February 15, 2011
GEORGE OSBORNE, PLAINTIFF-APPELLANT,
KYMBERLY OSBORNE, DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Chancery Division, Family Part, Passaic County, Docket No. FM-16-1500-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted December 13, 2010 - Decided Motion for reconsideration granted. Resubmitted February 8, 2011 - Decided Before Judges Grall and C.L. Miniman.
December 20, 2010
Plaintiff George Osborne appeals from an order awarding defendant Kymberly Osborne a $17,500 counsel fee award in their matrimonial action. With the exception of a dispute about their interest in real estate involving a third party that was settled in an action filed in General Equity, the parties were able to reach an agreement on all other issues incidental to their divorce. Their agreement was incorporated in the dual final judgment of divorce filed on January 6, 2010. We affirm the award of the counsel fees but modify the sum awarded.
George and Kymberly were married on November 23, 2002. There were no children born of this marriage. They each have one child born of a previous relationship. George's daughter was born in 1996, and Kymberly's son was born in 1994.
Kymberly was employed as a legal secretary earning $40,000 per year until she resigned in 2003. Kymberly has lupus and rheumatoid arthritis, suffers from debilitating seizures, takes time-released morphine daily and is medicated twenty-four hours a day. In May 2007, she was awarded permanent Social Security disability benefits and since that time she has received $16,000 per year. The father of her child pays her $285 child support per week, and pursuant to her agreement with George, Kymberly received $1500 alimony per month until April 16, 2010, and is entitled to receive $1300 per month until April 23, 2013.*fn1
Without considering child support and including alimony of $1300 per month, her income is about $31,600 per year until April 2013.
George is employed by a company he founded with his sister and a friend. He reported gross income of $74,450 in 2007 and $75,800 in 2008, making his income roughly $75,000 per year. In addition to his alimony obligation to Kymberly, George has a $155-per-week child support obligation for his daughter and pays a portion of her medical, school, and camp expenses. Without deducting his child support payments, his income after payment of $1300 alimony per month is about $59,400 per year.
The parties separated on April 1, 2008, almost a year after the government awarded Kymberly benefits. With the exception of personal property and a retirement account with a value of less than $35,000, which the parties agreed to divide, there were no marital assets.
Because George contends that Kymberly's litigation conduct is pertinent to counsel fees, we provide the details that can be discerned from the record provided on appeal. George filed his complaint for divorce on April 11, 2008. Kymberly's counterclaim was filed about three months later pursuant to a consent order vacating a default entered against her and extending her time to file responsive pleadings.
Under the initial case management order, case information statements (CISs) were to be filed and interrogatories and notices to produce exchanged by September 19, 2008. Responses were due by December 5, 2008. Both parties missed this deadline. A second case management conference was held on December 18. George had filed his CIS and served interrogatories and a notice to produce, but Kymberly had not. The December 18, 2008 order requires Kymberly to file her CIS and both parties to answer interrogatories and comply with document demands by January 9, 2009. Kymberly served interrogatories on January 2, and did not comply with the remainder of the order. George did not answer by January 9.
George moved for relief, and Kymberly did not oppose the motion. By order of April 3, 2009, the judge struck Kymberly's answer and counterclaim for failure to file a CIS and respond to George's interrogatories and notice to produce, and he awarded George a $737 counsel fee, payable within twenty days.
On May 29, 2009, another judge reinstated Kymberly's answer and counterclaim subject to payment of a reinstatement fee. The judge further directed Kymberly to provide, within thirty days, complete responses to George's interrogatories and notice to produce. Her response was to include a copy of her 2007 tax form and income information and copies of her medical records and bank statements or authorizations for George to obtain them. George provided his answers to Kymberly's interrogatories in July 2009.
On October 26, 2009, the parties executed a property settlement agreement. As noted above, it resolves all issues other than their claims for counsel fees and costs. Paragraph VIII of the agreement provides for the parties to submit "their respective claims for counsel fees and costs in this matter" to the judge for "determination based upon [c]ertifications to be submitted pursuant to a time schedule established by the [c]court." (emphasis added).
The parties' litigation expenses were comparable. George's attorney billed a total of $37,055.03 - $31,108.75 for 157.75 hours of work plus $1299.12 for costs and a $4647.16 finance charge. The attorney, George's sister-in-law, normally charges $295 per hour and billed him at $195 per hour; her associate billed at $200 per hour. George had paid $600 of that total bill. Kymberly's attorney billed a total of $27,475.50 - $27,060 for 98.4 hours at a rate of $275 per hour plus $49.50 in photocopies, messenger and mail fees of $200, and filing fees of $165. Kymberly's mother paid a $3,700 retainer, and she did not pay anything.
The parties' requests for counsel fees are governed by paragraph VIII of their agreement, which governs fees in "this matter." The agreement does not address fees in related but separate litigation - an action commenced by Kymberly under the Prevention of Domestic Violence Act or an action in General Equity on a contract for the purchase of real estate from Kymberly's mother.
The parties' lawyers submitted certifications that include fees for services rendered in the separate actions. George's attorney billed for 30 hours of services readily identified as related to those actions; without those services, the properly billable hours are 127.75, at a rate of $195 for a total of $24,911.25. Kymberly's attorney billed for 3.7 hours of work related to the General Equity action. Without those services, the properly billable hours for her are 93.6, at a rate of $275 per hour for a total of $25,740.
Kymberly does not dispute that her delayed cooperation with her discovery obligations contributed to the costs of the litigation, but by way of explanation she points to her illness and the unreasonable nature of George's demands for medical records and reports given his personal knowledge of her permanent disability.
The certification of services submitted by Kymberly's attorney includes 24.9 hours of services attributable to her delay that include his efforts to get her cooperation; obtain a consent order vacating default; address the striking and reinstatement of her pleadings; and prepare and file a motion to be relieved as counsel. Without those services, Kymberly's bill in this action would have been for 68.7 hours rather than 93.6 hours. At $275 per hour, Kymberly's bill for legal services would have been $18,892.50.
Excluding the services related to the motion that resulted in a $737 counsel fee award to George, his attorney billed for 15.5 hours of services related to Kymberly's delay. At her hourly rate of $195, the delay cost George $3022.50.
The judge correctly summarized the legal principles governing counsel fees in a matrimonial action. The judge found that George's legal expenses were in excess of about $37,000 and that his income was about $75,000 per year; he determined that Kymberly had expenses in excess of $27,000 and income of $16,000. With respect to alimony, the judge noted that the obligation "will terminate shortly." Reasoning that Kymberly "does not have the ability to pay a substantial fee as is being sought," the "[c]court awarded the sum of $17,500 to be paid by" George to Kymberly's attorney. In the judge's view, "this award was in line with the criteria of the statute and the facts and circumstances submitted by the parties."
On appeal George argues that the factual findings and legal conclusions that explain this award are inadequate and a remand is required. We agree that the order cannot be affirmed for the reasons stated by the judge. The judge's decision is little more than a recitation of the legal principles and a conclusion that is not explained. See Loro v. Colliano, 354 N.J. Super. 212, 227 (App. Div.), certif. denied, 174 N.J. 544 (2002). See generally Curtis v. Finneran, 83 N.J. 563, 569-70 (1980); Rosenberg v. Bunce, 214 N.J. Super. 300, 303-04 (App. Div. 1986). Ordinarily we would remand the matter for additional findings, but we have determined that an exercise of original jurisdiction pursuant to Rule 2:10-5 is more appropriate.
An "appellate court may exercise such original jurisdiction as is necessary to the complete determination of any matter on review." R. 2:10-5. Where "original factfinding" is required, we exercise our original jurisdiction "'with great frugality and in none but a clear case free of doubt.'" Tomaino v. Burman, 364 N.J. Super. 224, 234-35 (App. Div. 2003), certif. denied, 179 N.J. 310 (2004) (quoting In re Boardwalk Regency Corp. Casino License Application, 180 N.J. Super. 324, 334 (App. Div. 1981), mod. on other grounds, 90 N.J. 361 (1982)).
There is a need for original factfinding in this case, but that does not deter us from exercising jurisdiction. In accordance with their property settlement agreement, the parties asked the judge to make the determination based on the certifications submitted to him. Thus, our position is no different than that of any trial judge to whom this matter might be assigned on remand.*fn2 Because the parties have asked for a determination on certifications, to the extent that either party relies on a disputed fact regarding good and bad faith and unreported income, neither the trial court nor this court could resolve that dispute. See Harrington v. Harrington, 281 N.J. Super. 39, 47 (App. Div.), certif. denied, 142 N.J. 455 (1995). Where, as here, parties have asked for a determination of counsel fees to be made solely on the basis of certifications, in our view we have two choices. We can disregard disputed facts or compel a hearing on the facts in dispute.
In the interest of judicial economy and because these parties agreed to and requested a determination based on the certifications, we decline to order a remand for a hearing on contested facts that will lead the parties to "spend more money in attorneys' fees to determine what those fees should have been in the first place." Chestone v. Chestone, 322 N.J. Super. 250, 260 (App. Div. 1999).
We turn to consider the merits. In exercising its original jurisdiction, this court uses the same standards as the trial court. Bressman v. Gash, 131 N.J. 517, 528-29 (1993). Under N.J.S.A. 2A:34-23, "[w]henever any other application is made to a court which includes an application for . . . [a] final award of counsel fees, the court shall determine the appropriate award for counsel fees . . . and shall consider the factors set forth in the court rule on counsel fees, the financial circumstances of the parties, and the good or bad faith of either party." The relevant court rule is Rule 5:3-5(c). It states that the court should consider, "in addition to the information required to be submitted pursuant to R. 4:42-9[(b), (c) and (d)]," regarding affidavits of service, the following factors:
(1) the financial circumstances of the parties;
(2) the ability of the parties to pay their own fees or to contribute to the fees of the other party;
(3) the reasonableness and good faith of the positions advanced by the parties both during and prior to trial;
(4) the extent of the fees incurred by both parties;
(5) any fees previously awarded;
(6) the amount of fees previously paid to counsel by each party;
(7) the results obtained;
(8) the degree to which fees were incurred to enforce existing orders or to compel discovery; and
(9) any other factor bearing on the fairness of an award.
The referenced provisions of Rule 4:42-9 relate to the reasonableness of the fees charged to the party seeking to compel contribution. Rule 5:3-5(c) focuses on the factors the court considers in determining how much, if any, of one spouse's bill should be paid by the other.
The Supreme Court has succinctly explained the relevant considerations: "whether the party requesting the fees is in financial need; whether the party against whom the fees are sought has the ability to pay; the good or bad faith of either party in pursuing or defending the action; the nature and extent of the services rendered; and the reasonableness of the fees." Mani v. Mani, 183 N.J. 70, 94-95 (2005) (emphasis omitted); see Williams v. Williams, 59 N.J. 229, 233 (1971); Mayer v. Mayer, 180 N.J. Super. 164, 169-70 (App. Div. 1981). There are some guiding principles. A court may not base its decision solely on the disparity of income between the parties and must consider each and every factor set forth in the rule and implicated in the case. Accardi v. Accardi, 369 N.J. Super. 75, 90-91 (App. Div. 2004). Nonetheless, where one party has a substantial income and the other does not, "[t]hat disparity alone would suggest some entitlement . . . to a fee allowance." Lavene v. Lavene, 148 N.J. Super. 267, 277 (App. Div.), certif. denied, 75 N.J. 28 (1977).
We turn to apply the factors to the facts stated above, which we have drawn from the certifications submitted on the motion and included in the pleadings that were before the trial judge. Both parties seek an award of fees and costs.
The reasonableness of the billing rates is not in question. George's attorney charged a discounted fee but generally bills at a higher rate than Kymberly's attorney. Neither party contends that the other's attorney charges a rate not justified in light of the lawyer's qualifications, experience, workload or the difficulty of the case.
There is, however, a need to isolate fees not incurred in this action, which is the matter that was submitted to the trial judge. As noted above, adjusted to deduct for fees they incurred in separate proceedings, George's bill for services is $24,911.25 and Kymberly's is $25,740.
An important factor in this case is the expense both parties incurred as a consequence of Kymberly's delay. Her bills for services would have been $18,892.50 if charges attributable to her delay and her lawyer's response were not incurred. For obvious reasons, it would not be equitable to require George to contribute to fees she incurred due to her delay. Her conduct is also relevant to George's request for fees he incurred to enforce her discovery obligation, a total of $3022.50 not including the efforts that resulted in an order awarding $737 on George's motion to strike Kymberly's pleadings.
Beyond the question of delayed discovery, review of the certifications does not establish bad faith on the part of either party. George contends that Kymberly's early demands for alimony were unreasonable, and she argues that his demands for her medical records amounted to bad faith given his personal knowledge of her condition and her award of benefits based on permanent disability. Neither party's position was sufficiently unreasonable to amount to bad faith comparable to those that have been found relevant in this context. Yueh v. Yueh, 329 N.J. Super. 447, 461-63 (App. Div. 2000) (discussing standard and relevance of failure to comply with discovery and defiance of court orders); Chestone, supra, 322 N.J. Super. at 259 (approving consideration of lack of candor). Debilitating illness that deprives a spouse of the capacity for self-support is a fact favoring alimony, N.J.S.A. 2A:34-23b(3), (5), but the government's finding of permanent disability is not conclusive on the question. Golian v. Golian, 344 N.J. Super. 337, 342-43 (App. Div. 2001). Moreover "failure to settle disputed claims is not in itself a permissible consideration in assessing a fee." Diehl v. Diehl, 389 N.J. Super. 443, 455 (App. Div. 2006).
The parties' respective ability to pay their own and contribute to the other's counsel fees is therefore a significant factor in this case. The equitable distribution awarded was limited to the marital portion of a single retirement account with a total value of about $30,000, and there is no evidence that either party has significant personal assets. The only evidence relevant to ability to pay is their respective incomes.
Consideration of ability to pay favors an award to Kymberly. Until April 2013, George must pay Kymberly $15,600 per year in alimony. Without alimony her annual income is $16,000, and with alimony it is $31,600. George's annual income is about $75,000, but after payment of alimony it is about $59,400. During the next two years, then, Kymberly has about 36% of the parties' combined income and George about 64%. Her income is about 53% of his, and they both have one child to support. It is important to note, however, that the disparity will dramatically increase in April 2013, a date before either of them is likely to pay for this litigation and the related matters in full. At that point, Kymberly's income will be about 21% of George's income.
Balancing the relevant factors, it is appropriate for George to pay $13,335, which is approximately 70% of the $18,892.50 fee towards which he can be equitably compelled to contribute. That amount should be reduced by $737, the award of counsel fees that has not been paid, plus $907, which represents thirty percent of the $3022.50 in fees that George would not have incurred but for Kymberly's delay. The foregoing determinations reflect our conclusion that George is not entitled to contribution from Kymberly for any fees other than those he incurred as a result of and to redress her delay and that the disparity in the parties' income warrants an award requiring George to contribute to, but not fully fund, Kymberly's necessary litigation costs.
The order is affirmed as modified to award Kymberly $11,691 in fees, and the matter is remanded for entry of an appropriate order.