodestar amount for this case is the $626,114.33 claimed by class counsel."

The judge "also concluded that a contingency enhancement is appropriate" because the case was taken on a contingency basis and because considerable time will have to be spent finalizing and administering the settlement, "including the time spent after the initial fee submission," which he did not include in the lodestar. He determined that it was appropriate to set the enhancement toward the top of the ordinary range suggested by Rendine, supra, 141 N.J. at 343, and concluded that forty-five percent was "fully warranted." The judge entered an order on June 15, 2007, awarding total counsel fees in the amount of $907,865.79. This appeal followed.

II.

Although New Jersey generally follows the "American Rule," barring a prevailing litigant from collecting attorneys' fees from the losing party, id. at 322, where a statute provides for such fees, the party seeking the fees may apply therefor under Rule 4:42-9(a)(8) by complying with the provisions of Rule 4:42-9(b) and Rule of Professional Conduct ("RPC") 1.5(a). RPC 1.5(a) "must inform the calculation of the reasonableness of a fee award in . . . every case" and "a trial court must analyze [these] factors in determining an award of reasonable counsel fees." Furst, supra, 182 N.J. at 21-22. RPC 1.5(a) provides:

A lawyer's fee shall be reasonable. The factors to be considered in determining the reasonableness of a fee include the following:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to ...


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