PAULO BRUNO and SUSANNA
RIBIERO,
Plaintiffs,
v.
GALE, WENTWORTH & DILLON
REALTY; THE HILLS DEVELOPMENT
COMPANY; DAVE DINO; CLIFFORD
WILSON; LYNN O'REAR, INC. t/a
DECKS AND WALLS GENERAL
CONTRACTORS,
Defendants.
________________________________
Submitted January 26, 2004 - Decided June 29, 2004
Before Judges Petrella, Wefing and Collester.
On appeal from Superior Court of New Jersey,
Law Division, Essex County, L-10751-97.
Maloof, Lebowitz, Connahan & Oleske, attorneys
for appellant Charles J. Gayner (Charles J.
Gayner, of counsel and on the brief).
Shapiro & Sternlieb, attorneys for respondent
Gary S. Shapiro (Gary S. Shapiro, of counsel
and on the brief).
The opinion of the court was delivered by
COLLESTER, J.A.D.
Although the caption in this case relates to a civil action for
damages, the issue presented on appeal involves an application for division of a
contingent fee between attorneys following a settlement of the above-captioned negligence case in
the amount of $400,000.
Appellant Charles J. Gayner, Esq. filed a motion before the Law Division seeking
a referral fee in an amount equaling one-third of the net legal fee
received by Shapiro & Sternlieb, LLC, the respondent law firm. Although an order
was entered on August 16, 2002, granting Gayner's application, the judge later entered
an order granting reconsideration because the court had not received the opposing papers
before the return date. The judge therefore vacated the August 16, 2002 order.
She further found that Gayner was not entitled to a one-third "referral fee"
since respondent was not a certified civil attorney
See footnote 1 and restricted allocation of any
portion of the fee to Gayner upon his showing a basis under quantum
meruit. The motion was then adjourned to give time for Gayner to submit
an affidavit of services and any accompanying papers and for Shapiro & Sternlieb
to file papers in opposition. After the supplemental filings by both parties, the
judge decided the matter on the papers by a letter opinion on January
7, 2003, in which she denied Gayner any part of the contingent fee
amount.
The issue presented is what, if any, referral fee is Mr. Gayner entitled
to in this case. He seeks one-third of the fee based upon his
referral to Mr. Sternlieb. Since neither Mr. Sternlieb nor his partner are Certified
Civil Trial Attorneys, the one-third referral fee cannot be paid.
R. 1:39-7(d) permits
a referral fee to be divided without regard to services performed when a
certified attorney receives a case referral. Therefore, the Court must look to a
quantum meruit scheme of fee apportionment.
I have reviewed submissions by and on behalf of Mr. Gayner and by
Mr. Sternlieb. Clearly there was interaction between plaintiff Paul Bruno and Mr. Gayner.
Unfortunately, there is no showing that any fruits of that labor were passed
on to Mr. Sternlieb in furtherance of the prosecution of the case. Therefore,
there can be no recovery of an attorney's fee. To be paid, one's
work must have played a part in the recovery.
Gayner appeals from the February 10, 2003, order entered pursuant to the judge's
letter opinion. He concedes that he is not entitled to a one-third referral
fee by reason of R. 1:39-6(d), but he argues that the judge did
not give proper consideration and weight to the work he performed in advancing
the cause of plaintiff Paulo Bruno and thereby denied him a portion of
the contingent fee received and held by respondent.
See footnote 2
By way of background, Paulo Bruno was injured as a result of a
construction site accident on September 20, 1995. He sustained injury when a nail
he was hammering popped up from the wood and impaled his eye. After
the accident, he consulted and retained Gayner, then a partner in the law
firm of Handwerker, Honschke, Marchelos & Gayner, which had offices in both New
York and New Jersey and shared office space in both states with Shapiro
& Sternlieb. Gayner had Bruno sign medical authorization forms, which are dated September
28, 1995, and, within a matter of days thereafter, referred the case to
Sternlieb to be handled, at least initially, as a workers' compensation case. Neither
Gayner nor anyone in his law firm handled workers' compensation matters.
On October 3, 1995, Gayner wrote to Mr. and Mrs. Bruno as follows:
As discussed with you today, it appears that your claim will be handled
as a worker's compensation claim. Towards that end, and to further evaluate a
potential personal injury action, we have referred your matter to David Sternlieb, Esq.
We anticipate Mr. Sternlieb keeping us apprised as to all significant developments.
Bruno met with Sternlieb and signed a standard retainer agreement providing for a
contingent fee in conformity with the Rules of Court and including a provision
that Shapiro & Sternlieb would advance all costs and disbursements concerning a third
party action and, in the event of non-recovery, would not seek reimbursement from
Bruno. From this time forward Sternlieb was in charge of the litigation, which
included not only the workers' compensation claim but also a subsequent third party
negligence case which was developed and advanced by Sternlieb. Sternlieb's law firm made
all disbursements, conducted all investigations, filed all pleadings, retained an ophthalmologist for a
report concerning Bruno's eye injury, retained an expert in occupational safety to show
deviations from OSHA standards, retained a vocational expert, participated with plaintiff in mediation
and negotiated the $400,000 settlement of the third party action. Sternlieb certified that
Gayner did not participate to any extent in the third party action, did
not contribute to any of the costs and did not assist or act
as co-counsel prior to and following the settlement of the case.
Gayner underscores that Bruno contacted him immediately after the accident and requested his
representation in the matter. He admits that he turned the contents of his
file over to Sternlieb five days after Bruno signed the medical authorizations. Moreover,
while he concedes that the great bulk of the work in advancing Bruno's
cause and settlement of the third party claim were due to Sternlieb's effort,
he supplied an affidavit of services indicating that he spent 47.1 hours on
Bruno's personal injury claim. Using a multiplier of $237.50 as his hourly rate,
Gayner calculated his total fee entitlement in quantum meruit as $11,186.25.
Gayner relies to a great extent on the supporting certification of Paulo Bruno
in which he states that he met with Gayner to discuss the case
and signed a retainer agreement with him. He provided Gayner with information about
the job site where he had been injured. He said that Gayner visited
the scene and spoke with a co-worker about how the accident occurred. After
Gayner told him he wished to transfer the case to Sternlieb, Bruno says
he was assured by Gayner "that he was not abandoning me and would
stay in touch with me throughout the case." Bruno certified that throughout the
entire litigation he remained in touch with Gayner "every step of the way."
He discussed various aspects of the case, had Gayner prepare him for his
deposition and he consulted with him about the settlement offers being discussed. Bruno
said that he always considered Gayner his attorney because he stayed in touch
with him and advised him over the years while the case was pending.
He certified:
I relied on Mr. Gayner's advice throughout this process. He was attentive in
that he would always return my calls, meet with me when needed and
spend time explaining to me each event that occurred. During the settlement negotiations,
Mr. Gayner fully explained the potential risks and rewards and, I have come
to learn, relayed my concerns and interests to Mr. Sternlieb and Mr. Shapiro.
The proper measure of compensation under quantum meruit is "as much as is
deserved."
La Mantia v. Durst,
234 N.J. Super. 534, 537 (App. Div.), certif.
denied,
118 N.J. 181 (1989). Since quantum meruit is an equitable remedy, a
mere listing of hours expended is insufficient since it may lead to an
inequitable result. "[T]he crucial factor in determining the amount of recovery is the
contribution which the lawyer made to advancing the client's cause." Glick v. Barclays
DeZoete Wedd, Inc.,
300 N.J. Super. 299, 311 (App. Div. 1997); see also,
Dinter v. Sears, Roebuck & Co.,
278 N.J. Super. 521, 531-32 (App. Div.),
certif. denied,
140 N.J. 329 (1995); La Mantia, supra, 234 N.J. Super. at
539-43; Anderson v. Conley,
206 N.J. Super. 132, 150-51 (Law Div. 1985); Buckelew
v. Grossbard,
189 N.J. Super. 584, 587-88 (Law Div.) aff'd o.b.
192 N.J.
Super. 188 (App. Div. 1983).
In making the evaluation as to the sharing of a contingent fee, hard
and fast rules are difficult to apply, La Mantia, supra, 234 N.J. Super.
at 540; see also, Littlefield v. Kearns,
8 N.J. Super. 198, 203 (App.
Div. 1950). In La Mantia we listed some of the factors for consideration.
Trial courts should consider the length of time each of the firms spent
on the case relative to the total amount of time expended to conclude
the client's case. State v. U.S. Steel Corp.,
22 N.J. 341 (1956). The
quality of that representation is also relevant. Hudson Cy. Nat. Bank v. Woodruff,
123 N.J. Eq. 151, 153 (Ch. Div. 1938).
Viability of the claim at
transfer also bears upon the value of a former firm's contribution
Soper v.
Bilder,
87 N.J. Eq. 564, 569 (Ch. Div. 1917). The amount of the
recovery realized in the underlying lawsuit also impacts upon the quantum meruit valuation.
Shaad v. Moksaw,
59 A.D.2d 1061,
399 N.Y.S.2d 822 (1977).
[234 N.J. Super. at 540-41.]
These factors are by no means exclusive or exhaustive of matters to be
considered on the question of division of a contingent fee between initial and
successor attorneys.
[I]n addition to normal considerations for reasonable fees as outlined in the Rule
of Court, where the fee disputes are between successive lawyers, other consideration must
weigh heavily in making fee allocation determinations.
[Ibid.]
Among other considerations is the relationship between client and attorney. Here Bruno's certification
clearly states that he selected Gayner as his lawyer, considered him to be
his lawyer through the case and regularly consulted with him on questions about
the case including whether to accept the settlement offer. This relationship built on
trust by the client cannot be totally discounted. While it may not translate
into the amount of settlement with an insurance company, the advice and guidance
given by an attorney to a client should not be worthless in terms
of advancing the client's cause.
Furthermore, the motion judge gave no weight to the "rainmaker" factor, which relates
to the fact that the initial attorney brought the case to the successor
attorney. See, La Mantia, supra, 234 N.J. Super. at 542. In this instance,
it is clear that Shapiro & Sternlieb would never have been involved in
the case except for the referral from Gayner after discussing it with Bruno.
To exclude him from any portion of the resultant fee leads to an
anomalous result. That is, under R. 1:39-6(d), Gayner would have been entitled to
a division of the contingent fee without performing any services if Sternlieb had
been a certified trial attorney. However, under the decision of the motion judge
he receives nothing in spite of services performed for the client. Rather, Shapiro
& Sternlieb receives the entire contingent fee because Sternlieb had not obtained certification
as a civil trial lawyer. On its face the result appears unjust and
inconsistent with the equitable remedy of quantum meruit. While we do not suggest
that Gayner is entitled to a windfall, his client contacts and other work
performed should have received some consideration and weight by the motion judge.
Moreover, in this instance the motion judge made her decision based on certifications
containing conflicting factual assertions. For example, Gayner certified he discussed Bruno's case with
Sternlieb on several occasions, an assertion roundly denied by Sternlieb. Sternlieb stated that
Gayner has no standing to seek any portion of the contingent fee because
Bruno's case was forwarded solely as a workers' compensation case with no thought
of a third party negligence action. The certifications of both Gayner and Bruno
conflict with this contention as does Gayner's October 3, 1995, letter to Bruno
which we have set forth earlier.
To insure a proper accommodation to fairness there must be findings of fact
on these and other disputed issues. Therefore,
we are constrained to reverse and remand this matter for a plenary hearing
to resolve the conflicting factual contentions set forth in the certifications and for
an evaluation of Gayner's claim for a quantum meruit distribution of the attorney's
fee received consistent with this opinion.
Reversed and remanded.
Footnote: 1
R. 1:36-6(d) provides:
a certified attorney who receives a case referral from a lawyer who is
not a partner in or associate of that attorney's law firm or law
office may divide a fee for legal services with the referring attorney or
the referring attorney's estate. The fee division may be made without regard to
services performed or responsibility assumed by the referring attorney, provided that the total
fee charged the client relates only to the matter referred and does not
exceed reasonable compensation for the legal services rendered therein.
Footnote: 2
Respondent argues that the appeal should be dismissed because appellant failed to
comply with
R. 2:5-3, which requires that an appellant must serve a request
for the preparation of the transcript of the proceedings before the court. He
refers to the oral argument held on September 27, 2002, on the motion
for reconsideration in which the judge vacated the prior order and held that
any fee division must be based upon quantum meruit. Since appellant does not
dispute any fee division, the case must be based on quantum meruit, and
we deem that the transcript is not vital to our review of the
order and arguments raised on appeal. We therefore decline to dismiss the appeal.