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Fox v. Drozd

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


January 13, 2010

JAMES A. FOX, PLAINTIFF-APPELLANT,
v.
VIVIAN FRANCIS DROZD, DEFENDANT-RESPONDENT.

On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-1635-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Telephonically argued December 9, 2009

Before Judges Grall, Messano and LeWinn.

Plaintiff James A. Fox appeals from a judgment entered on his claim alleging that defendant Vivian Francis Drozd breached her contract to pay for legal services rendered by Fox at the rate of $250 per hour; committed fraud by assuring him that payments due would be made; and, alternatively, alleging entitlement to be "fairly compensated" for services rendered at the contract rate. Fox sought payment in the amount of $53,029.25 for fees and costs, interest due under the terms of the retainer agreement in the amount of $11,130, plus pre- and post-judgment interest and counsel fees. Drozd filed an answer in which she acknowledged the contract but denied breach, fraud and any outstanding debt. She also asserted affirmative defenses seeking offset on the ground that the fees were excessive and the services unnecessary.

The matter was tried to the court. At the close of plaintiff's case, he voluntarily dismissed his claim for fraud. Following trial, the judge concluded that plaintiff's billing records were inadequate to establish a breach of the contract or that plaintiff rendered services for which he had not been fairly compensated. Accordingly, the judge dismissed the complaint with prejudice.

In reviewing a trial court's decision after a trial to resolve a dispute under a retainer agreement for legal services, appellate courts accord "traditional deference . . . to a trial court's conclusions on credibility" and "also defer to the trial court's findings of fact" that are "supported by credible evidence." Cohen v. Radio-Elecs. Officers Union, 146 N.J. 140, 157 (1996). After reviewing the record in light of those standards, we affirm the judgment because it is supported by the judge's assessment of credibility and the evidence presented at trial.

In October 2004, plaintiff and defendant executed an agreement for plaintiff to provide legal services to defendant in two matters. Under its terms, defendant agreed to pay an advance of $3550 to "be used to pay [her] fees and expenses according to this Agreement." The "fee" included a $2000 "minimum fee" payable "regardless of the amount of time actually spent on this case." Otherwise, defendant agreed to pay for services rendered at the rate of $250 per hour plus fees and costs for necessary expenses. Plaintiff was required to "send [defendant] itemized bills from time to time," and defendant's payments were "due upon receipt" and subject to interest on any balance unpaid within thirty days of the date of the bill assessed at a "yearly rate of 18%." The agreement expressly provides that if defendant needs services related to matters other than the two specifically designated, "you and the Law Firm may make a new agreement to provide the other services."

At trial, plaintiff testified to the difficulties he encountered in representing defendant in the matters covered by the retainer agreement and defendant's recalcitrance in paying her bills. Because defendant had not made payments, plaintiff did not file a brief in support of defendant's appeal from one of the judgments, and that appeal was dismissed. By plaintiff's account, at the time of trial defendant owed about $95,000, which included more than $31,000 interest due under the terms of the agreement.

On cross-examination, plaintiff acknowledged that he had included his client's social security number in the caption of his complaint in this action to collect fees due in order to make it more difficult for defendant to deny that she was the person named in the complaint. He admitted that the bills he gave defendant included billable hours that he estimated, without notes, months after providing the services. In addition, plaintiff agreed that bills of June 9 and October 26, 2005 included duplicate billings for the same services. Plaintiff also identified a charge for four hours he spent in municipal court in response to a subpoena, but defendant testified that she was represented by a public defender in that case.

Plaintiff also presented the testimony of the attorney who was his adversary in the one of the proceedings for which he was retained by defendant to establish the reasonableness of the fees plaintiff charged. That attorney described the nature of that litigation and the fees he earned, $60,000, in representing his client.

Defendant testified about her efforts to acquire documentation upon receiving the bills plaintiff submitted for payment and her frustration with plaintiff's failure to provide that additional information. She had complained in writings transmitted to plaintiff on two separate occasions. Further, defendant contended that she and plaintiff did not speak by telephone with the frequency reflected in the bills he alleged and testified that his records omitted two $500 payments she had made.

The judge delivered an oral opinion detailing her findings of facts and legal conclusions. The judge determined that defendant's testimony was credible, especially when contrasted with plaintiff's testimony, and the judge concluded that plaintiff failed to establish his claim that defendant breached the contract. In the judge's view, the plaintiff's admitted billing mistakes and his acknowledged practice of estimating billable hours long after rendering service precluded him from establishing that the amount he claimed was owed.

The judge found:

In this case, it was the [p]laintiff's mistakes that have . . . caused the contract theory not to have been proven.

The [p]laintiff . . . has numerous mistakes on his billing records, and has estimated . . . the billing entries for all the bills prepared.

The following specific facts are found by the [c]court in relation to denying the breach of contract claim alleged by

[p]laintiff. Number one; the bills were prepared three to five months after the billable event occurred.

Number two; no contemporaneous records for the billing were prepared to keep accurate records of the time spent.

Number three; [p]laintiff admitted that he estimated his time in compiling the bills months later.

Number four; [p]laintiff admitted to doubling [sic] billing . . . actual bills that are presented to this [c]court for payment.

Number five; [p]laintiff has no documentation on the subject matter of the numerous phone calls that he has billed for.

Number six; [p]laintiff has inconsistent times charged for the same billing event in different bills.

Number seven; [p]laintiff admitted to having anger at . . . [d]efendant for her nonpayment of the bills.

Number eight; [p]laintiff attempted to reveal . . . [d]efendant's social security number on the caption of the case ["]to protect himself.["]

This attempt is completely self-serving and was unnecessary; and further, in violation of the . . . fiduciary duty that

[p]laintiff owed . . . [d]efendant. Number nine; [p]laintiff failed to produce correspondence to [d]efendant, to keep her informed at trial, notwithstanding, his, ["]recollection,["] at this trial, that he did constantly copy . . . [d]efendant with his correspondence to others involv[ed] in the litigation.

Number ten; [p]laintiff allowed the [defendant's] . . . filed appeal to be dismissed while he was still [the] attorney of record, and without informing the client.

A Motion for excusal from the case or some other sort of application for relief, would have been more appropriate than just to ignore it because the client had ignored him.

Number eleven; [p]laintiff admitted that he would file an appeal for payment of unpaid bills, and would not proceed further without money; and therefore . . .

[p]laintiff permitted a dismissal of that appeal - simply because the client did not pay.

And, number twelve; . . . [p]laintiff failed to include two separate $500 payments . . . that [d]efendant made to him. . . .

Not including proper credits on the billings, the wrong social security number, in an attempt to do the wrong thing and reveal the client's social security number on the caption of the case, double billing - on different time events, estimating the time events; these are all . . . a summary of these . . . 12 factors that the [c]court relies upon for its determination that a breach of contract - has not been proven.

The foregoing findings are more than adequately supported by the record.

Despite the judge's conclusion that plaintiff failed to meet his burden of establishing the amount defendant owed under the retainer agreement, the judge went on to consider whether plaintiff was entitled to recover amounts, in addition to the $25,040 defendant had paid, under a theory of quantum meruit. The court undertook a painstaking review of the bills plaintiff submitted. After discounting amounts billed for services not identified by date, omitting duplicative entries, reducing amounts that appeared to be excessive and crediting defendant with the two unrecorded payments to which she testified, the court concluded that the total amount to which plaintiff was entitled was less than the amount defendant had paid.

On appeal, plaintiff raises five issues:

I. THE TRIAL JUDGE ERRED WHEN HOLDING NO CONTRACT EXISTED.

II. THE TRIAL COURT ERRED IN FAILING TO AWARD EXPECTATION DAMAGES.

III. THE TRIAL COURT, ACTING AS A FACT-CREATOR AND NOT A FACT-FINDER, COMMITTED REVERSIBLE ERROR IN CALCULATING QUANTUM MERUIT DAMAGES.

IV. THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY FAILING TO RECOGNIZE DEFENDANT-RESPONDENT WAS ESTOPPED FROM DENYING PLAINTIFF-APPELLANT'S RIGHT TO COMPENSATION.

V. THE TRIAL JUDGE ERRONEOUSLY MADE A CORRELATION BETWEEN ETHICAL CONDUCT AND CONTRACTUAL OBLIGATIONS AND ANY REMAND SHOULD BE TO ANOTHER JUDGE.

The argument raised in Point I is based upon a misreading of the trial judge's opinion. The judge did not find that there was no contract. To the contrary, she found that plaintiff failed to establish that defendant owed fees under the terms of the retainer agreement. Because that determination is based upon factual findings and assessments of credibility that are supported by the record and entitled to our deference, we affirm. Plaintiff's contention that the judge found the retainer agreement "essentially invalid" is without foundation; the judge found his evidence inadequate to establish that he was entitled to payment for the hours he claimed to have spent rendering legal services for defendant.

The judge's scrutiny of plaintiff's billing records and his testimony about the practices he employed to generate his bills was not improper. Courts are expected to "scrutinize contracts between attorneys and clients to ensure that they are fair." Cohen, supra, 146 N.J. at 155. The scrutiny does not end with contract terms. "[A] lawyer's bill for services must be reasonable both as to the hourly rate and as to the services performed. That is not only the lawyer's legal obligation but his ethical one as well." Gruhin & Gruhin, P.A. v. Brown, 338 N.J. Super. 276, 280 (App. Div. 2001).

We recognize that a bald assertion that hours billed are excessive is not enough to defeat a claim for payment due for legal services rendered at an agreed upon hourly rate. Ibid. But this case is not about bald assertions of excessiveness made by the client. Plaintiff's testimony about his practice of estimating billable hours long after the fact, the apparent duplicative billings for services and a billing for services not rendered called the validity of his bills into question.

The trial court appropriately recognized that plaintiff, not defendant, had the obligation of establishing the reasonableness of the fees he claimed to be owed. While courts adjudicating claims for payment of legal services "should ordinarily defer to the parties' agreement and the fee charged thereunder," plaintiff had the obligation to make a prima facie showing of "fairness and reasonableness." Id. at 281. Without that showing, defendant had no obligation "to come forward with anything of substance to rebut" the reasonableness of his bill. Ibid.

We need not consider whether plaintiff had a valid claim for recovery under a theory of quantum meruit in the circumstances of this case in order to affirm the judge's denial of relief on that claim. Cf. Cohen, supra, 146 N.J. at 164 (recognizing an attorney's right to recover in quantum meruit for the reasonable value of the services provided under a contract that was not enforceable). The basic deficiencies in plaintiff's billing records and other evidence relevant to hours of service rendered were equally fatal to his efforts to establish the amount of any loss he incurred in reliance on defendant's agreement to pay, or the amount of the payment he "reasonably" expected when he rendered services or the reasonable value of those services. It suffices to note that plaintiff provides no argument based upon the record to demonstrate errors in the judge's specific findings relevant to the value of the services he provided.

Based on our review of the record in light of the arguments presented, we conclude that the issues raised warrant no additional discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

20100113

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