November 1, 2010
PHILIP B. VINICK, ESQ., PLAINTIFF-RESPONDENT,
KEVIN LIPKA; KEVSHE REALTY ASSOCIATES; AND SHE-KEV, INC., DEFENDANTS-APPELLANTS, AND SHELLY LIPKA, DEFENDANT.
On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-4879-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 5, 2010
Before Judges Wefing and Payne.
Defendants appeal from a trial court order directing them to pay $49,205.24 to plaintiff's attorney, representing plaintiff's counsel fees and expenses for the period October 20, 2008 through August 17, 2009. After reviewing the record in light of the contentions advanced on appeal, we affirm.
Plaintiff Philip B. Vinick, Esq. is an attorney admitted to the practice of law in New Jersey who provided a variety of legal services to defendants. Defendants, however, did not pay his statement for those services. Plaintiff afforded them the option of arbitrating the dispute over his fees, R. 1:20A-6, but they declined. He then began suit to collect the balance he alleged was due and owing, $76,224.17.
The matter was arbitrated pursuant to Rule 4:21A, and plaintiff was awarded the full amount he claimed was owed. Defendants rejected the arbitration award and sought a trial de novo. R. 4:21A-6.
In October 2008, plaintiff filed and served an offer of judgment, offering to take judgment in his favor for $63,500. Defendants responded with an offer to have judgment entered against them for $5,000, including counsel fees and costs.
The matter proceeded to trial before a jury in July 2009. After five days of trial, the jury found that all of the defendants other than Shelly Lipka were liable to plaintiff for the full amount of counsel fees he claimed he was owed. As to Shelly Lipka, the jury found no cause for action. Following this verdict, plaintiff filed a motion for fees under Rule 4:58-5. The trial court granted this motion, and awarded plaintiff the fees and costs noted at the outset of this opinion. This appeal followed.
Defendants raise no question on appeal with respect to the trial that took place. Their only contention is that the trial court erred when it granted plaintiff his post-trial motion for fees. They argue that the trial court should have denied plaintiff's motion for fees because the position they took at trial was legitimate and reasonable. They also contend that plaintiff is not entitled to an award of fees because, other than during the time of his own testimony, when he was represented by counsel, he represented himself. Defendants, pointing to our recent decision in Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510 (App. Div. 2009), certif. denied, 203 N.J. 93 (2010), assert that plaintiff did not incur counsel fees and thus is not entitled to recover fees under Rule 4:58.
Rule 4:58-1 permits a party, in anything other than a matrimonial action, and at any time prior to twenty days in advance of the trial date, to offer to take judgment for a sum stated. Rule 4:58-2(a) sets forth the consequences of rejecting such an offer:
(a) If the offer of a claimant is not accepted and the claimant obtains a money judgment, in an amount that is 120% of the offer or more, excluding allowable prejudgment interest and counsel fees, the claimant shall be allowed, in addition to costs of suit: (1) all reasonable litigation expenses incurred following non-acceptance; (2) prejudgment interest of eight percent on the amount of any money recovery from the date of the offer or the date of completion of discovery, whichever is later, but only to the extent that such prejudgment interest exceeds the interest prescribed by R. 4:42-11(b), which also shall be allowable; and (3) a reasonable attorney's fee for such subsequent services as are compelled by the non-acceptance.
The only exception is under subsection (b) of Rule 4:58-2, which provides that an allowance of fees shall not be made if to do so would impose an undue hardship. It further provides that if the hardship can be eliminated by reducing the amount of the fee award, the court shall do so. To obtain a fee award, a timely motion must be made under Rule 4:58-6 and in compliance with the terms and provisions of Rule 4:42-9(b).
The underlying purpose of Rule 4:58 is to foster the settlement of disputes without the necessity of a trial.
The fundamental purpose of the rule is to induce settlement by discouraging the rejection of reasonable offers of compromise. That goal is achieved through the imposition of financial consequences (the award of fees and costs) where a settlement offer turns out to be more favorable than the ultimate judgment. [Best v. C&M Door Controls, Inc., 200 N.J. 348, 356 (2009) (citations omitted).]
Thus, the rule states that a successful claimant "shall be allowed" counsel fees and interest; we consider it significant that it does not state that a successful claimant "may be allowed" such fees and interest. In our judgment, it would run counter to the rule's fundamental purpose if a trial court were called upon to engage in a post-trial assessment of whether a party acted reasonably when it rejected the opposition's offer of judgment. It is thus immaterial that defendants believed their rejection of plaintiff's offer of judgment was reasonable.
We are also satisfied that Alpert, supra, provides no basis for us to set aside the trial court's order. In Alpert, we were called upon to consider the parties' competing claims with respect to the plaintiff firm's attempt to collect counsel fees it alleged were due and owing. The dispute between the parties generated extensive motion practice before the trial court and then extensive briefing to this court following the trial court's ultimate determination that defendants were liable for an aggregate $163,745.93 in counsel fees. Id. at 519. In the course of our opinion, we reached several conclusions. We held initially that to the extent that the plaintiff firm based its claim for counsel fees and costs upon a Master Retainer which had not been explained to defendants, it was not entitled to recover. Id. at 536-37. We also rejected the argument that the lack of discovery precluded a grant of summary judgment to the plaintiff, id. at 539, as well as their contention that the failure to hold a Ferreira conference (Ferreira v. Rancocas Orthopedic Assocs., 178 N.J. 144 (2003)), tolled the time within which they were required to file an affidavit of merit. Id. at 542.
The final issue we addressed was whether the plaintiff firm was entitled to an award of counsel fees under Rule 1:4-8 as a sanction for frivolous litigation in light of the fact that it had not retained separate counsel to represent it in this action. It is on this point that defendants who are before us on this appeal now rely because we held that the firm was not entitled to an award of fees as it had not "incurred" counsel fees. Id. at 543-47.
We decline to translate the principles we articulated in Alpert, under Rule 1:4-8, to the instant situation, which arises under an entirely different rule, Rule 4:58. To do so, in our judgment, would not further the rule's underlying purpose of fostering the settlement of litigation. Indeed, it might have the opposite result for a party could refuse an offer of judgment proffered by an attorney proceeding pro se secure in the knowledge that he was entirely sheltered from the consequences of his decision.
The better principle for purposes of Rule 4:58 was stated in Brach, Eichler, Rosenberg, Silver, Bernstein, Hammer & Gladstone, P.C. v. Ezekwo, 345 N.J. Super. 1, 18 (App. Div. 2001).
[W]hen a pro se litigant is a law firm earning its income from the private practice of law, we see no reason why, for purposes of R. 4:58-2, that firm should not be entitled to the recovery of attorney's fees under the offer of judgment rule for the reasonable value of the time expended by the firm when it is compelled to proceed to trial.
We restated that view in Port-O-San Corp. v. Teamsters Local Union No. 863 Welfare & Pension Funds, 363 N.J. Super. 431, 441 n.5 (App. Div. 2003), and can perceive no basis for departing from it here.
Finally, defendants argue that the award imposes an "undue hardship" upon them. They provide no support for that contention, and thus we decline to address it.
The order under review is affirmed.
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