Jacobs v. Lindsay and Son Plumbing and Heating, Inc., 458 N.J. Super. 194 (App. Div. 2019). The defendant in this appeal, Mark Lindsay and Son Plumbing & Heating, Inc. (“MLSP”) has had “a history of instituting criminal actions as a means of collecting its unpaid invoices,” as Judge Fuentes stated in today’s opinion for the Appellate Division. Plaintiff hired MLSP to repair an air conditioning unit, but after three service visits, MLSP was unable to fix the problem. Despite that, MLSP issued bills, the first two of which plaintiff paid. When MLSP’s third repair attempt failed, plaintiff refused to pay for the third visit and stopped payment on his checks for payment of the prior invoices.
MLSP then brought a criminal complaint for theft of services, which a Municipal Court ultimately dismissed for lack of probable cause. Plaintiff then sued defendants for violating the Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. (“CFA”), and for malicious prosecution, defamation, and tortious interference. A Law Division judge granted summary judgment to plaintiff on his CFA claim. There were multiple bases for that ruling, including that MLSP wrongly failed to provide a written contract describing the services that MLSP would provide and the method used to determine the total charge for those services, and that MLSP’s filing of a criminal complaint was an unconscionable commercial practice.
The case was then assigned to a new judge. The parties thereafter entered into a settlement, under which MLSP was to pay plaintiff $45,000 on account of the CFA violation (but not including attorneys’ fees), and plaintiff was to dismiss his other claims. Plaintiff applied for several hundred thousand dollars in attorneys’ fees, including a requested multiplier under Rendine v. Pantzer, 141 N.J. 292 (1995), and Walker v. Giuffre, 209 N.J. 124 (2012) [Disclosure: I argued Walker in the Supreme Court for the successful plaintiff]. The new judge, however, awarded only $19,800 in fees and no filing fees or costs of suit, even though the CFA makes a cost award mandatory.
The parties entered into a consent order embodying their settlement. That consent order provided that the first judge’s finding of a CFA violation and resulting ascertainable loss was “not altered or amended” by the consent order. The consent order also purported to preserve MLSP’s right to appeal the CFA summary judgment against it. MLSP filed an appeal from that summary judgment, and plaintiff appealed as to the amount of attorneys’ fees awarded. Applying de novo review, and recognizing that fee awards are overturned “on the rarest of occasions, and then only because of a clear abuse of discretion,” Judge Fuentes rejected MLSP’s appeal, reversed the fee award, and remanded the matter for further proceedings.
Defendant’s appeal was easily disposed of. Judge Fuentes stated that the practice of purporting to preserve in a consent order an issue for appeal “is disapproved of because it preempts the appellate court’s authority to decide whether to hear an interlocutory appeal, improperly placing jurisdiction upon the appellate court.” Here, “review of the Law Division’s ruling concerning defendants’ liability under the CFA would constitute nothing more than an academic exercise. Plaintiff retains the $45,000 settlement paid by defendants’ insurance carrier regardless of how this court views the Law Division’s ruling.” MLSP’s preservation of a right to appeal the CFA summary judgment was thus “nothing more than a transparent subterfuge intended to obtain an advisory ruling from this court on a question of law.” Accordingly, the panel dismissed defendants’ appeal.
Plaintiff won a reversal on his appeal because the second judge “did not appreciate the interrelation between facts supporting defendants’ unconscionable commercial practices claim under the CFA and the common law torts of malicious prosecution, defamation, and tortious interference with economic relationships. The judge thus disallowed as unrelated to the CFA, professional time devoted by plaintiff’s counsel in discovery that touched upon or overlapped with these common law claims.”
The Law Division failed, Judge Fuentes said, to follow the four-step procedure of Rendine (assessing the reasonableness of counsel’s hourly rate, determining whether the number of hours spent was reasonable, deciding whether plaintiff’s success was limited compared to what he sought, and considering a multiplier in a contingent case such as this one) in ruling on fees. That failure to apply the proper legal test was a clear abuse of discretion. The Law Division’s further error in declining, without explanation, to award any of the $24,377.39 in filing fees and costs that plaintiff claimed, when the CFA mandates the award of filing fees and costs, was also error.
Judge Fuentes concluded with a ringing affirmation of the purpose of fee-shifting under the CFA. MLSP’s “outrageous abuse of our criminal justice system is precisely the type of unconscionable commercial practice the CFA was designed to protect consumers from and deter unscrupulous commercial entities from engaging in. However, the salutary purpose of the CFA is undercut if the professional work performed by competent private counsel in the course of representing consumers victimized by such practices is arbitrarily undervalued by the judges entrusted to enforce the CFA’s fee-shifting provision.” The panel remanded for a new decision on fees and costs, guided by the Rendine/Walker criteria and the plain language of the CFA.