PER CURIAM.
This is a fee dispute case between plaintiff Wilentz, Goldman & Spritzer, P.A. (WGS) and its former client defendant Louis Grant, Jr. (Junior).
WGS agreed to represent Junior in connection with a will contest following the death of Louis S. Grant, Sr. (Senior), who died on February 13, 2001. Prior to his death, Senior owned and operated a successful business known as Roosevelt Sales Stables. Junior worked with his father in the business for more than forty years. When he died, Senior was survived by his three children: Junior, Virginia Grant Liotta (Virginia), and Nancy Grant (Nancy).
For many years, Senior had a personal and professional relationship with Warren Wilentz, Esq., a WGS partner. Wilentz represented Senior in various legal matters and prepared estate documents for him. Wilentz represented Junior on at least three separate occasions. At Senior's request, Wilentz prepared a new will for him, which Senior signed on April 16, 1998. Article Four of the will left the "tack and inventory" from Senior's business to Junior. Article Six left Senior's residuary estate to his three children in equal shares, and Article Nine designated the three children as co-executors.
Senior liquidated the business inventory in 1999 and deposited the proceeds into his business account. The same year, Senior asked Wilentz for estate tax advice, and Wilentz consulted with another member of the firm, Timothy Dengler, who prepared a family partnership agreement. The purpose of the partnership agreement was to reduce estate taxes by allowing Senior to convey real property to his three children during his lifetime. Senior and Junior signed the partnership documents in December 1999; however, Virginia and Nancy never signed the documents. Sometime after signing the partnership agreement, Junior opened his own business, which bought and sold horse equipment.
When his father died, Junior asked Wilentz and his firm to represent him in connection with his father's estate. In June 2001, Dengler filed a verified complaint and order to show cause on behalf of Junior in the Hunterdon County Chancery Division, Probate Part, seeking to admit Senior's April 16, 1998 will to probate. Shortly thereafter, Junior's sisters retained counsel and filed an answer and counterclaim. In their counterclaim, Virginia and Nancy alleged that their father suffered from mental and physical disabilities, and that Junior exercised undue influence over his father. The sisters sought to have an earlier will admitted to probate.
Virginia and Nancy also filed a motion to disqualify WGS on the grounds that Wilentz and other members of the firm would probably be witnesses in the probate proceeding. Wilentz asked Frederick H. Dennehy, another member of the firm, to handle the disqualification motion. In his opposition papers, Dennehy argued that the Rules of Professional Conduct did not disqualify WGS from representing Junior. The probate court agreed and denied the motion on November 29, 2001. The probate court also appointed all three children as temporary co-administrators of their father's estate.
Thereafter, Dennehy served as lead counsel for Junior, with assistance from attorney Christopher Hager. Dennehy and Hager answered interrogatories, attended several meetings with Junior and his long-time companion, Jane Greiner, conducted depositions, interviewed various individuals, and prepared for trial. According to Dennehy, his objective was to prove by clear and convincing evidence that Senior had the requisite testamentary capacity to execute his will on April 16, 1998, there was no undue influence by Junior, and Junior did not mismanage his father's finances.
For more than a year, WGS had no written retainer agreement with Junior. Nevertheless, statements for legal services performed by WGS were sent to Junior and paid by Junior. The retainer agreement signed by Junior on April 30, 2002, set forth WGS's hourly billing rates for charges, and it stated that the fee agreement was "independent" of any fees paid by Senior's estate.
During discovery, Dennehy learned that Brian Sheprow, the accountant for Senior's business, testified at his deposition there was $977,000 worth of inventory that belonged to Junior because "he had built that up himself" and it was not part of Senior's business inventory. Dennehy did not believe that Sheprow's testimony was accurate, and when Dennehey met with Junior and Greiner to discuss the source of the funds, Junior "admitted that the $977,000. . . had been transferred to him" by his father. Dennehy advised Junior it was necessary to "present the truth" at trial, and the estate should not be responsible for the additional legal work required to address the inventory issue.
Prior to trial, Virginia and Nancy filed a motion for summary judgment and for an accounting of the estate. WGS prepared opposition papers to the summary judgment motion, which was denied. However, the probate court granted the request for the appointment of an independent accounting firm to value Senior's estate.
During the summer of 2002, Junior and WGS attempted to settle the dispute, but their efforts were unsuccessful. According to Junior, Virginia's husband, attorney Carmine Liotta, was the primary obstacle to settlement.
Although WGS was prepared for trial, which was scheduled to begin in October 2002, the trial was adjourned and the case was transferred from Hunterdon County to Warren County. In a letter dated November 13, 2002, the Hunterdon County Surrogate explained:
In December 2002, Wilentz suffered disabling injuries in an automobile accident. Following the accident, the attorney-client relationship between Junior and WGS deteriorated because Wilentz was "the primary contact" between Junior and the firm. In February 2003, Junior terminated WGS's representation and hired attorney Victor Deutch.
The probate matter proceeded to trial in Warren County, and Junior prevailed. The probate court rejected the sisters' undue influence and testamentary incapacity claims and entered judgment in favor of Junior. Virginia and Nancy appealed, but the judgment admitting Senior's will to probate was affirmed.
In August 2007, WGS filed a complaint in the Law Division, Middlesex County, against Junior, individually and as executor of Senior's estate, alleging non-payment of fees and costs in the amount of $263,695.55. Junior accepted service of the complaint on November 26, 2007, and his attorney and WGS stipulated that the time to answer the complaint would be extended to January 18, 2008. Nevertheless, no answer was filed by the agreed upon date.
On January 22, 2008, Junior's attorney filed a motion for a change of venue from Middlesex County to Hunterdon County. The motion was opposed, and it was denied on February 29, 2008. Thereafter, on March 10, 2008, the court entered a default judgment for the amount specified in the complaint against Junior individually and as executor of his father's estate.
Nine days later, on March 19, 2008, Junior filed a motion to vacate the default judgment. However, no action was taken on the motion for several months, because the probate judge in Hunterdon County entered an order appointing a neutral third-party to administer Senior's estate, and the administrator agreed to submit WGS's fee claim against the estate to binding arbitration. Therefore, Junior and WGS agreed that no further action would be taken in connection with Junior's motion until the arbitration proceeding was concluded.
On October 15, 2008, the arbitrator awarded the sum of $177,712.04 to WGS, which was paid by the estate. WGS then sought the unpaid balance of its fee in the amount of $85,983.51 from Junior.
After the arbitrator's decision, Junior renewed his motion to vacate the default judgment. On January 9, 2009, the court granted Junior's motion subject to the following terms and conditions: (1) Junior's answer was due by January 23, 2009; (2) the default judgment would remain in place but could not be enforced until WGS's claims and Junior's counterclaims were resolved; (3) WGS was awarded reasonable attorney's fees and costs for entering default and default judgment, and for opposing Junior's application to vacate the judgment; and (4) WGS was instructed to submit an affidavit for costs and fees pursuant to the five-day rule.
An answer and counterclaim was filed on January 20, 2009. Junior alleged in his counterclaim that WGS was negligent for ignoring a "potential conflict of interest" and for "failing to attend to essential tax issues, failing to file required tax returns, providing poor advice or in some instances no advice, failing to appoint proper counsel to handle the estate issues, and generally ignoring the estate issues." Junior also demanded a trial by jury.
In July, WGS served Junior with interrogatories, a request for production of documents, a notice to take Junior's deposition on August 31, 2009, and a motion to extend the discovery end date to September 15, 2009. WGS also submitted an offer of judgment to Junior in the amount of $50,000 on July 14, 2009, which was never accepted. In response to WGS's motion, Junior filed a cross-motion to adjourn the October 5, 2009 trial date and to extend discovery to April 19, 2010.
The court granted WGS's motion to extend discovery to September 15, 2009, and it denied Junior's cross-motion. The order extending the discovery end date required the parties to serve expert reports by August 20, 2009, provide discovery responses by September 10, 2009, complete depositions by September 15, 2009, and to appear for trial on October 5, 2009.
Junior did not meet the August 20, 2009 deadline for providing an expert report, and WGS agreed to adjourn Junior's deposition to September 17, 2009, to allow him time to retain new counsel. On September 15, 2009, Junior informed WGS that he would not appear for his deposition on September 17, 2009, due to poor health. Junior provided WGS with a letter from Lucille T. Len, M.D., his primary care physician, which stated:
Junior retained new counsel on October 2, 2009, and the October 5, 2009 trial date was adjourned. In November, Junior filed a motion to change the track assignment from track I (collection matter) to track III (legal malpractice), and to extend discovery to April 20, 2010. That motion was denied on November 20, 2009. In addition, WGS filed a motion in November 2009, to suppress Junior's answer and counterclaim without prejudice based on his failure to comply with the discovery deadlines in the August 14, 2009 order that extended the discovery end date to September 15, 2009. The court granted WGS's motion on December 4, 2009. The order contained the following handwritten notation: "Paper discovery to be served by January 15, 2009. Defendant must be deposed 20 days prior to trial. Upon satisfaction of these conditions, this order shall be vacated."
On January 19, 2010, Junior provided paper discovery to WGS but did not provide an expert report. In his answers to interrogatories, Junior certified he made eight payments to WGS totaling $72,587.55, which was consistent with the billing records maintained by WGS.
Both attorneys appeared for trial call on February 1, 2010, and the trial was adjourned to March 15, 2010. The court entered a case management order requiring Junior to appear for his deposition by March 15, 2010. The order also stated: "Immediately after the deposition defendant can pay [the] fee to reinstate his answer. [The] answer shall then be deemed reinstated."
Although the attorneys attempted to schedule depositions for both Junior and Greiner, they could not agree on a date. When counsel appeared for trial on March 15, 2009, they were told to return on March 17, 2010. On March 16, 2010, Len provided another letter regarding Junior's medical condition. In her letter, Len stated she was "seeing [Junior] for his hypertension, diabetes, obesity and depression." She also said that his health would not improve "until the matters involving the courts and attorneys are resolved." Len therefore released Junior "to proceed with his deposition." However, Len asked the court to "wait thirty days, for recent changes in medication to take effect." On March 17, 2010, the trial was adjourned to April 5, 2010.
The court denied Junior's motion to restore his answer and counterclaim on April 1, 2010, and counsel appeared for trial on April 5, 2010. Despite the fact that Junior was never deposed, he never submitted an expert report to support his legal malpractice claim, his pleading was never restored, and the default judgment was never vacated, Junior's attorney asked the court to extend discovery "so that [Junior's] counterclaim [could] be developed." He also requested a change of venue and a jury trial.
The court denied Junior's request for additional discovery and rejected his request to transfer the case to another county. The court also ruled that Junior was not entitled to a jury trial because Junior's answer and counterclaim, the only pleading requesting a jury, had been suppressed:
Nevertheless, the court ruled that Junior was not precluded from raising "all defenses previously struck," including his claim that the fees were excessive and unreasonable.
The court permitted Junior and his attorney to fully participate in the bench trial conducted on April 5, June 15, June 16, and July 27, 2010. WGS presented testimony from Dennehy, Dengler, and Hager, and they were cross-examined by Junior's attorney. In addition, WGS called Junior as a witness, and Greiner testified on Junior's behalf. The attorneys submitted post-trial briefs, and the court rendered a comprehensive eighteen-page written decision on October 4, 2010.
The trial court reduced some of the charges and concluded that WGS was entitled to a judgment in the amount of $63,474:
Following the entry of judgment, Junior filed a motion for reconsideration, and WGS filed a motion for an award of attorneys' fees, costs, and prejudgment interest pursuant to
On appeal, Junior presents the following arguments:
In addition, WGS presents the following argument in its cross-appeal:
After reviewing the record and the applicable legal principles, we have concluded that all of Junior's arguments "are without sufficient merit to warrant discussion in a written opinion."
In its cross-claim, WGS argues there was "no evidence to support a finding of undue hardship," and the court incorrectly concluded that WGS "failed to recover an award equal to or in excess of 120% of $50,000." We agree that this issue must be remanded to the trial court for further proceedings and additional findings.
It is clear that WGS's motion was not "academic" because the amended judgment in the amount of $60,974 exceeded 120% of the offer of judgment ($50,000 × 120%=$60,000). Thus, the amended judgment was mathematically sufficient to recover fees, costs, and interest under the offer of judgment rule.
The offer of judgment rule "imposes financial consequences on a party who rejects a settlement offer that turns out to be more favorable than the ultimate judgment."
Pursuant to
In view of the foregoing, we affirm on the appeal and reverse and remand on the cross-appeal. Jurisdiction is not retained.
