Brunt v. Board of Trustees, Police & Firemen’s Retirement System, 455 N.J. Super. 357 (App. Div. 2018). In general, except as specified by statute, court rule, or a contract between parties, New Jersey follows the “American Rule,” under which litigants must bear their own fees and costs. This decision today by Judge Rose, in a case that was argued before her and Judge Ostrer, and then re-argued before those two judges and Judge Sabatino, is the latest reiteration of that principle.
Plaintiff was serving as interim deputy chief of the Middletown Township Police Department when he retired. His pension did not account for his increased deputy chief salary, and he brought administrative proceedings to correct that error. An Administrative Law Judge and the defendant Board ruled in his favor. Middletown, however, was not notified of the matter and did not participate in the proceedings.
Thereafter, the Board notified plaintiff that Middletown needed to provide an update to a certain certification in order for the Board to process the corrected pension benefit. Plaintiff then filed an action in lieu of prerogative writ in the Law Division, naming as defendants the Board, Middletown, and employees of both public entities. “In essence, plaintiff sought enforcement of the Board’s adoption of the ALJ’s initial decision granting plaintiff’s recalculated pension.”
The :Law Division granted enforcement and, after first reserving decision on plaintiff’s request for attorneys’ fees for the prerogative writ case, awarded plaintiff $4,492 in fees. That court referred to plaintiff’s “two-year pursuit to correct the miscalculation of [his] retirement award,” in which defendants were “uncooperative,” and cited the principle of liberally construing pension provisions in favor of public employees.
The Law Division recognized the existence of the American Rule, but found that “justice would not be served” if plaintiff had to bear his own attorneys’ fees. The judge reaffirmed that view in denying a defense motion for reconsideration, citing the dissent in In re Estate of Folcher, 224 N.J. 496, 519-20 (2016) (Albin, J., dissenting), in support of the view that it would be inequitable for plaintiff, who served Middletown for decades, to have to pay his own fees.
Defendants appealed the fee award. Judge Rose recognized the abuse of discretion standard of review that applies to fee awards and motions for reconsideration. She found that the Law Division had misperceived the legal standard, an abuse of discretion, and that applying the de novo standard of review to the legal issue presented, reversal was required.
There was no statute or court rule that authorized fee-shifting, so the American Rule precluded them. Judge Rose noted that “unlike discrete statutes permitting an award of counsel fees to successful litigants in certain administrative matters, the Legislature has not delegated such authority in pension cases.”
Equitable principles did not do the trick for plaintiff either. The Folcher case on which the Law Division relied involved fraud and forgery by the decedent’s wife, to the detriment of other beneficiaries of the decedent’s estate. And unlike the dissent, the majority did not find a basis for attorneys’ fees there, since no fiduciary duty ran from the wife to the other beneficiaries. In any event, in today’s case, even if defendants were “uncooperative,” there was no fraud or breach of fiduciary duty, and for that reason too, no right to attorneys’ fees in contravention of the American Rule.