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Chase Bank Usa, N.A v. Jennifer Staffenberg

April 11, 2011


On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Camden County, Docket No. DC-19555-09.

The opinion of the court was delivered by: Sabatino, J.A.D.



Argued December 6, 2010

Before Judges Lisa, Sabatino, and Alvarez.

The opinion of the court was delivered by SABATINO, J.A.D.

Defendant, a debtor with a delinquent credit card account, challenges the Special Civil Part's inclusion of $133.14 in counsel fees as part of a default judgment entered against her in favor of the credit card company. The counsel fees were awarded as taxed costs to the creditor pursuant to N.J.S.A. 22A:2-42. The debtor argues that such counsel fees were not recoverable in this case because the legal services for the creditor were performed by its in-house attorneys. In support of her argument, the debtor invokes two other statutes, N.J.S.A. 17:3B-40 and N.J.S.A. 17:16C-42(d), which preclude the recovery of counsel fees in certain contexts where the creditor was represented by in-house counsel. The debtor argues that these two provisions in Title 17 restrict the counsel fees ordinarily recoverable in the Special Civil Part as taxed costs under N.J.S.A. 22A:2-42.

The trial court rejected the debtor's statutory interpretation, and consequently denied her motion to vacate the final judgment's inclusion of counsel fees. For the reasons that follow in this opinion, we affirm.


The pertinent facts are uncomplicated and essentially undisputed.

Chase Bank USA, N.A. ("plaintiff" or "Chase"), is a national banking corporation with offices in Delaware. Defendant Jennifer Staffenberg, a resident of New Jersey, is the holder of a credit card issued by plaintiff or one of its affiliate Chase companies.

In October 2009, plaintiff filed a one-count complaint in the Special Civil Part against defendant. The complaint alleged that defendant was indebted on her Chase credit card resulting from purchases of goods and services at various retail stores, and/or for cash advances that she received. The complaint sought recovery of a balance then due in the sum of $5,868.98, inclusive of service charges, interest, and costs charged under defendant's cardholder agreement.*fn1 Attached to the complaint was a summary of defendant's credit card account, corroborating the amounts due. The complaint alleged that defendant had failed to pay those sums, despite plaintiff's demand for such payment. Consequently, the complaint sought judgment in the sum of $5,868.98, "together with lawful interest, attorney['s] fees, and costs of suit."
The summons and complaint each listed as plaintiff's counsel of record two attorneys in the JPMorgan Chase Legal Department*fn2 in Woodbridge. It is undisputed that these two lawyers, both members of the New Jersey bar, are employed as salaried, in-house counsel by Chase or its affiliates. It is also undisputed that Chase did not retain outside counsel to represent its interests in the prosecution of this collection action in the Special Civil Part.*fn3

Defendant did not respond to the complaint. Consequently, a default was automatically entered against her by the Special Civil Part pursuant to Rule 6:6-2.

On November 30, 2009, plaintiff submitted to the Special Civil Part a certification of proof and non-military service in support of its application for judgment by default. The certification was signed by an assistant treasurer of Chase Bankcard LLC, which we presume is another affiliated Chase entity. The certification confirmed that the balance then due from defendant was $5,868.98, together with $37.95 in interest, pursuant to Rule 4:42-11(a), calculated from October 2, 2009 through November 30, 2009, for a combined total of $5,906.93.

In addition, plaintiff sought $133.14 in counsel fees, a sum computed in accordance with the formula set forth in N.J.S.A. 22A:2-42. The first paragraph of N.J.S.A. 22A:2-42 authorizes a five percent award of counsel fees for the first $500.00 of a judgment procured in the Special Civil Part, and two percent on sums exceeding that amount.

The full text of N.J.S.A. 22A:2-42 reads:

There shall be taxed by the clerk of the Superior Court, Law Division, Special Civil Part in the costs against the judgment debtor, a fee to the attorney of the prevailing party, of five per centum (5%) of the first five hundred dollars ($500.00) of the judgment, and two per centum (2%) of any excess thereof.

In actions of replevin the court shall allow the attorney of the prevailing party a fee of not less than five dollars ($5.00) nor more than ten dollars ($10.00), to be taxed and collected as aforesaid.

Upon entry of any order adjudging a person in contempt for violation of any order of the court or upon any motion or application to the court made subsequent to the commencement of an action or proceeding in the Special Civil Part, the court, in its discretion, may award an attorney or counsel fee of not more than ten dollars ($10.00) to be paid in such manner as the court shall direct. [Emphasis added.]

Applying this formula, the applicable counsel fees were calculated at $133.14, consisting of a $25.00 portion (equaling five percent on the first $500.00 due) plus an additional portion of $108.14 (comprising two percent of the $5,406.93 remainder).

Plaintiff also sought court costs in the sum of $57.00. This consisted of the $50.00 fee for filing a complaint in the Special Civil Part exceeding the $3,000 limit of the Small Claims Section, see N.J.S.A. 22A:2-37.1a(3)(a); R. 6:1-1(c), plus a $7.00 fee for the service upon defendant by mail, see N.J.S.A. 22A:2-37.1a(5); R. 6:2-3(d)(3).*fn4

On December 7, 2009, the clerk of the Special Civil Part in Camden County entered a default judgment against defendant in the total amount of $6,097.07, comprised of the aforesaid $5,906.93 debt and accrued interest, plus $57.00 in court costs for the complaint and mail service, plus $133.14 in counsel fees. Plaintiff was listed on the judgment as the creditor, and the judgment was addressed to Chase's in-house legal department.

Meanwhile, an attorney retained by defendant wrote letters to plaintiff, urging that it cease and desist its collection activities because defendant was contemplating the filing of a bankruptcy petition. However, defendant apparently did not file such a petition. Defendant's bank account was subsequently levied in the amount of $1,502.42, in partial satisfaction of the judgment.

On March 18, 2010, three months after the default judgment was entered, defendant filed a motion for relief pursuant to Rule 4:50-1(f). In her certification in support of that motion, defendant asserted that she had a meritorious defense to plaintiff's claims, stating that there were "amounts alleged in the complaint for damages which [she] neither caused or was responsible for."*fn5 In addition, and more significantly for this appeal, defendant asserted that Chase had illegally charged her counsel fees because such fees are not, in her view, statutorily recoverable when the legal services to the creditors are provided by salaried, in-house attorneys of a bank or credit card company.

Defendant enclosed with her moving papers a proposed answer and counterclaim. The proposed counterclaim asserted that Chase is precluded under both N.J.S.A. 17:3B-40 and N.J.S.A. 17:16C-42(d) from recovering counsel fees, unless the account receivable has been referred for collection to an attorney who is not a salaried employee of the creditor or lender. The counterclaim further alleged that Chase's demand for such counsel fees was defective, and in violation of the Truth-In-Consumer Contracts, Warranty and Notice Act, N.J.S.A. 56:12-14.

Defendant also claimed that the counsel fee demand constituted a per se violation of the Consumer Fraud Act ("CFA"), N.J.S.A. 56:8-1 to -195.

Defendant sought to litigate her proposed counterclaim as a class action under Rule 4:32, on behalf of: (1) individuals who have had debts held or serviced by Chase in New Jersey for six years prior to the complaint and through the date of class certification, and (2) individuals who received a demand for payment of attorney's fees in matters handled by Chase's in-house counsel. She also sought to have the case transferred from the Special Civil Part to the Civil Part of the Law Division.

In its papers opposing defendant's Rule 4:50-1 motion, plaintiff noted that defendant had not filed a bankruptcy petition and that its ongoing collection activities were therefore permissible. Plaintiff also furnished the trial court with a more detailed billing history of defendant's delinquent credit card account.

As to the central issue now on appeal concerning the taxed costs of $133.14 in counsel fees, plaintiff asserted that it had not sought what it described as "contractual" fees under either N.J.S.A. 17:3B-40 or N.J.S.A. 17:16C-42(d), but instead had sought only the "statutory" counsel fees authorized under N.J.S.A. 22A:2-42. Plaintiff argued that, unlike the two provisions in Title 17 invoked by defendant, N.J.S.A. 22A:2-42 does not restrict the recovery of counsel fees to situations in which the creditor is represented by in-house counsel.

After hearing oral argument, the trial court denied defendant's motion for relief under Rule 4:50-1. In his oral ruling, the judge first observed that defendant's assertion of a meritorious defense of the collection action was conclusory, and insufficient to set aside the judgment under Rule 4:50-1.*fn6

The judge then rejected defendant's claim that the award of counsel fees to plaintiff under N.J.S.A. 22A:2-42 was improper. The judge recognized that if plaintiff had sought fees pursuant to the terms of the cardholder agreement, it could not recover such fees, unless it were represented by outside counsel. The judge distinguished such contractual fees from the limited statutory fees that are ...

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