PER CURIAM.
Lampf, Lipkind, Prupis & Petigrow, P.A. (LLPP) appeals from an order entered by the trial court on October 15, 2010, which granted in part and denied in part LLPP's petition against its former client, Morton L. Ginsberg (Ginsberg), for attorneys' fees and costs. For the reasons that follow, we affirm.
This appeal arises from the following facts. In 1985, Ginsberg purchased a one-half interest in a high-rise apartment building and shopping center complex in Fort Lee, New Jersey, called the Presidential. The other one-half interest in the Presidential was owned by Moric Bistricer and Elsa Bistricer (the Bistricers). By 1994, Ginsberg was faced with millions of dollars in judgments against him, and the Presidential was the subject of a mortgage foreclosure action.
To settle the foreclosure proceedings, Ginsberg and the Bistricers sought to refinance the mortgage on the property through Anchor Savings Bank (Anchor). As a condition for the refinancing, Anchor required that ownership of the Presidential be transferred to an entity whose sole purpose would be ownership of the property. Accordingly, Ginsberg and the Bistricers agreed to transfer their respective ownership interests to Zaka, L.L.C. (Zaka). The Bistricers and other members of the Bistricer family are principals of Zaka.
In furtherance of the refinancing, Zaka agreed to loan Ginsberg the amounts necessary to obtain releases of the liens and judgments against his interest in the Presidential, up to $500,000. Zaka also agreed to offer the property for sale and pay Ginsberg fifty percent of the net sale proceeds, less any monies due from Ginsberg on the loan.
On December 1, 1994, Ginsberg and the Bistricers entered into another agreement. They agreed that, if more than $500,000 was required to obtain the releases of the liens and judgments against Ginsberg's interest in the Presidential, the Bistricers would have the option to advance Ginsberg the sums required as a loan, which would bear interest and be paid from the cash flow from the property or proceeds from its sale.
Ginsberg thereupon executed a deed conveying his interest in the Presidential to Zaka. The Bistricers advanced $1,003,441.28 to Ginsberg so that he could obtain releases of the liens and judgments against him. On December 23, 1994, the mortgage refinancing closed. Zaka did not, however, sell the Presidential. Zaka continued to operate the Presidential, received cash proceeds from those operations, and did not distribute any of those monies to Ginsberg.
Meanwhile, beginning in 1991, Ginsberg entered into a series of transactions with Donaldson, Lufkin and Jennette Securities Corporation (DLJ) to refinance mortgages on thirty-eight residential complexes that were owned by Ginsberg or partnerships for which he was general partner. DLJ issued mortgage-backed certificates to finance these transactions. By 1994, defaults had been declared on mortgages on the thirty eight properties and foreclosure proceedings commenced.
DLJ and/or its affiliates thereafter purchased all of the mortgages and the mortgage-backed certificates related to these properties. Ginsberg attempted to obtain financing to repurchase the mortgages and certificates in order to reclaim ownership of the properties. He approached David Bistricer, who expressed an interest in the transaction.
Ginsberg apparently believed that David Bistricer and other members of the Bistricer family had agreed to participate in a joint venture to reclaim the thirty-eight properties. In March 1997, however, DLJ and/or its affiliates agreed to sell certain members of the Bistricer family and other entities controlled by them their interests in the mortgages and the mortgage-backed certificates.
In late 1997, Ginsberg approached LLPP to discuss potential litigation arising from the aforementioned transactions. Ginsberg told LLPP he was interested in pursuing four claims: 1) a claim that David Bistricer and other members of the Bistricer family breached fiduciary duties owed to him by entering into the contract with DLJ and/or its affiliates regarding Ginsberg's thirty-eight properties; 2) a claim against Zaka and members of the Bistricer family for misappropriation of Ginsberg's portion of the cash flow from the Presidential since 1995; 3) a claim against Zaka and members of the Bistricer family for mismanagement of the Presidential; and 4) a claim against DLJ for wrongfully causing holders of the mortgage-backed certificates to commence foreclosure proceedings against his thirty-eight properties.
Thereafter, Neil Prupis (Prupis), a member of LLPP, prepared a retainer agreement, which Prupis and Ginsberg executed on December 24, 1997. The agreement stated that LLPP would represent Ginsberg in all four matters. With regard to the claims involving the Presidential, the agreement provided that LLPP would
The agreement acknowledged that the defendants in the lawsuits might assert counterclaims or third-party claims. The agreement stated that LLPP had no obligation to represent Ginsberg on those claims and "a separate agreement may be made regarding same."
In addition, the agreement included a provision regarding termination of representation. It provided in part:
On January 20, 1998, LLPP filed a complaint in the Chancery Division on behalf of Ginsberg and other plaintiffs against David Bistricer, Moric Bistricer, Alex Bistricer, Elsa Bistricer and other defendants. The complaint was thereafter amended and a second amended complaint filed in October 2000.
In count one of the complaint, Ginsberg and the other plaintiffs asserted claims relating to Ginsberg's thirty-eight properties. Among other things, Ginsberg sought to enforce the alleged agreement with David Bistricer and other members of the Bistricer family regarding those properties.
In count two of the complaint, Ginsberg asserted claims relating to the Presidential against the Bistricers, Zaka and Eilat Management Corp. (Eilat), the Prudential's management company. Ginsberg claimed that he retained a fifty percent ownership interest in the Presidential pursuant to the parties' agreements, notwithstanding the transfer of his interest to Zaka. Ginsberg also claimed that the Bistricers, Zaka and Eilat had denied him participation in the Prudential's management and had operated the property for their own benefit to his exclusion and detriment.
Ginsberg further alleged that the Bistricers, Zaka and Eilat had converted and misappropriated funds from the Presidential, committed waste of the premises, negligently failed to increase rents, allowed vacancies to persist, refused to provide him with an accounting despite repeated requests for the same, and failed to distribute revenues to him in accordance with his fifty-percent ownership interest. Ginsberg demanded an accounting, compensatory and punitive damages, appointment of a receiver, partition of the property, and attorneys' fees and costs.
In count three which was included in the second amended complaint, Ginsberg alleged that David Bistricer, through Morgan Capital, L.L.C. (Morgan), an entity he owned, had purchased certain judgments against Ginsberg that were held by unrelated persons and entities. Ginsberg claimed that Morgan had transferred those judgments to other entities that David Bistricer owned, and attempted to levy and execute upon Ginsberg's interest in the Presidential. Ginsberg alleged that, by doing so, David Bistricer and other members of the Bistricer family were attempting to wrongfully divest him of his interest in the Presidential. Ginsberg sought, among other relief, a permanent injunction restraining these defendants from executing on the judgments.
In addition, in 1999, LLPP filed an action on Ginsberg's behalf in the United States District Court for the District of New Jersey against DLJ with regard to Ginsberg's thirty-eight properties. That case was dismissed as a result of a bankruptcy settlement. Ginsberg objected to the application of some of the proceeds of the settlement to LLPP in payment of fees owed to the firm.
This dispute was resolved by a January 21, 2000 settlement agreement between LLPP and Ginsberg, which provided that attorneys' fees due to LLPP on all matters through January 20, 2000 were deemed to be paid in full. The January 21, 2000 agreement also provided that fees on the Presidential matter would remain subject to the parties' December 24, 1997 retainer agreement. Fees on other matters being handled for Ginsberg would be billed at LLPP's normal hourly rates. Payment of the fees would be deferred until the conclusion of the Presidential case, and LLPP agreed to loan Ginsberg $100,000 from the fees LLPP had received.
On February 11, 2000, LLPP and Ginsberg entered into another agreement. The agreement stated that if Ginsberg should receive any money prior to the conclusion of the Presidential matter, LLPP's post-January 20, 2000 fees would be paid from that money. The agreement also stated that "any money recovered based on [Ginsberg's] interest in [t]he Presidential, including any money recovered [from] cash flow claimed by [Ginsberg], will be counted toward the $4 million threshold" for purposes of calculating whether LLPP would be entitled to a Success Premium under the retainer agreement.
On October 24, 2002, Ginsberg filed a motion in the trial court for partial summary judgment on count two and sought a declaration that he retained an equitable fifty percent ownership interest in the Presidential. Defendants filed a cross-motion for dismissal of count two. On November 22, 2002, the court granted Ginsberg's motion and denied defendants' cross-motion. Defendants filed a motion for reconsideration, which the court granted on May 20, 2003.
Thereafter, the court conducted a bench trial on the issue of damages and reserved decision. Defendants then moved for partial summary judgment on count three and for dismissal of Ginsberg's claim for punitive damages. The court denied defendants' motion for summary judgment on count three but granted their motion for dismissal of the punitive damages claim.
On December 23, 2003, the trial court entered a judgment in favor of Ginsberg and against David Bistricer, Alex Bistricer, Moric Bistricer, Elsa Bistricer and Zaka, with regard to the claims in counts two and three. Among other things, the judgment awarded Ginsberg $3,492,780.53; dismissed his claim for punitive damages; permanently enjoined these defendants from executing on any judgment against Ginsberg that they had purchased; directed Zaka to convey to Ginsberg an undivided fifty percent ownership interest in the Presidential; and denied Ginsberg's request for a sale of the Presidential without prejudice, subject to his right to bring an independent action to compel partition of the property.
The trial court certified the judgment as final and defendants appealed. Ginsberg cross-appealed from that part of the judgment dismissing his claim for punitive damages. Defendants moved in the trial court for a stay of the judgment pending appeal. They agreed to deposit $3,874,074.53 into an escrow account to secure payment of the judgment and deposit any additional distributions due to Ginsberg from the operation of the Presidential. LLPP represented Ginsberg in the appeal and cross-appeal.
In an unpublished opinion, we affirmed the trial court's declaration that Ginsberg possessed an equitable fifty percent interest in the Presidential and affirmed in part the damages award to him.
After our decision, the stayed escrow account, which had grown to $9,685,105.05 while the appeal was pending, was released to LLPP's trust account. LLPP sent Ginsberg a letter dated May 21, 2007, seeking his authorization to withdraw $3,143,667.45 from the trust account. This represented attorneys' fees and costs in the amount of $1,206,630.44, plus twenty percent of the amount of the escrow fund or $1,937,037.01.
Ginsberg testified that he did not recall receiving the letter. The trial court found, however, that Ginsberg received the letter and authorized the withdrawal of the monies from the trust account, but the authorization was without prejudice to his right to review the retainer agreement, the invoices and credits.
In August 2007, Ginsberg stopped paying LLPP fees for post-April 30, 2007 work on the Presidential or other matters. Ginsberg claimed that he did not owe LLPP anything for the trial court's determination that he retained a fifty percent interest in the Presidential. On February 29, 2008, Ginsberg terminated LLPP's services. Orloff, Lowenstein, Stifelman & Siegel assumed responsibility for representing Ginsberg in the remand proceedings.
In April 2009, the parties reached a settlement, with the Bistricers and other defendants agreeing to pay Ginsberg $20,000,000 for his interest in the Presidential. Closing on the settlement took place in September 2009, and $2,900,000 of the settlement proceeds were placed into an escrow fund to secure LLPP's claim for attorneys' fees and costs.
On June 16, 2009, LLPP filed a pre-action notice against Ginsberg pursuant to
The court conducted a bench trial on LLPP's claim, and thereafter issued a written opinion finding that LLPP is not entitled to the Success Premium on the basis of the court's December 23, 2003 judgment. The court further concluded that LLPP was not entitled to a Success Premium on the proceeds of the settlement because the settlement was reached after Ginsberg discharged LLPP and there was no convincing evidence that the settlement was the result of LLPP's work. The court further found that a Success Premium was not owed on any post-judgment cash distributions that Ginsberg received.
The court additionally determined that the retainer agreement did not apply to appellate and post-appellate litigation. The court found, however, that the firm would be entitled to compensation for this work on a
The court accordingly entered an order dated October 15, 2010, memorializing its decision. The order states that $1,937,037.01 had previously been transferred to LLPP from its trust account. The court ordered LLPP to return $1,384,202.01 to Ginsberg. LLPP filed a motion for reconsideration. The court denied the motion. This appeal followed.
LLPP argues that the trial court erred by finding that it was not entitled to a Success Premium under the December 24, 1997 retainer agreement with Ginsberg. We disagree.
"Agreements between attorneys and clients concerning the client-lawyer relationship generally are enforceable, provided the agreements satisfy both the general requirements for contracts and the special requirements of professional ethics."
Furthermore, the Rules of Professional Conduct (RPCs) require that contingent fee agreements be in writing and that they specify "the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal[.]"
Here, the retainer agreement requires Ginsberg to pay the firm a Success Premium equal to twenty percent "of an amount in excess of $4,000,000 received by settlement or judgment against the Bistricers[.]" LLPP claims that it is entitled to a Success Premium because, after the trial court's December 23, 2003 judgment, Ginsberg received in excess of $4,000,000 by settlement or judgment, consisting of cash distributions from the operation of the Presidential and the $20,000,000 Ginsberg received for his interest in the Presidential.
We agree with the trial court that, although LLPP successfully prosecuted Ginsberg's claim that he had retained a fifty percent interest in the Presidential and secured through its efforts the December 23, 2003 judgment, it is not entitled to a Success Premium under the retainer agreement. As we noted previously, the December 23, 2003 judgment declared that Ginsberg retained a fifty percent interest in the Presidential and awarded Ginsberg damages in the amount of $3,492,780.53.
By its terms, the judgment did not award Ginsberg an amount in excess of $4,000,000. If LLPP wanted a Success Premium based on cash distributions received by Ginsberg from the operation of the Presidential after the judgment was entered, the firm was required by
LLPP also was not entitled to a Success Premium under the retainer agreement because Ginsberg received $20,000,000 for his interest in the Presidential as a result of the settlement of the remand proceedings. The December 23, 2003 judgment declared that Ginsberg had an ownership interest in the Presidential but the judgment did not award Ginsberg any monetary compensation for that interest. The retainer agreement did not require payment of a Success Premium based solely upon a declaration that Ginsberg retained an interest in the Presidential.
Moreover, the agreement did not establish a means whereby such an interest could be appraised and valued for purposes of determining whether a Success Premium was due. If LLPP wanted to have a Success Premium based upon a declaration that Ginsberg retained an interest in the Presidential, the firm was required to clearly set forth that obligation in the retainer agreement, along with the method of valuing the interest. It did not do so.
The fact that Ginsberg received $20,000,000 for his interest in the Presidential in the post-judgment settlement does not compel a different result. LLPP was not entitled to a Success Premium as a result of that settlement because the firm was not representing Ginsberg when the remand proceedings were settled. LLPP argues that its right to the Success Premium based on the $20,000,000 settlement accrued under the December 23, 2003 judgment but, as we have explained, LLPP was not entitled to a Success Premium based on the terms of that judgment.
LLPP further argues that Ginsberg's signature on the firm's letter of February 11, 2000, indicates that Ginsberg recognized that any money he received for his interest in the Presidential, including post-judgment cash flow distributions and settlement proceeds, would be counted in calculating whether a Success Premium was due under the retainer agreement.
As we noted previously, the trial court found that Ginsberg signed the February 11, 2000 letter. The court determined, however, that Ginsberg's signature on the letter did not represent an agreement on his part that LLPP would be entitled to a Success Premium on any money he received as result of the court's determination that he retained an interest in the Presidential. The record supports that finding. The record shows that Ginsberg authorized the payment without prejudice to his further review of the retainer agreement, the invoices and credits.
LLPP further argues that the trial court failed to accord sufficient weight to the fact that Ginsberg is a lawyer with considerable experience with attorneys' fees and retainer agreements. LLPP contends that, as a knowledgeable and sophisticated client, Ginsberg knew that the Success Premium would be owed on the monies he received as a result of post-judgment distributions from the Presidential as well as the money he received in the settlement.
"When interpreting agreements between lawyers and their clients, courts may consider the circumstances in which the agreement was made, the parties' past practices and agreements, the extent to which they actually negotiated the agreement, and the client's level of sophistication or experience in retaining and compensating lawyers."
Here, LLPP entered into a retainer agreement with a knowledgeable and sophisticated client. Even so, LLPP had the obligation under
LLPP next argues that the trial court erred by determining that the retainer agreement did not apply to appellate and post-appellate work. Again, we disagree.
The RPCs require that contingent fee agreements be in writing and specify the amounts that shall accrue to the attorney" in the event of settlement, trial or appeal...."
As Prupis acknowledged in his testimony at trial, LLPP's retainer agreement did not expressly state that it applied to appellate work. The agreement states:
Prupis testified that the agreement did not have to specify that it applied to appeals because the introductory section of the agreement indicated that "everything" was covered from the beginning of the firm's representation until the matter was "totally concluded." Ginsberg testified, however, that he and Prupis never discussed whether the fee agreement would apply to appeals.
The trial court found that the retainer agreement could be reasonably interpreted to cover appellate and post-appellate work and also could be reasonably interpreted not to cover such work. The court determined that, because the agreement was subject to two reasonable but differing interpretations, it was incumbent upon LLPP to make clear in the agreement whether it applied to any appellate and post-appellate litigation that might ensue. We agree.
LLPP argues, however, that the trial court should have considered whether appellate and post-appellate litigation was excluded, rather than included, in the services to be provided. LLPP also contends that the court should have considered the circumstances under which the agreement was made, including Ginsberg's experience with fee agreements, both as an attorney and client. According to LLPP, Ginsberg wanted LLPP to take all steps necessary to achieve his objective in the lawsuits, which would include appellate and post-appellate work.
We are not persuaded by these arguments. As the trial court found, the agreement is subject to different interpretations as to whether appellate and post-appellate work was covered. Moreover, Ginsberg may have experience with fee agreements but that does not relieve LLPP of its obligation to present the client with an agreement that clearly outlines the services covered. In addition, while Ginsberg may have contemplated that LLPP would act to achieve his objectives in the litigation, he could have reasonably believed that the retainer agreement only covered the trial court litigation.
We therefore conclude that the record supports the trial court's determination that the retainer agreement does not apply to appellate and post-judgment work.
LLPP additionally argues that the trial court erred in its calculation of the
The decision to award attorneys' fees is committed to the discretion of the trial court.
"
The purpose of
We are convinced that the trial court did not abuse its discretion by finding that LLPP was entitled to a fee based on its standard hourly rates for the time devoted to the appellate and post-appellate work. Here, the trial court determined the fees to be awarded by considering the relevant factors under
The court noted that LLPP had devoted a substantial amount of time, skill and money to the trial court litigation. The court also noted that the firm's efforts resulted in a decision that Ginsberg retained a fifty percent ownership interest in the Presidential. The court found, however, that LLPP had been unable to secure a favorable settlement for Ginsberg in the time that it represented him. The court determined that, under these circumstances, the firm should be compensated at its standard hourly rate.
LLPP argues that it should have been awarded $3,175,893.68, which was the amount it would have received under the retainer agreement if the Success Premium had been applied to the settlement monies and post-judgment cash distributions that Ginsberg received. Alternatively, LLPP argues that it should have been awarded $710,710.60, an amount determined by applying the Success Premium to the cash distributions and applying its hourly rates to the settlement process.
We find no merit in these arguments. LLPP was compensated pursuant to the retainer agreement for the time devoted to the trial court proceedings. As we have determined, the trial court correctly found that the firm was not entitled to a Success Premium on Ginsberg's post-judgment cash distributions or the settlement monies he received. We are satisfied that it would be inappropriate to award the firm a fee based on the Success Premium under a
LLPP additionally argues that the trial court erred by computing the fees for its appellate and post-appellate work based on the hourly rates in effect when the firm performed the work was performed. In support of that argument, LLPP relies upon
LLPP also argues that the trial court erred by refusing to permit Richard Brennan (Brennan) to testify as an expert on the reasonableness of its fee request. It is within the discretion of the trial court to admit or exclude expert testimony.
The trial court found that, while Brennan has had a lengthy career as an attorney, LLPP failed to establish that he had specialized knowledge of the RPCs or particular expertise on the reasonableness of fee agreements. Indeed, Brennan testified that he is not an authority on the RPCs or the reasonableness of fee agreements. We therefore conclude that the trial court did not abuse its discretion by precluding Brennan from testifying as an expert.
Finally, we note that Ginsberg argues that the trial court should have granted him pre-judgment interest on the $800,000 that LLPP withdrew from the escrow account. That issue is not properly before us because Ginsberg did not file a cross-appeal from the trial court's judgment.
Affirmed.
