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Pena v. Drive-Masters Co.

July 29, 2010

FRANCISCO PENA, KARLA TORRES, BLANCA I. TORRES, REYNALDO DIAZ, FRANCISCO PENA AND KARLA TORRES, INDIVIDUALLY AND AS GUARDIAN AD LITEM OF IRVING PENA, A MINOR, AND KARLA TORRES, ADMINISTRATRIX AD PROSEQUENDUM OF THE ESTATE OF MARVEN PENA, ON BEHALF OF THE ESTATE OF MARVEN PENA, PLAINTIFFS-APPELLANTS,
v.
DRIVE-MASTERS CO., INC., AND THE BRAUN CORPORATION, DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-4529-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 11, 2010

Before Judges Messano and LeWinn.

Plaintiffs appeal from the Law Division's order granting their attorneys, F. Gregory Barnhart, of Searcy, Denney, Scarola, Barnhart & Shipley, P.A.,*fn1 and Alan Y. Medvin, of Medvin & Elberg, attorneys' fees pursuant to Rule 1:21-7(c).*fn2 Barnhart and Medvin sought fees based upon a total recovery of $13,490,000 obtained in the settlement of a complex products liability/negligence action in which plaintiffs collectively suffered serious injuries. Given the size of the recovery, counsel sought 25% of the amounts recovered by the Estate of Marven Pena, a minor who died in the accident, and another minor plaintiff, Irving Pena*fn3 ; the attorneys sought one-third of the settlement amounts designated for the adult plaintiffs, two of whom suffered permanent and total disability as a result of the accident. The attorneys sought a total fee of $4,082,556.52 and agreed to split that amount.

Plaintiffs opposed the request as to the fees sought on the settlements reached on behalf of the adult plaintiffs, and hired other counsel to argue their cause in the Law Division. We digress briefly to provide some background from the underlying lawsuit.

In August 2004, plaintiffs were on a family vacation in Florida in their Ford Econoline van that had been specially modified to accommodate a lift so that Marven, who was severely disabled and used a wheelchair, could access the vehicle. While traveling on the highway in Florida, the van's drive shaft fractured, causing it to tear a hole in the fuel tank. A fire erupted, and, while the other family members were able to escape, Marven could not, and he subsequently died. The remaining plaintiffs suffered injuries in varying degrees of severity.

The family retained Barnhart's firm in Florida, which filed suit in New Jersey, and retained local counsel, Medvin, to assist in the prosecution of the case. On April 9, 2009, the last aspect of the litigation settled before now-retired Judge Donald S. Goldman. At the time, both Barnhart and Medvin appeared, along with defense counsel, and the settlement was placed on the record. With plaintiffs present, the judge explained that given the size of the settlement, "there w[ould] have to be an application made with respect to attorneys' fees to the . . . assignment judge," and requested the application be made "as soon as practicable."

The four adult plaintiffs indicated they understood the terms of the settlement, and each indicated their satisfaction with the award and the services provided by their attorneys. Judge Goldman noted the work that had been done to secure the settlement, stating, "all the attorneys in this case can be proud from a professional level of the work that they've done."

Barnhart and Medvin submitted certifications to the court in their application seeking fees. Barnhart detailed the significant legal work involved in "bring[ing] more defendants who could share liability" into the suit, including the Ford dealer itself, Hackettstown Ford, Inc. He noted the various layers of insurance coverage that were ultimately marshaled to comprise the total settlement amount. At one point, Barnhart certified that "there were no less than twelve law firms aligned against plaintiffs' counsel." He attached copies of the contingency fee agreements his firm executed with plaintiffs, which provided for a one-third fee on the gross settlement amount in the event litigation was filed and resulted in a recovery. Barnhart claimed this was less than the amount actually permitted under Florida law.

Barnhart provided a "good faith estimate" of the amount of time actually spent by various members of the firm on the litigation, noting that it was not until January 2009 that his firm "began keeping time in all cases." Based upon his estimate, and his hourly rates, Barnhart claimed his firm alone was due more than $3.5 million dollars; he acknowledged that the total fee sought would be shared with Medvin, thus, resulting in a fee to his firm of $2,041,278.26. Barnhart further provided extensive detail regarding the complexity of the litigation, the need for experts in several fields, and the fact that he and Medvin "used every bit of [their] creativity, legal knowledge and experience to fashion theories of liability which would withstand judicial scrutiny and to find other sources of liability and insurance coverage."

Medvin's certification similarly detailed the complex nature of the litigation. He acknowledged that he "did not keep time records with respect to this case," as was his routine practice except when "retained on an hourly basis." He estimated the time spent to be 4,650 hours, and that both firms had expended $600,000 in costs preparing for trial, which, at the time of the last settlement, was looming. Medvin claimed that at no time did he have "more than three other cases pending in addition to the Pena matter."

Plaintiffs filed a joint certification in opposition. They noted "that [they] ha[d] absolutely no problem with the manner in which either Mr. Barnhart or Mr. Medvin represented [them]." They also "d[id] not dispute that this was a difficult case, but it [wa]s [their] understanding that many cases of this type [we]re difficult." They further noted the lack of any documentation by either firm regarding the hours spent on the litigation. Plaintiffs claimed that "the issue of a 'full fee' was not discussed with [them] until after the case was settled." Plaintiffs urged the judge to grant "a fee of 20 to 25%" which they believed was "reasonable."

Barnhart and Medvin filed reply certifications. Each claimed they had discussed the one-third fee with all the family members after the "net result to each client [was] calculated." They claimed the fee was discussed again after the settlements were placed on the record and after Marvin's settlement was approved. Barnhart claimed that discussions took place at every settlement.*fn4 Barnhart further asserted ...


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