SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-2050-94T5
ROSE GERSZBERG, Individually and as
Executrix of the Estate of Shepherd
Gerszberg, deceased, and as Guardian
ad Litem of EPHRAIM GERSZBERG, a minor,
JONATHAN GERSZBERG, a minor, and NAOMI
GERSZBERG, a minor, and SETH GERSZBERG,
Plaintiff-Appellant,
v.
JACUZZI WHIRLPOOL BATH and TOMS RIVER
PLUMBING & HEATING SUPPLY, INC.,
Defendants.
* * * *
O'CONNOR & RHATICAN, ESQS.,
Respondents.
___________________________________________________________________
Argued November 29, 1995 - Decided December
27, 1995
Before Judges King, Landau and Kleiner.
On appeal from Superior Court, Law Division,
Ocean County.
Dennis S. Deutsch argued the cause for
appellant (Ferrara, Turitz, Harraka &
Goldberg, attorneys; Mr. Deutsch, on the
brief).
Gerald B. O'Connor argued the cause for
respondents (O'Connor & Rhatican, attorneys;
Mr. O'Connor, on the brief).
The opinion of the court was delivered by
LANDAU, J.A.D.
This appeal by plaintiff Rose Gerszberg, individually and as
executrix of the estate of Shepherd Gerszberg, deceased, is taken
from part of a final Law Division order of distribution dated
November 7, 1994. The order apportioned, under N.J.S.A. 2A:31-4,
net proceeds of the $300,000 settlement of a wrongful death action
(N.J.S.A. 2A:31-1) in which plaintiff was represented by
respondents O'Connor and Rhatican, Esqs. Respondents cross-appealed but did not pursue the cross-appeal in their brief and
argument.
The order first approved deduction of respondents' reasonable
out-of-pocket expenses, leaving $279,575. Upon recommendation of
the court-appointed guardian ad litem, that sum was allocated in
five equal parts of $55,915, before counsel fees, among decedent's
wife Rose and their four children, Seth, Ephraim, Jonathan and
Naomi.
Next, the order awarded $87,786 in counsel fees to
respondents, purportedly calculated in accordance with R. 1:21-7,
with a "specific reduction" to twenty-five percent for the
allocation to Naomi, who was a minor at the time of allocation.See footnote 1
The counsel fee award is the subject of this appeal. We affirm the
result.
Appellant executrix argues that the court erred in failing to
consider dispositive a retainer agreement that she entered into
individually and as "Administratrix" [sic]See footnote 2 of the estate, and as
guardian ad litem of her four children. In support of this
argument, appellant's appendix contained an unsigned All-State
Legal Fee Agreement form. In that form, a check mark appears next
to a box in paragraph five which purports to read, as amended by
hand, "The legal fees will be reduced to 25" of the net recovery if
this matter is settled without trial on behalf of any of the
children of Shepherd Gerszberg." Respondents' appendix contains
what purports to be a signed agreement, on the same All-State form,
in which no check marks are made and no handwritten amendments
appear. Each form provides for the standard contingent fee allowed
by R. 1:21-7, namely 33 1/3" of the first $250,000 recovered, 25" of the next $250,000 recovered, and 20" of the next $500,000
recovered.
In order to address appellant's claim of error, we must first
note that the trial judge erred in dividing the net settlement into
five equal shares before subtracting counsel fees. This procedure
could have resulted in the improper application of a 33 1/3%See footnote 3
contingent fee to the entire net settlement of $279,575. As
appellant challenges the counsel fee award because the equitable
distributees under the Death Act apportionment included one or more
minors, we refer to settled principles recently revisited in In re
Estate of Travarelli,
283 N.J. Super. 431 (App. Div. 1995).
Travarelli reaffirmed that there is only one wrongful death claim,
and only one recovery for that claim on which to base a contingent
fee. Id. at 439-40.
We repeat the comprehensive explanation set forth in McMullen
v. Maryland Casualty Co.,
127 N.J. Super. 231, 238-39 (App. Div.
1974), aff'd sub nom. McMullen v. Conforti & Eisele, Inc.,
67 N.J. 416 (1975), and quoted in Travarelli:
Under our Death Act, in cases of
intestacy an action for damages arising out of
a wrongful death may be brought only by an
administrator ad pros. specially appointed for
that purpose. N.J.S.A. 2A:31-2. If the
decedent dies testate, his executor may bring
the action. In cases of intestacy payment is
always to the general administrator of the
estate, never to the administrator ad pros.
N.J.S.A. 2A:31-6. No matter who brings the
action, recovery is effectuated in one lump
sum representing past and future economic loss
to the class of beneficiaries entitled to
share in the proceeds of the action. This
class consists of "the persons entitled to
take any intestate personal property of the
decedent." N.J.S.A. 2A:31-4. The statute
goes on to provide that if any members of the
class were dependent upon decedent, they shall
take to the exclusion of any non-dependent
members of the class.
Once the lump-sum recovery is obtained,
whether by way of settlement or judgment, the
trial court must hold a hearing without a jury
in order to apportion the fund equitably among
the members of the class entitled to share in
it. N.J.S.A. 2A:31-4. See Jurman v. Samuel
Braen, Inc.,
47 N.J. 586, 598 (1966), and
Suarez v. Berg,
117 N.J. Super. 456 (App. Div.
1971).
The settlement here was apportioned among plaintiff and her children pursuant to N.J.S.A. 2A:31-4. The argument is advanced that each distributive share represents a
separate recovery and that the fee schedule
should be applied to each fund after its
division among the beneficiaries. We reject
the contention. The rule assesses a sliding
scale fee based on varying percentages of the
amount "recovered." There were no separate
recoveries for each beneficiary and cannot be.
The beneficiaries have no right to sue
individually to recover their respective
losses. All that our statute permits is a
lump-sum recovery by one suing in a
representative capacity, the sum later to be
divided equitably among those entitled to
benefit from it. Since under our Death Act
there can be only one "recovery," the fee
schedule is to be applied to the total amount
received, no matter how many beneficiaries
are entitled to share in it, and not to the
amounts of the various shares after
distribution is determined.
Applying the R. 1:21-7 formula incorporated in the fee
agreement to the net settlement, as mandated by Travarelli and
McMullen, would produce a maximum allowable counsel feeSee footnote 4 computed
as follows:
33 1/3" of $250,000 = $83,333.33
25" of $29,575 = $ 7,393.75
Respondents' application submitted below requested that the court fix a fee in accordance with this formulation. Thus, even if a reduction in fee were deemed appropriate or compelled because of the age of any distributee, $90,727.08 should have been the
starting point.
Our calculations indicate that the judge instead took $13,379,
i.e., 25" of the one-fifth distribution of $55,915 he allocated to
the one child who is presently a minor, and added that to the
$73,807 sum arrived at by applying 33" (not 33 1/3") to $223,660,
representing all the other distributions. He thus arrived at the
$87,786 counsel fee award here under review. Had there been no
minor distributee, however, the same procedure would have resulted
in a $93,191 award of counsel fees, excessive by $2464, i.e., the
difference between $9858 (33 1/3" of the $29,575 in excess of
$250,000) and $7394 (25" of $29,575).
Appellant contends: (1) that the fee award was entered in
disregard of the unsigned, amended version of the initial fee
agreement submitted in her appendix; and (2) that if a reduction to
twenty-five percent of net recovery was warranted as to Naomi, who
was a minor at the time of the order of distribution under N.J.S.A.
2A:31-4,See footnote 5 then the court should have applied the twenty-five
percent maximum fee (provided under R. 1:21-7(c)(5) where an amount
recovered by settlement is for the benefit of a client who was a
minor when the contingent fee arrangement was made) to the entire
settlement.
It is unnecessary to resolve the variance between the signed
and unsigned versions of the retainer agreement. As McMullen,
supra, makes clear, "[t]here were no separate recoveries for each
beneficiary and cannot be. The beneficiaries have no right to sue
individually to recover their respective losses." 127 N.J. Super.
at 239. Thus the matter was not "settled without trial on behalf
of any of the children of Shepherd Gerszberg." Rather there was a
Death Act recovery by the executrix who sued in a representative
capacity, subject to later equitable division among those entitled
to benefit, pursuant to N.J.S.A. 2A:31-4.
As to appellant's second argument, it is true that the
relevant date for determination of minority under R. 1:21-7(c)(5)
is the date of execution of the contingent fee agreement on behalf
of those for whose benefit the agreement was made. All four
Gerszberg children were under eighteen at that time. Thus, if a
reduction to twenty-five percent was indeed required by reason of
Naomi's minority, it would appear also to have been required as to
her siblings. However, after noting that Suarez v. Berg,
117 N.J.
Super. 456 (App. Div. 1971),See footnote 6 the authority relied on by
appellants, was decided before R. 1:21-7 was adopted, we later said
in McMullen that "[s]ince under our Death Act there can only be one
`recovery,' the fee schedule is to be applied to the total amount
received [by the one suing in a representative capacity], no matter
how many beneficiaries are entitled to share in it, and not to the
amounts of the various shares after distribution is determined."
McMullen, supra, 127 N.J. Super. at 239.
We went on to make clear that the
above applies with equal force to the thought
that some portion of the settlement here is
subject to R. 1:21-7(c)(6)See footnote 7 which limits fees
to not more than 25" on amounts recovered by
way of settlement for the benefit of infants
and incompetents. We think the rule basically
was aimed at those situations, all subject to
judicial approval, where a specific settlement
is obtained because of a tort committed
against the person or property of an infant or
incompetent and was not intended to apply to
wrongful death recoveries where the class of
beneficiaries included one or more adults.
[Ibid. (footnote omitted) (our footnote 7 added).]
McMullen's clear articulation has stood for twenty years without modification by rule or subsequent case law. We are not inclined to readdress the issue, particularly as there is nothing in this record to suggest that the trial judge failed to exercise
reasonable discretion.
The N.J.S.A. 2A:31-4 apportionment was made here primarily to
the children, apparently for estate planning reasons upon request
of the spouse/executrix. In many cases, it instead might as easily
have been molded to award the largest part of the amount recovered
to the surviving spouse. There presently appear to us no
compelling equitable reasons why an attorney's fee should turn on
such external factors, unless all possible distributees were minors
when the fee agreement was executed.
The underlying wrongful death action involved a products
liability claim against the manufacturer and distributor of a
whirlpool hot-tub in which the decedent had bathed shortly before
suffering a fatal heart attack. If anything, the extent and
originality of legal effort involved in achieving this settlement
might have warranted a R. 1:21-7(f) fee award.
The award of $87,786 in counsel fees falls well within the
amount allowed by Rule 1:21-7 and the retainer agreement, as above
interpreted.
We see no indication of an inequitable result. Inasmuch as
respondents have not pursued their cross-appeal, we affirm the
result, but not the reasoning, embodied in the portion of the
judgment from which the appeal was taken.
Affirmed.
Footnote: 1Presumably based upon R. 1:21-7(c)(5) which provides:
"where the amount recovered is for the benefit of a client who was
a minor or incompetent when the contingent fee arrangement was
made, the foregoing limits shall apply, except that the fee on any
amount recovered by settlement without trial shall not exceed 25%."
Footnote: 2Decedent died testate.
Footnote: 3The judge actually used only thirty-three percent, for
reasons that are not clear to us.
Footnote: 4Subject only to the special application procedure for
additional fees provided for under R. 1:21-7(f).
Footnote: 5N.J.S.A. 2A:31-4 provides:
The amount recovered in proceedings under this chapter shall be for the exclusive benefit of the persons entitled to take any intestate personal property of the decedent, and in the proportions in which they are entitled to take same. If any of the persons so entitled were dependent on the decedent at his death, they shall take the same as though they were sole persons so entitled, in such proportions, as shall be determined by the court without a jury, and as will result in a fair and equitable apportionment of the amount recovered, among them, taking into account in such determination, but not limited neces-sarily thereby, the age of the dependents,
their physical and mental condition, the
necessity or desirability of providing them
with educational facilities, their financial
condition and the availability to them of
other means of support, present and future,
and any other relevant factors which will
contribute to a fair and equitable
apportionment of the amount recovered.
Footnote: 6In Suarez, the attorney's challenge to the counsel fee award
was raised for the first time on appeal, and rejected on that
basis. Suarez, supra, 117 N.J. Super. at 464.
Footnote: 7Now R. 1:21-7(c)(5).