MASTERS AT KNOB HILL CONDOMINIUM ASSOCIATION, INC. VS. SEAN M. LALLJEE (F-001113-16, MONMOUTH COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: June 6, 2018
• Docket: A-3028-16T2
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-3028-16T2

MASTERS AT KNOB HILL CONDOMINIUM ASSOCIATION, INC.,

Plaintiff-Appellant,

v.

SEAN M. LALLJEE,

Defendant-Respondent. ________________________________________

Submitted February 27, 2018 – Decided June 6, 2018

Before Judges Carroll and DeAlmeida.

On appeal from Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. F-001113-16.

Ansell Grimm & Aaron, PC, attorneys for appellant (Breanne M. DeRaps and David J. Byrne, on the brief).

The Boyer Law Firm, attorneys for respondent (Michele T. Boyer, on the brief).

PER CURIAM

Plaintiff Masters at Knob Hill Condominium Association, Inc.

("the Association") appeals from an order of the Chancery Division

awarding it attorney's fees and costs in this foreclosure action. Plaintiff argues that the court erred when it determined the amount

of attorney's fees awarded. We reverse and remand for a new

determination of the amount of attorney's fees to be awarded to

plaintiff.

I.

Plaintiff is a residential condominium association

responsible for the management of the common elements of a

condominium complex in Manalapan. Defendant Sean M. Lalljee owns

a residential unit at the complex. Defendant concedes that he did

not fulfill his responsibility under the governing documents of

the Association to pay common expense assessments on his unit.

Pursuant to the New Jersey Condominium Act, N.J.S.A. 46:8B-1 to -

38, the unpaid assessments constitute liens on defendant's unit

in favor of the Association.

Plaintiff recorded liens against Lalljee's unit with the

Clerk of Monmouth County for unpaid common expense assessments on

the following dates and in the following amounts: (1) March 29,

2009, $5,258.95; (2) November 14, 2011, $3,571.04; and (3) May 1,

2013, $5,759.47. The liens, totaling $14,589.46, secured amounts

including assessments, late charges, and other fees through the

end of 2013.

2 A-3028-16T2 In 2014, a bankruptcy petition filed by defendant was

discharged. Some, but not all, of the debts memorialized in the

liens were discharged.

On January 13, 2016, the Association filed a complaint in the

Chancery Division to foreclose on the portion of the liens not

discharged in the bankruptcy. Defendant filed an Answer on or

about March 9, 2016.

Attempts to settle the matter were unsuccessful. Plaintiff

contends defendant rebuffed settlement offers, and attempts by the

Association's Board President to resolve the matter without

incurring significant attorney's fees. Defendant, on the other

hand, contends that he was willing to pay the assessments that

were in arrears, but plaintiff was unable to provide a precise

payoff amount. The record contains several communications from

plaintiff setting the payoff amount at divergent amounts.

Plaintiff filed three motions prior to trial. The first, to

strike defendant's defenses and suppress his answer without

prejudice pursuant to Rule 4:23-5, was denied when defendant

provided discovery responses before the return date of the motion.

The second, for partial summary judgment, was denied because a

certification supporting the motion was not forwarded to the court.

Plaintiff's third motion, for reconsideration of its motion for

3 A-3028-16T2 partial summary judgment, was returnable on the day after trial.

As a result, the motion was not heard by the trial court.

On September 15, 2016, the parties and counsel appeared for

trial. They resolved the matter that day. Defendant agreed to

acknowledge and pay the amount of the open assessments secured by

the liens and recognize the Association's right to an award of

reasonable attorney's fees and costs incurred in collecting the

assessments. The total amount of common expense assessments

recovered by plaintiff was $1,715.67, with interest.

On October 12, 2016, the Association, pursuant to Rule 4:42-

9, submitted its attorney's fee affidavit seeking $31,627.50 in

attorney's fees, and $1,618.96 in costs. The attorney's fees

sought were charged by two firms. Stark & Stark, P.C. ("Stark")

represented the Association through March 2015, resulting in

attorney's fees of $5,274.50, and costs of $677.87. Among other

things, Stark prepared and recorded liens, engaged in settlement-

related actions, including communicating with defendant, and

drafting proposed payment agreements.

The Association retained Ansell, Grimm & Aaron P.C.

("Ansell") in March 2015. Ansell represented the Association from

the preparation and filing of the foreclosure complaint through

entry of final judgment. Ansell's representation of the

Association resulted in attorney's fees of $26,353, and costs of

4 A-3028-16T2 $941.09. Some of the attorney's fees charged by Ansell were for

set amounts for identified tasks, as agreed upon by the Association

and Ansell. The remaining fees were based on an hourly rate.

On November 4, 2016, the trial court awarded all of the costs

sought, $1,618.96, but only $11,274.50 in attorney's fees.

On February 27, 2017, the court entered a final judgment of

foreclosure memorializing plaintiff's entitlement to $1,715.67 in

common expense assessments, with interest, and $12,893.46 in

attorney's fees and costs.

This appeal followed.

II.

Although New Jersey generally disfavors the shifting of

attorney's fees, a prevailing party may recover attorney's fees

if expressly provided by statute, court rule, or contract.

Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 440 (2001)

(citing North Bergen Rex Transp., Inc. v. Trailer Leasing Co., 158

N.J. 561, 564 (1999) and Dep't of Envtl. Prot. v. Ventron Corp.,

94 N.J. 473, 504 (1983)). Rule 4:42-9(a)(8) permits the award of

attorney's fees "[i]n all cases where attorney's fees are permitted

by statute."

The Condominium Act authorizes the award of attorney's fees

as follows:

5 A-3028-16T2 [t]he association shall have a lien on each unit for any unpaid assessment duly made by the association for a share of common expenses . . . together with interest thereon and, if authorized by the master deed or bylaws, late fees, fines and reasonable attorney's fees.

[N.J.S.A. 46:8B-21(a).]

Defendant does not dispute that plaintiff, having prevailed

in its foreclosure action with respect to delinquent common expense

assessments on his unit, is entitled by statute and the governing

documents of the Association to reasonable attorney's fees. The

only issue before us is the quantum of the attorney's fees awarded.

In calculating the amount of reasonable attorney's fees, "an

affidavit of services addressing the factors enumerated by RPC

1.5(a)" is required. R. 4:42-9(b); Township of W. Orange v. 769

Assocs., LLC, 198 N.J. 529, 542 (2009). RPC 1.5(a) sets forth the

factors to be considered when determining an attorney's fee award.

The rule provides:

(a) A lawyer's fee shall be reasonable. The factors to be considered in determining the reasonableness of a fee include the following:

(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;

6 A-3028-16T2 (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.]

Courts determine the "lodestar," defined as the "number of

hours reasonably expended" by the attorney, "multiplied by a

reasonable hourly rate." Litton Indus., Inc. v. IMO Indus., Inc.,

200 N.J. 372, 386 (2009) (citing Furst v. Einstein Moomjy, Inc.,

182 N.J. 1, 21 (2004)). "The court must not include excessive and

unnecessary hours spent on the case in calculating the lodestar."

Furst, 182 N.J. at 22 (citing Rendine v. Pantzer, 141 N.J. 292,

335-36 (1995)). We afford trial courts "considerable latitude in

resolving fee applications . . . ." Grow Co. v. Chokshi, 424 N.J.

Super. 357, 367 (App. Div. 2012). Such "'determinations by trial

courts will be disturbed only on the rarest of occasions, and then

only because of a clear abuse of discretion.'" Packard-Bamberger,

167 N.J. at 444 (quoting Rendine, 141 N.J. at 317).

7 A-3028-16T2 Here, the trial court reviewed each of the factors set forth

in RPC 1.5. The court found both the fixed fees charged by Ansell,

and the hourly rates charged by both firms to be reasonable. The

court determined, however, that the proportionality of the amount

of attorney's fees sought to the amount of the assessments

recovered from defendant warranted a reduction in the fees awarded.

The court explained its rationale: "I've considered all the . . .

RPCs, and . . . you comply with that, but it kind of shocks the

[conscience] when I'm asked to – to give a fee of [fifteen] times

the amount" recovered. This is the only factor on which the trial

court relied in reducing the attorney's fee award.

To calculate the fee, the trial court allowed the entire

amount sought for services provided by Stark, $5,274.50. With

respect to the $26,353 in attorney's fees sought for services

provided by Ansell, however, the court allowed only $6,000. This

amount was determined not by eliminating excessive or unwarranted

hours from Ansell's affidavit. In fact, the court made no finding

that any particular action taken by the Ansell firm was

unreasonable or unwarranted. Instead, the trial court appears to

have selected a dollar figure it determined to be reasonable

without explaining how it reached that figure.

We rejected this approach to determining attorney's fees in

The Glen Section I Condo. Assoc. v. June, 344 N.J. Super. 371

8 A-3028-16T2 (App. Div. 2001). In that case, the trial court, acting without

an affidavit of services, held that

I do [not] know of anyone that would pay $7000 in attorney's fees to collect a judgment on slightly over $2,800. It is not reasonable. I can only, therefore, and will only award counsel fees reasonably related to what should have been done in this case. That fee that I'm allowing is the sum of $1000, which I believe adequately compensates counse[l].

[Id. at 382.]

Finding that this reasoning "clearly contravene[s] the purpose of"

Rule 4:42-9, we remanded the matter "for a determination of

reasonable attorney's fees based upon the proper submission of an

affidavit of services." Ibid.

Although a court may consider the damages recovered by a

prevailing party when determining an attorney's fee award, a

reduction in attorney's fees may not be justified merely by

comparing the amount of damages recovered to the amount of

attorney's fees sought. Our Supreme Court requires a more nuanced

analysis. As explained in Rendine,

if the specific circumstances incidental to a counsel-fee application demonstrate that the hours expended, taking into account the damages prospectively recoverable, the interests to be vindicated, and the underlying statutory objectives, exceed those that competent counsel reasonably would have expended to achieve a comparable result, a trial court may exercise its discretion to

9 A-3028-16T2 exclude excessive hours from the loadstar calculation.

Similarly, a trial court should reduce the loadstar fee if the level of success achieved in the litigation is limited as compared to the relief sought. "If . . . a plaintiff has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonable hourly rate may be an excessive amount. This will be true even where the plaintiff's claims were interrelated, nonfrivolous, and raised in good faith."

[141 N.J. at 336 (quoting Hensley v. Eckerhart, 461 U.S. 424, 436 (1983)).]

With respect to the first circumstance addressed in Rendine,

the trial court must consider the hours expended, the damages

reasonably recoverable, the interests to be vindicated, and the

underlying statutory objectives. The trial court did not examine

these factors. We note the legislative intent when enacting

N.J.S.A. 46:8B-21(a), a factor overlooked by the trial court. The

Chancery Division describe the statute as follows:

[t]he legislative scheme for collection of assessments for maintenance charges against individual unit owners is a recognition that such charges are the financial life-blood of the Association. They are conceptually akin to the right of a municipality to levy and collect real estate taxes. The legislature clearly did not intend that the necessary income stream be reduced by the payment of "reasonable attorneys fees" incurred in the process of collection of the charges.

10 A-3028-16T2 [Park Place E. Condo. Ass'n v. Hovbilt, Inc., 279 N.J. Super. 319, 323-24 (Ch. Div. 1994).]

Any attorney's fees not paid by defendant will be borne by the

other owners of units at the Association's condominium complex.

In addition, to the extent that attorney's fee awards are

reduced in actions to collect common expense assessments, the

statutory incentive for unit owners to pay assessments in a timely

fashion is weakened. These considerations must be weighed by the

trial court, along with the likelihood that common expense

assessments might often be relatively small when compared to the

cost of employing counsel to collect them. Reductions in

attorney's fees awards based on the small amount of assessments

collected may have the unintended, and negative consequence of

encouraging the accumulation of large amounts of delinquent

assessments prior to an Association's initiation of legal action.

In addition, as the Court noted in Rendine, "a trial court

may exercise its discretion to exclude excessive hours from the

loadstar calculation" where appropriate. 141 N.J. at 336. Here,

the trial court did not excise hours from the attorney's fee

application, but simply reduced the Ansell attorney's fee award

to a round number the court found reasonable.

We also agree with plaintiff that it was an abuse of the

trial court's discretion to, without explanation, award the entire

11 A-3028-16T2 amount of attorney's fees incurred for services by the Stark firm,

but to reduce the fees incurred for services by Ansell. The court

must "evaluate carefully and critically the aggregate hours"

expended by each firm and eliminate those that "are excessive,

redundant, or otherwise unnecessary." Rendine, 141 N.J. at 335.

With respect to plaintiff's level of success achieved, the

appropriate analysis is to compare the relief sought by plaintiff

to the relief obtained. The Association initiated its foreclosure

action to obtain a final judgment of foreclosure with a set amount

due from defendant if he wished to avoid foreclosure. Plaintiff

was completely successful in obtaining that relief. A comparison

of the amount of attorney's fees incurred to the amount of damages

awarded, standing alone, to determine the level of a prevailing

party's success has been rejected by our Supreme Court.

Szczepanski v. Newcomb Med. Ctr., 141 N.J. 346, 366 (1995) ("We

decline to construe New Jersey's fee-shifting statutes to require

proportionality between damages recovered and counsel-fee awards

even if the litigation . . . vindicates no rights other than those

of the plaintiff.").

Reversed and remanded for a determination consistent with

this opinion of reasonable attorney's fees to be awarded to

12 A-3028-16T2