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Kas Oriental Rugs, Inc v. Matt Ellman

April 21, 2011

KAS ORIENTAL RUGS, INC., PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
v.
MATT ELLMAN, DEFENDANT-RESPONDENT/CROSS-APPELLANT.



On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-525-04.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 30, 2011

Before Judges Fisher, Sapp-Peterson and Simonelli.

This is the third appeal in this case. In the first, we determined that defendant Matt Ellman, a former salesman, was entitled to less in damages from plaintiff Kas Oriental Rugs, Inc., than awarded at the conclusion of the non-jury trial. Kas Oriental Rugs, Inc. v. Ellman (Kas I), 394 N.J. Super. 278 (App. Div.), certif. denied, 192 N.J. 74 (2007). That reduction in the amount of Ellman's judgment placed him in the cross-hairs of the fee-shifting provisions of the offer-of-judgment rule, Rule 4:58; consequently, we remanded for consideration of fees based on that rule as well as the fee-shifting provisions of the Sales Representatives' Rights Act (SRRA), N.J.S.A. 2A:61A-1 to -7. Id. at 289-91.

Subsequent proceedings in the trial court led to an award in favor of Kas based on the offer-of-judgment rule, which we reversed in the second appeal. Kas Oriental Rugs, Inc. v. Ellman (Kas II), 407 N.J. Super. 538 (App. Div.), certif. denied, 200 N.J. 476 (2009). Again, we remanded for a resolution of the competing claims for fees based on the SRRA, as well as Kas's claim for fees based on an application of the frivolous litigation statute, N.J.S.A. 2A:15-59.1. We held that Ellman was entitled to fees on his claim for the payment of pre-termination fees, which had to be quantified; we also recognized the possibility that Kas might be entitled to fees and remanded for a determination as to whether Ellman's claim for post-termination commissions was frivolous and, if so, a quantification of such an award. Kas II, supra, 407 N.J. Super. at 563-70.

Following our last remand, the motion judge*fn1 determined that Ellman was entitled to $11,777.76 in counsel fees in pursuing his claim for the payment of pre-termination commissions. She also concluded that the claim for post-termination commissions was frivolous but that certain categories of fees incurred by Kas were not reimbursable; for example, the judge awarded nothing to Kas for fees incurred in pursuing or providing pretrial discovery or in the work done on appeal in Kas I, concluding they were "hazards of litigation." In addition, the judge discounted the award to Kas because the judge believed that, as an individual, Ellman could not bear a large award like a corporation or other business entity.

Kas appealed, and Ellman cross-appealed. In its appeal, Kas argues:

I. THE MOTION COURT IMPROPERLY FAILED TO MAKE THE REQUISITE LODESTAR FINDINGS UNDER R. 1:7-4 AND ERRONEOUSLY AND ARBITRARILY REDUCED THE FEE AWARD TO KAS BECAUSE ELLMAN IS AN INDIVIDUAL AND KAS IS A CORPORATION.

II. THE MOTION COURT ERRONEOUSLY GRANTED ELLMAN FEES AND COSTS FOR ELLMAN'S FORMER NEW JERSEY COUNSEL EVEN THOUGH VIRTUALLY ALL SUCH FEES AND COSTS WERE INCURRED ENTIRELY FOR UNSUCCESSFUL EFFORTS AND OTHERWISE BARRED.

A. Ellman Was Barred from Receiving Fees Under Best v. C&M Door Controls, Inc.[, 200 N.J. 348 (2009)].

B. The Motion Court Erroneously Granted Ellman Fees for Unsuccessful Efforts.

C. Ellman Was Judicially Estopped, In Any Event, From Seeking Fees and Costs on Remand.

In his cross-appeal, Ellman argues:

I. A PARTY WHO HAS SURVIVED A MOTION FOR SUMMARY JUDGMENT CANNOT BE FOUND TO HAVE ENGAGED IN FRIVOLOUS LITIGATION.

II. THE COURT BELOW IGNORED ABUNDANT EVIDENCE IN THE RECORD THAT ELLMAN'S CLAIMS WERE NOT FRIVOLOUS.

III. KAS FAILED TO APPEAL THE AWARD OF FEES TO ELLMAN.

We find insufficient merit in Kas's Point II and Ellman's Point III to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).*fn2

It is striking that the merits of the parties' pleaded claims were resolved over four years ago with our decision in Kas I on March 6, 2007, but the parties have yet to go their separate ways. The disputes now before us, which require our examination of the granting and denying of fees, including the claim for fees incurred in seeking fees, have become "a sideshow of a side-show."*fn3 We conclude that mistakes were made in the motion judge's disposition of some of the claims for fees, and to ...

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