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Franzblau Dratch, P.C v. Michael Altman


November 30, 2011


On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-3284-10.

Per curiam.


Submitted October 31, 2011

Before Judges Parrillo and Skillman.

Defendant Michael Altman appeals the August 27, 2010 order of the Law Division denying his motion to vacate the default judgment against him. We affirm.

Following a September 8, 2009 hearing in the underlying fee dispute between plaintiff Franzblau Dratch, P.C. and defendant, at which defendant appeared, the Supreme Court of New Jersey District Fee Arbitration Committee awarded plaintiff $15,398.30 in legal fees in March 2010. The arbitration decision was mailed to defendant on April 7, 2010 at BHNV Management, P.O. Box 3226, Weehawken, New Jersey, the same address at which he received notice of the arbitration hearing. Plaintiff thereafter sought to confirm the arbitration award and, pursuant to Rule 1:20A-3(e), moved in the Law Division for an order entering judgment against defendant. The notice of motion and supporting papers were served upon defendant at the BHNV address by certified and regular mail, and a green card was returned to plaintiff.

Defendant failed to appear on the return date of the motion, May 14, 2010, and an order of judgment against defendant in the amount of $15,398.30 was entered. On May 28, 2010, plaintiff served an information subpoena on defendant at the BHNV address by certified and regular mail; again plaintiff received a green card. After defendant failed to respond to the information subpoena, plaintiff moved for an order enforcing litigant's rights, returnable July 23, 2010, and on June 30, 2010, served the motion, supporting documents and fee arbitration decision on defendant by certified and regular mail at the BHNV address. Defendant filed opposition to the motion, dated July 14, 2010, claiming that he failed to receive notice of all prior documents and pleadings. The Law Division entered an order to enforce litigant's rights on July 23, 2010.

Thereafter defendant moved to vacate the May 14, 2010 default judgment. In support of his application, defendant argued that: he was never served with a summons and complaint or the fee arbitrator's award; he did not owe the money claimed by plaintiff and that, in any event, he was not personally liable because the debt was a corporate liability; and the fee arbitrators acted arbitrarily in their award. Following a hearing on August 27, 2010, the Law Division judge denied defendant's motion to vacate the default judgment, concluding that

[e]ven if you got a copy of the fee arbitration award that was not timely, you still had plenty of time to file an appeal, and even if you did file an appeal, you haven't raised any grounds, under New Jersey Statute, to the four factors that would allow a court to throw out the arbitration decision. So the bottom line is they still got a judgment against you for 15,398.30.

So you could still try to file an appeal. You know, that would probably be your next step. Whether they would take it as a timely appeal or not, you could raise all the issues you raised here again, and then I'm sure they're going to oppose it.

We agree.

Fee arbitration committees have jurisdiction to arbitrate fee disputes between clients and attorneys. R. 1:20A-2(a). The decision of the fee arbitration committee is final and binding on the parties and the Disciplinary Review Board (DRB or Board), alone, has appellate jurisdiction in these matters. R. 1:20A-3(c); see also Linker v. Co. Car Corp., 281 N.J. Super. 579, 587 (App. Div. 1995).

Rule 1:20A-3(d) sets forth the procedure for appealing the determination of the fee arbitration committee to the DRB:

The party taking an appeal shall file a notice of appeal in the form prescribed by the Board within twenty-one days after the parties' receipt of the Fee Committee's written arbitration determination. The notice of appeal shall be filed with the Board and shall include a statement of the ground for appeal and an affidavit or certification stating the factual basis therefor. [(emphasis added).]

The grounds for appealing fee arbitration determinations are extremely narrow. Under Rule 1:20A-3(c), no appeal from the determination of a fee committee may be taken by the client or the attorney to the DRB except where facts are alleged that:

(1) any member of the Fee Committee hearing the fee dispute failed to be disqualified in accordance with the standards set forth in R. 1:12-1; or

(2) the Fee Committee failed substantially to comply with the procedural requirements of R. 1:20A, or there was substantial procedural unfairness that led to an unjust result; or

(3) there was actual fraud on the part of any member of the Fee Committee; or

(4) there was a palpable mistake of law by the fee committee which on its face was gross, unmistakable, or in manifest disregard of the applicable law, which mistake has led to an unjust result.

In this regard, the DRB "shall dismiss the appeal on notice to the parties if it determines that the notice of appeal fails to state a ground for appeal specified in paragraph (c) of [Rule 1:20A-3] or that the affidavit or certification fails to state a factual basis for such ground." R. 1:20A-3(d).

Here, by his own admission at the August 27, 2010 hearing, defendant received the fee arbitration committee decision as part of plaintiff's motion to enforce litigant's rights, which was served on defendant on June 30, 2010. Indeed, defendant filed opposition to this motion on July 14, 2010. Even assuming then that defendant had not received notice of the arbitrators' award until June 30, 2010 at the latest, he had twenty-one days from that date to file an appeal with the DRB, which he has not done. Not only has defendant failed to file a timely appeal of the fee committee determination with the body having singular jurisdiction over the matter, he has not demonstrated any of the four exclusive grounds upon which the DRB could have granted relief under Rule 1:20A-3(c) in the first instance. Having failed to exhaust his procedural remedies under the administrative scheme and lacking any meritorious challenge to the arbitrators' award, defendant has presented no basis to vacate the default judgment and the motion judge's denial of such relief was therefore proper.



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