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

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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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 ...


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