NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-3934-22
MCCARTHY GALFY & MARX LLC,
Plaintiff-Respondent,
v.
STEPHEN LEE,
Defendant-Appellant. _______________________
Submitted November 19, 2024 – Decided December 2, 2024
Before Judges Perez Friscia and Bergman.
On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-2337-20.
Stephen Lee, appellant pro se.
McCarthy & Soriero LLC, attorneys for respondent (James T. McCarthy, on the brief).
PER CURIAM Defendant Stephen Lee, self-represented, appeals from a July 17, 2023
Law Division order denying reconsideration of a March 9, 2023 order, which
granted plaintiff McCarthy Galfy & Marx, LLC final judgment for a sum certain.
Having reviewed the record, parties' arguments, and applicable legal principles,
we affirm in part, reverse in part, and remand.
I.
This matter returns to us after we reversed and vacated the Law Division's
prior order entering final judgment and remanded for further proceedings. We
incorporate and summarize the salient facts and procedural history as set forth
in our prior opinion, McCarthy Galfy & Marx, LLC v. Stephen Lee, (McCarthy
I), No. A-0382-21 (App. Div. June 29, 2022) (slip op. at 1-22).
In 2012, defendant retained Steven A. Caputo, Esq. to represent him in a
divorce action. McCarthy I, slip op. at 2. He signed a retainer agreement with
Caputo that provided an hourly billable rate of $325 for legal services. Ibid.
The intervention of "a businessman from China, who had a judgment of
approximately $1,040,000 against" defendant's wife Xiaoping Li, complicated
the divorce action. Id. at 3. In connection with the divorce action, Caputo "filed
an affidavit of services in support of his request for $175,275 in legal fees and
$1,354.01 in costs." Ibid. After the Family Part entered a judgment of divorce
A-3934-22 2 and "granted [the businessman's] motion for entry of default judgment against
Li," Caputo filed an appeal on defendant's behalf. Ibid. "On September 4, 2018,
we vacated the [Family Part's] ruling on equitable distribution and remanded"
for further proceedings. Lee v. Xiaoping Li, No. A-5063-15 (App. Div. Sept. 4,
2018) (slip op. at 1-25).
In May 2018, because of a severe medical illness, the Supreme Court
placed Caputo on "disability inactive status." McCarthy I, slip op. at 3. Caputo
had represented defendant from 2012 until 2018, including filing "an appeal on
defendant's behalf." Id. at 20-21. In October 2018, "Caputo sent a billing
statement to defendant for services rendered in connection with the divorce
action" and appeal. Id. at 4. Caputo also provided a copy to plaintiff's partner,
James McCarthy. Ibid.
After we remanded the divorce action, the Family Part held a hearing in
April 2019, and plaintiff assumed representation of defendant. Ibid. Plaintiff
failed to file a substitution of attorney with the Family Part and enter a retainer
agreement with defendant. Id. at 20-21. Nevertheless, it is undisputed plaintiff
worked on defendant's Family Part action and a consent judgment was entered
after settlement. Id. at 4.
A-3934-22 3 On February 24, 2020, plaintiff advised defendant by letter that it was
holding $144,721.88 in proceeds from the Family Part action in its trust account.
Id. at 5. Caputo was listed as of counsel on the letterhead. Plaintiff requested
payment from the funds for legal services rendered but withdrew its prior offer
to compromise the fee, which would have released $30,000 to defendant. Ibid.
After receiving the letter, defendant paid no money to plaintiff or Caputo for
legal services rendered.
On July 22, plaintiff filed a Law Division complaint against defendant for
legal "fees in the amount of $172,922.80." Id. at 6. Defendant filed an answer
and counterclaim, alleging legal malpractice claims. Id. at 7. After defendant
failed to submit an affidavit of merit and discovery responses, plaintiff moved
to strike defendant's answer and defenses, which the Law Division granted. Id.
at 8. Plaintiff thereafter moved for summary judgment, which the Law Division
granted as unopposed. Ibid. Later, defendant moved for reconsideration of the
Law Division's order granting plaintiff summary judgment, which the Law
Division denied. Id. at 9-11.
On appeal, we reversed the Law Division's order denying plaintiff
reconsideration because the "record plainly d[id] not show that plaintiff and
defendant entered into a retainer agreement" supporting the award of counsel
A-3934-22 4 fees. Id. at 14. Further, we observed defendant disputed plaintiff's work and
representation. Ibid. Caputo never requested "defendant's consent or . . . leave
of court" to withdraw from representing defendant. Id. at 20. We noted it was
"undisputed that defendant had a written retainer agreement with Caputo" and
that "Caputo represented defendant from the onset of defendant's divorce
proceedings until Caputo was transferred to disability inactive status . . . ." Ibid.
On August 8, 2022, after our remand, a new Law Division judge addressed
the motion and invited the parties to file further submissions. On September 6,
plaintiff submitted a brief and affidavits of service from McCarthy and Caputo.
Plaintiff "waive[d] any fees or costs that it generated and" limited the application
"to seeking fees and costs generated by Caputo pursuant to the written retainer
agreement with [d]efendant." Caputo certified to representing defendant in the
divorce action "until such time as his firm was taken over by [plaintiff] in or
about May 2018." On September 23, defendant filed a letter brief, objecting to
summary judgment, arguing: "[t]he fees generated by Caputo ha[d] not been
verified and [we]re inaccurate"; "[p]laintiff [wa]s not entitled to the fees
generated by Caputo" because "[t]here [wa]s no privity of contract between
[p]laintiff and [d]efendant"; and "Caputo did not earn the value of his
A-3934-22 5 representation" as he was "very ill" and had a diminished "ability to practice
law."
On March 9, 2023, after considering the submissions, the motion judge
issued an order granting plaintiff summary judgment and entering final
judgment against defendant for $144,879.26 in counsel fees for work The Law
Firm of Stephen A. Caputo, PC performed. The motion judge cited our decision,
which stated, "It is . . . undisputed that, from November 2012 to June 2016,
Caputo performed work pursuant to the retainer agreement with defendant . . . .
Moreover, from October 2018 to July 2019, plaintiff performed work on
defendant's behalf without a retainer agreement." The motion judge further
highlighted our opinion's conclusion that "[u]nder the unique circumstances of
this case, we vacate the entry of judgment and remand for the trial court to
determine what plaintiff may be entitled to because of its acquisition of Caputo's
firm and under a quantum meruit theory." After recognizing plaintiff had
waived its right to counsel fees the firm had generated, the motion judge
"focus[ed] solely on the issue of the fees and costs generated by The Law Firm
of Steven A. Caputo, PC . . . pursuant to the written retainer agreement with
[d]efendant." The motion judge found it undisputed that while the Family Part
order was on appeal, plaintiff's "firm merged with Caputo's firm and took over
A-3934-22 6 the Caputo firm files." Further, the motion judge reviewed Caputo's certification
and concluded that "the rate of $325 [was] contained in [Caputo's] [r]etainer
[a]greement," and Caputo's alleged "total legal fees and costs . . . [we]re
$144,879.26."
The motion judge highlighted that defendant "elected not to participate in
discovery," "served [no] discovery demands," and only "served his discovery
responses" after summary judgment was granted, "nearly a month after the
discovery period had ended." The motion judge found no disputed material
issues of fact because: Caputo's billable amount was $325 per hour under the
retainer agreement; his "bill[ing statement] dated October 7, 2018 . . . [wa]s for
work performed . . . two years prior to [his] disability [status]"; defendant had
acknowledged Caputo was no longer billing for work "after he was placed on
disability"; and the Family Part consent judgment defendant allegedly entered
under duress was "dated April 23, 2019, well after the period of time covering
Caputo's work for [d]efendant."
The motion judge considered the factors under the Rules of Professional
Conduct (RPC) 1.5(a) and concluded that "Caputo performed work for
[d]efendant from 2012 through 2016 and on the appeal," and "[p]laintiff then
A-3934-22 7 acquired Caputo's firm, thereby entitling [p]laintiff to fees generated by
Caputo."
Defendant moved for reconsideration of the order granting summary
judgment and awarding counsel fees, which a new judge heard because the prior
motion judge retired. The reconsideration judge considered both parties'
submissions and noted plaintiff had waived its claim for McCarthy's fees. She
found the motion judge had properly focused on the "fees and costs generated
by The Law Firm of Steven A. Caputo, PC pursuant to the written retainer
agreement with . . . defendant." After a detailed evaluation of the motion judge's
findings and conclusions, she concluded defendant failed to demonstrate the
order granting summary judgment was "based upon a palpably incorrect or
irrational basis." She also found the motion judge did not "fail[] to appreciate
the significance of probative, competent evidence."
On appeal, defendant contends the motion judge erred by granting
judgment to plaintiff: without conducting a quantum meruit analysis; and
because it was not entitled to Caputo's fees and the amount was unreasonable.
II.
Our review of a trial court's summary judgment decision is de novo.
DeSimone v. Springpoint Senior Living, Inc., 256 N.J. 172, 180 (2024); see also
A-3934-22 8 R. 4:46-2(c). "The court's function is not 'to weigh the evidence and determine
the truth of the matter but to determine whether there is a genuine issue for
trial.'" Rios v. Meda Pharm., Inc., 247 N.J. 1, 13 (2021) (quoting Brill v.
Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995)). Our review entails
determining "whether the competent evidential materials presented, when
viewed in the light most favorable to the non-moving party, are sufficient to
permit a rational factfinder to resolve the alleged disputed issue in favor of the
non-moving party." C.V. ex rel C.V. v. Waterford Twp. Bd. of Educ., 255 N.J.
289, 305 (2023) (quoting Samolyk v. Berthe, 251 N.J. 73, 78 (2022)).
"Rule 4:46-2(c)'s 'genuine issue [of] material fact' standard mandates that
the opposing party do more than 'point[] to any fact in dispute' in order to defeat
summary judgment." Globe Motor Co. v. Igdalev, 225 N.J. 469, 479 (2016)
(alterations in original) (emphasis omitted) (first quoting R. 4:46-2(c); and then
quoting Brill, 142 N.J. at 529). A court should grant summary judgment, "in
particular, 'after adequate time for discovery and upon motion, against a party
who fails to make a showing sufficient to establish the existence of an element
essential to that party's case, and on which that party will bear the burden of
proof at trial.'" Friedman v. Martinez, 242 N.J. 449, 472 (2020) (quoting
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)).
A-3934-22 9 "A dispute of material fact is 'genuine only if, considering the burden of
persuasion at trial, the evidence submitted by the parties on the motion, together
with all legitimate inferences therefrom favoring the non-moving party, would
require submission of the issue to the trier of fact.'" Gayles by Gayles v. Sky
Zone Trampoline Park, 468 N.J. Super. 17, 22 (App. Div. 2021) (quoting Grande
v. Saint Clare's Health Sys., 230 N.J. 1, 24 (2017)). Insubstantial arguments
based on assumptions or speculation are not enough to overcome summary
judgment. Brill, 142 N.J. at 529; see also Dickson v. Cmty. Bus Lines, Inc., 458
N.J. Super. 522, 533 (App. Div. 2019) ("'[C]onclusory and self-serving
assertions by one of the parties are insufficient to overcome' summary judgment
motions." (quoting Puder v. Buechel, 183 N.J. 428, 440-41 (2005))).
We review orders denying reconsideration under Rule 4:49-2 for an abuse
of discretion. See AC Ocean Walk, LLC v. Blue Ocean Waters, LLC, 478 N.J.
Super. 515, 523 (App. Div. 2024). A trial court should only grant a motion for
reconsideration when "1) the [c]ourt has expressed its decision based upon a
palpably incorrect or irrational basis, or 2) it is obvious that the [c]ourt either
did not consider, or failed to appreciate the significance of probative, competent
evidence[,]" or 3) "if a litigant wishes to bring new or additional information to
the [c]ourt's attention which it could not have provided on the first application."
A-3934-22 10 Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996) (quoting D'Atria
v. D'Atria, 242 N.J. Super. 392, 401 (Ch. Div. 1990)).
III.
We begin by recognizing our Supreme Court's holding that "[a]greements
between attorneys and clients concerning the client-lawyer relationship
generally are enforceable, provided the agreements satisfy both the general
requirements for contracts and the special requirements of professional ethics."
Tax Auth., Inc. v. Jackson Hewitt, Inc., 187 N.J. 4, 15 (2006) (quoting Cohen v.
Radio-Elecs. Officers Union, 146 N.J. 140, 155 (1996)). "A retainer agreement
between an attorney and client is a contract, but not an ordinary contract. '[T]he
unique and special relationship between an attorney and a client' requires that a
retainer agreement satisfy not only ordinary principles governing contracts, but
also the professional ethical standards governing the attorney-client
relationship." Balducci v. Cige, 240 N.J. 574, 592 (2020) (alteration in original)
(quoting Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J.
Super. 510, 529 (App. Div. 2009)).
Pursuant to Rule 4:42-9(b), "[A]ll applications for the allowance of fees
shall be supported by an affidavit of services addressing the factors enumerated
by RPC 1.5(a)." A party seeking attorneys' fees must establish reasonableness
A-3934-22 11 under the factors. See Seigelstein v. Shrewsbury Motors, Inc., 464 N.J. Super.
393, 405 (App. Div. 2020). RPC 1.5(a) mandates, "A lawyer's fee shall be
reasonable" and provides, "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;
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.
"Ultimately, 'the attorney bears the burden of establishing the fairness and
reasonableness of'" a fee arrangement. Balducci, 240 N.J. at 594 (quoting
Cohen, 146 N.J. at 156). This burden is satisfied by a preponderance of the
A-3934-22 12 evidence. Giarusso v. Giarusso, 455 N.J. Super. 42, 50 (App. Div. 2018). When
a fee dispute arises, courts "ordinarily defer to the parties' agreement and the fee
charged thereunder if it appears that they meet a prima facie test of fairness and
reasonableness." Alpert, 410 N.J. Super. at 538. "If that test is met and the
client utterly fails to come forward with anything of substance to rebut the prima
facie showing and no expert is produced to challenge the invoice as
unreasonable, the court appropriately should enforce the agreement." Ibid.
We first address defendant's contentions that the motion judge erred by
failing to apply "a quantum meruit analysis, . . . unjustly enrich[ing] . . .
[p]laintiff by allowing [McCarthy] to collect fees on services he did not
provide." Defendant conflates the application of a quantum meruit analysis to
plaintiff's prior fee claim for McCarthy's legal services performed without a
retainer agreement and plaintiff's contractual fee claim for Caputo's legal
services performed under the retainer agreement. Undisputedly, plaintiff
waived the collection of counsel fees for its legal services that Caputo did not
bill for, as it had not entered a retainer agreement with defendant. This rendered
moot the motion judge's consideration of plaintiff's collection of McCarthy's
legal service fees under a quantum meruit analysis. We generally "do not
resolve issues that have become moot due to the passage of time or intervening
A-3934-22 13 events." Wisniewski v. Murphy, 454 N.J. Super. 508, 518 (App. Div. 2018)
(quoting State v. Davila, 443 N.J. Super. 577, 584 (App. Div. 2016)).
We next address defendant's arguments that plaintiff is not entitled to
collect Caputo's counsel fees for the work he performed under the retainer
agreement. McCarthy's September 2022 affidavit stated that "due to Caputo's
illness, [p]laintiff's firm merged with Caputo's firm and took over the Caputo
files." Further, McCarthy attested that "[p]laintiff [wa]s entitled to fees for work
generated by Caputo." Caputo's affidavit stated, "[H]is firm was taken over by
[plaintiff] in or about May 2018," and "[plaintiff] [wa]s entitled to [the] legal
fees and costs for work generated by . . . Caputo." We note defendant
acknowledged he did not seek any discovery. Defendant offers no material fact
to refute Caputo's contention that after the firms' merged, plaintiff became
entitled to collect defendant's counsel fees owed to Caputo.
The motion judge copiously evaluated Caputo's legal fees under RPC
1.5(a) and determined: (1) "[a]ll of . . . [Caputo's] time and labor was
required . . . to properly perform legal representation"; (2) Caputo was
precluded "from spending time on other matters" "due to the significant time
spent" on defendant's matter; (3) "[t]he fee charged [wa]s customarily charged
in th[e] locality"; (4) the "[t]otal legal fees and cost[s] incurred by Caputo were
A-3934-22 14 $169,574.26" less the fees defendant already paid; (5) "[t]he time limitations . . .
were far greater than other cases given the procedural history and numerous
issues arising from the intervenor claim"; (6) Caputo represented defendant from
2012 until approximately May 2018; (7) "Caputo was admitted to the New
Jersey Bar in 1981"; and (8) the fee was hourly. Caputo's affidavit provided he
"expended 498.05 hours" representing defendant and "incurred costs of
$7,708.01." Further, Caputo referenced his "[c]ertification dated June 14, 2016
with statement[s] from July 11, 2012 through June 13, 2016 for 389 .50 hours
and costs in the amount of $1,354.01" and the "[b]ill[ing statement] dated
October 7, 2018 for 108.55 hours and costs in the amount of $6,354[]." Caputo
had revised his billable rate to $325, comporting with the retainer agreement.
As stated in our prior opinion, "defendant had a written retainer agreement
with Caputo" for $325 per hour, and "Caputo represented defendant from the
onset of defendant's divorce proceeding until Caputo was transferred to
disability inactive status." Further, defendant admitted Caputo performed legal
work for "over [six] years."
The record amply supports the motion judge's findings with the exception
of Caputo's three billing entries for 2.65 hours of legal services performed after
his May 2018 placement on disability inactive status. Specifically, we issued
A-3934-22 15 the Lee opinion on September 4, 2018, and Caputo billed for the receipt and
review of our decision, a scheduling order for judicial conference, and a civil
docketing statement. These billed services are precluded because they were for
legal services performed after he was placed on disability inactive status.
Therefore, the motion judge improvidently awarded the amount of $861.25. We
discern no error in the award to plaintiff of the remaining $144,018.01 for
Caputo's legal services rendered to defendant under the retainer agreement.
Further, we are unpersuaded by defendant's blanket statement that "[i]t
was unreasonable for the [motion judge] to issue judgment with the accuracy of
the billing statements at issue." While we have discerned, after a review of the
billing statements, that an adjustment for 2.65 hours is required, defendant failed
to specifically dispute Caputo's legal work delineated in the billing statements.
While defendant argues Caputo's health affected his legal abilities, defendant
provided no factual support disputing the sufficiency of Caputo's services.
Notably, defendant conceded Caputo successfully appealed the Family Part
judgment, garnering a reversal.
Defendant's general assertion that the "total amount of fees including
Caputo's [are] unreasonable" does not alone create a disputed material issue of
fact. As Caputo performed the work directly for defendant, defendant was
A-3934-22 16 clearly capable of disputing the accuracy of Caputo's billing statements, which
included a description of his work, the date rendered, and the time expended on
the work. An allegation is not enough to defeat summary judgment; the non-
moving party "must produce sufficient evidence to reasonably support a verdict
in its favor." Invs. Bank v. Torres, 457 N.J. Super. 53, 64 (App. Div. 2018),
aff'd and modified, 243 N.J. 25 (2020). We are also unpersuaded by defendant's
contention that Caputo is not entitled to fees because he engaged in the
unauthorized practice of law by attending defendant's 2019 Family Part hearing
with McCarthy.
Having concluded there are no genuinely disputed material issues of fact
regarding the legitimacy and reasonableness of Caputo's remaining legal fees
billed pursuant to the retainer agreement, we affirm in part, reverse in part, and
remand only to vacate the judgment as to the quantum of damages. On remand,
the court shall enter an amended judgment for the recalculated damages amount
of $144,018.01. See Mengle v. Shields, 53 N.J. Super. 76, 83 (App. Div. 1958)
(stating a judgment modified on appeal shall be remanded to the trial court "for
the entry of an amended judgment in the proper amount").
A-3934-22 17 To the extent that we have not addressed plaintiff's remaining contentions,
they lack sufficient merit to warrant discussion in a written opinion. R.
2:11-3(e)(1)(E).
Affirmed in part, reversed in part and remanded.
A-3934-22 18