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Cedar Knolls Estates, LLC, A New Jersey Limited Liability Company and v. Analan

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


December 16, 2011

CEDAR KNOLLS ESTATES, LLC, A NEW JERSEY LIMITED LIABILITY COMPANY AND STANLEY T. OLMAND, PLAINTIFFS,
v.
ANALAN, INC., A NEW JERSEY CORPORATION, AND ALAN FIORE,*FN1 DEFENDANTS-APPELLANTS, AND ONE TWELVE CORPORATION, DEFENDANT-RESPONDENT, AND A. FIORE SERVICES, INC., ANDREW FIORE, C&H ENVIRONMENTAL, INC., AND MARY R. ESPOSITO, DEFENDANTS, AND ANALAN, INC., A NEW JERSEY CORPORATION, ALAN FIORE, A. FIORE SERVICES, INC., AND ANDREW FIORE, THIRD-PARTY PLAINTIFFS,
v.
GAROFOLO & PRYOR, P.A., GAROFOLO ZIERAK & O'NEILL, P.A., AND ROBERT C. GAROFOLO, THIRD-PARTY DEFENDANTS.

On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-2790-05. Edward J. Gilhooly argued the cause for appellants.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued telephonically November 15, 2011 - Before Judges Fuentes, Graves and Koblitz.

Analan, Inc., and Allan Fiore appeal from a June 18, 2010 final judgment ordering them to pay attorneys' fees and costs incurred by respondent One Twelve Corporation. Before the trial court, Analan and Fiore conceded that they were obligated to indemnify One Twelve for reasonable defense costs resulting from a lawsuit brought by Cedar Knolls Estates, LLC (Cedar Knolls), but they claimed the fees charged by One Twelve's counsel were excessive and unreasonable. Because the trial court failed to make adequate factual findings, we reverse and remand for further proceedings.

The essential facts are not in dispute. In 1996, One Twelve sued Fiore, an adjacent property owner, alleging that Fiore had contaminated property owned by One Twelve. That lawsuit was resolved in 1999 when Analan (a corporation owned by Fiore and his brother) agreed to purchase One Twelve's property for $125,000; Analan and Fiore agreed to be solely responsible for the cost of remediating the contamination; and Analan and Fiore further agreed to "defend, indemnify and hold harmless [One Twelve] from and against all obligations, liabilities, damages, costs, fines, penalties, losses and expenses, including reasonable attorney fees and expert witness fees, under, in connection with, arising from or relating to Environmental Liabilities."

In 2001, Analan sold the property to Cedar Knolls, and in 2005, Cedar Knolls filed the present action against Analan, Fiore, and One Twelve to recover the costs incurred by Cedar Knolls to remediate the contaminated property. On November 22, 2005, Herold and Haines, P.A., filed an answer and counterclaim on behalf of One Twelve together with a cross-claim against Analan and Fiore alleging they were obligated to defend and indemnify One Twelve, and to hold it harmless for any and all environmental liabilities. Pursuant to a consent order dated March 9, 2006, Analan and Fiore "agreed to defend, indemnify and hold harmless One Twelve in the Litigation." Consequently, One Twelve's cross-claim was dismissed subject to reinstatement in the event that Analan or Fiore failed to comply with the terms of the consent order.

Counsel for Analan and Fiore represented One Twelve for more than two years (from February 2006 until August 2008) before claiming a conflict of interest. On August 20, 2008, Edward Gilhooly filed a substitution of attorney stating that he would represent only Analan and Fiore, and Herold and Haines resumed the defense of One Twelve. In April 2009, Herold Law, P.A., substituted in for Herold and Haines.

One Twelve and Cedar Knolls eventually agreed to release their claims against each other. One Twelve sought reimbursement for its legal fees and costs from Analan and Fiore. Thereafter, on August 12, 2009, One Twelve filed a motion to enforce litigant's rights. Included with One Twelve's motion was a copy of a "Client Ledger Report" from Herold Law showing that it had been paid the sum of $79,563.79 for the legal services it rendered on behalf of One Twelve.

During oral argument on October 9, 2009, the court found there was "an obligation on the part of Analan and Allan Fiore to reimburse One Twelve for the reasonable, necessary attorneys' fees, costs and disbursements, and expert fees, that it incurred." However, the court added that the specific amount to be paid would "remain open" because it did not have "detailed bills." The court ordered One Twelve to provide detailed invoices within seven days, and the court gave Analan and Fiore seven days to respond to the itemized statements if any of the charges were disputed.

Subsequently, on October 30, 2009, Analan and Fiore claimed that several of the charges on the itemized invoices were excessive and unreasonable. They argued that the actual cost for legal services should not have been "more than $25,000 to $30,000." During oral argument on November 19, 2009, the court stated it would "split the difference," and the court entered an order on November 22, 2009, that required Analan and Fiore to make an interim payment in the amount of $27,500. The order provided that the interim payment would "be applied as a credit toward any final amount owed [by Analan and Fiore] to One Twelve."

The court also gave One Twelve two weeks to respond to the objections raised by Analan and Fiore, and it stated it would conduct a hearing if convinced of the need for one: "[I]f you want a hearing, you give me the pitch for the hearing, and if I think a hearing is necessary, I'll call you and allow you to argue it orally."

In December 2009, One Twelve provided the court with a response to the "problem areas" raised by Analan and Fiore. Analan and Fiore then requested an evidentiary hearing to resolve "the attorney fee issue." However, no hearing-- evidentiary or otherwise--was held.

On June 18, 2010, the trial court entered a final judgment that required Analan and Fiore to pay One Twelve "the initial amount of $27,500.00," plus "the total remaining amount of $91,179.16." In a statement of reasons attached to the judgment, the trial court found that One Twelve was forced to retain its own counsel and, pursuant to the consent order and the contract of sale between the parties, One Twelve was entitled to be reimbursed for its legal fees and defense costs. The court did not make any findings, however, regarding the reasonableness of the legal fees and costs incurred by One Twelve, and the court did not address any of the claims by Analan and Fiore that certain charges were unnecessary, excessive, and unreasonable.

On appeal, Analan and Fiore present the following arguments:

POINT I

THE JUDGMENT MUST BE REVERSED WITH A MANDATE TO DISMISS ALL OR PART OF THE CLAIM. THAT WHICH IS NOT DISMISSED SHOULD BE SUBJECT TO A JURY TRIAL. THIS ARGUMENT RUNS ALONG THE FOLLOWING INTERTWINED POINTS NOT EASILY DIFFERENTIATED IN THE TEXT.

A. ANALAN, INC. ALAN FIORE AND FIORE WERE NOT IN BREACH (FACTUAL ISSUE NOT RESOLVABLE WITHOUT A PLENARY HEARING). MOREOVER, THE SEPTEMBER 1, 1999 INDEMNITY, DEFENSE AND HOLD HARMLESS AGREEMENT IS NOT ENFORCEABLE AS INDEFINITE. ALTHOUGH RULES OF CONSTRUCTION CAN LEND DEFINITENESS TO THE CONTRACT, NO ATTEMPT WAS MADE BY ONE TWELVE TO CONSTRUE THE CONTRACT WITH THESE RULES. IN ANY EVENT, EVEN AS CONSTRUED, THE EFFECTUATION OF THE CONTRACT WAS RIPE WITH DISPUTED FACTUAL ISSUES. JURY TRIAL REQUIRED.

B. EVEN IF ONE TWELVE WAS ENTITLED TO RECOVER DEFENSE FEES AND EXPENSES, ALL THOSE FEES AND EXPENSES AFTER THEY ANNOUNCED SETTLEMENT OF THEIR LIABILITY IN THE CASE (JUNE 19, 2009) ARE COLLECTION FEES AND WERE NOT ACTIONABLE. THIS REDUCES THE JUDGMENT BY ABOUT $20,000. See R. 4:42-9(A).

C. ON REMAND THE BILLINGS MUST BE DIVIDED BETWEEN DEFENSE FEES AND COSTS DEFENDING ALLEGATION OF ONE TWELVE FAULT AND ANALAN/FIORE FAULT, AS INDEMNITY MAY NOT BE HAD FOR THE FORMER. (NOT ARGUED BELOW AS A BASIS TO DENY FEES AND COSTS, BUT WOULD BE PLAIN ERROR TO JUSTIFY REVERSAL).

D. THE AMOUNTS BILLED ARE UNREASONABLY HIGH AND ONE TWELVE DID NOT MEET R. 4:42-9 NOR R.P.C. 1.5 FOUNDATIONS.

POINT II

THE SETTLEMENT OF THE CASE BETWEEN PLAINTIFFS AND DEFENDANT ONE TWELVE, INITIALLY CONFIDENTIAL, WAS WITHOUT THE INVOLVEMENT OF ANALAN/FIORE AND WITHOUT THEIR CONSENT. AS ANALAN/FIORE WERE SUBROGATED TO THE RIGHTS OF ONE TWELVE'S FRIVOLOUS LITIGATION NOTICE TO PLAINTIFFS, THE SETTLEMENT GAVE THOSE RIGHTS AWAY AND THEREFORE ONE TWELVE MAY NOT SEEK ATTORNEY FEES AND COSTS AGAINST ANALAN/FIORE.

Preliminarily, we note that Analan and Fiore only appeal from the June 18, 2010 final judgment, which ordered them to pay the interim amount of $27,500 and "the total remaining amount of $91,179.16" to One Twelve. Thus, the scope of our review is limited to that disputed issue. "[I]t is clear that it is only the judgments or orders or parts thereof designated in the notice of appeal which are subject to the appeal process and review." Pressler, Current N.J. Court Rules, comment 6.1 on R. 2:5-1 (2012); see also 1266 Apt. Corp. v. New Horizon Deli, 368 N.J. Super. 456, 459 (App. Div. 2004) (refusing to consider an issue not addressed in the brief because "it is clear that it is only the judgment or orders designated in the notice of appeal which are subject to the appeal process and review"); Campagna v. American Cyanamid, 337 N.J. Super. 530, 550 (App. Div.) (finding that an issue was not properly before the court because plaintiffs did not appeal from the order specifically addressing that issue), certif. denied, 166 N.J. 294 (2001). Therefore, the issues raised in Point I-A. and Point II are not properly before us.

"[A] lawyer's bill for services must be reasonable both as to the hourly rate and as to the services performed." Gruhin & Gruhin, P.A. v. Brown, 338 N.J. Super. 276, 280 (App. Div. 2001); see also RPC 1.5(a) (stating, "[a] lawyer's fee shall be reasonable" and setting forth the factors to be considered in determining the reasonableness of a fee). A court must determine the reasonableness of the rate charged by counsel by comparing it to the rate for similar services charged by lawyers of reasonably comparable skill, experience, and reputation in the community. Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 22 (2004); (citing Rendine v. Pantzer, 141 N.J. 292, 335 (1995)). A court must also determine whether the time expended by counsel is equivalent to the time "'competent counsel reasonably would have expended to achieve a comparable result.'" Ibid. (quoting Rendine, supra, 141 N.J. at 336).

Pursuant to Rule 1:7-4, a trial court must "find the facts and state its conclusions . . . on every motion decided by a written order that is appealable as of right." R. 1:7-4(a). As our Supreme Court has stated: "Failure to perform that duty constitutes a disservice to the litigants, the attorneys and the appellate court. Naked conclusions do not satisfy the purpose of R. 1:7-4. Rather, the trial court must state clearly its factual findings and correlate them with the relevant legal conclusions." Curtis v. Finneran, 83 N.J. 563, 569 (1980) (citations omitted). Consequently, the trial court erred when it failed to explain its reasons for the fee awarded in the final judgment. See Furst, supra, 182 N.J. at 21 ("[A] trial court must analyze the Rendine factors in determining an award of reasonable counsel fees and then must state its reasons on the record for awarding a particular fee.").

In view of the foregoing, the final judgment entered on June 18, 2010, is reversed and the matter is remanded to the trial court for such further proceedings as the court deems necessary and appropriate to determine the amount of attorneys' fees and costs that One Twelve is entitled to receive. We do not retain jurisdiction.

Reversed and remanded.


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