(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
Argued January 21, 1999 -- Decided June 22, 1999
COLEMAN, J., writing for a unanimous Court.
This appeal involves a commercial lease that requires the lessee to pay reasonable attorneys' fees in the
event the lessor has to procure legal services to enforce the lease agreement. The issue raised is whether a lessor
who does not prevail on all of its claims is entitled to 100" of its attorneys' fees plus interest.
Between October 1992 and March 1994, Trailer Leasing Company (TLC) leased ninety trailers to North
Bergen Rex Transport (Rex). Separate lease documents with identical terms and conditions were executed for each
trailer, each lease containing both a provision for the payment of 1-1/2" interest on overdue invoice payments and
a provision requiring the lessee to pay the lessor's reasonable attorneys' fees in the event the lessor retained the
services of counsel to enforce the terms of the lease agreements.
In 1993, Rex became delinquent in its lease payments to the extent of $140,000. After attempts at
installment payments on the delinquent amount failed, on March 22, 1994, TLC demanded that Rex pay the entire
outstanding balance and threatened to sue. Still, Rex made only nineteen out of twenty-nine payments between
February and September 1994.
Notwithstanding that it was delinquent on its payments, Rex filed a four-count complaint against TLC,
seeking a declaration of rights pursuant to N.J.S.A. 2A:16-50 to -58 based on TLC's alleged rental and repair
overcharges. TLC filed an answer and counterclaim, which sought judgment against Rex for the lease
delinquencies, interest at the contract rate for all delinquent charges, costs, expenses, and attorneys' fees incurred.
Both parties filed motions for summary judgment. The trial court granted partial summary judgment in
favor of TLC in the amount of $100,000. The remainder of the claims were disposed of through trial, with TLC's
base claim being reduced below the amount originally sought. In addition, TLC requested over $54,000 in pretrial
attorneys' fees and costs.
In September 1996, thirteen months after the trial ended, the trial court issued a letter opinion, concluding
that TLC had overcharged Rex by $75,498.05. It further concluded that an award for the payment of pretrial legal
fees was appropriate. To determine the exact amount of pretrial and trial attorneys' fees, TLC's counsel was
required to submit a certification. Thereafter, in April 1997, the trial court issued a final judgment against Rex in
favor of TLC in the amount of $161,986.20. That amount reflected credits TLC owed Rex; interest on delinquent
rental charges from July 1995 to January 1997; and TLC's attorneys' fees and costs in the amount of $107,554.10
(representing both pretrial and post-trial fees), including eighteen percent interest on the attorneys' fees.
In an unpublished opinion, the Appellate Division affirmed TLC's entitlement to receive attorneys' fees
based on the express language in the leases. The panel reversed the award of eighteen percent interest on
attorneys' fees because the express language in the lease agreements referred only to interest concerning rental
payments - not attorneys' fees. Although the panel found no contractual basis to allow interest on the attorneys'
fees, it nevertheless remanded the matter to the trial court to recompute the prejudgment interest, if any, that may
be due and owing on such award of attorney's fees, citing R. 4:42-11(a).
The Supreme Court granted Rex's petition for certification.
HELD: It was improper to award 100" of the attorneys' fees requested where TLC obtained only limited relief
on its claims; in the absence of a specific contractual provision to the contrary, no prejudgment interest should be
awarded on the reasonable attorneys' fees.
1. Although New Jersey courts will uphold the contractual choice of law if it does not violate New Jersey's public
policy, because the award of attorneys' fees and interest is a procedural rather than a substantive law issue, New
Jersey law applies. (pp. 7-8)
2. Contractual provisions regarding attorney-fee shifting are strictly construed in light of the general policy
disfavoring the award of attorneys' fees. (pp. 8-9)
3. In determining whether an attorneys' fee award is reasonable, the party seeking the fees need not recover all
relief sought. Rather, there must be the settling of some dispute that affected the behavior of the party from whom
the fees are sought toward the party seeking payment of the fees. (pp. 10-12)
4. If a prevailing party has achieved only limited relief in comparison to all of the relief sought, the trial court must
determine whether the expenditure of counsel's time on the entire litigation was reasonable in relation to the
actual relief obtained and, if not, reduce the award proportionately. In this case, the $54,993.84 in pretrial counsel
fees and the $52,560.26 in counsel fees for the trial are both excessive and therefore unreasonable. (pp. 12-15)
5. Although there is no per se requirement that there be a close relationship between recovery and fees awarded
for services rendered, when a substantial portion of a claim sought is ultimately rejected, that circumstance should
be considered along with other factors, including those contained in RPC 1.5(a), to determine a reasonable award
of attorneys' fees. (pp. 15-16)
6. The equitable purpose of prejudgment interest is to compensate a party for lost earnings on a sum of money to
which it was entitled, but which has been retained by another. (p. 17)
7. Rule 4:42-11(b), which permits a court in a tort action to suspend the payment of usual prejudgment interest in
exceptional cases, should apply to a contract case. Under the special circumstances presented (the thirteen-month
judicial delay), the contractual rate of interest is suspended for that period. Instead, during that period, TLC is
entitled to interest in accordance with equitable principles. (pp. 17-18)
8. Absent a controlling contractual provision, permitting prejudgment interest on attorneys' fees would be contrary
to New Jersey's strong public policy disfavoring shifting of attorneys' fees. Thus, the award of prejudgment
interest on attorneys' fees in this case was inappropriate and without legal or logical foundation. (pp. 18-20)
Judgment of the Appellate Division is AFFIRMED as modified by this opinion and the matter is
REMANDED to the Law Division to determine reasonable attorneys' fees, on which no prejudgment interest is
allowed, and to fix an equitable amount of prejudgment interest on the amount awarded TLC on its counterclaim
for the thirteen months of judicial delay.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI, and STEIN
join in JUSTICE COLEMAN's opinion.
SUPREME COURT OF NEW JERSEY
A-
212 September Term 1997
NORTH BERGEN REX TRANSPORT, INC. a
New Jersey corporation; and MURRAY
BARNETT,
Plaintiffs-Appellants,
v.
TRAILER LEASING COMPANY, A DIVISION
OF KELLER SYSTEMS, INC.,
Defendant-Respondent.
Argued January 21, 1999 -- Decided June 23, 1999
On certification to the Superior Court,
Appellate Division.
Robert A. Recio argued the cause for
appellants (Gallo Geffner Fenster, attorneys;
Mr. Recio and Debra M. Polglaze, on the
briefs).
Ronald H. Balson, a member of the Illinois
bar, argued the cause for respondent (Cole,
Schotz, Meisel, Forman & Leonard, attorneys;
Mr. Balson and Carl A. Rizzo on the brief).
The opinion of the Court was delivered by
COLEMAN, J.
This appeal involves a commercial lease that requires the
lessee to pay reasonable attorneys' fees in the event the lessor
has to procure legal services to enforce the lease agreement.
The critical issue raised is whether a lessor who does not
prevail on all of its claims is entitled to 100" of its
attorneys' fees plus interest.
The trial court awarded the lessor Trailer Leasing Company
(TLC) 100" of its attorneys' fees and 18" interest on those fees.
The Appellate Division affirmed the award of attorneys' fees but
reversed and remanded with regard to the interest assessed. We
granted the lessee's petition for certification.
156 N.J. 388
(1998). We hold that it was improper to award 100" of the
attorneys' fees requested and that no prejudgment interest should
be awarded on the reasonable attorneys' fees.
Between October 1992 and March 1994, TLC leased as many as ninety trailers to Rex. Separate lease documents with identical terms and conditions were executed for each trailer. Pursuant to the lease agreements, TLC sent Rex monthly invoices reflecting the charges for each of the trailers. The leases contained the following two provisions regarding interest and attorneys' fees:
7. Lessee agrees to pay the rentals to Lessor for the full term as computed on the front of this agreement. There shall be no proration of charges for partial terms. Invoices not paid on time shall carry interest at the rate of 1-1/2" per month from the date due until paid.
24. Lessee shall pay and discharge or promptly reimburse Lessor for all costs, expenses and reasonable attorney's fees, which shall be incurred and expended by Lessor in enforcing the covenants and agreements of this [Lease] whether by the institution of litigation or by the taking of advice of counsel or otherwise.
[(Emphasis added).]
In 1993, Rex became delinquent in its lease payments to the extent of $140,000. In an attempt to satisfy that debt, Rex and TLC negotiated a payment plan whereby Rex was required to pay a minimum of $5,000 per week until the obligation was satisfied and to return some of the trailers it had leased from TLC. On or about February 26, 1994, the parties memorialized their agreement in a writing, which stated in pertinent part: “As we discussed[,] the $5000.00 is only a minimum and your cooperation with increasing this weekly check will be appreciated. In addition[,] if your account balance is not steadily reduced, TLC will need to receive a larger commitment from N.B. Rex Transport.”
For approximately a month after the parties had memorialized their agreement, Rex paid the weekly installments of $5,000 or more and returned some of the trailers. However, because there were several trailers still retained by Rex, its debt increased. Thus, on March 22, 1994, TLC demanded that plaintiffs pay the entire balance and threatened to sue. Even with the threat of litigation, Rex made only nineteen out of twenty-nine payments between February 25, 1994, and September 9, 1994.
Notwithstanding the fact that Rex was delinquent under the agreement, on March 30, 1994, plaintiffs filed a four-count complaint seeking a declaration of rights pursuant to N.J.S.A. 2A:16-50 to -58 against TLC based on alleged rental and repair overcharges. In their complaint, plaintiffs asserted that they had fully complied with their obligations under the February 1994 agreement.
TLC filed an answer and a counterclaim. The answer referred to the February 1994 agreement as an admission that plaintiffs owed TLC $5,000 weekly installments for delinquent rental and other charges. The counterclaim sought judgment against plaintiffs for the lease delinquencies, interest at the rate of one and one-half percent per month (which translates to eighteen percent annually) for all delinquent charges, costs, expenses, and attorneys' fees incurred.
The parties filed cross-motions for summary judgment. In April 1995, the trial court granted partial summary judgment in favor of TLC in the amount of $100,000. Between August 8 and August 22, 1995, a four-day trial was held on the remaining claims. At the onset of the trial, TLC's base claim was reduced from $211,681.35 to $111,681.35 after a $100,000 payment was made pursuant to the partial summary judgment. Certain adjustments conceded by TLC at the beginning of the trial further reduced the claim to $103,637.92. TLC requested $54,993.84 in pretrial attorneys' fees and costs plus $435 in repairs on returned trailers, which increased the amount being sought to $159,066.76.
In September 1996, thirteen months after the trial ended, the trial court issued a letter opinion. It concluded that TLC had overcharged plaintiffs by $75,498.05 and issued plaintiffs a credit for that amount. The trial court also concluded that the $54,993.84 in pretrial legal fees was appropriate. To determine the exact amount of pretrial and trial attorneys' fees, TLC's counsel was required to submit a certification.
In April 1997, the trial court issued a final judgment against plaintiffs, jointly and severally, in favor of TLC in the amount of $161,986.20. The amount reflected: credits TLC owed plaintiffs, interest on delinquent rental charges from July 1995 to January 1997, and TLC's attorneys' fees and costs in the amount of $107,554.10 ($54,993.84 pretrial and $52,560.26 for trial and post-trial), including eighteen percent interest on the attorneys' fees. The trial court also allowed an additional $2,088.87 in attorneys' fees in connection with a motion for reconsideration of the verdict.
The Appellate Division, in an unpublished opinion, affirmed TLC's entitlement to receive attorneys' fees based on the express language in the leases. The panel reversed the award of eighteen percent interest on attorneys' fees because the express language in the lease agreements referred only to interest concerning rental payments, and the provision permitting reimbursement for attorneys' fees did not address interest. Although the court found no contractual basis to allow interest on the attorneys' fees, it nonetheless remanded the matter to the trial court "to recompute the pre-judgment [sic] interest, if any, which may be due and owing on such award of attorney's fees. See R. 4:42-11(a)."
“Ordinarily, when parties to a contract have agreed to be governed by the laws of a particular state, New Jersey courts will uphold the contractual choice if it does not violate New Jersey's public policy.” Instructional Sys., Inc. v. Computer Curriculum Corp., 130 N.J. 324, 341 (1992). However, New Jersey law will govern if:
“(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or
(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which * * * would be the state of the applicable law in the absence of an effective choice of law by the parties.”
[Id. at 342 (quoting Restatement (Second) of Conflicts of Laws § 187 (1969) (Restatement)).]
The substantial relationship standard under the Restatement
has been met in the present case because TLC is headquartered in
Illinois. Another well-established principle of choice of law is
controlling, however, namely that the procedural law of the forum
state applies even when a different state's substantive law must
govern. Heavner v. Uniroyal, Inc.,
63 N.J. 130, 135 (1973); Du-Wel Prods., Inc. v. United States Fire Ins. Co.,
236 N.J. Super. 349, 362 (App. Div. 1989), certif. denied,
121 N.J. 617 (1990).
This Court has held that attorneys' fees are a matter of practice
and procedure, rather than of substantive law. Busik v. Levine,
63 N.J. 351, 372-73, appeal dismissed,
414 U.S. 1106,
94 S. Ct. 831,
38 L. Ed.2d 733 (1973); State v. Otis Elevator Co.,
12 N.J. 1, 5-6 (1953). This Court has also observed that it is not
“inappropriate to think of prejudgment interest as a matter of
procedure in the context of law-making.” Busik, supra, 63 N.J.
at 371. Thus, because the award of attorneys' fees and interest
is a procedural rather than a substantive law issue, we conclude
that the correct choice of law is New Jersey law.
New Jersey has a strong policy disfavoring shifting of
attorneys' fees. McGuire v. City of Jersey City,
125 N.J. 310,
326 (1991). We have generally adhered to the so-called "American
Rule," meaning that "'the prevailing litigant is ordinarily not
entitled to collect a reasonable attorneys' fee from the loser.'"
Rendine v. Pantzer,
141 N.J. 292, 322 (1995) (quoting Alyeska
Pipeline Serv. Co. v. Wilderness Soc'y,
421 U.S. 240, 247,
95 S.
Ct. 1612, 1616,
44 L. Ed.2d 141, 147 (1975); Gerhardt v.
Continental Ins. Cos.,
48 N.J. 291, 301 (1966)). Although the
basic approach and philosophy regarding the allowance of counsel
fees has been "that sound judicial administration is best
advanced if litigants bear their own counsel fees," Department of
Envtl. Protection v. Ventron Corp.,
94 N.J. 473, 504 (1983), a
party may agree by contract to pay attorneys' fees. Community
Realty Management, Inc. v. Harris,
155 N.J. 212, 234 (1998);
Satellite Gateway Communications, Inc. v. Musi Dining Car Co.,
110 N.J. 280, 286 (1988). That exception to the general rule has
been incorporated into Rule 4:42-9. However, even where
attorney-fee shifting is controlled by contractual provisions,
courts will strictly construe that provision in light of the
general policy disfavoring the award of attorneys' fees.
McGuire, supra, 125 N.J. at 327; Alcoa Edgewater No. 1 Fed.
Credit Union v. Carroll,
44 N.J. 442, 448-49 (1965).
Consequently, we will examine the reasonableness of the
attorneys' fees awarded and the appropriateness of prejudgment
interest on the attorneys' fees under New Jersey law.
Plaintiffs argue that it is inappropriate for TLC to receive 100" of its attorneys' fees because it did not receive 100" of the relief it was seeking. Plaintiffs contend that although the trial court rendered a net judgment in favor of TLC, the amount was reduced significantly because of TLC's improper billing practices.
The threshold issue in determining whether an attorneys' fee award is reasonable is whether the party seeking the fee prevailed in the litigation. Singer v. State, 95 N.J. 487, 494, cert. denied, 469 U.S. 832, 105 S. Ct. 121, 83 L. Ed.2d 64 (1984). Because the focus should be on the ultimate results achieved through the litigation, a two-pronged test has been established to determine when a party seeking fee shifting has been a prevailing party. Ibid. The first part of the Singer test requires “[a] party [to] demonstrate that his lawsuit was causally related to securing the relief obtained; a fee award is justified if [the party's] efforts are a 'necessary and important' factor in obtaining the relief.” Ibid. The first prong requires a factual causal nexus between the pleading and the relief ultimately received. Ibid.
The second part of the Singer test requires the party seeking attorneys' fees to show that “the relief granted had some basis in law.” Ibid. The second prong requires both a factual and legal determination. Ibid. The party seeking attorneys' fees need not recover all relief sought, but rather, there must be “'the settling of some dispute that affected the behavior of the [party asked to pay attorneys' fees] towards the [party seeking attorneys' fees].'” Davidson v. Roselle Park Soccer Fed'n, 304 N.J. Super. 352, 357 (Ch. Div. 1996) (quoting Feriozzi Co. v. City of Atlantic City, 268 N.J. Super. 310, 314 (Law Div. 1993)) (noting because eleven-year-old female soccer player tried out for and made all-boys team prior to litigation brought under our Law Against Discrimination, parents could not demonstrate existence of causal connection between litigation and ultimate result).
In the present case, TLC satisfies the first part of the Singer test. In the counterclaim, it sought past-due lease payments totaling $220,000. At the conclusion of the trial, TLC's claims were reduced to $154,432.10, which was approximately seventy percent of the amount sought. As noted previously, $100,000 of the $154,432.10 was determined on a pretrial motion for summary judgment. Nonetheless, TLC won a substantial portion of its claims for the over-due lease payments.
TLC also satisfies the second part of the Singer test because the relief sought was based on the contract that required Rex to pay the rental charges in a timely manner. Therefore, there was a legal basis to compel payment under the lease. Accordingly, TLC was the prevailing party. A prevailing party on a counterclaim should be treated the same as if that party were a plaintiff in the litigation. R. 4:5-2.
Plaintiffs argue that because TLC's claims were reduced by at least thirty percent, TLC should be denied any attorneys' fees. As an alternative, plaintiffs argue that TLC should be limited to only a reasonable portion of its attorneys' fees.
Singer recognized that when a prevailing party has not been successful on all of its claims, an award of attorneys' fees based on an hourly rate times the hours spent may result in an excessive fee. Singer, supra, 95 N.J. at 499-500. Before Singer was decided, the Appellate Division adopted a rule for measuring whether attorneys' fees are excessive in cases in which the prevailing party received less than a complete recovery. In Cohen v. Fair Lawn Dairies, Inc., the court stated:
“[W]here the merit or necessity of the creditor's claim or defense is successfully challenged, courts may decline to enforce attorney's fee provisions. When contractual provisions for payment by a debtor of his creditor's attorney's fees and costs are invoked, such payment should not be enforced in the full amount of the creditor's legal expenses (even though actually incurred, and reasonable in amount) where his claims or defenses giving rise to such expenses lack substantial merit. In no event should the sum allowed be so large as to amount to an undue penalty for taking one's grievance to the courts. And if the creditor has benefitted . . . by having a doubtful question of law resolved, thus reducing the area of potential future dispute, the debtor should bear only a fair portion of the burden.”
[ 86 N.J. Super. 206, 216-17 (App. Div. 1965), aff'd, 44 N.J. 450 (1965) (quoting Manchester Gardens, Inc. v. Great West Life Assurance Co., 205 F.2d 872, 878 (D.C. Cir. 1952)).]
Thus, “if a successful [prevailing party] has achieved only
limited relief in comparison to all of the relief sought, the
[trial] court must determine whether the expenditure of counsel's
time on the entire litigation was reasonable in relation to the
actual relief obtained . . . and, if not, reduce the award
proportionately.” Singer, supra, 95 N.J. at 500; see also
Rendine, supra, 141 N.J. at 336 (quoting Hensley v. Eckerhart,
461 U.S. 424, 436,
103 S. Ct. 1933, 1941,
76 L. Ed.2d 40, 52
(1983)) (stating “'[i]f . . . a [party] 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'”). A similar standard would govern even if Illinois
law were applied in this case. See Leader v. Cullerton,
343 N.E.2d 897, 900 (Ill. 1976); Brzozowski v. Northern Trust Co.,
618 N.E.2d 405, 412 (Ill. App. Ct. 1993).
Here, plaintiffs sought a declaratory judgment and alleged a
breach of contract. The trial court found in plaintiffs' favor
on thirty percent of the total claims filed by TLC in its
counterclaim. Of the claims that had to be tried, the trial
court rejected $75,498 and found that only $54,432 had been
established. That meant that approximately fifty-eight percent
of the claims TLC tried ($75,498 plus $54,432 equals $129,930 in
total claims tried) were rejected. Yet, the attorneys were
awarded 100" of the fees sought based on pretrial services and
services rendered during the trial.
The trial court acknowledged that the $54,993.84 in
pretrial legal fees “may be high in proportion to the amount
[recovered], but the services were necessary in view of the
dispute.” The Appellate Division did not question the amount of
attorneys' fees awarded, finding plaintiffs' objection to the
amount of attorneys' fees awarded to be meritless. We disagree
with the courts below and conclude that the $54,993.84 in
pretrial fees and the $52,560.26 in attorneys' fees for the trial
are both excessive and therefore unreasonable.
Despite the trial court's statement that the fees were
necessary in light of the services rendered, nothing in the
record indicates that plaintiffs filed their complaint or
litigated in bad faith. See Cohen, supra, 86 N.J. Super. at 216-17 (implying that an award of attorneys' fees may be reduced if
the party seeking attorneys' fees litigated in bad faith);
Specialized Med. Sys., Inc. v. Lemmerling,
252 N.J. Super. 180,
186-87 (App. Div. 1991) (same). Moreover, the $75,498.05 credit
plaintiffs received after the trial is not an insignificant
amount in comparison to an award to TLC for over-due charges of
$154,432.10. Viewed in that context, TLC prevailed on about
fifty-one percent of its claims. Although we do not establish a
per se requirement that there be a close relationship between
recovery and fees awarded for services rendered, we believe that
when a substantial portion of a claim sought is ultimately
rejected, that circumstance should be considered along with other
factors, including those contained in RPC 1.5(a),See footnote 1 to determine a
reasonable award of attorneys' fees. Thus, we modify the
Appellate Division's judgment and remand the matter to the Law
Division to determine reasonable attorneys' fees. The present
award of $107,554.10 must be substantially reduced.
Plaintiffs argue that although the leases called for an
eighteen percent annual interest rate for late rental payments,
they should not be required to pay such a high rate of
prejudgment interest on the award during the thirteen months the
trial court reserved decision following the completion of the
trial. When the contract rate is applied to the $54,432 awarded
TLC, the interest for the thirteen months amounts to $10,620.
TLC contends that it should not be deprived of that amount of
contractual prejudgment interest because it had no control over
the lapse of time between the end of the trial and the date the
trial court rendered its decision.
The “equitable purpose of prejudgment interest is to
compensate a party for lost earnings on a sum of money to which
it was entitled, but which has been retained by another.” Sulcov
v. 2100 Linwood Owners, Inc.,
303 N.J. Super. 13, 39 (App. Div.),
certif. granted,
152 N.J. 10 (1997); see also, Pressler, Current
N.J. Court Rules, comment 8 on R. 4:42-11 (“[P]rejudgment
interest is not a penalty but rather its allowance simply
recognizes that until the judgment is entered and paid, the
defendant has had the use of money rightfully the plaintiff's.”).
Although this is not a tort case, Rule 4:42-11(b) permits a
court in a tort action to suspend the payment of usual
prejudgment interest in "exceptional cases." That exception,
however, should be used sparingly. Osborne v. O'Reilly,
267 N.J.
Super. 329, 334 (Law Div. 1993). We conclude that the same rule
should apply to a contract case. Here, the usual rate would be
the eighteen percent annual interest rate fixed by contract. The
exceptional circumstance is the thirteen-month judicial delay
that was not caused by the parties or their attorneys. That
delay was contrary to the administrative practice requiring
reserved decisions to be completed within sixty days. Under the
special circumstances presented, the contractual rate of interest
is suspended for the thirteen-month period. During that time,
TLC is entitled to interest in accordance with equitable
principles. Manning Eng'g, Inc. v. Hudson County Park Comm'n.,
71 N.J. 145, 159 (1976); Bak-A-Lum Corp. v. Alcoa Bldg. Prod.,
69 N.J. 123, 131 (1976); Trico Mortgage Co. v. Penn Title Ins. Co.,
281 N.J. Super. 341, 354 (App. Div.), certif. denied,
142 N.J. 456 (1995).
Plaintiffs also contend that no prejudgment interest should
be awarded on the attorneys' fees. The Appellate Division
properly found that there is no contractual basis for prejudgment
interest on the attorneys' fees. It nonetheless remanded the
matter to the trial court "to recompute the pre-judgment [sic]
interest, if any, which may be due and owing on such award of
attorney's fees. See R. 4:42-11(a)." We conclude "that an award
of prejudgment interest on attorneys' fees was inappropriate and
without legal or logical foundation." Maynard v. Mine Hill Tp.,
244 N.J. Super. 298, 300 (App. Div. 1990). Absent a controlling
contractual provision, permitting prejudgment interest on
attorneys' fees would be contrary to our strong public policy
disfavoring shifting of attorneys' fees. Rule 4:42-11(a) is
limited to post-judgment interest in tort actions. Rule 4:42-11(b) permits limited prejudgment interest in tort actions. This
is not a case in which the incurring of reasonable attorneys'
fees is a traditional element of damages in the specific cause of
action such as occurs in a civil malicious prosecution or abuse
of process case. Penwag Property Co. v. Landau,
76 N.J. 595, 598
(1978). Moreover, an attorney should not be entitled to
prejudgment interest on an unliquidated demand for attorneys'
fees. Consequently, absent any equitable basis to warrant
prejudgment interest, no prejudgment interest on reasonable
attorneys' fees is authorized in this case. The same result
would be reached under Illinois law. See Prior Plumbing and
Heating Co. v. Hagins,
630 N.E.2d 1208, 1212 (Ill. App. Ct.
1994).
As modified by this opinion, the judgment of the Appellate
Division is affirmed. The matter is remanded to the Law Division
to determine reasonable attorneys' fees and to fix an equitable
amount of prejudgment interest on the $54,432 awarded TLC on its
counterclaim for the thirteen months of judicial delay. Except
for those thirteen months, TLC is entitled to prejudgment
interest at the contract rate. No prejudgment interest is
permitted on the reasonable attorneys' fees.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, O'HERN, GARIBALDI, and STEIN join in JUSTICE COLEMAN's opinion.
NO. A-212 SEPTEMBER TERM 1997
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
NORTH BERGEN REX TRANSPORT,
INC. a New Jersey corporation; and
MURRAY BARNETT,
Plaintiffs-Appellants,
v.
TRAILER LEASING COMPANY,
A DIVISION OF KELLER SYSTEMS, INC.,
Defendant-Respondent.
DECIDED June 23, 1999
Chief Justice Poritz PRESIDING
OPINION BY Justice Coleman
CONCURRING OPINION BY
DISSENTING OPINIONS BY
Footnote: 1 RPC 1.5(a) provides:
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;
(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.