February 8, 2010
JUSTINE P. COLE, PLAINTIFF-RESPONDENT,
JOSEPH R. COLE, DEFENDANT-APPELLANT.
BUDD LARNER, P.C., PETITIONER-RESPONDENT.
On appeal from the Superior Court of New Jersey, Chancery Division-Family Part, Monmouth County, Docket No. FM-13-1608-03A.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 4, 2010
Before Judges Rodríguez, Yannotti and Chambers.
Defendant Joseph R. Cole appeals from the order of October 17, 2008, enforcing the judgment entered against him on August 8, 2008. That judgment, in the sum of $50,000, was for the attorney's lien of petitioner Budd Larner, P.C. (Budd Larner).*fn1
Defendant contends that the trial court should not have entered and enforced this judgment, in part, due to the legal malpractice action he had pending against Budd Larner. We find no error in the court resolving the attorney's lien issue within the context of the matrimonial litigation, since defendant did not request a stay of the attorney's lien proceeding nor did he seek to consolidate it with the malpractice action until after a decision was rendered. The trial court expressly carved out the malpractice issue from its decision, and it made no findings on those allegations. Finding no error, we affirm.
We will not review the complex procedural and factual history in this matrimonial litigation that spanned a period of over five years, but rather will focus on those facts pertinent to resolving this appeal. On April 28, 2003, defendant retained Budd Larner to represent him in matrimonial litigation, and he entered into a written retainer agreement with that firm. Defendant discharged Budd Larner on November 4, 2005. By that time, he had paid the firm $60,684.17 in legal fees, and the firm contended that additional fees were due.
On February 10, 2006, a consent order was entered permitting a substitution of attorney for defendant and providing that the firm had "an enforceable charging lien" in the sum of $53,347.76 for services through November 5, 2005. An order dated March 30, 2007, vacated the charging lien, but provided that the proceeds of any resolution of the matrimonial litigation in defendant's favor be held in escrow until the amount of the lien was determined. The order of May 14, 2007, set forth the parties' resolution of their financial issues, and among its provisions, defendant agreed to pay his wife the sum of $75,000 from his share of marital assets being held in escrow, and she agreed to waive her right to alimony. The order of September 21, 2007, required that the $75,000 be held in escrow until defendant had established an escrow account as security for the attorney's lien. In the interim, defendant was required to make alimony payments of $300 per week until the $75,000 was released to his wife.
After the financial disputes in the divorce litigation had been resolved, the trial court held a plenary hearing to determine the amount of Budd Larner's attorney's lien. At the hearing, the trial court heard testimony from Thomas D. Baldwin, Esq., defendant's former attorney from the Budd Larner firm, and from defendant, who was appearing pro se.
About two and one-half months prior to the commencement of the plenary hearing, defendant had filed a pro se legal malpractice complaint against Budd Larner and Baldwin. While Budd Larner and Baldwin denied service of the complaint, they and the trial court were aware, during the plenary hearing, that defendant had asserted a malpractice case against Budd Larner and Baldwin which was pending.
At the plenary hearing, Baldwin presented evidence that the total fee, calculated pursuant to the written retainer agreement, was $124,547.81, and that with payments and write-offs the balance due was $53,663.89. In addition, Budd Larner sought interest at the rate of twelve percent per year compounded monthly.
In its oral decision, the trial court noted that defendant had not challenged any specific entry in the bills. Defendant had not contended that any specific amount charged was excessive or in error. The trial court found that Budd Larner had provided the services, and that there was no evidence of overbilling, overcharging, or charging for work that was not done. However, the trial court did not allow the interest sought by Budd Larner. Due to some irregularities in the invoices, the trial court reduced the fee to $50,000 and entered a judgment in favor of Budd Larner and against defendant in that sum.*fn2
The trial court expressly indicated that it had not decided the question of whether Budd Larner or Baldwin had committed malpractice in connection with their representation of defendant. While defendant indicated his unhappiness with the quality of the representation he had received from Budd Larner, the trial court rebuffed his efforts to litigate those issues during the plenary hearing. At the conclusion of the hearing, Baldwin expressly asked the trial judge to comment on whether the firm had been negligent, contending that defendant had an opportunity to present those issues at the plenary hearing. The trial court rejected this request and stated:
I was not dealing with a malpractice case. I did not - I certainly did not find anything [in] that regard. I was not dealing with that. I was dealing with simply an attorney fee lien and then services provided. And there was not - as I just said a minute ago, there was nothing presented before me which would indicate that you did not - other than him voicing general unhappiness, he did not point to any specific overbilling or service that was not rendered. So I did not make any rulings on a negligence or a malpractice claim because that was not before me at all.
Defendant's motion for reconsideration to vacate the attorney fee award and transfer the attorney fee dispute to the law division was denied. The judgment of $50,000 was enforced by the trial court and paid by defendant.
On appeal, defendant contends that the trial court erred in conducting the plenary hearing fixing the attorney's fees and in ordering the judgment to be paid when there was a legal malpractice action pending. He maintains that the malpractice allegations go to the reasonableness and necessity of the legal fees, and that due to the malpractice, Budd Larner was not entitled to recover legal fees from him. He contends that because the legal malpractice action was pending, it was reversible error to enforce the judgment and require him to pay the fee.
We find no error in the trial court's conducting a plenary hearing on the attorney's lien issue under the circumstances here. Defendant cites no law prohibiting this procedure nor did defendant make any effort to coordinate his legal malpractice case with the plenary hearing by requesting a stay or consolidation until after the decision was made. The procedure followed here by the trial judge, namely, holding a plenary hearing to determine the amount of the attorney's lien within the matrimonial action, was in accordance with the generally accepted procedure regarding attorney's liens.
The Attorney's Lien Act provides that an attorney asserting a claim in a suit has a lien upon his client's claim which attaches "to a verdict, report, decision, award, judgment or final order in his client's favor." N.J.S.A. 2A:13-5. Upon petition by the attorney, the trial court in the underlying action will conduct a plenary hearing to determine the lien. Levine v. Levine, 381 N.J. Super. 1, 9-10 (App. Div. 2005); see N.J.S.A. 2A:13-5 (stating that "[t]he court in which the action or other proceeding is pending, upon the petition of the attorney . . . may determine and enforce the lien"). Accordingly, the conduct of a plenary hearing in the underlying matrimonial action to determine the amount of the attorney's lien was in accordance with this accepted procedure.
Because a separate malpractice action was pending, the trial court did not adjudicate any malpractice questions in the plenary hearing but was careful to carve out the legal malpractice issues from its rulings. It prohibited defendant from inserting malpractice issues into the plenary hearing, and at the conclusion of the hearing, it expressly stated that it had not ruled on the malpractice questions, leaving defendant to pursue those claims in the law division. As a result, the decision on the attorney's lien did not establish that there was no malpractice.
In this way, the situation is akin to that confronting the Court in Saffer v. Willoughby, 143 N.J. 256, 261-63 (1996), where a fee arbitration committee made a fee award while the client's malpractice action against the attorney was pending. The attorney argued that the fee award represented a conclusive determination that there was no malpractice. Id. at 272. The Court rejected this argument because the fee arbitration committee had no jurisdiction under Rule 1:20A-2(c)(2) to decide legal malpractice claims. Id. at 272-73. Here, while the trial court may have had jurisdiction to decide malpractice claims, it did not exercise that jurisdiction, but rather deferred to the court handling the legal malpractice action. As a result, there was no adjudication of the legal malpractice issues.
While arguably a client may be entitled to a stay of the adjudication of an attorney's lien issue pending the outcome of a legal malpractice case, see id. at 268 (determining a fee arbitration award will be stayed where a substantial claim of legal malpractice is also pending), the record does not indicate that defendant sought such a stay. Further, under the circumstances here, where final implementation of the parties' financial settlement was delayed due to the presence of the attorney's lien, it was not error to go forward and fix the amount of the lien at a plenary hearing.
We next address whether, having fixed the amount of the attorney's lien and entering a judgment, the trial court improperly enforced the judgment, by requiring that it be paid before the legal malpractice case was resolved. Ordinarily an attorney will not be able to collect fees for services that were negligently performed. Id. at 271-72. As a result, a fee arbitration award will be stayed pending the outcome of a related legal malpractice case provided the court finds a "substantial basis" for the legal malpractice action. Id. at 268.
While defendant sought to vacate the judgment in his motion for reconsideration, he did not, in the alternative, seek a stay of its enforcement. Under these circumstances, we find no error in the trial court's actions determining the amount of the attorney's lien, and entering and enforcing a judgment for the attorney fees owed.
Defendant also contends that the trial court did not make adequate findings of fact and conclusions of law and that the record does not support the entry of the judgment.
The fee charged by an attorney "must be reasonable both as to the hourly rate and as to the services performed." Gruhin & Gruhin, P.A. v. Brown, 338 N.J. Super. 276, 280 (App. Div. 2001); see also RPC 1.5(a) (setting forth the factors to be considered when determining whether an attorney's fee is reasonable). Here, the parties had a written retainer agreement governing Budd Larner's legal fees. Retainer agreements will ordinarily govern the client's obligation to pay counsel fees "provided the agreements satisfy both the general requirements for contracts and the special requirements of professional ethics." Cohen v. Radio-Elecs. Officers Union, Dist. 3, 146 N.J. 140, 155 (1996). Such an agreement is enforceable "unless it is overreaching or is violative of basic principles of fair dealing or the services performed were not reasonable or necessary." Gruhin, supra, 338 N.J. Super. at 281. The fees in this case were calculated in accordance with the provisions in the retainer agreement.
After hearing the testimony of the witnesses and reviewing the evidence, the trial court concluded that the attorney had performed the services set forth in the billing statements. It did not find any overcharges or overbilling, noting that defendant had not questioned any specific entries in the bills. As we stated in Gruhin:
[A]lthough the court has the power and authority to review the fairness of the agreement and the reasonableness of the fee charged, it should ordinarily defer to the parties' agreement and the fee charged thereunder if it appears, as here, that they meet a prima facie test of fairness and reasonableness, the client utterly fails to come forward with anything of substance to rebut that prima facie showing, and no expert is produced to challenge the bill rendered as unreasonable. [Ibid.]
Under our standard of review, we must defer to the factual determinations of the trial judge provided they are supported by adequate, substantial and credible evidence. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). However, our review is de novo on questions of law and the legal consequences that flow from the established facts. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
On the limited issues decided by the trial court at the plenary hearing, we find no error. It was undisputed that the hourly rate charged by the firm was consistent with the retainer agreement and defendant did not challenge the reasonableness of the rate charged. It was also undisputed that the time reflected in the bills represented time actually spent; that the costs reflected actual expenditures that were reasonable; and that the services rendered were of the type necessary and reasonable for the litigation involved. What remained in dispute was whether the attorneys were negligent in the performance of those services. That question was not resolved by the trial judge and remains to be adjudicated.
After careful consideration and review of the record, applicable law, and the arguments of counsel, we conclude that the balance of the issues raised by defendant in this appeal are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).