United States District Court, D. New Jersey
W. JAMES MAC NAUGHTON, Plaintiff pro se,
SHAI HARMELECH pro se, CABLE AMERICA, INC., d/b/a SATELLITE AMERICA and USA SATELLITE & CABLE, INC., Defendants.
MEMORANDUM OPINION AND ORDER
MCNULTY UNITED STATES DISTRICT JUDGE.
October 13, 2016, Magistrate Judge Michael A. Hammer filed a
report and recommendation ("R&R", ECF no. 426))
denying the application of W. James Mac Naughton, plaintiff
pro se, for attorney's fees. Mac Naughton filed
a timely objection to the R&R (ECF no. 427). No papers
were filed in response to the objection. I have, however,
reviewed the papers filed by both sides in connection with
the Magistrate Judge's decision. Substantially for the
reasons stated by the Magistrate Judge, the R&R is
adopted as the ruling of the Court.
standard of review is de novo. In this diversity
case, I must apply State substantive law, which requires me
to determine how the State's highest court has decided,
or predict how it would decide, the applicable legal issues.
See Hunt v. U.S. Tobacco Co., 538 F.3d 217, 220-21
(3d Cir. 2008); Norfolk Southern Ry. Co. v. Basell USA
Inc., 512 F.3d 86, 92 (3d Cir. 2008); see also West
v. AT&T Co., 311 U.S. 223, 237 (1940); McCabe v.
Ernst & Young, LLP, 494 F.3d 418, 424 (3d Cir.
issue, as presented to the Magistrate Judge, was primarily
one of law. Defendants urged, and Judge Hammer accepted, that
a party who happens to be a lawyer but appears pro
se is not entitled to an award of fees. The heart of Mac
Naughton's objection is that the cases prohibiting such
an award deal with statutory fee-shifting provisions.
Parties, he urges, should be able to contract for a contrary
result, as they did in this case.
the Magistrate Judge, Mac Naughton argued that Illinois law
applied, and defendants argued that New Jersey law applied.
On appeal, Mac Naughton appears to concentrate more on New
Jersey law. Judge Hammer considered both Illinois and New
Jersey law, but ultimately decided that the choice of law
issue was inconsequential, because the two states' laws
are similar. (R&R 5)
Illinois, Judge Hammer cited Homer v. Lentz, 132
Ill.2d 49, 62-63 (1989), as well as intermediate appellate
court cases citing Hamer. (R&R 6-7) In
particular, he cited Tantiwongse v. Law Offices of Edward
R. Jaquays, 371 Ill.App.3d 1161, 1164 (2007), which
extended the reasoning of Hamer to bar a
contractually-based fee award. (R&R 7-8)). I agree with
Judge Hammer's reasoning.
Jersey, as Judge Hammer found, the picture is similar. The
leading case is Segal v. Lynch, 211 N.J. 230, 264
(2012), which involved a fee-shifting rule, N.J. Ct. R.
2:11-4. I agree with Judge Hammer that there are strong
indications that New Jersey would apply the Segal
rule to contractually-based fee awards as well.
Segal itself cited at least one prior lower court
case disallowing a contractually-based pro se fee
award, without distinguishing it in any way. See Gruber
& Colabella, P.A., v. Erickson, 345 N.J.Super. 248,
252 (Law Div. 2001) (interpreting a retainer agreement, and
stating that "when a law firm appearing pro se prevails
in an action to collect legal fees from a former client, it
is not entitled to recover additional attorney's fees for
its collection efforts.") (cited in Segal, 211
N.J. at 261). Segal did not, however, discuss this
aspect of Gruber, which it cited it in connection
with documenting a split in the New Jersey case law. (See
discussion at R&R 8-9.)
I supplement the R&R by noting that research has
uncovered only one only New Jersey case (an unpublished one)
that interprets Segal in connection with
contractually-based fees. See Ragan & Ragan,
P.C. v. Winberry Realty Partnership, 2013 WL 1438102
(Super. Ct. N.J. App. Div. Apr. 10, 2013). Ragan
applied the Segal rule and disallowed the fees.
Judge Hammer noted Segal's strong public policy
basis for disallowing pro se fees. (See
R&R 8 (general policy discouraging fee-shifting); R&R
9 (discouragement of abusive litigation tactics, avoidance of
disparate treatment of classes of pro se litigants); R&R
10 (policy of encouraging parties to obtain independent
counsel) (citing Kay v. Erhler, 499 U.S. 432, 437-38
(1991)). I agree with Judge Hammer that these policies do not
suggest any strong basis for distinguishing between statutory
and contractually-based fees. (R&R 10-11)
appeal, Mac Naughton stresses that Segal represented
a change in the law, and that pre- Segal law should
apply to a lawsuit begun before Segal was decided in
2012, based on a pre-Segal contract. As Mac Naughton
presents it, Segal changed everything; before
Segal, pro se fees were allowed (Mac Naughton Brf.
at 5 (citing Brach, Eichler et al. v. Ezewko, 345
N.J.Super. 1, 783 A.2d 246 (App. Div. 2001) (statutory
fee-shifting case)). Actually, as Segal carefully
documented, the pre-Segal New Jersey cases were
split; what Segal accomplished was not a U-turn in
the law, but a resolution of that split. No vested
expectations were defeated by Segal. In any event, I
am not persuaded that Segal intended to grandfather
all existing contracts, permitting fee awards into the future
until all such contracts expired or claims were exhausted.
Certainly Segal's public policy rationale would
argue against creating such an ongoing entitlement for some
litigants, but not others.
the only authority on this point seems to be the unpublished
Ragan case, which is not binding but persuasive. It
held that "[n]othing in the Court's opinion suggests
that Segal was intended to have only prospective
application." Ragan, 2013 WL 1438102 at *6
(applying Segal to bar fee award in case on direct
appeal when Segal was decided).
based on the sound reasoning of Judge Hammer, the R&R is