July 7, 2011
HILL WALLACK, A PARTNERSHIP, PLAINTIFF-RESPONDENT,
JACKIE SAINT GERARD JORDAN, A/K/A JACKIE ST. GERARD JORDAN, DEFENDANT-APPELLANT,
JACK JORDAN, PLAINTIFF-APPELLANT,
HILL WALLACK, A PARTNERSHIP, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket Nos. L-2900-09 and L-2899-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 17, 2010 - Before Judges R. B. Coleman and J. N. Harris.
This appeal stems from a dispute over outstanding legal fees and a countersuit for legal malpractice.*fn1 Plaintiff Hill Wallack, LLP, sued defendant, Jackie Saint Gerard Jordan, seeking unpaid legal fees in excess of $88,000 associated with its representation of defendant in a divorce action. Defendant filed a separate complaint against plaintiff, alleging legal malpractice on grounds that plaintiff unnecessarily prolonged the litigation, resulting in excessive billing. Thereafter, the cases were consolidated upon consent.
Following a jury trial in August 2009, plaintiff was awarded $67,000 "plus interest" of the unpaid fees sought by plaintiff. Defendant contends the trial was infected by inflammatory factors and that an improper legal theory (breach of contract) was presented to the jury. For the reasons that follow, we affirm the jury verdict.
In March 2003, defendant, an attorney, retained plaintiff to represent him in a divorce action instituted by his wife.
Rocky Peterson was the partner in charge of defendant's matter and represented him at trial.
The divorce complaint filed by defendant's wife alleged extreme cruelty, adultery, and failure to communicate. During the divorce proceedings, plaintiff simultaneously represented defendant in a domestic violence action filed by defendant's wife against defendant. Though a restraining order was temporarily imposed, the action was ultimately dismissed and the order lifted. On April 8, 2004, the parties agreed to a fifty-fifty split of the marital assets plus alimony.
Prior to that time, defendant had made every payment due to plaintiff and, according to Peterson, had never claimed that he was being overcharged. In an email to Peterson from defendant dated April 20, 2004, defendant opined that it was the first time in his legal career that he had not received a one-third discount as a professional courtesy. Defendant later testified that he didn't dispute the earlier bills because he had been told by Peterson, "I'll take care of that Jack. We know you have one-third coming off."
On February 7, 2005, plaintiff filed a complaint against defendant, seeking unpaid legal fees plus interest, fees and costs. The last check received by plaintiff was dated October 11, 2004. Between August 10 and August 14, 2009, the case was tried in the Law Division, Middlesex County, before a jury and Judge Phillip Lewis Paley.
At trial, both defendant and plaintiff provided very different versions of why the litigation took longer than expected and why defendant was still in arrears of over $88,000 in legal fees on a $158,313.84 bill resulting from work conducted as of December 2004. Peterson testified that at the start of the representation, he informed defendant that a divorce following a thirty year marriage would most likely result in a fifty-fifty split of the marital assets. Notwithstanding this forewarning, Peterson testified that defendant instructed him to reject any settlement offers which included the payment of alimony.
Defendant testified he was never told his assets would most likely be split equally and that he would have to pay alimony until "the whole end of the process." Defendant stated that had he been informed of such a likely result, he would have told Peterson, "let's get it wrapped up." The withholding of this information, defendant alleged, amounted to malpractice.
Defendant also alleged that Peterson had orally promised him a one-third professional discount rate off the $295 defendant believed to be Peterson's standard hourly rate. Peterson denied agreeing to a one-third professional discount, stating that defendant appeared satisfied with the estimated $295 rate Peterson was charging in lieu of his "usual rate" of up to $350. The retainer letter defendant signed, without reservation, indicated that attorneys billed anywhere from $125 to $375 per hour, stipulated a minimum billing unit of one-fourth of an hour and established the right to charge interest in the event of any arrearage. The letter did not mention a one-third discount.
Plaintiff's expert witness, Steven Haller, testified as to the reasonableness of the fees charged as well as the form of the fee agreement. Haller found the $295 per hour rate to be relatively low in his experience, found the quarter-hour billing increments to be standard practice, and determined the matrimonial fee agreement utilized by plaintiff to be "[a]nnoying but not fatal." While the expert conceded that the agreement was not in accordance with current New Jersey Court Rules, he believed the agreement contained "the basics," which were sufficient to apprise the client of the overall terms of representation.
Defendant's expert witness, Gary Borger, found the $295 per hour fee to be "at the high end for this part of the state at the time" and testified that one-tenth of an hour intervals, not one-quarter was standard in matrimonial practice at the time.
As far as plaintiff's failure to follow the proper format for matrimonial fee agreements per Rule 5:3-5, Borger concluded that while the fee agreement did not conform to the requirements set out in the Rule and constituted a deviation from the standard of care, defendant suffered no economic harm as a result.
At the charge conference, neither party objected to the charge prepared by the trial court. Nor did the parties object to the verdict sheet which asked (1) if plaintiff had proven a breach of contract resulting in damages by defendant and (2) whether plaintiff had breached the fee agreement or was negligent and owed defendant damages.
Prior to trial, plaintiff had advised the court of the domestic violence issue in the case and requested guidance on how to handle the matter before the jury. The court limited the discussion at that time to opening statements, restricting the parties' reference to the domestic abuse complaint to mention of a "divorce related matter" in municipal court, but agreeing that the action was relevant to the legal fees accrued over the course of litigation.
At trial, Peterson testified that there was a "confrontation" between defendant and his wife after the divorce complaint was filed, resulting in "an order . . . removing [defendant] from the marital home." Defendant raised no objection at that time. However, when the term "domestic violence" was mentioned during the examination of Haller, defense counsel objected and requested a mistrial. The court denied defendant's request for a mistrial but immediately instructed the jury to "disregard the term." The judge explained that "there was an incident in the house which resulted in an application in municipal court and an order removing [defendant] from the house on a temporary basis as I understand it." During the jury charge, the judge repeated that the jurors were to disregard any testimony he had told them to disregard.
In defense counsel's summation, he alerted the jury to what he described as "affronts" against his client that "have nothing to do with the case, but [are] designed . . . to turn the eight of you against Mr. Jordan and against me." These alleged affronts included (1) talking about defendant's affair with another woman; (2) that defendant's expert witness has been sued for legal malpractice; (3) the domestic violence complaint brought against defendant in municipal court; (4) Jordan's reference to his "dutiful wife"; (5) the defendant's son's certification in support of his mother; (6) Haller's reference to defendant's attorney as a "personal injury lawyer"; (7) testimony that indicated the divorce decree was based on extreme cruelty; and (8) that defendant had been sued for failure to pay his condominium fees.
In his summation, plaintiff's counsel adopted a similar tone. He noted that defendant paid every bill without objection until the divorce was finalized. In addition, he encouraged the jury to assess defendant's character and credibility, stating, "[a]nd we know from [defendant's] litigation with his condominium association that there are times that he just feels he doesn't have to pay his bills and winds up getting sued over that." Defense counsel raised no objection at that time. Plaintiff counsel continued:
[w]e also learned a little bit about how [defendant] treated his wife during the marriage and while they were getting divorced, and you can draw your own conclusions about what that says about what kind of man he is and whether you can believe him and . . . trust what he told you.
The jury returned a verdict in favor of plaintiff, finding by a preponderance of the evidence that defendant breached his contract with plaintiff, for which the jury awarded $67,000 in damages. This appeal followed.
Defendant argues that the court erred in admitting various negative testimony regarding matters peripheral to the fee dispute and which reflected poorly on defendant's character.
Defendant contends that mention of these "prior bad acts," without adequate curative instructions, was unduly prejudicial under N.J.R.E. 404(b) and resulted in an unfair trial. Plaintiff counters that it was entitled to disclose the complained of "bad acts" in order to explain why the bill was greater than what ordinarily might be charged in a typical divorce action. Plaintiff further submits that the jury heard this information in the most light-handed manner possible and that in the end, the jury made credibility findings that should not be disturbed.
Our review of evidential rulings is limited to whether there has been an abuse of discretion. Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 383-84 (2010). Accordingly, we will not overturn a trial court's decision absent a "'clear error of judgment.'" Id. at 384 (quoting State v. Koedatich, 112 N.J. 225, 313 (1988)).
Under N.J.R.E. 402, relevant evidence is presumptively admissible. However, even "relevant evidence may be excluded if its probative value is substantially outweighed by the risk of  undue prejudice, confusion of issues, or misleading the jury." N.J.R.E. 403. In general, "'[e]vidence claimed to be unduly prejudicial is excluded only when its probative value is so significantly outweighed by its inherently inflammatory potential as to have a probable capacity to divert the minds of the jurors from a reasonable and fair evaluation of the issues in the case.'" State v. Wakefield, 190 N.J. 397, 429 (2007) (quoting State v. Koskovich, 168 N.J. 448, 486 (2001)), cert. denied, 552 U.S. 1146, 128 S. Ct. 1074, 169 L. Ed. 2d 817 (2008); N.J.R.E. 403. Ultimately, this determination rests within the sound discretion of the trial court. Green v. N.J. Mfrs. Ins. Co., 160 N.J. 480, 492 (1999). Only when an evidentiary ruling has resulted in a "'manifest denial of justice,'" will it be overturned on appeal. Green, supra, 160 N.J. at 492 (quoting State v. Carter, 91 N.J. 86, 107 (1982), cert. denied sub. nom., 484 U.S. 1011, 108 S. Ct. 711, 98 L. Ed. 2d 661 (1988)).
Defendant first asserts that testimony relating to the domestic violence action brought against him by his wife was irrelevant to the "straightforward issues" in the case and unduly prejudicial. If testimony on those matters was relevant to the explanation of fees, as plaintiff suggests, defendant urges that the probative value of the evidence was outweighed by its inflammatory nature.
We find that defendant's reliance on N.J.R.E. 404(b) is misplaced. That rule bars the admissibility of character evidence, as well as prior bad acts, to prove that a personacted in conformity therewith on a particular occasion. N.J.R.E. 404(b). Evidence of the domestic violence action brought against defendant was not used to show defendant's bad character, but rather to show that the divorce was complicated by plaintiff having to simultaneously represent defendant in a municipal court action that resulted in higher than expected fees. Reference to the domestic violence action was not only relevant to the fees sought in the instant litigation, but it was arguably necessary to explain how plaintiff arrived at the total sum charged for representation.
Furthermore, the capacity of such evidence to distract the jury or prejudice it against defendant was not so great to exclude it altogether. Defendant relies on State v. Vallejo, 198 N.J. 122, 124 (2009), in which the court held that repeated references to prior instances of domestic violence between defendant and his girlfriend, unrelated to the domestic violence incident on which the trial was based, were highly prejudicial and denied defendant a fair trial. In that case, prior to trial, a N.J.R.E. 104 hearing was held in which the judge ruled that prior incidents of domestic violence between the parties should not be mentioned. Id. at 127. Despite that ruling, various witnesses provided testimony, which referred to prior incidents without objection from defense counsel or a curativeinstruction from the judge. Id. at 127-29. Because the testimony improperly painted defendant as a person predisposed to acts of domestic violence, the court ordered a new trial. Id. at 137.
The prejudicial effect found in Vallejo is not present here. For one thing, the instant case involved a dispute over fees allegedly owed on a contract for legal services in a divorce action, not domestic violence. Further, both parties were limited in their opening statements to what terminology they could employ to refer to the domestic violence action. At the court's direction, both sides referred to the domestic violence action as a "municipal court matter" and avoided the term "domestic violence" in their openings. During trial, the jury heard the term "domestic violence" just once and immediately received a curative instruction from the trial judge, which was repeated during the jury charge. The most prejudicial allusion to the domestic violence action took place in the closing by plaintiff's counsel and upon defense counsel's objection, the court gave a limiting instruction stating:
There was a statement made at one point during the summations about the way in which [defendant] treated his wife. That was an -I interpreted that and I'm going to ask you to interpret that as in terms of the litigation, in terms of tactics and strategy and how the divorce case went. That's all we're talking about. We're not talking about what happened between them in intimate circumstances or at home or - and so forth, we're talking about this litigation only.
"The credibility of a witness may be attacked or supported by evidence in the form of opinion or reputation, provided, however, that the evidence relates only to the witness' character for truthfulness or untruthfulness." N.J.R.E. 608. Although the closing remarks of plaintiff's counsel had no bearing on defendant's character for truthfulness, because a limiting instruction was provided, and because the possible prejudice to defendant was slight compared to the relevance of the municipal matter to plaintiff's computation of fees, the evidence was appropriately admitted at trial.
Next at trial, plaintiff's counsel asked defendant, if he had been sued by his condominium association for unpaid fees, to which defendant responded in the affirmative. Defendant submits that reference to this unrelated litigation was irrelevant and highly prejudicial. Because defendant did not object at trial, we review the alleged error under the plain error standard.
R. 2:10-2; State v. Walker, 203 N.J. 73, 89 (2010). The decision below will not be reversed unless the alleged error was "clearly capable of producing an unjust result." Walker, supra, 203 N.J. at 89.
The use of extrinsic evidence to impeach a witness's credibility is permitted by N.J.R.E. 607, but does not specify what types of extrinsic evidence may be used. The decision to admit or exclude evidence, for substantive or impeachment purposes, depends on the trial court's assessment of the relative value of the proffered evidence as compared to its capacity to prejudice a party or confuse the jury. Green, supra, 160 N.J. at 495. Defendant asserts that the evidence of the lawsuit was irrelevant to the question before the court and violated N.J.R.E. 404(b), which prohibits evidence of prior acts to prove a person "acted in conformity therewith."
We agree that evidence of defendant's past failure to pay condominium fees had no "tendency in reason to prove or disprove any fact of consequence to the determination," of whether he owed counsel fees. N.J.R.E. 401. It also constituted an impermissible use of a prior act to prove conformity therewith. See N.J.R.E. 404(b). Nevertheless, the error was not "clearly capable of producing an unjust result." Walker, supra, 203 N.J. at 89; R. 2:10-2. Though it would have been better practice for the trial court to provide a curative instruction as to plaintiff's line of questioning and commentary on the suit for condominium fees, the brevity of the remarks at trial, defense counsel's failure to object below, and that no discount was promised, militate against ordering a new trial.
Finally, plaintiff counsel attacked defendant's expert's credibility in his opening statement and cross-examination by reference to an instance in which he was sued for legal malpractice stemming from an unrelated divorce proceeding. Despite defendant's assertion that the cross-examination of his expert witness concerning this was "improper and unfairly prejudicial," we do not find the fact that an expert witness was once sued by a former client to be so prejudicial as to warrant a new trial. Hanges, supra, 202 N.J. at 383-84.
An expert witness is always subject to cross-examination as to the basis of his opinion. Wakefield, supra, 190 N.J. at 451-52 (citations omitted). Rather than using weaknesses in a person's experience or credentials to preclude him or her from testifying, trial courts rely on "searching cross-examination" to guide the jury in the weight it ascribes to the expert's testimony. State v. Jenewicz, 193 N.J. 440, 455, 467 (2008). Nevertheless, the scope of cross-examination rests within the sound discretion of the trial court, and a decision will not be reversed "'unless clear error and prejudice are shown.'" Wakefield, supra, 190 N.J. at 451 (quoting State v. Martini, 131 N.J. 176, 263 (1993)). No such error exists here.
We briefly address defendant's argument that plaintiff was not entitled to breach of contract damages because the retainer agreement did not comport to the form required by the New Jersey Court Rules concerning matrimonial fee agreements. Defendant requests that plaintiff's recovery be limited to quantum meruit damages, if any, and that a new trial should be ordered to charge the jury accordingly.
Retainer agreements are generally enforceable, provided they satisfy the general requirements of ordinary contracts and professional ethics. Tax Auth., Inc. v. Jackson Hewitt, Inc., 187 N.J. 4, 15 (2006) (citations omitted). Rule 5:3-5 governs the substantive requirements of retainer agreements in civil family actions. The rule provides that an agreement have annexed to it a "Statement of Client Rights and Responsibilities in Civil Family Actions," including a description of the services to be rendered, the manner in which fees will be computed, the amount of the retainer and how it will be applied, when bills are rendered, the hourly rate for the primary attorney on the case and all other attorneys who may provide legal services, and the availability of Complementary Dispute Resolution programs. R. 5:3-5(a).
Fee agreements have been held invalid where they contravene public policy or fail to meet the basic requirements for a valid contract. See Cohen v. Radio-Elecs. Officers Union, 146 N.J. 140, 155 (1996) ("[A]n attorney's freedom to contract with a client is subject to the constraints of ethical considerations and our supervision."); Glick v. Barclays De Zoete Wedd, Inc., 300 N.J. Super. 299, 309 (App. Div. 1997) (fee agreement invalid because it was not signed by the parties).
In this case, defendant and plaintiff executed a written fee agreement pursuant to Rule 5:3-5(a). The agreement did contain the required information about the fee structure in accordance with Rules of Professional Conduct 1.5(b), but it failed to have annexed to it a Statement of Client Rights and did not indicate the primary attorney who would be working on the case or a description of the services to be provided.
At trial, both parties' experts testified that while the retainer did not conform to Rule 5:3-5, defendant suffered no prejudice as a result. Additionally, Peterson testified that he discussed with defendant the opportunity to resolve the case using alternative dispute resolution. Finally, defendant signed the agreement freely and voluntarily. No ethical boundary was crossed and defendant was fully apprised of his options as a client. Accordingly, the jury charge on damages for breach of contract was not improper.