WILENTZ, GOLDMAN & SPITZER, P.A., Plaintiff-Respondent/ Cross-Appellant,
LOUIS GRANT, JR., Individually and as Executor of the Estate of LOUIS S. GRANT, SR., Deceased, Defendant-Appellant/ Cross-Respondent.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 22, 2012
On appeal from Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-7341-07.
Arthur J. Russo argued the cause for appellant/ cross-respondent (Russo Law Offices, LLC, attorneys; Mr. Russo, on the brief).
Brian J. Molloy argued the cause for respondent/ cross-appellant (Wilentz, Goldman & Spitzer, attorneys; Mr. Molloy, of counsel and on the brief; Keith L. Hovey, on the brief).
Before Judges Graves, Espinosa, and Guadagno.
This is a fee dispute case between plaintiff Wilentz, Goldman & Spritzer, P.A. (WGS) and its former client defendant Louis Grant, Jr. (Junior). Junior appeals from a November 12, 2010 amended judgment in favor of WGS in the amount of $60, 974. WGS cross-appeals from the part of the amended judgment that denied its application for fees, costs, and interest based on its offer to settle the case for $50, 000, which Junior rejected. For the reasons that follow, we affirm the amended judgment in favor of WGS and reverse and remand the part of the amended judgment that denied WGS's request for fees, costs, and interest under the offer of judgment rule. R. 4:58-2.
WGS agreed to represent Junior in connection with a will contest following the death of Louis S. Grant, Sr. (Senior), who died on February 13, 2001. Prior to his death, Senior owned and operated a successful business known as Roosevelt Sales Stables. Junior worked with his father in the business for more than forty years. When he died, Senior was survived by his three children: Junior, Virginia Grant Liotta (Virginia), and Nancy Grant (Nancy).
For many years, Senior had a personal and professional relationship with Warren Wilentz, Esq., a WGS partner. Wilentz represented Senior in various legal matters and prepared estate documents for him. Wilentz represented Junior on at least three separate occasions. At Senior's request, Wilentz prepared a new will for him, which Senior signed on April 16, 1998. Article Four of the will left the "tack and inventory" from Senior's business to Junior. Article Six left Senior's residuary estate to his three children in equal shares, and Article Nine designated the three children as co-executors.
Senior liquidated the business inventory in 1999 and deposited the proceeds into his business account. The same year, Senior asked Wilentz for estate tax advice, and Wilentz consulted with another member of the firm, Timothy Dengler, who prepared a family partnership agreement. The purpose of the partnership agreement was to reduce estate taxes by allowing Senior to convey real property to his three children during his lifetime. Senior and Junior signed the partnership documents in December 1999; however, Virginia and Nancy never signed the documents. Sometime after signing the partnership agreement, Junior opened his own business, which bought and sold horse equipment.
When his father died, Junior asked Wilentz and his firm to represent him in connection with his father's estate. In June 2001, Dengler filed a verified complaint and order to show cause on behalf of Junior in the Hunterdon County Chancery Division, Probate Part, seeking to admit Senior's April 16, 1998 will to probate. Shortly thereafter, Junior's sisters retained counsel and filed an answer and counterclaim. In their counterclaim, Virginia and Nancy alleged that their father suffered from mental and physical disabilities, and that Junior exercised undue influence over his father. The sisters sought to have an earlier will admitted to probate.
Virginia and Nancy also filed a motion to disqualify WGS on the grounds that Wilentz and other members of the firm would probably be witnesses in the probate proceeding. Wilentz asked Frederick H. Dennehy, another member of the firm, to handle the disqualification motion. In his opposition papers, Dennehy argued that the Rules of Professional Conduct did not disqualify WGS from representing Junior. The probate court agreed and denied the motion on November 29, 2001. The probate court also appointed all three children as temporary co-administrators of their father's estate.
Thereafter, Dennehy served as lead counsel for Junior, with assistance from attorney Christopher Hager. Dennehy and Hager answered interrogatories, attended several meetings with Junior and his long-time companion, Jane Greiner, conducted depositions, interviewed various individuals, and prepared for trial. According to Dennehy, his objective was to prove by clear and convincing evidence that Senior had the requisite testamentary capacity to execute his will on April 16, 1998, there was no undue influence by Junior, and Junior did not mismanage his father's finances.
For more than a year, WGS had no written retainer agreement with Junior. Nevertheless, statements for legal services performed by WGS were sent to Junior and paid by Junior. The retainer agreement signed by Junior on April 30, 2002, set forth WGS's hourly billing rates for charges, and it stated that the fee agreement was "independent" of any fees paid by Senior's estate.
During discovery, Dennehy learned that Brian Sheprow, the accountant for Senior's business, testified at his deposition there was $977, 000 worth of inventory that belonged to Junior because "he had built that up himself" and it was not part of Senior's business inventory. Dennehy did not believe that Sheprow's testimony was accurate, and when Dennehey met with Junior and Greiner to discuss the source of the funds, Junior "admitted that the $977, 000 . . . had been transferred to him" by his father. Dennehy advised Junior it was necessary to "present the truth" at trial, and the estate should not be responsible for the additional legal work required to address the inventory issue.
Prior to trial, Virginia and Nancy filed a motion for summary judgment and for an accounting of the estate. WGS prepared opposition papers to the summary judgment motion, which was denied. However, the probate court granted the request for the appointment of an independent accounting firm to value Senior's estate.
During the summer of 2002, Junior and WGS attempted to settle the dispute, but their efforts were unsuccessful. According to Junior, Virginia's husband, attorney Carmine Liotta, was the primary obstacle to settlement.
Although WGS was prepared for trial, which was scheduled to begin in October 2002, the trial was adjourned and the case was transferred from Hunterdon County to Warren County. In a letter dated November 13, 2002, the Hunterdon County Surrogate explained:
Several motions and status conferences have been heard since September 12, 2001, and the matter was scheduled for trial to begin October 8, 2002. At the pretrial conference [one of the attorneys] indicated that the accounting recently presented to him by Attorneys Hager and Dennehy has been presented to a local accounting firm to audit. Judge Bernhard [in Hunterdon County] indicated that the accounting firm was his private accountants and should the attorneys request his disqualification he would honor that request. On October 22, 2002, [one of the attorneys] wrote to Judge Bernhard asking for his recusal. Judge Bernhard agreed.
In December 2002, Wilentz suffered disabling injuries in an automobile accident. Following the accident, the attorney-client relationship between Junior and WGS deteriorated because Wilentz was "the primary contact" between Junior and the firm. In February 2003, Junior terminated WGS's representation and hired attorney Victor Deutch.
The probate matter proceeded to trial in Warren County, and Junior prevailed. The probate court rejected the sisters' undue influence and testamentary incapacity claims and entered judgment in favor of Junior. Virginia and Nancy appealed, but the judgment admitting Senior's will to probate was affirmed. In re Grant, Sr., No. A-2014-04 (App. Div. May 3, 2007).
In August 2007, WGS filed a complaint in the Law Division, Middlesex County, against Junior, individually and as executor of Senior's estate, alleging non-payment of fees and costs in the amount of $263, 695.55. Junior accepted service of the complaint on November 26, 2007, and his attorney and WGS stipulated that the time to answer the complaint would be extended to January 18, 2008. Nevertheless, no answer was filed by the agreed upon date.
On January 22, 2008, Junior's attorney filed a motion for a change of venue from Middlesex County to Hunterdon County. The motion was opposed, and it was denied on February 29, 2008. Thereafter, on March 10, 2008, the court entered a default judgment for the amount specified in the complaint against Junior individually and as executor of his father's estate.
Nine days later, on March 19, 2008, Junior filed a motion to vacate the default judgment. However, no action was taken on the motion for several months, because the probate judge in Hunterdon County entered an order appointing a neutral third-party to administer Senior's estate, and the administrator agreed to submit WGS's fee claim against the estate to binding arbitration. Therefore, Junior and WGS agreed that no ...