July 14, 2011
WALDER, HAYDEN & BROGAN, P.A., PLAINTIFF-RESPONDENT,
JOSEPH CATULLO, DEFENDANT, AND PHILIP J. SCUTIERI, JR., DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-1010-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted May 25, 2011
Before Judges Fuentes and Ashrafi.
Plaintiff law firm filed a complaint seeking to collect fees and related charges. Defendant Philip Scutieri appeals from a September 10, 2010 order denying his motion for summary judgment and granting plaintiff's cross-motion for summary judgment in the amount of $118,463.16. We affirm.
Viewed most favorably to defendant, see R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995), the evidence presented in the motions for summary judgment motion revealed the following facts.
Scutieri had a long-standing dispute with Raymond Chambers about family business matters dating back to the time that Scutieri's father died in 1978. Scutieri alleged that Chambers cheated his mother of funds that rightfully belonged to his father's estate. In 2007, Scutieri engaged the services of Joseph Catullo to hire and manage demonstrators to carry pickets in downtown Morristown expressing his views about Chambers and the alleged fraud committed against his family. On December 26, 2007, Scutieri signed and had notarized an "Indemnification Agreement" that stated:
All protestors involved in this demonstration shall be indemnified and held Harmless against any act or omission involving this Peaceful Demonstration against Raymond G. Chambers.
I Philip Scutieri shall personally indemnify and Hold Harmless the undersigned [sic] Joseph G. Catullo of [address] against any adverse Issue that may emanate and/or derive from the above demonstrations against Raymond G. Chambers beginning November 20, 2007.
Demonstrations and picketing occurred in Morristown periodically in late 2007 and 2008. Chambers filed a lawsuit against Catullo and others in the Superior Court for money damages and injunctive relief. Scutieri states he was not a defendant in the Chambers lawsuit, but the record shows that he was a defendant in a subsequently docketed case brought by Chambers. Scutieri was represented in the Chambers litigation by attorney Peter Bennett of the law firm of Giordano, Halleran & Ciesla.
On an unspecified date in early 2008, Bennett called attorney James Plaisted, a partner in the plaintiff firm who was a former colleague of Bennett and long-time friend. Bennett asked Plaisted to represent Catullo in the lawsuit filed by Chambers. He told Plaisted that he represented Scutieri and that Scutieri would pay all fees and costs plaintiff would charge in representing Catullo. He said that Scutieri had signed an indemnity agreement in favor of Catullo that would assure payment of the legal fees.
Plaisted and another partner from the plaintiff law firm met with Catullo, who provided to them a copy of the indemnification agreement signed by Scutieri. Catullo signed a written retainer agreement dated March 4, 2008, setting the terms of representation by plaintiff for the Chambers litigation. In payment of its retainer and additional charges, plaintiff received two bank checks dated March 6, 2008, each for $25,000 and each with a notation that Philip Scutieri was the remitter of the funds.
In the course of the Chambers litigation, plaintiff issued its billing statements to Catullo, not Scutieri. On April 29, 2008, plaintiff received a wire transfer of another $25,000 in payment of its fees from a company associated with Scutieri. After payment of the $75,000 in total, plaintiff received no further payments on its bills.
On October 2, 2008, plaintiff issued a letter in compliance with Rule 1:20A-6 as notification of its fee claim and the client's right to seek arbitration before the District Fee Arbitration Committee. The letter was addressed to Catullo, but plaintiff also sent a copy by certified mail to Scutieri at his address in Florida. The certified mailing was claimed and not returned to plaintiff.
When neither Catullo nor Scutieri paid the balance of the plaintiff's fees and charges, and neither requested arbitration, plaintiff filed its collection complaint against both, seeking an outstanding balance of $81,916.42 for legal fees and expenses, plus interest and attorney's fees in accordance with provisions of its retainer agreement. To its complaint, plaintiff attached the October 2, 2008 Rule 1:20A-6 letter, a statement of account, the March 4, 2008 retainer agreement, and the December 26, 2007 indemnification agreement of Catullo and Scutieri. In his answers to plaintiff's interrogatories, Catullo stated he had no defenses to plaintiff's claims but expected indemnification from Scutieri.
On appeal following summary judgment in favor of plaintiff, Scutieri argues he was never a client of plaintiff and never signed a retainer agreement. He also contends that the indemnification agreement he gave to Catullo could not cover plaintiff's fees for the Chambers litigation because there was no such litigation at the time he signed that agreement, and therefore, plaintiff could not be an intended third-party beneficiary of the indemnification agreement. Finally, he argues that plaintiff's collection complaint is procedurally defective against him because plaintiff did not direct pre-action notice of its claim to him, as required by Rule 1:20A-6, and because plaintiff's complaint did not allege it had given notice to him, as required by the same rule.
We need not address the competing arguments regarding whether plaintiff was a third-party beneficiary of the indemnification agreement executed by Scutieri. We conclude that plaintiff was entitled to summary judgment because there was no genuine disputed issue of fact as to Scutieri's direct contractual obligation to pay plaintiff's fees.
Scutieri did not challenge factually the certification of attorney Plaisted reciting the events that led to plaintiff's agreement to represent Catullo. Although Scutieri did not personally promise to pay plaintiff's fees, Bennett represented that Scutieri would pay, stating he was Scutieri's attorney and was acting on his behalf with respect to the Chambers litigation. Catullo confirmed in his initial meeting with plaintiff that Scutieri had promised to pay his legal bills, and he presented the indemnification agreement as proof. The representations of Bennett and Catullo were proven true when plaintiff received payments from Scutieri totaling $75,000.
"An agency relationship is created 'when one person (a principal) manifests assent to another person (an agent) that the agent shall act on the principal's behalf and subject to the principal's control, and the agent manifests assent or otherwise consents so to act.'" N.J. Lawyers' Fund for Client Prot. v. Stewart Title Guar. Agency, Inc., 203 N.J. 208, 220 (2010) (quoting Restatement (Third) of Agency § 1.01 (2006)). A principal may be bound by the apparent authority of another to make promises on his behalf if the principal's conduct manifests that authority and a third party has relied on those manifestations. See ibid.; Sears Mortgage Corp. v. Rose, 134 N.J. 326, 337 (1993); C.B. Snyder Realty Co. v. Nat'l Newark & Essex Banking Co., 14 N.J. 146, 154 (1953); Restatement (Third) of Agency § 2.03. "The doctrine of apparent authority 'focuses on the reasonable expectations of third parties with whom an agent deals.'" N.J. Lawyers' Fund, supra, 203 N.J. at 220 (quoting Restatement (Third) of Agency § 7.08 comment b)).
Here, Scutieri's actions in signing the indemnification agreement and then making payment on plaintiff's initial charges manifested Bennett's authority to bind him to pay for legal representation of Catullo. See Restatement (Third) of Agency § 1.03 ("A person manifests assent or intention through written or spoken words or other conduct."). In providing legal services to Catullo, plaintiff relied on those manifestations of Bennett's authority. Plaintiff's unrefuted proofs on the summary judgment motions included not only the spoken words of Bennett but also the actions of Scutieri that confirmed Bennett's authority as Scutieri's agent to engage the services of the plaintiff law firm. See AMB Prop., LP v. Penn Am. Ins. Co., 418 N.J. Super. 441, 454 (App. Div. 2011). No genuine issue of fact exists to be tried as to Bennett's authority to bind Scutieri for payment of plaintiff's fees and charges on behalf of Catullo.
With respect to plaintiff's procedural compliance with Rule 1:20A-6, Scutieri argues that the October 2, 2008 fee arbitration letter was addressed to Catullo and not him. He cites Mandelbaum, Salsberg, Gold, Lazris, Discenza & Steinberg, P.C. v. General Insurance Company Of America, 352 N.J. Super. 118, 122-23 (App. Div. 2002), for its holding that the procedural requirements of Rule 1:20A-6 apply not only when the attorney seeks to collect fees from a client but also from any other party. Defendant does not dispute he received the letter but contends it did not adequately notify him of his right to seek fee arbitration.
Although the letter was addressed to Catullo, it indicated that a copy was sent to Scutieri and named him as well in its text. The letter began: "Prior to commencing suit against you and Philip Scutieri, Jr. to collect our legal fees, we are required under New Jersey Law (N.J.S.A. 2A:13-6) and the Rules of Court (R. 1:20A-6), to forward to you a copy of our bill for fees and to advise you of your right to seek arbitration." Later, the letter stated: "we have no alternative and therefore are serving you and Mr. Scutieri with this formal notice and demand for full payment." Defendant had adequate notice that the letter was meant to apply to him as well as Catullo.
Also, by attaching the letter and making reference to it in the text of its complaint, plaintiff satisfied the pleading requirement of the rule.
Finally, the retainer agreement executed by Catullo expressly provided for pre-judgment interest on unpaid bills at the rate of twelve percent, and attorney's fees calculated at twenty percent of the amount awarded by the court. There was no error in the trial court's addition of pre-judgment interest and attorney's fees to the balance due on plaintiff's bills in accordance with the retainer agreement.
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