On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-10488-00.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Cuff, Payne and Waugh.
In 1999, the Verni family was involved in a serious automobile accident. The driver of the car who struck the Verni car had attended a football game at Giants Stadium and was highly intoxicated at the time of the collision. Antonia Verni, then two years old, suffered catastrophic injuries. Her mother, Fazila Verni, suffered less serious injuries.
Soon after the accident, the Verni family retained Rosemarie Arnold to represent them. In 2000, Arnold filed a complaint. In 2004, first Mrs. Verni and then the guardian ad litem discharged Arnold, and the law firm of Nagel, Rice and Mazie entered the case. David Mazie of the Nagel firm is the attorney who represented the Verni family following the substitution.*fn1 The substituted firm completed discovery, tried the case to verdict, defended the verdict on appeal, and was preparing the case for the new trial ordered by this court, Verni v. Harry M. Stevens, Inc., 387 N.J. Super. 160 (App. Div. 2006) (Verni I), certif. denied, 189 N.J. 429 (2007), at the time it settled the matter soon before the second trial commenced.
The fee dispute that is the subject of this appeal commenced shortly after the jury returned its verdict. Mazie filed a motion to discharge Arnold's statutory attorney's lien*fn2 against plaintiffs' damages recovery, asserting that the Arnold firm "added absolutely no value to the claims that plaintiffs prevailed upon at trial." On March 15, 2005, Mazie filed a motion to set legal fees in the matter, and on April 8, 2005, the trial court entered an order that plaintiffs' counsel be paid a "legal fee equal to 25% of all amounts recovered . . . in excess of $2 million," which in light of the $109,000,000 verdict meant the court approved a legal fee in excess of $25,000,000. The order explicitly stated that the court made no finding concerning the fee dispute that existed between the Arnold firm and Mazie.
Further action concerning the fee dispute was stayed after the Aramark defendants filed a notice of appeal on April 13, 2005. On August 3, 2006, this court issued a decision reversing the judgment below and remanding the matter for a new trial. See Verni I, supra.
Following settlement of the case, a judge conducted a "friendly hearing," see Rule 4:44-3, at which he approved the "very fair and reasonable settlement" arrived at on behalf of Antonia.*fn3 The order approving the settlement also included a $4,853,146.09 counsel fee award held in escrow pending the outcome of the fee dispute with Arnold.
The evidentiary hearing in the fee dispute occurred over five days from February 6 through 13, 2008. Mazie argued that Arnold should receive nothing; Arnold sought one-half of the fee. On April 18, 2008, the judge issued a written opinion in which he determined that a fees-payable-upon-discharge provision in Arnold's retainer agreements with the Verni family governed the amount of counsel fees due the firm. The judge further found that Arnold was "entitled to be compensated for the 827 hours of actual work that was performed on this case at the agreed upon rate of $275 per hour for a total fee of $227,425.00." Arnold appeals this order and an order denying her post-hearing motion to recuse the judge.
Our scope of review of the facts found by the trial judge is limited. "Appellate review of a trial court's attorney fee determination is deferential. We will only disturb the trial court determination on a showing of 'clear abuse of discretion' based on the record presented on the fee application." In re Estate of F.W., 398 N.J. Super. 344, 355 (App. Div.) (citation omitted), certif. denied, 196 N.J. 347 (2008). We owe no deference, however, to the legal conclusions of the trial judge. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
The rule for allocating fees among law firms who have provided services to the client pursuant to contingent fee retainer agreements is well understood. In LaMantia v. Durst, 234 N.J. Super. 534, 537-44 (App. Div.), certif. denied, 118 N.J. 181 (1989), this court directed that a court should apply the principles of quantum meruit. The considerations that inform this analysis include: the quantity and quality of time expended on the case by each firm, the viability of the claim when the file was transferred, and the amount of the recovery. Id. at 540-41.
Here, however, the contingent fee agreement between Arnold and the Vernis contained a termination provision that set an hourly rate at which the client agreed to reimburse the firm if the client terminated the relationship. The termination provision provides:
[i]n the event that there is no recovery at the conclusion of your case, you shall not be obligated to pay any fee to the Law Offices of Rosemarie Arnold for their services; however, you are responsible to reimburse the Law Offices of Rosemarie Arnold for all disbursements in connection with the preparation, institution, and prosecution of my [sic] claim. In the event you choose to discontinue the services of the Law Offices of Rosemarie Arnold, prior to the conclusion of your case, you will be responsible for paying the costs expended on your case within thirty (30) days of said date, and you will be responsible to pay the attorney on an hourly basis at a rate of $275.00 per hour for every hour spent on the file, without regard to the outcome of the case. [Emphasis added.]
Arnold argues this provision covered only the situation when a client abandoned the matter for which she was retained. Mazie argues the language is not so limited and applies to situations in which the matter proceeds with substitute counsel.
The judge held that the termination provision is clear and unambiguous and mandates that, upon being discharged, Arnold "is entitled to get [her] hourly rate for the time expended whether the client does better or worse in the outcome than is provided in the contingency fee clause" of the retainer agreements. The judge held that this express provision defined and limited Arnold's expectations on discharge. He stated that Arnold specifically waived successor participation in the contingency fee award. They [the Arnold firm] insisted on being paid an hourly rate of $275 for their time if they were terminated [by plaintiffs] without regard to the outcome of the case. Under such a provision they may do worse or they may do better ...