August 3, 2012
RAVIN GREENBERG, P.C., PLAINTIFF-RESPONDENT,
CALLALLO, INC., DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-3511-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted February 29, 2012
Before Judges Sapp-Peterson and Ostrer.
In this counsel fee dispute, defendant, Callallo, Inc., a Morristown restaurant owned by Lawrence Berger, an attorney, appeals from a final judgment entered in favor of plaintiff, the law firm, Ravin Greenberg, P.C. (Ravin Greenberg), in the amount of $21,115.50. Defendant argues the judgment should be reversed because plaintiff failed to show that its fees were reasonable and necessary. We affirm.
In 2002, defendant engaged plaintiff to represent it in connection with a Chapter 11 reorganization under the United States Bankruptcy Code, 11 U.S.C.A. §§ 1101--1174. Defendant filed an application with the bankruptcy court, dated July 11, 2002, for leave to retain plaintiff as counsel in its bankruptcy proceeding. The application stated defendant was to be represented by Morris Bauer, a member of Ravin Greenberg, and whose billing rate at the time was $290.
Prior to representing Callallo, plaintiff represented various other Berger-owned entities, providing both pre-confirmation and post-confirmation bankruptcy services. At no time during their almost ten-year relationship did plaintiff and Berger ever enter into a retainer agreement, nor did they do so in the present matter.
Defendant's bankruptcy confirmation occurred in November 2005. Prior to confirmation, plaintiff applied to the bankruptcy court and received approval for its pre-confirmation fees. From November 2005 to February 2007, defendant accrued $23,612.50 in legal fees. By letter dated February 26, 2008, plaintiff notified defendant of its right to request fee arbitration on its unpaid balance of $51,921.47, which included post-confirmation fees and unpaid pre-confirmation fees. Defendant did not seek arbitration, and in November 2008, plaintiff filed a complaint for the $51,921.47 due.
In April 2010, Judge W. Hunt Dumont granted plaintiff partial summary judgment for $26.306.01, which represented the pre-confirmation fees previously awarded by the bankruptcy court. Plaintiff's post-confirmation fees were the subject of a bench trial in March 2011 before a different judge.
On the first day of trial, the trial court heard testimony from Bauer, who appeared at the court's direction. Although Bauer's appearance was at the direction of the court, defendant objected, arguing that it prepared a defense based on plaintiff's representation that Bauer would not be utilized as a witness at trial. In response, the judge offered defendant the opportunity to depose Bauer, which defendant declined. The judge concluded, "I'm here to find the truth. . . . I can suspend the rules when and if the interest of justice require[s it] and I find that in this case[,] for whatever reason, the interest of justice require[s] it."
Bauer testified that he was appointed counsel to represent defendant in bankruptcy proceedings following the court's approval and entry of a July 23, 2002 retention order. He explained that it was not the firm's customary practice to execute a retainer agreement with the client. Rather, "[t]he application for the retention as part of a Chapter 11 case was viewed by Ravin Greenberg as being the retainer agreement." He testified that he filed fee applications every three to four months with the court and that he "kept good control of [his] records and what were the outstanding receivables." He was shown an exhibit marked P-2, the print out of services billed to defendant. He did not specifically recognize the document but testified that he would complete handwritten time sheets and then give it to his secretary who in turn would input the information into the system. He testified that his written notes would generally be prepared "the night of the day that [he] did the services, or the following morning they would have been written up on time sheets." He explained that when he subsequently filed a fee application a print-out of the entries put into the system would be prepared. He testified that he followed the same billing practices for his representation of defendant in connection with post-confirmation matters. Exhibit P-2 was moved into evidence without objection.
Bauer also testified that nine out of ten times there was always post-confirmation work to be done on behalf of a client.
He had no specific recollection of the actual work performed post-confirmation, but testified that from his time entries for that period of time he would be able to glean that he did the work. Under cross-examination, he was questioned regarding the circumstances of his appearance in court. He was not, however, questioned about the work he performed on behalf of defendant.
On the second day of trial, plaintiff rested. Defendant called no witnesses and did not move to introduce any exhibits. The attorneys then presented closing arguments to the court. Defense counsel argued plaintiff had engaged in duplicative billing, charging defendant for services provided to Pazzo Pazzo, another Berger-owned entity. In addition, the defense maintained that "it's nearly impossible to tell which services were rendered in connection with the bankruptcy, which services were rendered for Pazzo Pazzo, which services were rendered in connection with . . . any other specific issue." Plaintiff's counsel acknowledged that there had been some overlap in the services rendered to Callallo and to Pazzo Pazzo, entities which plaintiff pointed out were owned by Berger.
The court instructed the parties to provide post-trial submissions and permitted plaintiff to re-open its case and provide further evidence regarding the time charges on P-2.
The court also requested copies of the monthly bills plaintiff submitted to defendant.
Plaintiff's post-trial submission stated Pazzo Pazzo was a separate Berger-owned entity, which plaintiff represented simultaneously, and the time entries referencing Pazzo Pazzo were for services provided to both entities simultaneously which were not billed to Pazzo Pazzo separately. Plaintiff also included as exhibits, a certification from Ravin Greenberg partner, Howard Greenberg, explaining the nature of the relationship between plaintiff and defendant and letters sent directly to Berger dated May 12, 2006, June 22, 2006, July 11, 2006, August 23, 2006, September 25, 2006, November 7, 2006 and March 20, 2007, advising Berger of defendant's outstanding legal fees. Attached to each letter was the firm's Statement of Legal Services Rendered.
In defendant's post-trial submission, defendant argued that plaintiff failed to present proof that the billings were mailed to defendant each month. In addition, defendant objected to the certification of Greenberg as hearsay and as lacking in personal knowledge. Plaintiff submitted a reply, in which it noted the references to Pazzo Pazzo appeared within the first three billing statements and equaled 1.3 hours of the total time billed. Plaintiff asserted the hourly rate applied to the services rendered should be no less than $380 because "the Bankruptcy Court not only recognized a yearly increase in the attorneys' hourly rates in the Callallo bankruptcy case, but such rates were never objected to by Callallo."
The court rendered an oral decision on March 25, finding all of plaintiff's charges, with the exception of the 1.3 hours for work performed on behalf of Pazzo Pazzo, were reasonable and necessary and were in fact charged in connection with defendant's bankruptcy. The court stated:
[A]ttorneys are entitled to be paid for the services they render, and here there was no viable defense offered by the defendant to contest the reasonableness of . . . the services or their necessary nature and I find that Mr. Bauer's services at $380 per hour[,] given the specialized nature of this work, given his expertise, given his status as a member of the bar, certainly more than amply supports the charge at $380 per hour.
The court entered judgment for plaintiff in the amount of $21,115.50.
On appeal, defendant raises the following points for our consideration:
JUDGMENT SHOULD BE REVERSED BECAUSE PLAINTIFF FAILED TO SUSTAIN ITS BURDEN OF PROOF TO MAKE A PRIMA FACIE SHOWING THAT THE LEGAL SERVICES RENDERED WERE REASONABLE AND NECESSARY.
EVEN IF PLAINTIFF HAD MADE A PRIMA FACIE SHOWING THAT THE FEES WERE REASONABLE AND NECESSARY, DEFENDANT REBUTTED THE PRESUMPTION, RETURNING THE BURDEN [OF] PROOF TO PLAINTIFF, WHICH DID NOT SATISFY THAT BURDEN AT TRIAL.
THE SUPPLEMENTAL SUBMISSIONS WHICH THE TRIAL COURT DIRECTED PLAINTIFF TO MAKE IN ORDER TO SATISFY DEFICIENCIES IN PLAINTIFF'S CASE, DID NOT SATISFY THOSE DEFICIENCIES OR OTHER GAPS IN THE ELEMENTS OF ITS CAUSE OF ACTION WHICH WERE PLAINTIFF'S BURDEN TO PROVE BY A PREPONDERANCE OF THE EVIDENCE.
Our review of a judge's findings in a bench trial is limited. "A trial court's findings generally are binding on appeal 'when supported by adequate, substantial, credible evidence.'" Brach, Eichler, Rosenberg, Silver, Bernstein, Hammer & Gladstone, P.C. v. Ezekwo, 345 N.J. Super. 1, 9 (App. Div. 2001) (quoting Cesare v. Cesare, 154 N.J. 394, 412 (1998)).
In the absence of a retainer agreement, plaintiff may recover its fees on the theory of quantum meruit. To rule otherwise would amount to giving a client for whom services have been provided "a windfall at the expense of [his or her] attorneys." Starkey, Kelly, Blaney & White v. Estate of Nicolaysen, 340 N.J. Super. 104, 123 (App. Div. 2001) (quoting Vaccaro v. Estate of Gorovoy, 303 N.J. Super. 201 (App. Div. 1997)), aff'd in part, rev'd in part, 172 N.J. 60 (2002).
Quantum meruit is a form of quasi-contract permitting one who has rendered services to recover "as much as is deserved." Ibid. It is an equitable remedy that prevents a person from unjustly enriching himself at the expense of another. Starkey, Kelly, Blaney & White v. Estate of Nicolaysen (Starkey II), 172 N.J. 60, 68 (2002).
"To recover under a theory of quantum meruit, a plaintiff must establish: (1) the performance of services in good faith,
(2) the acceptance of the services by the person to whom they are rendered, (3) an expectation of compensation therefor, and
(4) the reasonable value of the services." Ibid. (internal quotations and citations omitted). Defendant's appeal focuses on the fourth factor, the reasonable value of the services.
"[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). The attorney has the burden of proving the reasonableness of the fee by a preponderance of the evidence. Saffer v. Willoughby, 143 N.J. 256, 264. A determination of reasonableness is made based upon the factors set forth in the Rules of Professional Conduct (RPC) 1.5. Ibid. The factors to be considered include:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services;
(8) whether the fee is fixed or contingent. [RPC 1.5(a).]
Here, the evidence established that the parties had a longstanding relationship during which plaintiff, for many years, provided legal services to not only to defendant, but to other Berger-owned entities, including Pazzo Pazzo. Bauer testified regarding the nature of the legal services provided on behalf of defendant and that in the context of post-termination fees, which are the fees at issue here, nine out of ten times additional issues are implicated, necessitating legal representation. On cross-examination, Bauer was never questioned regarding any particular entry for which services were performed nor challenged as to the necessity or reasonableness of the charges.
The post-trial submissions are consistent with the billings reflected in P-2. Defendant presented no contrary evidence refuting plaintiff's evidence that legal services had been rendered and were necessary. In fact, defendant raised only challenges to plaintiff's evidence that warrant comment. First, defendant identified what appeared to be double billings in connection with the Pazzo Pazzo matter. The court, in its judgment, agreed with this contention and discounted 1.3 hours which it found related to the Pazzo Pazzo matter. Second, defendant argued there was no proof defendant received any of the billing letters because plaintiff mailed the bills directly to Berger at his law firm rather than to defendant, a challenge we conclude is without merit.
In addition to finding the services performed necessary and reasonable, the trial court, after reviewing the records concluded "the specialized nature of this work, . . . [Bauer's] expertise [and] . . . his status as a member of the bar . . . more than amply support[ed] the charge at $380 per hour." The trial judge did not preside over the post-termination bankruptcy proceedings giving rise to the counsel fees sought and therefore cannot be presumed to know the necessity of the services or the quality of the representation provided. However, in the absence of any substantive challenge to the necessity and reasonableness of the legal services provided and given Bauer's testimony, which the judge found "was not assailed in any way," there was sufficient evidence in the record to support the judge's conclusion that the services rendered were reasonable and necessary and the hourly rate charged was reasonable.